CA Court of Appeal Opinion -- Employer Vacation Policy and State Law
On Friday, the Court of Appeal, Fourth Appellate District, Division One (San Diego), in Minnick v. Automotive Creations, Inc., et., (July 28, 2017, D070555) ___ Cal.App.4th ___,addressed whether defendants employers’ vacation policy violated state law by requiring all employees to wait until one year of employment to begin accruing vacation time. (Slip opn., p. 2). The Court of Appeal held that the vacation policy did not violate state law because “an employer can properly decide to paid vacation after a specified waiting period.” (Id. at p. 10.)
Plaintiff sued his former joint employers alleging their vacation policy violated state law because it required employees who worked for less than one year to forfeit vested vacation pay. (Slip opn., pp. 1-2.) The trial court sustained defendants’ demurrer. The Court of Appeal affirmed. (Id. at p. 2.) According to Labor Code Section 227.3, if an employer provides vacation pay to an employee, any vested vacation pay must be paid to the employee. (Id. at p. 5). However, vacation pay vests when it is accrued by the employee. According to the Court of Appeal, an employer is entitled to decide whether to provide for paid vacation and set the time frame for when paid vacation may begin to accrue. (Id. at p. 10). The court concluded that, “if employers can lawfully restrict vacation accrual at the back end, it follows that employers can lawfully impose a waiting period on the back end.” Therefore, the Court of Appeal held that the defendants’ policy of imposing a one year waiting time before issuing vacation pay did not violate state law. (Ibid.)
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