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Court of Appeal, Second District, Division 1, California.

Francisco SUASTEZ, Plaintiff and Respondent, v. PLASTIC DRESS-UP CO., Defendant and Appellant.

Civ. 62061.

Decided: October 28, 1981

Paul, Hastings, Janofsky & Walker and Elaine Holland, Los Angeles, for defendant and appellant. Gary B. McGaha, Pomona, for plaintiff and respondent.

Defendant Plastic Dress-Up Co. (hereinafter referred to as Plastic Dress-Up) appeals from a judgment of the superior court awarding $350.55 in vacation pay to plaintiff Francisco Suastez.


Suastez' original complaint seeking declaratory relief and vacation pay which he claimed was due from Plastic Dress-Up was dismissed September 12, 1979, on the ground that the court lacked jurisdiction because Suastez failed to exhaust his administrative remedies. Thereafter Suastez exhausted his administrative remedies and on February 1, 1980, filed the complaint for declaratory relief instituting the present action.

Defendant Plastic Dress-Up filed a motion for summary judgment based on its points and authorities, the stipulations of facts, the reporter's transcript of the proceedings at the prior trial, and the notice of intended decision filed in the earlier case. Plaintiff Suastez filed a cross-motion for summary judgment based on his supporting points and authorities, the stipulations of fact and prior transcript.

The facts as stipulated are that Plastic Dress-Up manufactures trophy components. Suastez was employed by the company continuously from October 16, 1972, until July 20, 1978, at which point he was terminated. At the time of his termination Suastez' wage rate was $3.895 per hour.

On July 20 he was paid $68.79 representing hourly wages earned during final week of employment. On January 24, 1979, he was paid his vested share from the profit sharing plan. Plastic Dress-Up's employees were paid on a weekly basis and pay days were on Fridays.

Plastic Dress-Up had in effect during Suastez' employment a policy providing employees with paid vacation. Had Suastez been employed through October 16, 1978, he would have been entitled to three weeks of paid vacation. Suastez did not, however, on July 20 or thereafter receive any amount constituting vacation pay. In fact he demanded and was denied pro rata vacation pay at the time of his termination. Suastez did not file a claim for vacation benefits with any state agency.

The record further discloses that Suastez was aware of the policy relating to vacation pay which he regularly requested immediately upon the date of his eligibility. In 1974 company policy required that an employee have worked a 12-month period from June 2 of one year to June 1 of the successive year to be eligible for vacation pay. Suastez became eligible on June 1, 1974, and received vacation pay July 14, 1974.

In August 1974 Plastic Dress-Up changed its vacation policy and the 12-month period of employment requisite to vesting of vacation pay benefits was determined as of the anniversary date of each individual employee's hiring by the company. The change in vacation policy was announced and explained to the employees at the time of implementation and thereafter in both Spanish and English. Suastez' anniversary date was October 16. He received vacation pay for the preceding year on October 17, 1975, the next pay day after he became entitled to it.

In 1976 vacation policy was modified to give employees additional vacation time and once more written and oral announcements and explanations were given. In 1976 and 1977 Suastez received vacation pay after completion of a year's employment on the last working day before his anniversary date which fell on a weekend in each of those years.

In 1978 Suastez received no vacation pay because he was terminated July 20 and the criteria for entitlement to vacation pay were not met. In fact approximately 300 employees quit or were terminated prior to their respective anniversary dates during 1976 and 1977 and none received pro rata vacation pay.

On the basis of the foregoing facts the trial court ordered that “vacation pay is wages that vest at the time earned and in the event an employee is terminated before he is eligible for vacation pay, it is payable on the basis of time served.” Accordingly, the court found Suastez entitled to vacation pay of $350.55 for time served from October 16, 1977, to July 20, 1978. Plastic Dress-Up has appealed.


Plastic Dress-Up contends that the trial court erred in granting the cross-motion of plaintiff Suastez for summary judgment since, as a matter of law, defendant was entitled to prevail because Suastez failed to satisfy the eligibility requirement which was a condition precedent to the vesting of vacation pay benefits.


Summary judgment is an appropriate remedy where, as in the case at bench, it appears by agreement and otherwise from the record that there is no material issue of fact to be tried and the sole question before the trial court is one of law as to whether the claim of the moving party (or one of the moving parties) is tenable on the undisputed facts. (Burke Concrete Accessories, Inc. v. Superior Court (1970) 8 Cal.App.3d 773, 775, 87 Cal.Rptr. 619.)

