Plaintiff Eric Paton, on behalf of himself and a class of others similarly situated, sued his former employer, defendant Advanced Micro Devices, Inc., alleging that defendant had failed to pay him for an eight-week sabbatical he had earned but not used by the time he resigned. Under defendant's sabbatical policy, salaried employees with seven years of service were eligible for an eight-week fully paid sabbatical. The leave was forfeited if the employee did not use it before employment terminated.
The trial court granted defendant's motion for summary adjudication (Code Civ. Proc., § 437c), finding, as a matter of law, that the sabbatical program offered a true sabbatical that was not subject to section 227.3 and Suastez. We conclude that on this record the issue cannot be decided as a matter of law. Accordingly, we shall reverse.
Suastez explained what section 227.3 meant by "vested vacation time." In Suastez, the employer's vacation policy provided that employees were entitled to an annual paid vacation but the employee did not become eligible for the vacation until the employee's anniversary date. Suastez's employment was terminated prior to his anniversary date. He asked to be paid for the vacation time he had earned between his anniversary date and his last day of
After Suastez was decided, the California State Labor Commissioner (Labor Commissioner) was concerned that employers might decide to offer sabbaticals as a "subterfuge" to avoid having to pay vested vacation time to departing employees. On the other hand, as the Labor Commissioner implicitly recognized, some employers undoubtedly wanted to offer sabbaticals for legitimate reasons. The problem was that Suastez could be read to apply to many of the sabbatical programs that had become popular in the business sector, which were granted after a set number of years and did not require the employee to engage in any job-related pursuit while away from work. Requiring an employee to work for a period of time in order to be eligible to take a paid leave sounded much like the deferred vesting policy Suastez had rejected as an impermissible condition subsequent. The Labor Commissioner grappled with the question whether a sabbatical which was conditioned only upon a period of service and which did not require the employee to account for his use of the time away could ever be exempt from Suastez.
To date, no published appellate opinion has adopted or interpreted the DLSE test or the Labor Commissioner's opinions on the issue. Much of the present dispute involves the validity of that test.
The trial court certified this matter as a class action. The class is defined as all salaried employees of defendant who were terminated after April 27, 2003, did not sign a release, and were not paid for a sabbatical benefit that was unused when their employment terminated. A total of 1,432 class members received notice of the action and have not excluded themselves from it.
Shortly before trial defendant filed a motion for summary judgment or, in the alternative, summary adjudication. The motion was based upon the argument that defendant's sabbatical benefit "is not vacation within the meaning of Labor Code section 227.3."
Without expressly listing the four points of the DLSE test, and acknowledging that the test was not controlling, the trial court found that defendant's sabbatical policy "meets all of these guidelines as a matter of law." The court explained that the length of the leave was sufficient to qualify as a sabbatical and that the program was "consistent with other provision[s] of California Law that address sabbatical programs" such as California Rules of Court, rule 10.502 and Unemployment Insurance Code, former section 12102.
Plaintiff argues that the trial court erred in concluding, as a matter of law, that the leave is a true sabbatical. Plaintiff maintains that the trial court did not properly apply the DLSE test and that the undisputed facts show that defendant's sabbatical policy does not meet the test. Defendant argues that the DLSE test is not controlling and that its policy conforms to the requirements of section 227.3.
We review the trial court's determination de novo, viewing the evidence in the light most favorable to plaintiff. (Schachter v. Citigroup, Inc. (2009) 47 Cal.4th 610,
We may affirm the granting of a summary adjudication motion only if we find that the evidence is incapable of supporting a judgment for plaintiff. "Thus even though it may appear that a trial court took a `reasonable' view of the evidence, a summary judgment cannot properly be affirmed unless a contrary view would be unreasonable as a matter of law in the circumstances presented." (Binder v. Aetna Life Ins. Co., supra, 75 Cal.App.4th at p. 838.) That is, we may affirm only if reasonable minds could draw but one conclusion from the evidence. (Gilbertson v. Osman (1986) 185 Cal.App.3d 308, 318 [229 Cal.Rptr. 627].)
