California law prohibits “use it or lose it” vacation policies. Under the California Labor Code (Section 227.3), employers must pay terminated employees all accrued vacation, “unless otherwise provided by a collective bargaining agreement.” Examining the meaning of the collective-bargaining-agreement exception for the first time, the California Court of Appeal has ruled that an employer is liable for unpaid pro rata vacation where its agreement with the union did not “clearly and unmistakably waive” the employees’ rights under Section 227.3. Choate v. Celite Corp., No. B239160 (Cal. Ct. App. May 2, 2013). However, the Court reversed judgment imposing waiting time penalties against the employer because it found the employer did not act willfully.