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We are an employer in CA. Our vacation policy states an

We are an employer...

We are an employer in CA. Our vacation policy states an exempt staff person may earn 96 hours per year (say Aug - Aug) and they can roll over up to 40 hours to the new year. If an exempt person used only 40 hours, their balance is 56 hours. But they can roll over only 40- what happens to the remaining 16 hours? CA does not allow "use it or lose it".

Lawyer's Assistant: Because employment law varies from place to place, can you tell me what state this is in?

California

Lawyer's Assistant: Is the employment agreement "at will," union, full time or part time?

At Will, Full Time. Exempt staff only receive vacation time. Hourly, part time staff do not. All exempt staff have position contracts.

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

That should be everything. We want to ensure we are following the law.

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Answered in 1 minute by:
10/16/2017
Legal Eagle
Legal Eagle, Lawyer
Category: Legal
Satisfied Customers: 8,373
Experience: Licensed to practice before state and federal court
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Hello! I am a CA licensed attorney, admitted to practice in state and federal court. I have a nearly 100% satisfaction rating (click here for more info) so all that means is that you can count on me to help today. Because I want to provide you

with the most accurate answer possible, do you mind if I take a moment to review your question?

Please keep in mind that our conversation does not include an attorney-client relationship and this is for general information purposes only. Additionally, most people believe a phone call is the easiest and most efficient way to handle problems. Accordingly, you will receive an automatic phone call request. If you would like a phone call, please click “Accept” when prompted.

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Customer reply replied 4 months ago
That is fine

Ok, thanks for your patience. Unfortunately, under CA law, the remaining 16 hours have to be either paid out or rolled over to the next year for the employee. Since CA does not allow a "use it or lose it" vacation policy and because they consider vacation to be "wages" under state law, it can only be transferred or paid out to the employee.

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What you could do is place a ceiling on how much vacation time is earned to prevent people from accruing ten years worth of vacation.

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Customer reply replied 4 months ago
Understood. Thank you.

The pleasure is all mine! Further up on the screen you should see a chance to give me a rating. 5-stars are always appreciated, but it is definitely not required! You can also click here in the future to request me individually. Don’t forget, if you haven’t already, you can always sign up for a membership with Just Answer and start asking more questions on the cheap.

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Customer reply replied 4 months ago
That's what we thought we had. You can earn X per vacation calendar year and if you do not use all of your time (we encourage them to use it all)- you can roll over 40 hours. Is that not a ceiling?

Do you pay them out if they have 56 hours left over?

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Customer reply replied 4 months ago
This is all new to us as we're the new management and these questions only arose recently thanks to our HR Admin. His opinion matches your advice. To date- hours have just been piling up. No one was watching them. Our HR Admin is now but we are trying to figure out what to do with someone who may have hundreds of hours. One exempt staff earns 120 per vacation calendar. If he does not use all of his time- the remaining amounts just roll over. So he may have as an example over 200 hours. He doesn't take much time off. So lets say he earned 120 vac hours, used 40- his balance would be 80. If that 80 is to be paid out or rolled over- he would then have 120 + 80 for his new calendar year.2015 - 2016: He earned 120 vac hours. Used 40. Has a balance of 80
2016 - 2017: Earns 120 vac hours and add to that the 80 unused from the previous year- his balance would be 200 hours. He took 64 hours so his final balance is 136. That is a lot to roll over. We're going back as far as 2015 as that is when the new management took over.

I see what you mean. That is a difficult spot to be in. I'd probably recommend maybe paying out vacation over each quarter or every 6 months to help shed some of the vacation time and to help encourage people to take it. I know if it were me and I had that much time, I'd basically use it because I'd rather take the time off then be paid and taxed on it. That may be the best wiggle room under the law for you.

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Customer reply replied 4 months ago
Understood. Roll over is fine but to keep in line with the company policy- ensure staff take time off. Going forward our HR Admin will advise us as each person's vacation calendar nears it end and if there is significant time unused- we will speak to the staff so that only small amounts roll over.

I think that'd be a smart choice to help you stay compliant, but also siphon off some of the unused vacation time. People may not be thrilled, but it'll help keep the business running and avoid issues with the DIR. Did you have any other questions for me?

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Customer reply replied 4 months ago
Siphon off the extreme- yes. Completely agree. This is all for now, thank you.

You bet. Thanks!

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