Does an ownership change require a vacation payout?

All wages must be paid at the time that the ownership change becomes effective, including all accrued vacation wages. You should cash out all employees on the last day of employment with the old entity to avoid waiting time penalties under Labor Code Section 203.

However, individual employees may want to keep their vacation balance. The selling and buying companies could agree to such a plan, but it requires that each individual employee agree in writing to the transfer of the obligation to pay out vacation. You should have your legal counsel draft such agreements.

Read more about Vacation in the HR Library.,