California holiday vacation rules: new law signed Sept. 30, 2026 changes advanced PTO handling from Jan. 1, 2027
Key points
- California does not require paid vacation, but once offered it is treated as earned wages under Labor Code section 227.3
- A new law signed Sept. 30, 2026 changes how employers handle PTO advanced to employees who later quit, starting Jan. 1, 2027
- Use-it-or-lose-it policies remain prohibited; combined PTO is treated as vacation and must be paid out at separation
California Employment Law Report advises California employers to review vacation rules. California does not require paid vacation, but once offered it is treated as earned wages under Labor Code section 227.3. A new law signed September 30, 2026 changes how employers handle PTO advanced to employees who later quit, starting January 1, 2027. Use-it-or-lose-it policies remain prohibited; combined PTO is treated as vacation and must be paid out at separation. For reference only; this is not legal advice.
What employers should do
- Review advanced-PTO policies ahead of the Jan. 1, 2027 change
Policy details
- Jurisdiction
- California
- Status
- Signed, not yet effective
- Effective date
- 2027-01-01
- Employers covered
- California employers
- Official source
- Official source pending
Original report: California Employment Law Report ↗Edited with AI assistance. Facts are based on official sources and original reports. For information only; not legal, immigration or insurance advice.