Employers should be aware that wage and hour issues are often the basis of employee lawsuits. As a result, it is important for employers to ensure that their employee handbooks are updated, including policies regarding vacation time and sick leave.
An employee is typically not entitled to paid vacation unless the employer has agreed to provide it. Although this seems like a simple rule, many disputes between employers and employees still arise.
An employer that provides vacation benefits to its employees must ensure that its policies comply with the law. For instance, an employer in California is not allowed to implement a “use it or lose it” policy. Once your employees have earned their vacation pay, you cannot take it away from them. However, employers are permitted to set a limitation on the amount of vacation pay that can accumulate. While you can set a maximum amount for the total amount of vacation pay that can accrue, you cannot require your employees to use the vacation time in the same year it is earned. It is important to have a knowledgeable attorney review your policies to verify they comply with the applicable state law.
What happens when an employee has accumulated vacation pay and is terminated? Under most circumstances, the employer must pay the terminated employee for the vacation pay that has accrued as wages at the employee’s last rate of pay.
The most crucial step in employer’s avoiding litigation over vacation pay is to draft a vacation policy in compliance with the applicable law. It should cover a variety of topics including eligibility requirements, rate paid, caps on accrual amount and whether approval must be obtained to use vacation time.
In September of this year, California’s governor signed a new sick leave law which becomes effective in July. The new law requires the majority of California’s employers (public and private sectors) to provide their workers with at least three paid sick days per year. Employers can use the accrual method or give the sick days in a lump sum. Employers are allowed to limit the accrual of paid sick days to 48 hours (six days), as well as limit the use of paid sick days to three per year. Connecticut, the District of Columbia and 16 cities, including New York City and Philadelphia have enacted sick leave laws. It appears that new sick leave laws are on the horizon in other states as well. As a result, as the laws change in your state, it is important to have a lawyer review your policies to determine if they comply with the changes.
Sound confusing? It can be, so don’t procrastinate in getting help. Contact Leslie S. Marell for assistance in updating your employee handbooks as well as your employment agreements.