Minnick v. Automotive Creations, Inc.
D070555
| Cal. Ct. App. | Jul 28, 2017Background
- Plaintiff Nathan Minnick worked for defendants Automobile Creations, Inc. and Dynamic Auto Images, Inc. for ~6 months (June–Dec 2014) and was terminated before his first anniversary.
- Employer's written vacation policy stated employees "earn 1 week of vacation after completion of one year service," expressly saying no monthly accrual ("you do not earn or accrue 1/12th . . . during your first year").
- Employer paid no vacation on termination consistent with the policy; Minnick sued individually and as a PAGA representative claiming unpaid vested vacation wages at termination.
- Complaint alleged failure to pay wages on termination (Lab. Code §§ 201, 202), UCL violation, and PAGA penalties; defendants demurred asserting the policy lawfully imposes a waiting period.
- Trial court sustained the demurrer without leave to amend; plaintiff appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an employer may lawfully impose a waiting period before employees earn vacation, such that employees who leave during the waiting period have no vested vacation | Suastez bars forfeiture; thus employer must credit vacation from day one and Minnick should have pro rata vacation for time worked | Policy unambiguously provides no accrual in year one; under Owen an employer may lawfully set a waiting period so no vacation vests before eligibility | Court affirmed: employer may lawfully impose a waiting period; where policy unambiguously states no accrual in year one, no vested vacation existed and no wages were due |
| Whether the policy is ambiguous such that extrinsic evidence or discovery could show forfeiture of vested vacation | Policy can be reasonably read as barring vesting until after year one; ambiguity exists per Minnick | Policy text plainly states no accrual in first year; context disconfirms Minnick's interpretation | Court held the policy is unambiguous; no reasonable interpretation makes the clause a forbidden post-vesting forfeiture |
| Whether plaintiff could plead additional facts (leave to amend) to show a viable claim | Minnick argued he could allege employer practices/interpretation showing forfeiture in year two or other extrinsic facts altering meaning | Any alleged misconduct in year two does not change plain meaning of the year-one waiting period; no facts identified that would cure defect | Court did not abuse discretion: plaintiff failed to identify specific facts that could cure pleading; denial of leave to amend affirmed |
Key Cases Cited
- Suastez v. Plastic Dress-Up Co., 31 Cal.3d 774 (Cal. 1982) (vacation pay is deferred compensation; vacation vests as earned and vested vacation cannot be forfeited)
- Owen v. Macy's, Inc., 175 Cal.App.4th 462 (Cal. Ct. App. 2009) (employer may lawfully adopt a waiting period during which no vacation is earned; no forfeiture where vacation was never earned)
- Boothby v. Atlas Mechanical, Inc., 6 Cal.App.4th 1595 (Cal. Ct. App. 1992) (employer policies limiting accrual beyond a set maximum are permissible and not unlawful forfeitures)
- Henry v. Amrol, Inc., 222 Cal.App.3d Supp. 1 (Cal. Ct. App. 1990) (similar approval of employer accrual limits and their enforceability)