Legal Clinic

The Forfeits of Job Abandonment

How an employer should deal with compensating someone who abandons a job mid-day and the amount of information a company is required to divulge to an outside source are the issues addressed this month.

Monday, August 13, 2007
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Isn't it amazing how legal issues creep into so many employment decisions? Someone abandons their job, and now the employer is left to sort out what they might owe to the employee. An employee has issues with creditors, and the employer has to figure out how much information to divulge and when. Those are the issues we address this month, as your questions continue to roll in.

When an employee walks out -- quits in the middle of the day -- do we have to pay her the accrued vacation time? We do not have any thing in our policy handbook; just that if we terminate we will pay but not anything about job abandonment and vacation pay. We are in Texas. Would the situation be different in other states?

Answer: The determination of whether accrued vacation days are "wages" that need to be paid upon termination varies from state to state.

In Texas, there is no law requiring employers to pay employees for unused vacation. The company policy will govern whether or not the employee is entitled to receive this pay. See Celanese, Ltd. vs. Johnston, 2005 Tex. App. LEXIS 595 (Tex. App. Jan. 27, 2005); Blanton vs. City of Martindale, 1999 Tex. App. LEXIS 445 (Tex. App. Jan 28, 1999).

Because the phrasing of the policy is determinative, in states like Texas, one would need to review the specific policy language to determine whether payout is required. To avoid uncertainty, employers should draft their vacation policies to clearly state the company policy regarding unused vacation with respect to both resignation and termination.

Under California law, however, earned vacation time is considered a form of wages and vests on a pro-rata basis as the work is performed. See Suastez vs. Plastic Dress-Up Co., 647 P.2d 122 (Cal. 1982). Once vested, the employee must be paid the pro-rata share regardless of whether he/she resigned or was terminated. CAL. LAB. CODE ยง 227.3 (2007).

In contrast, the Indiana Court of Appeals has found that an employee is entitled to a pro rata share of his/her accrued vacation under the state's Wage Payment Statute.

However, if there is a company personnel policy or employment contract which states certain conditions under which accrued vacation pay will be given upon termination, the employee must meet those conditions in order to receive their accrued vacation pay. Indiana Heart Assocs. vs. Bahamonde, 714 N.E.2d 309, 311-12 (Ind. App. 1999) ("An employee's right to vacation pay under the statute is not absolute. Rather, an employee is entitled to her accrued vacation pay to the time of termination 'provided no agreement or published policy exist[s] to the contrary ... .'" [internal citations omitted].

New York law is similar to that in Indiana (and the majority of states). That is, an employee must be paid for accrued vacation upon termination unless the employer has, through a written policy or agreement, specified that employees forfeit accrued vacation pay upon termination or other conditions. Glenville Gage Company, Inc. vs. Indus. Bd. of Appeals, 70 A.D.2d 283 (3d Dept 1979) aff'd, 52 N.Y.2d 777 (1980).

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Question: I have received an information subpoena for a current employee. It asks for the normal information -- name, address, SSN, DOB and weekly gross salary. It also asks for name of bank, routing and account numbers. I would not want my personal banking info given to anyone; what info do I need to supply?

Answer: An information subpoena is distinctly different from a written inquiry from a creditor. It is issued under authority of law, and an employer can be subject to court action for noncompliance.

However, there generally are mechanisms through which an employer can object to information being sought through a subpoena. The precise procedures vary depending on whether the subpoena is issued under the authority of a federal court, or that of a state court.

If you have received a federal subpoena that calls for disclosure of confidential information, pursuant to Federal Rule of Civil Procedure 45(c)(2)(B), you may object in writing within 14 days after service of the subpoena or before the time specified for compliance if such time is less than 14 days after service.

The party serving the subpoena must then obtain a formal court order to acquire the documents or information. If the court issues such an order, the employer would then be required to release the requested information, even if the employer deems it to be confidential.

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