Question:

I worked for my employer for nearly twenty years before I voluntarily quit. About a month after I quit, I realized that I had made a bad decision. Luckily, my employer rehired me, but I was classified as a new employee. As a result, under the employer’s policy, my twenty years of service no longer counts towards my seniority status for purposes of calculating the number of vacation days I receive every year. Are my employer’s actions within the law?

Answer:

Based on the facts contained in your question, it appears that your employer has acted in accordance with California law, which governs your situation. Employee compensation and benefits such as vacation time, pension plans, and retirement plans are discretionary. Employers have the right to decide how much to pay their employees and whether or not to grant benefits to employees. For example, it is up to employers to determine the amount of vacation time they provide to employees, if any. Because the provision of vacation, pensions, and retirement plans is discretionary, the employer can define who is eligible for those benefits, how the benefits accrue, and the level of benefits provided. Many employers provide vacation time, with accrual rates based on the length of continuous service of their employees. However, some employers grant different amounts of vacation to employees based on job classifications. In addition, employers may place a cap on the accrual of vacation time and place restrictions on when vacation time can be used.

California law provides that accrued vacation constitutes deferred wages, and these wages vest as they are earned. Therefore, an employee’s entitlement to vacation is a proportionate right and vests as labor is rendered. This is why all accrued vacation must be paid out to an employee when the employee resigns or is terminated.

If employers decide to grant benefits to their employees, they must follow their policies and procedures. For example, if a policy states that the accrual of vacation time is based on years of continuous service, employers must base accrual for all employees on years of continuous service. By contrast, if the vacation policy states that accrual is based on years of service, then there is an argument that an employee’s service to the employer need not be continuous. However, you have indicated that your employer’s vacation policy was in fact based on years of continuous service.

It is worth noting that in certain cases, employers will be in violation of the law if they treat similarly situated employees differently with respect to their policies and procedures. In order for unequal treatment to constitute unlawful discrimination, the aggrieved employee must fall into what is known as a protected class, and the unequal treatment must be directed at the employee because of his or her membership in the protected class. Pursuant to the California Fair Employment and Housing Act, the protected classes include: sex, gender, gender identity, race, color, national origin, ancestry, citizenship, disability, medical condition, age, religion, creed, pregnancy, sexual orientation, marital status, and veteran status. Thus, for example, if a Caucasian employee with ten years of continuous service is granted ten days of vacation per year, and a Hispanic employee with ten years of continuous service with the same job classification is granted fifteen days per year, the employer would be implementing its vacation policy in a discriminatory fashion. However, your question does not indicate that you were treated differently than others based on a protected class.

In closing, it appears that your employer has the right to grant you vacation benefits based on the length of time you have continuously worked since being rehired. The law does not provide a default grace period that will recapture your previous service to the company. Therefore, if there is no grace period mentioned in your employer’s policy, you are not entitled to one, regardless of your exemplary service over the years.
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