HR Alert

California Court of Appeal: Employers Not Required to List Accrued Paid Vacation Time in Wage Statements

Court Rules on Required Contents of Wage Statements

In a recent opinion, a California Court of Appeal concluded that the California Labor Code does not require employers to include the monetary value of accrued paid vacation time in employee wage statements unless and until a payment is due at the termination of the employment relationship.

Section 226(a) of the California Labor Code requires employers, either semimonthly or at the time of payment of wages, to furnish employees with itemized written statements that specify (among other things) gross wages earned and net wages earned.

Court Decision
In determining whether employers are required to itemize the monetary value of vacation pay as wages earned, the Court noted that under California law, paid vacation is a form of deferred wages, and that unused vacation time does not become a quantifiable vacation wage until the employment relationship is terminated.

As such, the Court concluded, the requirement that an employer identify earned "wages" does not extend to accrued vacation benefits, unless and until a payment is due at the termination of the employment relationship.

Note: According to the opinion, the Court's conclusions apply equally to "paid time off."

Click here to read the text of the opinion. Employers with questions about the impact of the case on employer wage statement requirements should contact a knowledgeable employment law attorney well-versed in state employment law.

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