Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) 63 Sequeira.304 Despite this clear conflict in appellate decisions, the California Supreme Court declined to review Church. Accordingly, the law remains uncertain in this area. Another employer policy fomenting class actions has been a “floating holiday” policy that allows employees to take a paid day off at the employee’s discretion but does not treat the floating holiday as vacation: the employee who does not use the floating holiday is not credited with a day of vested vacation time, but instead simply loses the opportunity for a paid day off. The DLSE has opined that an employer may have a use-it-or-lose-it policy with bona fide “holidays,” but only when the holiday is tethered closely to a specific event. For example, an employer may give employees Martin Luther King, Jr. Day as a paid day off, on a use-it-or-lose-it basis. But where “holiday” pay can be claimed on any day, at an employee’s discretion, the DLSE views it as disguised “vacation” pay, and has opined that an employer must treat any such holiday pay as vested vacation time.305 Based on this announced interpretation of the law, numerous class actions have been filed against employers who have a use-it-or-lose-it policy with respect to floating holidays. To date, no published decision has adopted or rejected the DLSE’s interpretation.306 In recent years, some organizations adopted “unlimited” vacation plans that, generally, allow employees to take varying amounts of paid time off without a specified cap. These policies predominate in industries, like accounting, where employees may take significant time off during the off-season, having worked long hours during the busy season. A non-profit’s unlimited vacation plan came under fire in McPherson v. EF Intercultural Foundation, Inc.307 Three managers sued for unpaid accrued vacation once their employment ended. They claimed that EF failed to pay all accrued vacation wages at the time of their termination, in violation of Labor Code Section 227.3. EF responded that its uncapped vacation policy did not create any accrued, vested vacation pay. Following a bench trial, the employer was held liable because EF’s unwritten policy was an “undefined” vacation plan rather than an unlimited plan. The trial court found that the plaintiffs’ vacation requests needed pre-approval and no one told them they could take ”unlimited” vacation. The trial court found that an oral agreement allowed the plaintiffs to take approved vacation of the typical duration of most jobs at the company. The decision was largely affirmed on appeal.308 McPherson found that EF’s unwritten policy was not a “true” unlimited time off or vacation policy. McPherson held that a lawful unlimited vacation policy would need to be written and have these characteristics: (1) clearly provide that the ability to take paid time off is not a form of additional wages for services performed, but perhaps part of the employer’s promise to provide a flexible work schedule (including employees’ ability to decide when and how much time to take off); (2) spell out the rights and obligations of both the employee and employer and the consequences of failing to schedule time off; (3) in 304 Church, 143 Cal. App. 4th at 1582-83. 305 DLSE Enforcement Manual § 15.1.12, et seq. (“There must be an objective standard by which it can be established that the leave time is attributable to holidays, sick leave, bereavement leave or other specified leave.”). 306 The DLSE’s interpretation was cited with approval in an unpublished District Court decision, Perez v. Performance Food Group, Inc., 2017 WL 6940526, at *13 (C.D. Cal. Dec. 15, 2017). 307 47 Cal. App. 5th 243 (2020). 308 47 Cal. App. 5th at 276 (upon remand, directing the trial court to recalculate plaintiffs’ unpaid vacation wages).
RkJQdWJsaXNoZXIy OTkwMTQ4