My employer is pretty decent overall. But for two years or so they engaged in a practice that I am pissed off about, even to this day. This is such a minor thing, but as I'll explain, it is big money...
In my understanding of California state employment law (IANAL), an employee can accrue or be granted vacation/paid time off, which is measured in hours. These hours are owned by the employee, and in the case of termination, they must be paid out at the hourly rate of the employee (salary divided by 2080 hours) on the last day of employment. A lawyer could state it better and I am just relying on some AEA employment law seminars I took as a manager several years ago.
So here's the rub, upon getting a raise, my employer would recalculate the amount of hours an employee had on the books by converting the hours to a dollar value (the old hourly rate), then taking that dollar value and dividing by the new hourly rate. The better you did, the higher the raise, the less vacation you would get to keep. I think this may have been a disincentive to keep vacation on the books, but the problem is that is isn't necessarily legal.
I'll make a generic example. Many of these numbers are based onn assumptions/guesses at and are just for visualization.
- ($25.00/hour) * (120 hours of vacation) = $3000
If we assume a 5% raise yearly
- ($3000) / ($26.26/hour) = 114.3 hours of vacation
So, the employee just lost 5.7 hours of vacation and the employee has lost $149.63 from what their vacation should be valued at in California.
Let's assume that there are 5000 employees in California and the above calulation is average
- (5000 employees) * ($149.63) = $748,150
Wow, that is a quarter million dollars... I wonder where that went...
The company has since stopped this policy and complies with employment law in California as far as I know. The sad thing is that most likely the average hourly rates are probably higher and the amount of vacation time banked it most likely higher.
- Google Answers Thread on the Subject: http://answers.google.com/answers/threadview?id=45228
- California Employment Law: http://california.lp.findlaw.com/ca01_codes/index.html