My friend has just learned that their California employer pays out used vacation at the end of the year. Even though the time off for vacation was taken in January, they will not receive money on their paycheck until December. The employee is non-exempt and paid hourly.

Is this a common practice? Are there any good references online that discuss this sort of policy?

Neither of us, nor anyone I've asked, has ever heard of an employer doing such a thing. I've searched everything I can think of, but I've been unable to find any mention of it.

Please note this isn't paying out accrued vacation (which is common), it's vacation time that has been used by the employee.

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    When vacation time is initially taken, is their paycheck reduced? What happens when someone leaves the company? – David K Jan 23 '18 at 20:30
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    This sounds really sketchy at best, illegal at worst. – Mike Harris Jan 23 '18 at 20:35
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    I would have your friend immediately call the California Labor Department. They can tell you the legality of this, but in 40 years in the workplace, I have never heard of a company doing this, so it may well be illegal. – HLGEM Jan 23 '18 at 20:40
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    Incidentally, whether it is legal or not, this is a company that would not retain me as an employee after the first time they tried this. Any company that would do this is likely to try to cheat their employees in many ways and is not one that anyone should be willing to work for unless they are starving to death. – HLGEM Jan 23 '18 at 20:43
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    I can't think of an honest reason why a company would do this even if it is legal. The only benefit I can see for them is that a percentage of people will forget they are owed pay that year, or lose track of how much they're owed, and the company can more easily defraud them. If anyone can think of a legitimate reason to do this, I'd be interested to hear it. – Jonathon Cowley-Thom Jan 24 '18 at 17:26

Common? Hardly.

I've been in the workforce since the 80's and in many states (including CA) and this is literally the first time I've ever heard of that being done much less have it done to me.

If it were me, I'd be looking for new work because that just isn't normal and I'm not in the habit of loaning my employer a week's worth of pay for up to a year.

  • 6
    I would also be investigating whether this practice is legal. It's uncommon enough to make me wonder. – David K Jan 23 '18 at 20:33
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    It's especially odd for California, which is a mandated payout state. It seems weird that they would be legally obligated to pay you for accrued vacation but not for used vacation. – shoover Jan 23 '18 at 21:50

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