Does vacation pay accrue during a layoff period?

When an employee is laid off without a specific return date within the normal pay period, the wages earned up to and including the layoff date are due and payable in accordance with Labor Code Section 201 — that is, immediately on layoff. This includes all accrued vacation wages. If there is a return date within the pay period and the employee is scheduled to work, the wages may be paid at the next regular payday (Labor Code Section 204).

Vacation wages, including pro-rata accrued vacation, must be paid at termination (Labor Code Section 227.3). Vacation accrual is considered a form of wages earned while working, so while an employee is on layoff, vacation wages do not accrue.