Vacation Accrual – What You Should Know

If you have seen the WARN Notice sent out via e-mail this afternoon, you may notice this interesting phrase at the end of the first paragraph:

“Where applicable, employees with accrued but unused vacation time may be scheduled for vacation prior to November 28.”

If you are “asked” to take vacation between now and November 28th, realize that this does not benefit you as a Heller Ehrman staff member – it only benefits the shareholders.  Here’s why:

– if you have accrued a large amount of vacation time, it is in the shareholders’ best interest to reduce that amount of money to which you are legally entitled and which must be paid upon your termination;

– if between now and November 28th there is not enough work for you in your position or your department that is not your problem – you need to make yourself available for work each day and making sure work is available is up to management;

– with the projected figures of $118 M accounts receivable less $50 M in loan debt, there should be plenty of money left to pay accrued vacation to Heller Ehrman staff;

I can’t emphasize this enough: if management asks you to take vacation please reconsider.  You can certainly do job hunting, etc. but you can’t really go and work for another firm during that period or make any other plans.  What you do after November 28 is your business.

And if management goes beyond “asking” and makes a demand, then please post comments here.

There are certain provisions of the California Labor Code which govern how vacation accrual must be paid and whether or not an employee can be mandated to take vacation in lieu of payment upon termination.

So gang, do not go and pack those suitcases for a vacation.  Besides, you are stuck on the S.S. Heller Ehrman with some of the most creative, funny, emphatetic and caring people you could ever ask for.  Not a bad place to be for the next 60 days, right?

Over and out

Heller Drone
Cruise Director

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12 Responses to “Vacation Accrual – What You Should Know”


  1. 1 Legal Secretary 26 September 2008 at 10:41 am

    “…if management asks you to take vacation, please reconsider. You can certainly do job hunting, etc. but you can’t contract for another position during this time.”

    My plan is to work here until the end of the 60 days, at which point I will then be issued a check for my additional unused vacation. However, the notice from management infers that they may try to force me to take vacation before Nov. 28 – which would mean I would get vacation in LIEU of instead of in addition to the 60 days.

    That alone is difficult to swallow. However, do I now understand correctly that there’s another complication? I.e., that if I am forced to take vacation now, the additional penalty will be that I will not be able to start work at some other place before November 28th?

    Please advise.

  2. 2 hellerdrone 26 September 2008 at 10:44 am

    Clarification (to be added to the post above as well):

    No – what you do after November 28th is your business. But say you were asked to be on vacation from November 1 through November 28. You aren’t supposed to be employed somewhere else – even contract work. Make sense?

    Heller Drone
    Cruise Director

  3. 3 Legal Secretary 26 September 2008 at 11:00 am

    Heller Drone – my question was whether Heller could prevent me from working at any other place before November 28th if I was on vacation at that time. Your answer appears to be ‘yes’, Heller CAN prevent me from working at any other place before then.

    That isn’t fair. I do not want to take my vacation before November 28th – but to be issued it in a lump sum payment on my last day. This money will be badly needed to compensate for the things I am losing – a job, raise, holiday bonus and my sabbatical (which would have come early next year), not to mention any form of a severance package. It just isn’t fair that I should now be penalized further by being deprived of my rightful vacation pay.

  4. 4 hellerdrone 26 September 2008 at 11:07 am

    Legal Secretary

    Please do not dispair – the vacation accrual glass is not half empty, not as far as I am concerned or as far as Heller Ehrman staff should be concerned.

    Vacation accrual is a liability which should already be on the financial books and if it isn’t then that’s just plain dumb. Heller management should know from week to week the total amount of vacation accrual that would need to be paid out in case of termination. In some states, you must be paid within 72 hours of termination in others there is a longer period.

    Please, please, sit tight. Heller Ehrman support staff has some very powerful set of cards to be played in this battle if that’s how management wants to play it. I don’t want to show the cards right yet. You just need to trust me. I know it is difficult to trust anyone right now, but in the long term, I guarantee that we will all have our 60 days of pay as well as our vacation accrual.

    For management to do otherwise would not only be publicly embarrassing but practically financial suicide.

    Heller Drone
    Cruise Director and Cut-throat Poker Player

  5. 5 Legal Secretary 26 September 2008 at 11:25 am

    Heller Drone,

    Thank you so much! If I haven’t said it before, I deeply appreciate all of the hard work you have done and are still doing. I can’t begin to tell you what a lifeline your site has been in these last traumatic days. Thanks again.

  6. 6 Anonymous 26 September 2008 at 11:43 am

    Click this link for more information about accrued vacation time.

    http://www.dir.ca.gov/dlse/FAQ_vacation.htm

  7. 7 Sorry-ex 26 September 2008 at 12:52 pm

    The below seems to indicate that Heller can direct staff to take vacation before 11/28, No???

    Q.Can my employer tell me when to take my vacation?

    A.
    Yes, your employer has the right to manage its vacation pay responsibilities, and one of the ways it can do this is by controlling when vacation can be taken and the amount of vacation that may be taken at any particular time.

  8. 8 Anon 26 September 2008 at 1:25 pm

    Sorry-Ex,

    I think this is taken out of context – like a company may not allow everyone to have the holiday weeks off. Doesn’t apply to company dissolving and paying benefits that have accrued for each employee. Of course, I’m not an attorney, but I think this is correct.

