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Monday, August 29, 2011

Paton v. Advanced Micro Devices: Sabbatical Leave May Be Protected as Vacation under Labor Code 227.3

In Paton v. Advanced Mirco Devices, Inc. (8/5/11) 197 Cal.App.4th 1505, a former employee brought a class action against his former employer, alleging that he was entitled to be paid for an eight-week sabbatical that he had earned but not used at time he resigned. The trial court (Santa Clara Superior, Judge Jack Komar) granted the employer's motion for summary judgment, and the employee appealed. The Court of Appeal reversed, holding that it could not determine as a matter of law that the sabbatical leave was not vested vacation pay subject to Cal. Labor Code section 227.3.

The Court first asked, "What is vacation?"
It is paid time off that accrues in proportion to the length of the employee's service, is not conditioned upon the occurrence of any event or condition, and usually does not impose conditions upon the employee's use of the time away from work. (See DLSE Opn. Letter [as of Jul. 26, 2011] “Leave time which is provided without condition is presumed to be vacation no matter what name is given to the leave.”)
Slip op. at 7.
In contrast to regular vacation, sabbatical leave, as it originated in the academic setting, is a conditional type of paid leave. The dictionary definition of “sabbatical” is “a period of paid leave granted to a university teacher for study or travel (traditionally one year for every seven years worked).” (Concise Oxford English Dict. (11th ed.2004) p. 1262, col. 2.) Sabbaticals are usually granted for one academic semester or for a full year. During the sabbatical the faculty member engages in a project intended to promote his or her professional development and, in turn, enhance the institution's status as an institute of higher learning. (Boening & Miller, Research and Literature on the Sabbatical Leave: A Review (Univ. of Ala., Higher Education Administration Program 1997), available at [as of Jul. 26, 2011].) Sabbaticals are granted with the expectation that the faculty member will return to the employing institution and put his or her newly acquired expertise to use there after the sabbatical is over. (Ibid.) Thus, traditional sabbaticals are like special-purpose, conditional types of leave in that the employee is expected to use time for the identified purpose. They also have an incentive component to the extent they encourage the employee to continue in the service of the institution that provides the opportunity for professional growth.
Ibid. Adopting three tests promulgated by the DLSE and adding a fourth test, the Court held that sabbatical leave differs from vacation as follows:
First, leave that is granted infrequently tends to support the assertion that the leave is intended to retain experienced employees who have devoted a significant period of service to the employer [and thus is sabbatical, not vacation]....

Second, the length of the leave should be adequate to achieve the employer's purpose. Since we are concerned here with unconditional sabbaticals given for the purpose of reenergizing the employee then, as the Labor Commissioner suggested, the length of the leave should be longer than that “normally” offered as vacation. Since regular vacation time may be used for rest, a sabbatical ought to provide the extended time off work that regular vacation does not.

Third, a legitimate sabbatical will always be granted in addition to regular vacation. And this point carries more weight when the regular vacation program is comparable in length to that offered by other employers in the relevant market. Because an employer could offer a minimal vacation plan and reward senior staff with sabbaticals as a way to avoid the financial liability of a more generous vacation plan, the employer's regular vacation policy should be comparable to the average vacation benefit offered in the relevant market.

A fourth factor is one that is implicit in the DLSE test but is not called out specifically. Since a sabbatical is designed to retain valued employees, then a legitimate sabbatical program should incorporate some feature that demonstrates that the employee taking the sabbatical is expected to return to work for the employer after the leave is over.

As to the nature of the employee to whom the sabbatical is offered, we are not persuaded that employers must limit sabbaticals to upper management or professional employees. Nor does it seem necessary to preclude offering sabbaticals to all employees, or to all employees in a class. The fundamental question is whether the leave is compensation earned over the course of the employment, the enjoyment of which is deferred, or whether the leave is intended to retain the most experienced or valued employees and to enhance their future service to the employer. The rank or classification of the employee to whom the sabbatical is offered may or may not be relevant to that question. Indeed, any number of other factors could apply as well as the four we have set forth above. As the Labor Commissioner suggested when first confronting the question, “The point is that each case will have to be decided on its own facts.”
Slip op. at 9. The Court found the record inconclusive and thus reversed the order granting summary judgment.
Although the underlying facts, such as they are, are essentially undisputed, the ultimate fact to be determined is defendant's purpose in establishing its sabbatical policy. That is the central fact in dispute and the record before us does not resolve it conclusively. While there are facts to support a finding that the sabbatical was intended as incentive to induce experienced employees to continue working for defendant and increase their productivity or creativity upon return to work, reasonable minds could find, instead, that the leave was actually intended as additional vacation for longer term employees.
Slip op. at 11. The opinion is available here.

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