California law requires employers to pay employees their unused accrued vacation at the time of termination. Specifically, California Labor Code section 227.3 states that "all vested vacation" shall be paid "as wages at [the employee's] final rate in accordance with such contract of employment or employer policy respecting eligibility or time served."
What is the "final rate"? Can it be just the base hourly pay/salary—or must it take into account other wages paid, such as shift differentials, commissions, and incentive pay?
For years, many employers have relied on the longstanding Division of Labor Standards Enforcement ("DLSE") interpretation that the employer's policy sets the rate of vacation pay—and that the "final rate" can be base pay if that is what the employer's policy provides.
The Ninth Circuit's recent decision in Mills v. Target Corp. interpreted "final rate" differently.
Target had paid the plaintiff, Cinnamon Mills, vacation wages at termination using only her base hourly rate. Mills argued that her vacation wages should have been paid at a rate including the $2 per hour shift differential she received before her termination. The federal district court and Ninth Circuit agreed with Mills.
The Ninth Circuit concluded that the plain and commonsense meaning of the term "final rate" is the "final wage rate," which includes shift differentials. It rejected the argument that the "final rate" refers to the "final vacation rate."
The Ninth Circuit also considered...
Tehran – Saba: The Iranian Foreign Ministry condemned the subversive actions taken by the rulers of Abu Dhabi against the Islamic Republic of Iran. Last night, Tasnim News Agency reported that the...