62 Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) Seyfarth Shaw LLP | www.seyfarth.com The decision was not actually a class action decision, but rather addressed the appropriate statute of limitations on any claim for unpaid vacation. Vacation differs from regular wages in that an employee has no entitlement to be paid for accrued but unused vacation until the employee quits or is discharged. That leaves open the question of whether an employee may sue only for vacation accrued but unpaid during the four years before the lawsuit, or for any vacation that accrued that was unpaid during the employment (assuming the employee brings suit within four years of leaving his employment).297 The Church court reasoned that the statute of limitations begins to run only when a cause of action accrues, and that no cause of action for unpaid vacation accrues until termination of employment.298 Accordingly, Church held that an employee who sues within the limitations period can sue for any unpaid vacation that accrued at any time throughout the entire tenure of employment.299 Church is squarely at odds with an older decision, Sequeira v. Rincon-Vitova Insectaries, Inc.,300 which had adopted the DLSE position that an employee suing for unpaid vacation may sue only for vacation accrued within the limitations period (which is four years for claims based on a written contract such as a written vacation policy). The DLSE reasoned that although an employee cannot demand payment of unused vacation until termination, the employee is entitled to take vacation upon earning the vacation. The DLSE also noted that allowing an employee to reach back throughout the entire employment would create serious recordkeeping problems for employers who may not save such records for periods that exceed the typical limitations period (e.g., three or four years). Accordingly, Sequeira held that the statute of limitations on a claim for vacation pay begins running as soon as the vacation is earned.301 Church declined to follow Sequeira because the Church court thought that the Sequeira decision improperly deferred to a DLSE interpretative bulletin.302 Church noted that intervening California Supreme Court precedent in Tidewater Marine Western, Inc. v. Bradshaw303 had held that such a bulletin is an invalid underground regulation that is not entitled to any deference. Re-evaluating the issue anew, Church thought that the more persuasive reasoning was that a cause of action for unpaid vacation pay does not accrue until the termination of employment and, therefore, chose not to follow 297 Church suggested, without deciding, that the statute of limitations on a vacation claim may be either two years (if based on oral promises) or four years (if based on a written contract). Id. at 1577. Given a plaintiff’s ability to recover unpaid vacation through a claim under the UCL, Bus. & Prof. Code § 17200, et seq., which has its own four-year statute of limitations, the discussion in Church of the appropriate statute of limitations is primarily academic. 298 Id. at 1576-77, 1582-83. 299 Id. at 1578-79. 300 32 Cal. App. 4th 632 (1995). 301 Id. at 635-36. 302 Church, 143 Cal. App. 4th at 1578. 303 14 Cal. 4th 557 (1996).
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