Human Resource Blog

Change in vacation policy

We recently changed our vacation accrual policy that would cause employees to be employed longer before getting an increase in their vacation accrual. Employees under the old policy, would have accrued 160 hours after 5 full years of service. The new policy now states that they would not bump to 160 hours until 10 full years of service. Can we enforce this policy change on existing employees or must it apply only to new hires and existing employees can be grandfathered in under the old policy?

In every state including California, you can enforce this policy for existing as well as new employees. Simply provide employees with the new policy in writing. If you want to be especially cautious, you can have the sign that they received the memo (or revised employee handbook) but you do not need the employees permission to implement this policy.

In several states, there may well be an issue with the vacation time that employees have already earned. Suppose Suzy has been with the company for 6 years and has 160 hours of vacation in the current year. In a number of states, Suzy must be allowed to use her 160 hours of vacation. (And in several states, if Suzy quits tomorrow, she is entitled for payment for those hours.) However, those regulations refer to the existing vacation time, rather than vacation earned in the future. Next year, Suzy may accrue only 80 hours of vacation and not receive 160 hours of vacation again until she has been with the company for 10 years.

To summarize, employees must be permitted to use the hours of vacation that they have already accrued. But future accruals are subject to the new company policy.