James W. Brown, Judge Donna D. Geck, Judge Superior Court County of Santa Barbara (Super. Ct. No. 1336975)
The opinion of the court was delivered by: Hoffstadt, J.*fn5
CERTIFIED FOR PUBLICATION
An employer in California must immediately pay a terminated employee for all of his "vested vacation time" unless the union representing that employee has negotiated a collective bargaining agreement that "otherwise provide[s]." (Labor Code, §§ 227.3, 201.)*fn1 We hold that a collective bargaining agreement "otherwise provide[s]" and thereby abrogates an employee's statutory right under section 227.3 to immediate payment for vested vacation time only if the agreement clearly and unmistakably waives that right. Because the agreement in this case lacked this clarity, Celite Corporation (Celite) was required to immediately pay terminated employees for all their vested vacation time. We nevertheless reverse the trial court's judgment imposing waiting time penalties because Celite's nonpayment was not "willful."
FACTS AND PROCEDURAL HISTORY
Celite mines and manufactures diatomaceous earth in Lompoc, California. International Chemical Workers Union/C-UFCW Local 146-C (Union) represents Celite's employees. Under the collective bargaining agreements in effect between 2003-2007 and 2007-2010 (the Agreements), Celite granted its employees between one and five weeks of vacation annually. Each January, Celite calculated a yearly "vacation allotment" based on each employee's length of employment and the number of hours they worked the year before.
Under the Agreements, employees terminated from Celite were entitled to "receive whatever vacation allotment is due them upon separation."*fn2 For 25 years, both Celite and the Union understood this provision to refer to the "vacation allotment" as defined above. Accordingly, Celite paid terminated employees for the vacation time already allotted to them for the year of their termination, but did not pay them the vacation time they had accrued toward the next year's allotment.
Howard Choate (Choate), Billy Henry (Henry), and Leroy Stricklin (Stricklin) (collectively, Plaintiffs) worked for Celite until they were laid off on March 1, 2007. Celite immediately paid Plaintiffs their "vacation allotment" for 2007, but did not pay them for vacation time they had accrued toward January 2008's allotment between January 1 and March 1, 2007.
Plaintiffs thereafter filed a class action against Celite seeking (1) the pro rata portion of the January 2008 "vacation allotment" they had earned while employed between January 1 and March 1, 2007, pursuant to section 227.3 (pro rata vacation time); (2) thirty days of salary, as waiting time penalties pursuant to section 203, because Celite had "willfully" refused to pay them immediately for the pro rata vacation time; and (3) damages arising from these violations, which they allege violated the unfair competition law, Business and Professions Code section 17200.*fn3
The parties made cross-motions for summary adjudication based on stipulated facts. The trial court denied summary adjudication of Plaintiffs' vacation pay and unfair competition claims.
The court granted summary adjudication to Plaintiffs on their waiting time penalties claim. The court concluded that section 227.3 obligated Celite to pay Plaintiffs for their pro rata vacation time immediately upon their termination unless the Agreements "otherwise provided." The court ruled that the Agreements did not waive Plaintiffs' rights to the pro rata vacation time in clear and unmistakable terms. The court further determined that Celite had acted willfully in refusing to pay Plaintiffs because Celite's legal duty to do so was clear and because Celite acted unreasonably in believing that the Agreements' implicit waiver of these rights was valid. The court also rejected Celite's argument that Plaintiffs' claims were preempted by the Labor Management Relations Act (LMRA). The court accordingly concluded that Celite owed waiting time penalties.
Plaintiffs dismissed their unpaid vacation claim because Celite eventually paid them for the pro rata vacation time, and dismissed their unfair competition claim to expedite appellate review. The parties also stipulated to class certification for the waiting time penalties claim. The court subsequently entered judgment for Plaintiffs.
Celite argues that it should not be held liable for waiting time penalties because (1) it never owed Plaintiffs the pro rata vacation time in the first place; (2) even if it did, it did not "willfully" refuse to pay Plaintiffs because it reasonably believed the Agreements had waived Plaintiffs' right ...