Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County, No. 37-2007-00067739- CU-OE-CTL Jeffrey B. Barton, Judge.
HALLER, Acting P. J.
Plaintiffs, former employees of RadioShack Corporation (RadioShack), filed a class action lawsuit against RadioShack. The complaint alleged that a " 'Personal Paid Absence Benefit' " provided by RadioShack constituted a vacation benefit subject to a Labor Code provision requiring payment for accrued vacation time upon termination of employment. The trial court rejected this interpretation of the personal paid absence benefit and granted summary judgment in favor of RadioShack. Plaintiffs challenge the summary judgment on appeal. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
RadioShack provides its employees a variety of paid leave benefits, including leave for purposes of vacation, holidays, illness, personal and family needs, bereavement, and jury duty. The leave benefit at issue in this appeal is a benefit denominated "Personal Paid Absence Benefit" (Absence Benefit) that incorporates sick leave and leave for other personal reasons. Plaintiffs contend that the Absence Benefit constitutes a vacation benefit because it allows for leave time to "run an important errand" or to attend to "personal or family needs."
The vacation benefit applies to permanent part-time and full-time employees. After six months of employment, these employees are provided from one to six weeks of paid vacation depending on the employee's status as part or full time, the length of employment, and whether the employee works a five-day or six-day workweek. Employees may accrue vacation time up to one and one-half times their annual benefit. During their employment, they do not have the option of receiving pay for their vacation time in lieu of taking vacation. However, they are paid for accrued vacation upon termination of employment as required by Labor Code section 227.3 (section 227.3).
The Absence Benefit applies to permanent full-time employees. This benefit is described in RadioShack's operations manual as available "[t]o help ease the financial burden when a team member must be absent because of personal illness, a family member's illness, doctor/dental appointments, the need to visit with a child's teacher, or to run an important errand." (Italics added.) Similarly, an employee handbook provided to RadioShack employees describes the benefit as designed to "help ease the financial burden when it is necessary to be absent due to personal illness, doctor's appointments, family illness or personal or family needs...." (Italics added.) The Absence Benefit provides employees 16 paid absence hours after six months of employment; an additional 16 hours after six more months; and 40 hours after two years and every year thereafter. Employees may accrue up to 120 hours of Absence Benefit credit. Every December employees receive payment for any accrued Absence Benefit hours in excess of 80 hours. The operations manual and employee handbook state that the Absence Benefit may not be used for vacation purposes, and that accrued Absence Benefit hours will not be paid at termination of employment.
Plaintiffs have filed a request for judicial notice of a dictionary definition of the term "must" which includes the synonym "necessary." We grant the unopposed request.
Employees requesting time off under either the vacation benefit or Absence Benefit are required to submit a form denominated "Vacation/Personal Paid Absence Notification Form" specifying the dates they would like to take off and marking whether they want to take the time as vacation time or under the Absence Benefit. The form does not require that the employees state the reason they are requesting to use the Absence Benefit.
In June 2007, plaintiffs filed a class action lawsuit alleging Labor Code violations, conversion, unjust enrichment, and unfair business practices based on RadioShack's failure to pay terminated employees for accrued Absence Benefit time under section 227.3. The complaint alleged that the Absence Benefit was the equivalent of a vacation benefit, and hence subject to section 227.3's payment requirement. RadioShack moved for summary judgment, arguing that the Absence Benefit was not a vacation benefit.
At the summary judgment proceedings, the parties submitted portions of an enforcement and interpretation manual from the Division of Labor Standards Enforcement (DLSE) addressing the distinction between accrued vacation time, which must be paid upon termination, and other accrued leave benefits that need not be paid upon termination. The DLSE manual states: "[L]eave time which is provided without condition is presumed to be vacation no matter what name is given to the leave by the employer. Such an enforcement policy insures that leave policies which are nothing more than vacation policies under a different name are not instituted as subterfuges to defeat provisions of Labor Code § 227.3 and the conclusions of the California Supreme Court in Suastez. Thus, there must be an objective standard by which it can be established that the leave time is attributable to holidays, sick leave, bereavement leave or other specified leave. Tying the right to take the time to a specific event or chain of events such as allowing a vacation period for the Thanksgiving weekend would suffice to satisfy the test."
Suastez v. Plastic Dress-Up Co. (1982) 31 Cal.3d 774.
