Vacation and Sick Leave
The law does not require employers to offer vacation time and sick leave to employees. Nevertheless, many employers provide these benefits to full-time workers as a way to retain employees and to provide job satisfaction. In addition, employees with health care coverage typically call in sick less often. Since the law does not mandate vacation and sick leave, these agreements are between an employer and an employee. Employers can define the terms of these benefits in an employee handbook, but must be aware of certain legal implications if they do offer such benefits.
If providing vacation time to employees, an employer should:
- Apply consistent accrual standards for each employee: Consistent application of accrual methods will prevent discrimination claims.
- Abide by state restrictions: While states do not mandate vacation benefits, if an employer does provide paid vacation time, the employer must abide by applicable limitations. Many states have laws that govern factors like the accrual of vacation time, the class of employees an employer can exclude from the benefit, and whether an employer can tell an employee when to take vacation time.
In some states, because an employee earns vacation time as work hours accumulate, vacation pay is a form of wages. Depending on the employer's plan, vacation time, for example, may accumulate on a daily or weekly basis. Consequently, earned and unused vacation time must be paid to the employee upon termination of employment, unless a collective bargaining agreement provides otherwise.
If providing sick leave, an employer should:
- Describe the terms of sick leave in an employee handbook: If the employer will require the employee to provide a doctor's note when taking sick leave, this term should be included in the handbook.
- Decide whether to pay employees for sick leave when employment ends: In most states, an employer is not required to pay the employee for accrued sick leave when a job ends, but an employer can establish a policy for doing so.
Some municipalities, including San Francisco, require employers to provide a certain number of paid sick days. Make sure you check the laws and ordinances in your jurisdiction before drafting a sick leave policy.
Paid Time Off
Many larger companies have combined sick leave and vacation into one lump sum called Paid Time Off (PTO). Under this system, employees receive a certain number of days for vacation, sick leave, and personal time. For example, if a company grants 10 days of vacation, 5 sick days, and 2 personal days, the employee would have a total of 17 days of paid time off.
Many companies have converted to this method to prevent abuse of sick time and to provide employees with flexibility to take time off when desired. Upon termination of employment, the employer must pay the employee for unused paid time off, including vacation, sick leave, and personal days.
The federal Family and Medical Leave Act (FMLA) allows qualified employees to take up to 12 weeks of unpaid leave under certain circumstances. A qualified employee is an employee who has worked for the employer for at least a year and has worked at least 1,250 hours during the previous 12 months. The act applies to employers with at least 50 employees within a 75-mile radius. The employee can take unpaid leave:
- To care for a newborn, an adopted child, or a child placed in the employee's home by the foster care system during the first year of arrival
- To care for an immediate family member (spouse, child, parent) with a serious mental or physical health condition
- Because the employee's suffers from a serious mental or physical condition that prevents the employee from working
In addition, many states provide additional benefits through their own family and medical leave laws.
Paid Leave in California
California offers employees that pay into State Disability Insurance paid time off. The Paid Family Leave program is a wage protection program for employees. A qualified employee can take up to 6 weeks of unpaid leave during a 12-month period. The program allows an employee to take time off to care for a parent, spouse, child, or a registered domestic partner with a serious health condition or for bonding with a new child. The program is funded through employee payroll deductions.
Get Legal Help with Your Small Business
While you don't have to offer paid sick leave (for the most part) or paid vacation, you must follow certain regulations when doing so. Consider speaking with an employment law attorney in your state with experience helping employers comply with labor laws.