Pursuant to statutory authority when an employee is discharged “the wages earned and unpaid at the time of discharge are due and payable immediately ....” (Lab.Code, s 201, italics added.) The trial court in the instant case awarded vacation pay to Suastez in reliance upon a recent decision of the appellate division of superior court holding that the term “wages” in Labor Code section 216 includes vacation pay and failure of the employer to make such payments may constitute a misdemeanor. (People v. Bishopp (1976) 56 Cal.App.3d Supp. 8, 10, 128 Cal.Rptr. 923.) Where there is no controlling agreement through the medium of collective bargaining or an established company policy, this principle may be generally applicable.

However, Labor Code section 227.3 refers to vested vacation time taking into consideration that there may be conditions precedent to the vesting of entitlement to vacation pay. Section 227.3, as amended in 1976, explicitly recognizes that there may be eligibility requirements relating to time and service in this respect. That section provides in pertinent part that whenever “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 ... employer policy respecting eligibility or time served; provided, however, that an ... employer policy shall not provide for forfeiture of vested vacation time upon termination....” (Italics added.)

Thus, a distinction is made between regular wages which are earned and for which compensation accrues continuously upon performance of work and vacation pay which accrues as earned together with wages but compensation for which may be subject to specific conditions precedent to vesting depending upon the terms of a union agreement or individual company policy.

The trial court at the original hearing acknowledged this distinction in its notice of intended decision when it made the following observations: “If there are condition precedents required to be fulfilled before entitlement to vacation pay, the employee must satisfy those condition precedents. (P) Applying this to the instant case, the evidence was clear that in order for plaintiff to be entitled to vacation pay, the condition precedent was that he reach his anniversary date before drawing vacation pay. He did this in 1974, 1975, 1976, and 1977, and vacation pay was given to him. In order for plaintiff to have ‘vested vacation time’ in 1978, he would have had to work until his anniversary date, namely, October 16, 1978. This he did not do, so on the date of his termination, July 20, 1978, he would not be entitled to any ‘vested vacation time’ as contemplated by Labor Code Section 227.3.”

The California authorities are in accord with this position, and Suastez has referred this court to no contrary authority from this state. It has been held that conditions precedent such as the one applied by the employer in the case at bench are enforceable, and where an employee is terminated before satisfying such conditions he is not entitled to vacation pay because he has not qualified for it. (Div. of Lab. L. Enf. v. Mayfair Mkts. (1951) 102 Cal.App.2d Supp. 943, 227 P.2d 463; Division Lab. L. Enfmt. v. Anaconda Min. Co. (1955) 138 Cal.App.2d 92, 291 P.2d 169.) The sole exception to this principle which has been called to our attention is found in Div. Labor L. Enf. v. Ryan Aero. Co. (1951) 106 Cal.App.2d Supp. 833, 236 P.2d 236. In that case the employee was terminated only five days prior to completion of his first year because of lack of work and pleaded substantial performance with his promise to work a full year before receiving vacation pay. Since the court found that there was no clearly expressed condition precedent to vesting in that case, it awarded vacation pay.

The case at bench falls within the principles enunciated in Division Labor L. Enf. v. Standard Coil etc. Co. (1955) 136 Cal.App.2d Supp. 919, 288 P.2d 637, which distinguished Ryan. Where the contract was clear the condition precedent to vesting of vacation pay was held enforceable and the court in Standard Coil found that “(T)o be entitled to a vacation in any year an employee must be ‘in the active employ of the company’ on June 1 of that year....” (Id., at p. 923, 288 P.2d 637.)

There can be no doubt as to the clearly defined and expressed terms of the company policy in the case at bench, and it is not argued by Suastez that any ambiguity in these terms exists or that he was not made fully aware of the conditions precedent to vesting of vacation pay. The company policy was clearly expressed and explained to the employees a number of times in both English and Spanish. Moreover, Suastez demonstrated his understanding of the policy by regularly drawing vacation pay at the earliest time it became available to him.


The judgment is reversed with directions to enter summary judgment in favor of Plastic Dress-Up.

L. THAXTON HANSON, Associate Justice.

SPENCER, P. J., and DALSIMER, J., concur.

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