  9. 9 Jayne Loughry 26 September 2008 at 1:47 pm

    I’m not a labor lawyer, but I do have some personal experience with WARN and employers’ obligation to pay accrued vacation. So, until the labor experts weigh in here, I thought I’d share a few thoughts.

    As noted in the site link provided by Anonymous, as a general rule, employers can tell employees when to take vacation. It’s only common sense that on-going businesses need to be able to manage their business in an orderly fashion. What if all the Best Buy sales people wanted to take their vacation the week before Christmas? Employers have to be able to make sure vacations are scheduled to fit the needs of the business. But telling an employee when they can take their vacation is different than telling an employee that he must take a vacation, and it’s really, really different than telling an employee she must take a vacation after sending out WARN lay-off notices.

    WARN obligations and accrued vacation/PTO obligations are two separate and distinct employer obligations. I’ve never heard of, and can’t find any authority for an employer trying to diminish its accrued vacation obligations by forcing employees to take vacation during a WARN notice period. The closest thing I could find was an article about how an employer can’t force employees to use their accrued vacation during a temporary shut-down without giving the employee at least nine months notice. The article cited to California Labor Code section 223.3, which states:

    “Unless otherwise provided by a collective-bargaining
    agreement, whenever a contract of employment or employer policy
    provides for paid vacations, and an employee is terminated without
    having taken off his vested vacation time, all vested vacation shall
    be paid to him as wages at his final rate in accordance with such
    contract of employment or employer policy respecting eligibility or
    time served; provided, however, that an employment contract or
    employer policy shall not provide for forfeiture of vested vacation
    time upon termination. The Labor Commissioner or a designated
    representative, in the resolution of any dispute with regard to
    vested vacation time, shall apply the principles of equity and
    fairness.”

    Interestingly, this article was written Heller labor lawyers and posted on Heller’s website. http://www.hewm.com/en/news/industry/industry_1103.html

    I’ve been mulling it over, but just can’t see how it’s fair or equitable for Heller to force some of the employees who it’s just notified it’s laying-off to use their accrued vacation just so it won’t have to pay them what they’ve accrued, what they’re owed. The WARN act says you have to either give employees 60 days notice of their impending lay-off or, if you want them to leave sooner, you have to pay them 60 days salary (on top of accrued vacation and whatever else they’re owed). The Heller WARN notice told employees there’s work for them and that they’re expected to show up. If Heller doesn’t need or want employees to show up, the fair and equitable thing to do is should pay them their 60 day WARN money and whatever else they’re owed, including accrued vacation. It is not fair and equitable to lower the amount owed and paid to some employees — just those with accrued vacation — by forcing them to to use up their accrued vacation.

    I think it’s great that Heller management has acknowledged its WARN obligations, and I’d like to think this business about requiring employees to use up their vacation time is an inadvertent mistake or miscommunication because the idea is not just probably illegal and definitely unfair and inequitable, it’s also just downright cheesy. Putting the squeeze for a few more bucks on some of the loyal employees you’ve just told are going out on the street in two months doesn’t gibe with a genuine concern for your employees.

    Of course Heller management could ask employees to voluntarily use up their accrued vacation, leaving it to each employee to decide without fear or pressure whether or not they want to make a contribution to the Heller shareholders capital restoration fund. As was pointed out above, according to the numbers that Larrabie gave out yesterday, Heller’s debt is about $50 million less than its expected accounts receivable collection. At the end of wind-down, after the debts and creditors are paid off, whatever is left presumably gets divvied up among the former partners– where else would it go? Of course I don’t know whether the shareholders will get all their capital and missed draws back, but using the numbers Larrabie gave, and adding in Heller’s other assets, including the value owed to Heller for business taken to other firms, it seems like there should be quite a bit of money for the shareholders. So I’m not sure why any employee would want to give away their accrued vacation, moreover I certainly hope Heller doesn’t descend to a level of weaselry where it tries to force its employees to do so.

  10. 10 Anon 26 September 2008 at 3:20 pm

    Jayne, well said! But don’t be surprised though by management’s lack of knowledge in managing – !! That’s a given.

  11. 11 Jayne Loughry 26 September 2008 at 4:31 pm

    Thanks, Anon, and you may be right. Other than one unfortunate encounter with Jessica Pers decades ago, I don’t think I’ve ever known anyone in Heller management. So, though I saw a lot of bumbling chowderhead partners pretending to know how to manage at Brobeck, I’m inclined to give Heller management and shareholders the benefit of the doubt.

    In Brobeck’s end, the problem was hubris as much chowderheadedness. Management — both that which ran Brobeck into the iceberg and the Vichy regime that followed — thought they could get away with doing/saying whatever they wanted, particularly to the employees. Oops, they didn’t get away with everything, and the partners paid a price for how the employees had been treated. So I find it very difficult to believe that the partners or former partners of any firm — especially those of Heller — would quietly sit on their thumbs and let a difficult situation be made into a very bad situation. I hope I’m right about that.


  1. 1 End of the Day: 9/26/2008 « Heller Highwater Trackback on 26 September 2008 at 2:59 pm
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