Many California businesses that shut down when the pandemic started in the U.S. two years ago almost to the day furloughed staff indefinitely, especially in the hospitality industry.
Did California law entitle those furloughed employees to the immediate payout of the value of their accrued but unused vacation time?
In June 2020, Hyatt made the furlough permanent and paid out the value of all unused vacation to furloughed employees, making a second payment of the value of additional accrued vacation to furloughed employees who had elected to receive an initial payout in March. Plaintiffs contended a termination and an indefinite furlough were essentially the same. The value of unpaid vacation constituted “wages earned and unpaid at the time of discharge ... due and payable immediately” in March under Section 201.
That may not be the end of the story. Plaintiffs’ counsel Jonathan Genish of Blackstone Law informed me in a telephone interview that an appeal is planned.To avoid later needing an after-the-fact judicial finding that continued benefits were sufficient to constitute continued employment, employers should consider immediately paying the value of accrued vacation to indefinitely furloughed employees and to discontinue vacation accrual.
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