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How To Calculate Vacation Pay in California

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The size of the vacation pay payment builds bigger all year. Know the amount of vacation pay the boss owes before asking the boss for the money.

Asking for vacation pay does not have to be a puzzling experience. The amount of money earned is an easy question to answer.

Work and take the extra pay after calculating the amount owed.

Calculation Steps

1. Measure the qualifying period. Write down the first work day vacation hours were earned and the last work day. Count up the number of full vacation pay earning periods in this period. Employers choose the vacation pay earning period. A day, a week, a month, and a pay period are all used. Ask the boss, or the worker manager, the period the company uses.

Measure. Date range. Count periods in date range.

E. g. An employer that gives vacation time day by day. Worker worked from January 1 to December 31. During that time, 160 days were worked.

2. Figure out the the number of earned vacation hours not taken. Use the percentage of the hours earned during a year to find the total hours owed for all the work done up to the last day. Divide the days worked by the total days in the year to find percentage of hours earned. Multiply this percentage times the total hours given in a year.

Then, subtract the hours used. Paid vacation days used for taking a vacation and earlier pay outs on hours both come out of the total hours. The result is the hours owed.

Formula. Percentage of hour earned in a year = days in worked year/365 days.

Hours owed = (percentage of hours earned in a year x total vacation hours given in a year) - vacation hours used.

E.g. Employer gives one week vacation time in a year. Worker has used 2 days vacation. Percentage of hours earned in a year = 365 days/365 days = 100 percent. Hours owed = (1.0 x 40 hours) - 16 hours used = 24 hours.

3. Multiply the hours owed by the daily rate of pay paid for the typical day at work. Californians all get their typical pay rate for their vacation pay rate, at least.

Multiplication. Vacation pay = vacation hours owed x daily pay rate.

E. g. Worker gets paid a $14.00 an hour daily pay rate. Vacation pay = 24 hours x $14.00/hr = $336.

Pro Rata Calculation Steps.

When asking for vacation pay in the middle of the year, or at the end of the job, use the pro rata calculation. In California, employers must use a daily pro rata calculation when workers end employment and vacation pay is owed.

1. Calculate the pro rata pay rate for daily vacation pay earnings. Multiply the work hours in the year times the vacation pay rate. This is the total vacation pay available in the year.

Typically, the worker's regular rate of pay is used for the vacation pay rate. Workers ending their employment use their final rate of pay. The California law says this rate is used.

Then, divide the total available vacation pay by the number of hours in the period the employer uses for vacation pay, such as a week. The result is the vacation pay earned in one work period.

Formula. Total available vacation pay = vacation hours given in a year x vacation pay rate.

Vacation pay earned in a work period = total available vacation pay / number of employer's vacation pay periods in the year.

Pro rata vacation pay rate = vacation pay earned in a work period.

E.g. Employer gives two weeks vacation pay in year and uses a week for the vacation pay period. The worker earns $17 an hour and asks for a vacation pay pay out at end of the 7th month. There are 2,080 work hours in the year.

Total available vacation pay = 80 x $17/hr = $1,360.

Vacation pay earned in a work period = $1,360/52 weeks = $26.15 a week.

Pro rata vacation pay rate = $26.15/wk.

2. Count the vacation pay periods worked in the year. Do not count any period that the vacation hours earned have already been taken or paid out.

E. g. Employer uses a week for the vacation pay period. Worker works seven months. Worker worked and earned vacation pay a total of 30 weeks. No vacation time has been used. No vacation hours have been paid out.

3. Multiply the pay periods worked by the pro rata vacation pay rate.

Multiplication. Vacation pay = pay period worked x pro rata vacation pay rate.

E. g. Vacation pay = 30 weeks worked x $26.15 = $784.50.

Note on Vacation Pay Caps.

California employers can put a reasonable cap on the total vacation hours that a worker can earn, such as 200 hours. If the vacation hours that have built up are above the cap, use the cap for the number of hours worked that earn vacation pay.

Workers that earn vacation pay during periods the employer chooses that want to use the pro rata calculation do not use any periods after the period the worker reached the cap limit in built up vacation hours. The regular rate of pay (or the final rate of pay) x the cap hours is the highest vacation pay that can be earned. Any pro rata calculation above this amount is reduced to the capped vacation pay earnings.

Be careful to calculate the exact amount. An error might get the boss into trouble with the State of California for a vacation pay violation.

Resources:

Division of Labor Standards Enforcement, Recapitulation of Vacation Pay.

Division of Labor Standards Enforcement, Frequently Asked Questions on Vacation (July 6, 2011).

Division of Labor Standards Enforcement, Vacation Pay Schedule.

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Adam Benjamin Pollack

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