The operations manual referred to several opinion letters prepared by the DLSE in response to specific inquiries concerning the distinction between vacation and other leave benefits. One letter explained that vacation time is leave time "which is not contingent upon the happening of a specific event (i.e., sickness, a holiday, bereavement, etc.)." (Italics added.) Another letter described the difference between vacation leave and sick leave as based on "the restrictive nature of sick leave, which cannot be used unless there is a valid reason; i.e., the employee is ill as determined by the employer's policy whereas vacation or personal time [may] be used by the employee with the only restrictions relating to the scheduling when the time off is to be taken." (Italics added.)
The trial court granted summary judgment in favor of RadioShack. The court applied the DLSE definition of vacation time as nonrestrictive, and concluded that the Absence Benefit was restrictive in nature and hence not vacation time. The court reasoned that the personal leave must be necessary and not for vacation. Further, the court concluded the terms "personal or family needs" and "run an important errand" were restrictive in and of themselves, and were also particularly restrictive when considered in the context of the entire Absence Benefit provision.
Although the trial court applied the DLSE's definition, the court recognized that it was not bound by the DLSE's interpretations. (See Gattuso v. Harte-Hanks Shoppers, Inc. (2007) 42 Cal.4th 554, 563.)
DISCUSSION
We review a grant of summary judgment de novo to determine if there are no triable issues of material fact and the moving party is entitled to judgment as a matter of law. (Galanty v. Paul Revere Life Insurance Co. (2000) 23 Cal.4th 368, 374.) When the facts are undisputed, we review the trial court's interpretation of statutory and contractual language de novo. (Alliance for a Better Downtown Millbrae v. Wade (2003) 108 Cal.App.4th 123, 129; People ex rel. Lockyer v. R.J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516, 520.) We seek to effectuate the intent of the Legislature and the reasonable expectations of the contracting parties, and interpret statutory and contractual language based on the plain, commonsense meaning of the words. (Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1103; TIG Ins. Co. of Michigan v. Homestore, Inc. (2006) 137 Cal.App.4th 749, 755.)
Section 227.3 provides that "whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages...." The section directs that when there is a dispute regarding vested vacation time, "principles of equity and fairness" should be applied. The policy underlying section 227.3 is that a vacation benefit is actually deferred compensation for continuous service, and accordingly an employee is entitled to be paid for whatever vacation time has accrued at the time of termination. (See Suastez v. Plastic Dress-Up Co., supra, 31 Cal.3d at pp. 779-780, 784.) That is, "[t]he consideration for an annual vacation is the employee's year-long labor. Only the time of receiving these 'wages' is postponed." (Id. at p. 779.)
Section 227.3 states: "Unless otherwise provided by a collective-bargaining agreement, whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages at his final rate in accordance with such contract of employment or employer policy respecting eligibility or time served; provided, however, that an employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination. The Labor Commissioner or a designated representative, in the resolution of any dispute with regard to vested vacation time, shall apply the principles of equity and fairness."
In contrast to vacation leave which is provided regardless of need, employers can also provide employees with a benefit, such as sick leave or other need-based leave, that is designed to meet an employee's specific need to be absent from work. We conclude that RadioShack's Absence Benefit falls into this need-based category, and it is not a vacation benefit.
Plaintiffs do not dispute that the Absence Benefit would be nonvacation leave if it merely allowed for time off due to illness or medical or school appointments. However, they contend that the benefit is a vacation benefit because it also allows for time off to run important errands or to attend to personal or family needs, which they construe as leave time without conditions. RadioShack's inclusion of a broad leave benefit allowing employees time off to take care of personal needs does not transform the benefit into a nonrestricted vacation benefit. The plain language of the Absence Benefit provision indicates that use of the benefit requires that the employee have a need to be absent from work—i.e., when the employee "must be absent... to run an important errand[,]" or when "it is necessary to be absent due to... personal or family needs." Thus, the benefit is conditioned on the existence of the employee's need to be absent, and is not akin to a vacation benefit which gives time off without consideration of whether the employee has a need that requires absence from work.
This is not a case where an employer does not provide an express vacation benefit, but merely provides an undifferentiated leave benefit to be used for sickness and any other reason an employee wishes time off from work. Section 227.3's directive to apply principles of equity and fairness may well support interpreting all or part of an undifferentiated leave benefit as a vacation benefit. (See also Murphy v. Kenneth Cole Productions, Inc., supra, 40 Cal.4th at p. 1103 [statutes governing employment conditions should be construed broadly in favor of protecting employees].) Here, there are no such equitable considerations warranting construction of the Absence Benefit as including a vacation benefit. RadioShack provides a vacation benefit, and an additional benefit for sick leave and personal needs leave. The fact that the Absence Benefit can only be used if the employee has a personal need distinguishes it from the vacation benefit which is afforded regardless of any such need.
