Disney Reaches Vacation Pay Settlement with Former Employees

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A settlement was reached last week in Zorio v. Walt Disney Worldwide Services Inc., a case brought by former Disneyland employee Reykeel Zorio, who alleged on behalf of himself and other former employees at six Disney facilities that Disney failed to compensate departing employees for accrued vacation time. See Zorio v. Walt Disney Worldwide Services Inc., No. BC549292 (Los Angeles Cty. Sup. Ct. 2014, consolidated with No. BC540154). Originally filed in March 2014 as a representative action, the claims relating to vacation wages were filed again in June 2014 as a class action.  The cases were subsequently consolidated and alleged that the defendants in the action failed to provide earned and vested vacation wages within any permissible time period to employees upon termination or separation.

The proposed settlement will reportedly pay $500,000 to more than 4,000 hourly-paid, non-exempt workers. The decision helps to reinforce the principle that paid vacation is a form of wages, earned as labor is performed, and is therefore compensable upon termination of employment pursuant to California Labor Code section 227.3, as well as sections 201-204.

While an employer is not required to provide its employees with vacation time, California law imposes restrictions on any policy, practice, or agreement implemented to provide paid vacation, and accrued vacation time is considered wages. See Suastez v. Plastic Dress-up Co., 31 Cal. 3d 774 (1982). An employee has no entitlement to be paid for accrued but unused vacation until the employee quits or is discharged. However, all earned and unused vacation must be paid to the employee at his or her final rate of pay within three days of termination of employment. Cal. Lab. Code § 227.3. The Disney Corporation learned this rule the hard way in Zorio.

Authored by: 
Karen Wallace, Associate