California law prohibits “use it or lose it” vacation policies and, under Section 227.3 of the California Labor Code, requires all accrued vacation to be paid on termination of employment, “unless otherwise provided by a collective bargaining agreement.” Examining the meaning of the collective bargaining exception for the first time, the California Court of Appeal ruled that the employer was liable for unpaid pro rata vacation because the union agreement did not “clearly and unmistakably waive” the employees’ rights under Section 227.3. Choate v. Celite Corp., No. B239160 (Cal. Ct. App. May 2, 2013). However, the Court reversed the judgment imposing waiting time penalties against the employer because the employer did not act willfully in its vacation payment practices. For more on Choate, click here .
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CBAs must clearly spell out waiver of unpaid vacation
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