Plaintiffs contend the Absence Benefit is a vacation benefit because the employees need not specify the reason for their use of the Absence Benefit. We are not persuaded. The fact that RadioShack does not require a specification of the employee's need for the absence does not mean the benefit does not require that the employee have a legitimate need to take time off work. That is, RadioShack's use of the "honor system" in relation to the Absence Benefit does not dispense with the need-based condition imposed on use of the benefit. Further, plaintiffs' contention that the need-based condition is "not subject to objective verification" is unavailing. RadioShack could have elected to require that employees submit verification of their need to be absent in order to use the Absence Benefit. Again, the fact that RadioShack did not impose this requirement on its employees does not mean the need is not objectively verifiable.
Asserting that only illness or medical, dental or school appointments are verifiable, plaintiffs assert that verification must come from a third party such as a doctor, dentist or teacher. There are other means to verify a need-based absence; for example, an employee could submit documents reflecting the matter that needs to be addressed, or an affidavit attesting to and describing the need for absence from work.
To support their interpretation of the Absence Benefit, plaintiffs cite a statement in Abud v. Department of Employment (1971) 14 Cal.App.3d 405, 408, where the court referred to "time off from work used for [the employee's] personal pleasure or personal business" as vacation time. (Italics added.) The statement arose in the context of evaluating whether payments from a vacation fund were wages that should be deducted from unemployment insurance benefits, and had nothing to do with the distinction between vacation and nonvacation leave time under section 227.3. (Abud, supra, at p. 407.) Because the issue was not before the Abud court, its reference to vacation as including time off for personal business does not constitute a definition of vacation for purposes of this case.
To support their position, plaintiffs submitted several DLSE opinion letters that address a variety of situations where the DLSE construed employer leave benefits as including vacation time. We may consider, but are not bound by, DLSE opinion letters. (Murphy v. Kenneth Cole Productions, Inc., supra, 40 Cal.4th at p. 1105, fn. 7; Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 584; Conley v. Pacific Gas & Electric Co. (2005) 131 Cal.App.4th 260, 270-271.) In these letters, the DLSE interpreted as a vacation benefit: (1) the portion of a sick leave benefit that afforded 24 hours of time off for " 'personal compelling business reasons' " after the accrual of 80 sick leave hours; (2) a "flexible time off" benefit that provided undifferentiated leave time for "vacation, sick leave, or personal business"; (3) a "general absence or leave policy" that permitted the employee to use the time as "personal or sick time... at his or her personal convenience or option"; and (4) floating birthday and employment anniversary holidays which could be used at any time and which were provided in addition to vacation and sick leave. Distinct from RadioShack's leave benefits, the first of these plans makes no mention of a distinct vacation benefit; the second and third plans appear to intermingle need-based and non-need-based leave time; and the fourth plan does not require that the leave be taken at the time of the event. RadioShack's leave benefits—which provide a vacation benefit that is distinct from the Absence Benefit and which condition the Absence Benefit on the existence of an actual need—do not resemble the benefits described in these letters, and DLSE's conclusions therein are not applicable here.
Plaintiffs also assert the trial court erroneously ruled RadioShack's revision of the Absence Benefit, made after the commencement of the class action lawsuit, was a remedial measure inadmissible under Evidence Code section 1151 and was irrelevant. The proffered evidence reflects that RadioShack revised the Absence Benefit to state that it was available to "help ease the financial burden when a team member must be absent because of personal illness, a family member's illness, doctor/dental appointments, the need to visit a child's teacher, or other purposes required by specific federal, state or local law...." (Italics added.) We need not decide whether the trial court's evidentiary ruling was correct, because even if we consider this evidence it does not change our conclusion. Contrary to plaintiffs' assertion, the revision does not show that the original benefit provision—allowing leave time for important errands or to take care of personal or family needs—provided for vacation time. As stated, RadioShack's Absence Benefit allowing time off to take care of personal matters does not constitute nonrestricted vacation time, but is a leave benefit conditioned upon the existence of an actual need.
Evidence Code section 1151 provides: "When, after the occurrence of an event, remedial or precautionary measures are taken, which, if taken previously, would have tended to make the event less likely to occur, evidence of such subsequent measures is inadmissible to prove negligence or culpable conduct in connection with the event."
DISPOSITION
The judgment is affirmed. Appellants to pay RadioShack's costs on appeal.
WE CONCUR: McDONALD, J., IRION, J.