Accrued Vacation for Stay Team Members

Before anyone stumbles upon this issue and Exhibits 2 and 3 to Heller’s 12/29/2008 Motion to Pay Wages, I want to bring this up:

On Exhibit 3, which like Exhibit 2 has had individual wage amounts redacted, you will see a column for Accrued Vacation.  It appears that a small group of Stay Team employees whose last day was 12/31/2008 will be paid for their accrued vacation.  

According to the Heller Dissolution Committtee in the Motion to Pay Wages which was approved by Judge Montali on 12/30/2008:

“In addition, it is common practice for the Debtor’s employees to accrue vacation time. The rate at which vacation time accrues for any particular employee depends upon various factors, including the employee’s length of employment with the Debtor and the employee’s job function. Since implementing the Plan of Dissolution, the Debtor has implemented a policy that any vacation that had been accrued prior to October 11, 2008 will not be carried forward for the benefit of the employee to be paid in the ordinary course of business. Rather, those amounts will remain accrued and unpaid, subject to payment in accordance with the priorities afforded under the Bankruptcy Code. However, upon termination of employment, all employees employed by the Debtor as of the Petition Date will be entitled to cash payments for the amount of any unused vacation time accrued on or after October 11, 2008 at their then-current rate of pay.

The Debtor expects that nine (9) employees will end their employment with the Debtor on December 31, 2008. As such, the Debtor will need to pay all accrued and unpaid wages and vacation pay to these individuals upon their last day of employment. The Debtor estimates that these employees will be owed approximately $56,659.23 in wages and unpaid vacation in the aggregate (not included in the January 2nd payroll). A breakdown of the December 31st payment amounts is attached hereto as Exhibit 3. None of these employees scheduled to receive accrued and unpaid wages and vacation pay on December 31st will receive an amount in excess of $10,950.”

Again, I am not an attorney (insert standard disclaimer about legal advice . . .) and not an expert in bankruptcy.  And since I know many of the Stay Team people and do not begrudge them, or any Heller employee, what they’ve earned, I do want to put this forth:

How is it that this group gets paid accrued vacation?  Or is this payment for just what they earned from 9/26/2008 (or some other date) up until their 12/31/2008 termination date?

If you read the Motion to Pay Wages document, in Heller’s argument to make such payments, it mentions that Heller’s employees are “entitled to a priority claim of up to $10,950 for pre-petition wages earned within the 180-day period prior to the Petition Date. See 11 U.S.C. §507(a)(4) (emphasis added here in this post and not in the original).”

I think we need some clarification and verification that the accrued vacation paid was indeed for the 180-day period prior to the Petition Date (12/28/2008) and not going back further.

Also, I am hoping that Heller Ehrman, currently debtor-in-possession and operating without an appointed trustee, does the right thing by all its former employees and pays up on all accrued vacation including over the $10,950 priority claim limit.

[Note: there is also reference to an Exhibit 4 to which I don’t have access.  If someone with PACER access could indulge me and send me a copy, I will gladly post it in the Bankruptcy page]


2 Responses to “Accrued Vacation for Stay Team Members”

  1. 1 Observer 2 January 2009 at 2:55 am

    As I read the court documents, Heller will pay the employees who were retained down to Dec. 29 the priority portion of their pre-petition accrued vacation pay. That is, vacation pay earned (accrued) during the 180 days prior to the petition date, up to the $10,950.

    This seems to be part of the retention policy of paying them enough to justify them to stay in jobs that will certainly be terminated (some as soon as Dec. 31, 2008).

    I certainly do not read this as any intent to pay immediately any accrued vacation to any employee who was not kept down to Dec. 29.
    Not that we won’t get that eventually, but only on the more regular time frame applicable to claims when filed and distributions to creditors when ultimately made.

  2. 2 Mary Sunshine 2 January 2009 at 8:14 pm

    It is for vacation earned from Oct. 11 through the employee’s termination date – not for any vacation accrued prior.

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