Opinion ID: 1672017
Heading Depth: 1
Heading Rank: 3

Heading: Liability for Accrued Vacation Pay

Text: The lower courts framed the issue in terms of whether the company policy violated La. R.S. 23:634. Summit argues that because Beard was not required to sign a contract providing that she would forfeit her wages if she resigned before the end of the contract period, La. R.S. 23:634 does not apply. However, clearly if an employer may not require an employee to sign a contract providing for forfeiture of wages upon termination or resignation, an employer cannot require an employee to forfeit wages simply by enacting a policy to that effect. Accordingly, the antiforfeiture provisions of La. R.S. 23:634, as well as the provisions of 23:631 and 632, apply to this case. Initially, we must determine whether Summit violated La. R.S. 23:631 by failing to pay her upon resignation any amount then due under the terms of employment, whether the employment is by the hour, day, week, or month, .... This Court has held that the phrase any amount then due under the terms of employment... refers to wages which are earned during a pay period. Boudreaux, supra at 622. We held that only compensation that is earned during a pay period will be considered wages under the statute. Id. Although this Court has never addressed whether accrued vacation pay qualifies as wages, every court of appeal that has addressed the issue has held that accrued vacation pay is wages under La. R.S. 23:631. Baudoin v. Vermilion Parish School Bd., 96-1604 (La.App.3rd Cir. 4/2/97), 692 So.2d 1316, writ den., 97-1169 (La.6/20/97), 695 So.2d 1358; Barrilleaux v. Franklin Foundation Hosp., 96-0343 (La.App.1st Cir. 11/8/96), 683 So.2d 348, 353, writ den., 96-2885 (La.1/24/97), 686 So.2d 864; Macrellis v. Southwest Louisiana Independence Center, 94-1155 (La.App. 3rd Cir. 5/3/95), 657 So.2d 135; Lambert v. Usry & Weeks, 94-216 (La. App.5th Cir. 9/14/94), 643 So.2d 1280, 1281; Potvin v. Wright's Sound Gallery, Inc., 568 So.2d 623 (La.App. 2nd Cir.1990); Garrison v. Burger King Corp., 537 So.2d 834, 836 (La. App. 5th Cir.1989); Blankenship v. Southern Beverage Co., Inc., 520 So.2d 440, 441 (La. App. 1st Cir.1988), writ dism., 522 So.2d 574 (La.1988); Pohl v. Domesticom, Inc., 503 So.2d 125 (La.App. 5th Cir.1987), writ den., 505 So.2d 1148 (La.1987); Lee v. Katz and Bestoff, Inc., 479 So.2d 459 (La.App. 1st Cir. 1985); Howser v. Carruth Mortg. Corp., 476 So.2d 830 (La.App. 5th Cir.1985). We agree. When an employer agrees to pay employees for unused vacation time as a condition of their employment, that accrued vacation pay is compensation that is earned during a pay period under Boudreaux. As such, accrued vacation time is an amount then due under the terms of employment and constitutes wages under La. R.S. 23:631. Summit argues that since its personnel policy provides that vacation pay is forfeited when an employee abandons his or her position, which Beard did, that the vacation pay is not due under the terms of employment. However, La. R.S. 23:634 strictly forbids an employer from requiring an employee to forfeit her wages upon resignation and provides that the employee shall be entitled to the wages actually earned up to the time of their discharge or resignation. The terms of Beard's employment were that she would be compensated for any unused vacation time. Because accrued vacation time is wages, La. R.S. 23:634 prohibits an employment policy or a signed employment contract which requires its forfeiture. [1] This holding is in line with the vast majority of court of appeal cases that have considered this issue. Baudoin v. Vermilion Parish School Bd., supra (once benefits such as vacation pay have vested, company policy cannot then deprive the employee of the right to these benefits); Barrilleaux v. Franklin Foundation Hosp., supra (Once an employee's right to vacation benefits has vested, an employer cannot force forfeiture of this earned right.); Soday v. Mall Snacks, Inc., 374 So.2d 138, 140-141 (La.App. 1st Cir.1979) (The fact that an employee quit her job abruptly without notice to employer does not justify the employer's withholding payment of the employee's earned wages. It is well established that a company policy can have no adverse effect on the requirement of prompt payment of earned wages upon termination of an employee.); Macrellis v. Southwest Louisiana Independence Center, supra (in spite of company policy providing that use of annual leave was permitted only after an employee had been employed for one year, annual leave was still earned during the first year and thus was an amount then due under La. R.S. 23:631(A)); Lee v. Katz and Bestoff, Inc., supra (company policy providing that unused vacation is forfeited upon separation of employment is manifestly unjust and invalid under La. R.S. 23:631 and 634 as the unilateral act of the employer prevents the fulfillment of the condition to the employee's receipt of the benefits); Duhon v. Prof Erny's Music Co., Inc., 328 So.2d 788 (La.App. 3rd Cir.1976) (company policy requiring employee to sign form before being entitled to wages is invalid as the statute does not allow the employer's procedures to condition the payment of wages); Hendrix v. Delta Air Lines, Inc., 234 So.2d 93 (La.App. 4th Cir.), writ den., 256 La. 364, 236 So.2d 498 (1970) (company policy of paying terminated employees seven to ten days after discharge could not outrank or invalidate statute requiring sooner payment). Accordingly, we hold that Summit violated La. R.S. 23:631 and 634 by refusing to pay Beard accrued vacation benefits in the amount of $439.00. Because of the clear wording of the statutes, the court of appeal erred in holding that a policy which provides for the forfeiture of benefits, which is not controlled by the unilateral act of the employer, may in some circumstances be permissible. The court of appeal also erred in considering the reasonableness of Summit's forfeiture policy as there is no such exception in La. R.S. 23:624.