Is Sabbatical a Form of Vested Vacation Benefits?
Employers who offer paid sabbaticals to their long-term employees probably should not be sued, but apparently they are not immune. In Paton v. Advanced Micro Devices, Inc., the plaintiff resigned his employment with AMD and then brought a class action against AMD alleging that the company failed to pay out earned but unused sabbatical pay. According to the plaintiff, the sabbatical pay was just another form of accrued vacation that was required to be paid out on termination of employment.The trial court threw out the claim, finding that AMD's sabbatical program was not the equivalent of vested vacation and that sabbatical pay did not have to be paid out on termination of employment. The plaintiff appealed.
On appeal, the court held that there was insufficient evidence before the court to find that AMD's time off program was a true sabbatical program and not vacation. The court discussed the differences between vacation and sabbaticals, explaining that vacation is not conditioned upon anything other than the employee's rendering of service and vacation does not impose conditions on how the employee uses the time away from work. Sabbaticals, on the other hand, tend to be purpose-driven and aimed at providing the employee with incentive for professional growth and continued employment. However, the court recognized that many private companies are providing sabbatical leaves that provide for an extended amount of time off (longer than any typical vacation) but are not necessarily tied to any special learning opportunity. The court indicated that this type of sabbatical program is harder to distinguish from a vacation program. Nonetheless the court laid out several factors to be considered in assessing whether a leave program is a sabbatical: (1) the leave must be granted infrequently, e.g. every seven years; (2) the leave time is longer than a typical vacation; (3) the leave must be granted in addition to regular vacation that is comparable to that offeredcomparable employees in the regular market; and (4) the leave program should specify that the employee is expected to return to work for the employer after the sabbatical is over.
Analyzing the specific sabbatical program before it, the court held that there was insufficient evidence to support a finding that the leave qualified as a sabbatical as a matter of law. AMD's policy originally provided for an 8-week sabbatical leave after seven years of employment, but was later changed to provide for a 4-week sabbatical after five years of service. The policy provided for continued accrual of vacation during the sabbatical leave and for return to work upon conclusion of the leave. The policy's express purpose was to encourage continued employment by providing time away for revitalization and enrichment. The court found that the length of the sabbatical leave and frequency upon which it could be taken were areas that reasonable minds could differ as to whether the leave was qualitatively different than traditional vacation leave. Furthermore, the court did not have evidence as to AMD's motivation in adopting the policy or how AMD's vacation policy compared to that of competitors. As such, the court remanded the case to the trial court.
Employers with sabbatical programs should carefully review these programs to ensure that they are adeqately distinguished from traditional vacation to avoid costly claims for unpaid “vacation” pay on termination of employment.