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Collective Bargaining Exception to California Labor Code Section 227.3 (Right to Immediate Vacation Time Payment Upon Termination) Requires Clear and Unmistakable Waiver

In Labor Code Section 203, Labor Code Section 227.3, Termination Pay (Labor Code section 201), Vacation, Waiting Time Penalties on May 2, 2013 at 4:11 pm
Collective Bargaining Bill Signing

Collective Bargaining Bill Signing (Photo credit: Office of Governor Patrick)

The Second District today issued its ruling in Choate v. Celite Corporation, No. B239160, __ Cal. App. 4th __ (2d Dist. May 2, 2013).  The case involved Labor Code section 227.3, which provides for full payment of vested vacation time upon termination:

Unless otherwise provided by a collective-bargaining agreement, whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages at his final rate in accordance with such contract of employment or employer policy respecting eligibility or time served; provided, however, that an employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination. . . .

(Emphasis supplied.)

The court rejected an implied waiver standard and held that for the collective bargaining agreement exception to apply, the CBA must clearly and unmistakably waive the right to immediate payment:

We hold that a collective bargaining agreement “otherwise provide[s]” and thereby abrogates an employee’s statutory right under section 227.3 to immediate payment for vested vacation time only if the agreement clearly and unmistakably waives that right. Because the agreement in this case lacked this clarity, Celite Corporation (Celite) was required to immediately pay terminated employees for all their vested vacation time. We nevertheless reverse the trial court’s judgment imposing waiting time penalties because Celite’s nonpayment was not “willful.”

(Emphasis supplied.)

Judges & Attorneys

Judge Brian M. Hoffstadt (sitting pro-tem) issued the opinion for the court, with Presiding Justice Arthur Gilbert and Associate Justice Steven Z. Perren concurring.

Trial Court: Hon. James W. Brown and Hon. Donna D. Geck of Santa Barbara County Superior Court.

Sheppard, Mullin, Richter & Hampton LLP, Jeffrey A. Dinkin and Karin Dougan Vogel for Defendant and Appellant.

Gilbert & Sackman, Robert A. Cantore and Adrian Barnes for Plaintiffs and Respondents.

By CHARLES H. JUNG

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