California law does not require employers to provide paid vacation or PTO, but does protect earned vacation/PTO. When employers offer paid vacation or PTO that can be used for any reason (vacation, illness, or other), the vacation/PTO that is earned is considered part of the employee’s wages and cannot be taken away. For instance, “use it, or lose it” policies are unlawful; that is, employees must be allowed to carry over earned vacation year-to-year and do not lose paid vacation for failing to use it by a deadline. However, employers can cap how much an employee can bank in vacation earnings. Upon termination of employment, employers must cash out any unused vacation/PTO and pay it along with the final paycheck.

Employees typically earn, or “accrue,” vacation/PTO incrementally with each pay period, even if the employer’s policy says it is earned less often. An employer usually cannot wait until the end of the year to grant vacation rights for the past year.

California law requires employers to provide paid sick leave to employees who work in California for 30 days or more. Starting 2024, the paid sick leave required increased from 3 to 5 days per year. Sick leave can be used to tend to the employee’s own conditions or those of a family member, and includes diagnosis, care, treatment, and preventive care. Victims of domestic violence can also use earned sick time in some circumstances. An employee may begin to take sick leave after 90 days of employment. Employees earn paid sick leave incrementally, by pay period. Wage statements must show how much sick leave was earned during the pay period. As with vacation/PTO pay, employees can carry over unused sick pay year-to-year. Unlike vacation/PTO, employers are usually not required to cash out sick time at termination.

Many cities have expanded employees’ rights to paid sick leave, particularly in the Bay Area.