Tuesday, January 8, 2008

40th Anniversary

January 8, 1968, 40 years ago today, at about this time of day, I put my hand up in the air and was admitted to practice law. 40 years, and all I heard this morning was it's Elvis' birthday. Do I feel like Rodney Dangerfield? Smile.

It has been a wonderful run; I have been privileged to represent many wonderful people, to fight many good fights, and in the course thereof to meet many interesting individuals. Hope I can continue to do this for another 40. It's just mid-life.

Vacation Pay

There is lots going on the vacation pay front.

In Minnesota, the Supreme Court in Lee v. Fresenius Medical Care, Inc., 2007 Minn. LEXIS 682 (Minn., Nov. 15, 2007), interpreting the state wage payment and collection statute, held that vacation benefits are "wholly contractual." In other words, whether or not an employer is obligated to pay a discharged employee his/her vacation depends upon the terms of the employer's policy. The Court found that the statute is a "timing statute," and does not mandate what an employer must pay a terminated employee, but rather when an employer must pay a terminated employee.

The Court noted that its interpretation conforms to the interpretations of similar statutes in Indiana and Maryland. For its statement regarding Indiana law, it relied upon Indiana Heart Assocs., P.C. v. Rahamonde, 714 N.E. 2d 309, 311 (Ind. Ct. App. 1999). For Maryland, it relied upon Rhoads v. F.D.I.C., 956 F.Supp. 1239, 1259-60 (D. Md. 1997), Rev'd on other grounds, 257 F.3d 373 (4th Cir. 2001). In Rhoads, Judge Kaufman held that a terminated employee was not entitled to accrued vacation pay under the Maryland WPCL because the employee manual in effect at the time of the employee's termination stated that "[i]f you are terminated for cause by the Association, payment for accrued vacation leave is forfeited."

Quite obviously, the Minnesota Supreme Court did not have the unreported decision of the Maryland Court of Special Appeals in Catapult Technology Ltd. v. Wolfe, No. 997, unreported (Md. Ct. Spec. App. 2006) (available at http://www.wagecollection.com/Opinion.pdf). In Catapult, Judge Barbera, with respect to Rhoads, had the following to say: " . . . Rhoads is a Federal District Court case, and, of course, is not binding authority on this Court. In any event, both Rhoads and Magee [Magee v. DanSources Technical Servs., Inc., 137 Md. App. 527 (2001)] were issued before Medex [Medex v. McCabe, 372 Md. 28 (Md. 2002)], which clearly held that an employer's personnel policies cannot be used to contravene the public policy that employees have a right to be compensated for their efforts." In response, the Maryland Department of Labor, Licensing and Regulation revised its opinion about vacation pay as follows: "When an employee has earned or accrued his or her leave in exchange for work, an employee has a right to be compensated for unused leave upon the termination of his or her employment regardless of the employer's policy or language in the employee handbook." The Catapult case settled, and therefore the issue will not be presented to the Maryland Court of Appeals.

Our thanks to Marc J. Smith of Wage Collection, who blogs on wage issues in Maryland and Washington, D.C.

The Minnesota Supreme Court noted that Montana in Langager v. Crazy Creek Productions, Inc., 954 P.2d 1169 (Mont. 1998) held that the employer is obligated to pay "earned" vacation.

The majority in the Minnesota Lee case noted that if it "held that employees have actually earned an absolute right to vacation pay as they accrue vacation hours for working each pay period, the legality of both the use-it-or-lose-it" policy that many employers have and caps-on-vacation-time-accrual policies would be called into question.

Judge Page wrote a vigorous dissent, noting that neither the Indiana or Maryland statutes were as similar as majority suggested.

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