Legal Question in Business Law in California

Re: Final payment with unpaid vacation

This subject is covered by California Labor Code section 227.3, which says that a terminated employee must be paid for vested vacation time at his final rate of pay upon termination. The amount vested is determined with reference to the employee's contract, employer policy, or the collective bargaining agreement, if any.

Since your question implies that there was no accural or vesting policy set forth in writing, I think your situation would be governed by the employer's past practice. For example, if an employee were hired on January 1, would the company allow him or her to take three weeks paid vacation in March? In July? Probably not, but I don't know.

By the way, in checking the annotated code, I found about four appellate cases where vesting was at issue. In all those cases, the court found that vesting was "pro-rata" as services were performed. Based on all of this, I think the company's position is correct unless you can find examples to show that its' policy was to make an entire year's paid vacation available to an employee at the beginning of the year, or immediately upon hire.