Defendant established its sabbatical program in 1988. Under the original program all full-time salaried employees were "eligible" for an eight-week sabbatical after seven years of service.
As set forth in the written policy, the express purpose of the sabbatical program was to "encourage continued employment with [defendant] by providing time away from work for enrichment and revitalization." One of
Defendant revised the sabbatical policy twice. In 2006, defendant changed the program to allow eligible employees the option of taking their sabbatical as two 4-week leaves. In 2007, defendant shortened the length of the sabbatical to four weeks after five years of service. Other provisions of the policy remained substantially the same as the earliest version. Defendant abandoned the program altogether in 2009.
At all pertinent times, defendant had a vacation policy in addition to the sabbatical program. The stated purpose of the vacation policy was to "provide compensation for employees who take time off for vacation." Employees earned two weeks of vacation per year for the first two years of service. The benefit increased yearly to a maximum of four weeks per year at the beginning of the eighth year of service. Employees with eight years of service could accumulate as much as eight weeks of vacation time. Taking a vacation required approval by the "authorized Time Approver." Managers could reschedule vacation as needed. The vacation policy does not say whether the employee continued to earn vacation time while on vacation; it does say that vacation does not accrue "for employees who are on a paid or unpaid Leave of Absence." While not part of the written policy, defendant's evidence showed that when an employee is on vacation, "his or her position and duties are typically not performed by an assigned replacement."
Plaintiff produced evidence to show that he had worked for defendant as a salaried employee for approximately eight years, from 1997 until 2005. Prior to accepting employment with defendant, plaintiff was aware of the sabbatical program. He knew about the program from the first interview, when the interviewer described the sabbatical program as "a nice little perk." Plaintiff also knew that he had to work for seven years in order to take the sabbatical but he was not aware of the policy's forfeiture-upon-termination provision. During the course of his employment, plaintiff was recruited by other firms but did not pursue them because he liked defendant and he knew that if he left before he had worked for seven years he would not get to take his sabbatical.
After learning that he would not be paid for the sabbatical he had not taken, plaintiff filed a complaint with the DLSE, alleging that defendant had failed to pay wages due. The DLSE denied the claim.
The factual question before the trial court was whether defendant's sabbatical policy was a legitimate sabbatical or regular vacation within the meaning of section 227.3. The distinction between the two types of leave has not been clarified either legislatively or judicially in this state. Accordingly, the threshold question before us is how to distinguish a legitimate sabbatical from regular vacation. The four-point DLSE test was designed to identify a sabbatical. But before we consider whether the test correctly characterizes a legitimate sabbatical, we look first for a definition of vacation. After all, plaintiff's burden at trial would be to prove the principal allegation of his complaint, which is that the eight-week leave is regular vacation. Accordingly, we begin with the question: What is "vacation" within the meaning of section 227.3?
California's judicial sabbatical program is an example of the traditional academic sabbatical in a nonacademic setting. In order to be eligible for a sabbatical a judicial officer must have at least seven years of service, cannot have taken a sabbatical within seven years of the last sabbatical, and must agree to continue to serve as a judicial officer for at least three years after the sabbatical. (Cal. Rules of Court, rule 10.502(b)(1).) The judicial officer must submit an application to take a sabbatical. The application must include a description of the sabbatical project. (Id., rule 10.502(c)(2)(C).) The sabbatical application is granted or denied depending, among other things, upon whether the sabbatical "will benefit the administration of justice in California and the judge's performance." (Id., rule 10.502(e)(2)(A).)
By attempting to incorporate the characteristics of a traditional sabbatical into the DLSE test, the Labor Commissioner implicitly recognized that legitimate sabbaticals would be those that were designed to achieve purposes similar to the purposes for which traditional sabbaticals are used, namely to provide incentive for experienced employees to continue with and improve their service to the employer. Where a corporate sabbatical is granted for a specified sabbatical project (other than rest and recreation) one would have little trouble concluding that it is not vacation. The thornier problem is where the sabbatical is granted based only upon the length of service and is unconditional with regard to the employee's use of the time away. Such a program has elements in common with regular vacation. But it could still be a legitimate sabbatical if the facts show that the leave is designed as an incentive for continued and improved performance by the most experienced employees and not merely as a reward for a prior period of service.
