Louisiana Court of Appeals Highlights the Need For Clear Vacation Policies
The Louisiana Court of Appeals—Fourth Circuit, recently overturned a trial court’s determination that an employee of a pest control company was not entitled to the payout of his accrued, but unused, vacation leave. Contrary to the findings of the trial court, the Court found that the terms of the policy were ambiguous and therefore, the employee’s interpretation should prevail. See Bodenheimer v. Carrolton Pest Control & Termite Co., Case No. 2017-CA-0595 (La Ct. App. Feb. 14, 2018).
The employee in this case worked for the pest control company for twenty-three years prior to his resignation. Over those years, the employee had earned approximately 1.25 vacation days per month. At the time of his resignation, he had only used three of his fifteen accrued vacation days for 2015 and none of the 6.25 days he had accrued in 2016. Therefore, the employee sought compensation for 18.25 days of vacation from his employer.
The employer, interpreting the vacation policy differently than the employee, only paid the employee for 3.25 days upon his resignation and refused the employee’s demands for payment relating to the other days in dispute. The employee subsequently filed suit under La.R.S. 23:631 and 23:632 for unpaid vacation wages of $2,974.02, plus interest.
The issues in the case was whether the vacation policy permitted unused vacation leave to be carried over to a subsequent year or whether unused leave was forfeited at the end of each year. The policy at issue provided that:
- “Vacation may be taken in any one calendar year to the full extent that it has been accumulated provided this does not pose an imposition on C.P.C.
- At the end of each calendar year, the amount of earned by unused vacation cannot exceed one time the maximum amount per the employee’s longevity bracket amount if not used before the end of the calendar year as herein defined will be lost.
- Unearned vacation may not be advanced.”
The trial court determined that this section was clear on vacation accrual and, contrary to the assertion of the employee, required an employee to use his vacation leave in the year accrued or lose it. After reviewing the trial court’s decision, the policy, and supporting documents from both parties, the Court found that the language of the vacation policy was ambiguous regarding whether unused accrued vacation leave could be carried over into another year, and the ambiguous language should be used against the employer because it was the party that drafted the policy. The Court reversed the trial court’s decision insofar as it interpreted the policy to require the use of vacation days in the same calendar year in which they are earned and awarded the employee vacation wages for the full 18.25 days sought.
The takeaway for employers is a reminder that whether vacation leave is able to be carried over from year to year and payable upon termination must be clearly articulated in the company policies. Otherwise, an employer may be unintentionally liable for the payment of unused vacation upon the termination of an employee.