Collective Bargaining Agreement’s Waiver of California Labor Code Section 227.3 Right to Vacation Pay Upon Termination Must Be Clear and Unmistakable

Take a Vacation!

Take a Vacation! (Photo credit: Wikipedia)

The Second District held today that the collective-bargaining exception to Labor Code section 227.3 requires that the right to immediate payment of vested vacation time is waived only if the CBA “clearly and unmistakably waives that right”.  Choate v. Celite Corporation, No. B239160, __ Cal. App. 4th __ (2d Dist. May 2, 2013).

The Court of Appeal, however, reversed the trial court’s ruling that defendant willfully refused to pay vacation time.  Labor Code section 203 allows for waiting time penalties of up to 30 days’ wages if an employer willfully fails to pay the employee any outstanding wages upon termination:

203. (a) If an employer willfully fails to pay, without abatement or reduction, in accordance with Sections 201, 201.3, 201.5, 202, and 205.5, any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days. . . .

(Emphasis supplied.)  But because the present case was the first to define the standard for waiver under section 227.3, the Court found defendant did not act unreasonably.

The trial court’s ruling that Celite acted willfully was based in part on the premise that Celite’s misunderstanding of the law governing waiver—even though shared by the Union—was unreasonable. This premise necessarily assumes that section 227.3 requires any waiver to be clear and unmistakable. Although we agree with the trial court that this is the appropriate standard, this is the first case to define the standard for waiver under section 227.3. Plaintiffs argue that Saustez decided this issue, but it did not. (Saustez, supra, 31 Cal.3d 774.) Celite’s good faith reliance on a different waiver standard was accordingly reasonable, particularly in light of the language in Firestone supporting that standard. (Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th 314, 325-326 [position taken where law is undecided can be reasonable].) That Celite’s position did not prevail does not mean that its position was unreasonable. (8 Cal. Code Regs., § 13520.)

You can read more here.

By CHARLES H. JUNG

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