On April 1, 2020, the California Court of Appeal issued the first published decision addressing unlimited vacation policies under California law.  “Unlimited” vacation policies in which employees have no minimum and no maximum vacation and do not accrue any vacation time have become increasingly popular in recent years.  However, without guidance from the courts, employers that have implemented these policies have faced legal uncertainty.  In McPherson v. EF Intercultural Foundation, Inc., the court held that the employer’s purported “unlimited” paid time off policy violated Labor Code Section 227.3 based on the particular facts of that case.  Since the court limited its ruling based on the facts in McPherson, it left open many questions regarding the lawfulness of unlimited vacation policies generally.  Fortunately, the court also provided example features of an unlimited vacation policy that it suggested might not violate Section 227.3.  Nevertheless, this newly published decision may have opened a door for more litigation and we recommend employers review their flexible/unlimited time off policies.
Continue Reading California Court of Appeal Addresses Unlimited Vacation Policies for the First Time in McPherson v. EF Intercultural Foundation, Inc.