Vacation, paid time off (PTO) and sick leave are benefits that you can choose to offer your employees. Both vacation and PTO are considered a form of wages that employees earn as they work. Under California’s wage and hour laws, vacation and PTO must accrue and must be paid out at termination. The only exception is where the benefit is provided through an Employee Retirement Income Security Act (ERISA) qualified plan. Sick leave is not considered a form of wages.
Vacation is typically used by employees to pay for time away from work for their own personal use and enjoyment. Employers who maintain a separate vacation policy generally maintain a sick leave policy also.
PTO typically combines sick leave and vacation allowances into one block of time. The employee can use PTO for personal reasons, vacation or sick leave.
While there is no requirement that your employee handbook contain information about benefits such as sick leave, vacation and paid time off, such policies are recommended. You can include eligibility requirements, conditions for scheduling time off or calling in sick, any requirements for prior approval of vacation or paid time off, and other issues related to time-off benefits.
CalChamber’s Employee Handbook Software can help you quickly create an employee handbook that contains these policies. Purchase the software at the CalChamber store.