In Drumm v. Morningstar, Inc. (N.D.Cal., Nov. 5, 2009, No. C08-03362 TEH) 2009 U.S.Dist. Lexis 108709, the federal district court accepted the DLSE test as setting forth the factors relevant to deciding whether a six-week sabbatical was actually regular vacation. In Drumm, under instructions patterned after the DLSE test, the jury found that the employer's sabbatical program was actually regular vacation. (Id. at pp. *3-*4.) The defendant moved for judgment as a matter of law (Fed. Rules Civ.Proc., rule 50, 28 U.S.C.), challenging the validity of the DLSE test. The district court denied the motion, stating, "The applicability of section 227.3 should hinge not on an employer's semantic choices, but on objective criteria. The DLSE adopted such criteria, requiring that a sabbatical be something more than a longer, less-frequent variant on vacation to avoid section 227.3. The DLSE's criteria have been in place for more than two decades, and employers are likely to have relied on its guidance with respect to their own time-off policies. As such, the Court did not err in instructing the jury based on the DLSE standards. Furthermore, whether Morningstar's policy fit the characteristics of a vacation was a question of fact that the Court properly allowed the jury to decide ...." (Drumm v. Morningstar, Inc., supra, at p. *16.)
First, leave that is granted infrequently tends to support the assertion that the leave is intended to retain experienced employees who have devoted a significant period of service to the employer. Every seven years is the traditional frequency and it seems an appropriate starting point for assessing corporate sabbaticals, as well. In many cases, an interval of seven years would be long enough for an employee to gain experience and demonstrate expertise that an employer might want to retain. Greater or lesser frequency could be appropriate depending upon the industry or particular company involved.
Second, the length of the leave should be adequate to achieve the employer's purpose. Since we are concerned here with unconditional sabbaticals given for the purpose of reenergizing the employee then, as the Labor Commissioner suggested, the length of the leave should be longer than that "normally" offered as vacation. Since regular vacation time may be used for rest, a sabbatical ought to provide the extended time off work that regular vacation does not.
Third, a legitimate sabbatical will always be granted in addition to regular vacation. And this point carries more weight when the regular vacation program is comparable in length to that offered by other employers in the relevant market. Because an employer could offer a minimal vacation plan and reward senior staff with sabbaticals as a way to avoid the financial liability of a more generous vacation plan, the employer's regular vacation policy should be comparable to the average vacation benefit offered in the relevant market.
As to the nature of the employee to whom the sabbatical is offered, we are not persuaded that employers must limit sabbaticals to upper management or professional employees. Nor does it seem necessary to preclude offering
We finally come to the facts of this case and the question whether defendant carried its burden of showing that one or more elements of the first cause of action cannot be established or that there is a complete defense to it. We conclude that defendant did not carry that burden.
As to the elements of plaintiff's wage claim, the undisputed evidence shows that defendant's sabbatical program contained the elements of a vacation. It was based upon the employee's length of service; if he worked seven (or five) years he was eligible for eight (or four) weeks off with pay. Although the program required that the employee bring his performance up to company standards before he could use the leave, and it allowed defendant to postpone a planned leave if it had business reasons for the postponement, the written policy does not impose any conditions upon earning the time off. Both the policy itself and the benefits brochure indicate that the employee was eligible after service for the prescribed number of years. The leave was granted without any conditions as to how the time was to be spent and did not require the employee to account in any manner for what he or she did while away.
