By Matthew Roberts - June 26, 2020
A consequence of the prolonged shelter-in-place and stay-at-home orders issued as a result of the COVID-19 pandemic is dramatically reduced travel. As a result, during this time many employees are not taking earned vacation time and may not do so for months resulting in the following question from employers: Can we change our vacation policies as a result of the employees not using their time?
This is a tricky question. Generally, however, employers do have control over their vacation policies subject to certain rules. Below are some common ways in which an employer may address its vacation policies while staying within compliance.
California law allows employers to set reasonable caps on vacation accruals. Accrual caps mean that the employee no longer accrues vacation time while they are at the cap.
Although there is no set standard on what a reasonable cap may be, commonly caps meet this requirement when they are no less than 1.5 to 2 times the annual rate for employees. This is because employees need to be provided a reasonable opportunity to take all the vacation that they earn within a year.
So, for example, an employee who accrues 40 hours of vacation a year should have a cap of no less than 60 hours before they stop accruing vacation.
Some employers who have already instituted caps want to temporarily increase the cap as a benefit to the employee since there is little incentive to use vacation during a shelter-in-place order.
Employers may increase or decrease their caps, however, California prohibits “use it or lose it” vacation policies. For example, if an employee has a 200-hour cap, and the employer decided to temporarily increase that cap to 240 for the rest of year, the employer cannot take away any vacation hours in excess of 200 once the employer decides to return the cap to that level. Read More