Dive Brief:

• Under California law, Target should have accounted for a former employee’s shift differential when it calculated her final wages for unused vacation, the 9th U.S. Circuit Court of Appeals held (Mills v. Target Corp., No. 21-56308 (9th Cir. Mar. 6, 2023)). Because California courts haven’t been clear on the law, Target acted on a good faith belief of what was required and did not willfully exclude the shift differential, the 9th Circuit found.
• After she was terminated, the employee filed a class action suit against Target. She alleged Target violated California law by failing to pay her vested vacation pay and by willfully failing to pay her final wages. Specifically, she alleged Target paid her a final base rate of $13 per hour, excluding a $2 per hour shift differential she was receiving at the time she was terminated.
• A federal district court held that although the shift differential should have been included in calculating the employee’s final wage rate, including in determining her unused vacation pay, Target did not act willfully. On appeal, the 9th Circuit affirmed. Under the California’s labor code, employers that provide paid vacation must pay terminated employees their unused vested vacation time “as wages at [their] final rate.” The term “final” indicates “that the rate of wages to be paid is the rate at the employee’s termination – no matter when the employee accrued the vacation,” the appeals panel explained. There was no evidence Target’s error...

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