As to defendant's claim that the leave was a legitimate sabbatical, defendant produced evidence to support that claim. The policy provides that employees on sabbatical "will return to their same job," which suggests that the program is designed as a retention incentive. But that feature alone is not dispositive. Although defendant asserted that the leave was also offered for a longer period than what was "normally" offered for vacation, and that it was not offered "too" frequently in that it was offered only every five or seven years, these are qualitative parameters upon which reasonable minds could differ. If a jury were presented with only the sabbatical and vacation policies, we cannot say that a reasonable jury would reach but one conclusion. It would not be unreasonable for a jury to decide that a four-week sabbatical is
None of the other evidence defendant offered is dispositive, either. Evidence that defendant instituted the sabbatical policy to be competitive in the chip-design market does not help. Enhanced benefits of any kind would attract workers. The fact that management assigns others to take over the duties of an employee on sabbatical is not determinative. Any employer would want to plan in advance for an employee's extended absence, whether the absence was taken as a four-week sabbatical or a vacation. And limiting the sabbatical to salaried employees could suggest that the leave was actually just a way to give more highly compensated employees a more generous vacation plan.
The record contains little if any evidence of the context in which defendant decided to offer the sabbatical in the first place and none on what forces, internal or external, prompted it to modify the program after it was in operation for several years, or why, in the end, it abandoned it. All of this might have had some bearing upon the crucial factual question: What was the true purpose of the program?
Because we cannot decide as a matter of law whether the eight-week leave is a sabbatical or is regular vacation, we need not reach the parties' contentions concerning the remaining causes of action, the ultimate determination of which will depend upon resolution of the central factual dispute.
The judgment is reversed. The parties shall bear their own costs on appeal.
Rushing, P. J., and Elia, J., concurred.
"Purpose: [¶] To encourage continued employment with [defendant] by providing time away from work for enrichment and revitalization.
"Policy: [¶] [Defendant's] sabbatical program provides salaried (exempt) employees who have seven or more years of credited service the opportunity to have an extended period of paid time away from work.
"Procedure:
"A. All regular salaried (exempt) employees who work at least 80 hours per pay period are eligible for an eight-week sabbatical at regular pay after every seven years of credited service. [Part time employees are eligible for a prorated leave.]
"B. Employees must be on active status for at least three consecutive months before beginning a sabbatical. A sabbatical may start after the end of a medical leave with management approval. A personal leave of absence may not be used to extend the length of the sabbatical.
"C. If an employee needs to take a protected leave while on sabbatical, they [sic] must notify the Leave of Absence Administrator....
"D. Rehired employees must be active for at least twelve (12) months after their rehire date before beginning a sabbatical.
"E. Employees who become eligible for a sabbatical while on assignment outside of the U.S. can not [sic] take the sabbatical until reassigned to the U.S. ...
"F. Employees who are transferred to the U.S. will have their prior credited service counted toward their eligibility for a sabbatical benefit....
"G. Vacation may not be combined with the sabbatical except in exceptional circumstances with prior approval of the designated Vice President.
"H. Employee's vacation time will continue to accrue while on a sabbatical.
"I. Any company paid holiday which falls on the employee's normal workday during the sabbatical will extend the sabbatical by as many days as the paid holiday.
"J. The sabbatical must be taken within two years of eligibility. If a sabbatical is not started within two years of the employee's eligibility date, the employee forfeits the sabbatical and must wait until eligible for his/her next sabbatical.
"K. Management has the right to postpone the scheduling of sabbaticals due to business reasons, but such postponement must not extend beyond the two-year window. If exceptional business conditions require postponing the beginning of the sabbatical past its expiration date, a written request, signed by the employee's manager, the division VP and the division HR Representative must be sent to the Corporate Benefits Manager for approval.
"L. Employees must wait at least 36 months after taking a sabbatical before beginning another sabbatical.
"M. Employees should notify their supervisor of their intent to take a sabbatical at least three months in advance of the start date by completing a sabbatical request form and submitting it to their supervisor....
"N. Employees on a current written warning must successfully achieve required performance standards prior to scheduling or taking their sabbatical.
"O. Salaried (exempt) employees who become eligible for a sabbatical and then change to hourly (non-exempt) status prior to taking the sabbatical will remain eligible for a sabbatical.
"P. While on sabbatical, employees remain on active status and are entitled to all current AMD benefits both insured and accrued. Employees on sabbatical will return to their same job.
"Q. Employees who terminate and have not taken their sabbatical forfeit their eligibility.
"R. Should an employee terminate while on sabbatical, all sabbatical benefits will end two weeks from the date the employee gives notice."
