The Fifth District today ruled on an important aspect of California Wage & Hour law, namely: vacation wage pay.
Holding that the Sequeria court improperly relied on DLSE regulations not promulgated according to the requirements of the California Administrative Procedures Act. Essentially, the Church court smacked down the DLSE for attempting to interpret portions of the Code of Civil Procedure.
In sum, reasoning that an employee's right to his vacation as wages does not become ripe for suit until his termination (per Labor Code 227.3), this Court held that there is no "look-back" cutoff period for the payment of vacation wages. In other words, earning or accruing your vacation does not begin the statute of limitations period, because there is no requirement that you use it or be paid for it then.
This ruling doesn't address the law of accrual, other than to say it is not disturbing Suastez.
This opinion makes a lot of sense, frankly. I'm sure we'll see some shock-and-awe briefing from the big boys on this, but it doesn't change my advice much.
A sound policy remains to cash out vacation at regular intervals, pursuant to a written policy, and encourage employees to take vacations to increase their productivity and minimize turnover. Now you have a cash-management reason to do it too.