HAROLD G. HAMILTON, PATRICIA PERRONE SANDERS, and all others similarly SITUATED v. MEMOREX TELEX CORPORATION
Case Details
- Citation
- 118 N.C. App. 1
- Judge(s)
- Judges GREENE and JOHN concur.
- Procedural Posture — the stage the case had reached
- appeal
- State
- North Carolina
- Circuit
- 4th Circuit
Related Laws
No specific laws identified for this ruling.
Claim Types
Outcome
Plaintiffs prevailed on Wage and Hour Act claims for vacation pay owed under the old policy, but the court limited liability to those terminated before January 1, 1990, and modified damages calculations. Defendant prevailed on some issues, including discovery disputes.
Excerpt
HAROLD G. HAMILTON, PATRICIA PERRONE SANDERS, and all others similarly SITUATED v. MEMOREX TELEX CORPORATION No. 9310SC1081 (Filed 21 February 1995) 1. Limitations, Repose, and Laches § 113 (NCI4th)— pay for unused vacation days — change in policy — action not time barred Plaintiffs’ action was not barred by the statute of limitations where plaintiffs brought the action under the Wage and Hour Act to recover the value of vacation days they had not taken before they were terminated where defendant had changed its vacation policy on 21 December 1988 from earning vacation days one year for use in the next to advancing days on 1 January for use in that year and plaintiffs filed their action on 3 April 1991. Plaintiffs suffered no injury until the, defendant failed to pay them for vacation days they had allegedly earned in 1988; defendant’s policy did not require it to pay cash for any unused vacation days until the employment was terminated and no individual plaintiff had a cause of action until next pay day after termination. The trial court correctly found that only those plaintiffs whose pay date next following termination preceded 3 April 1989 (two years prior to the filing of this action) were barred by N.C.G.S. § 95-25.22. Am Jur 2d, Limitation of Actions §§ 107 et seq. 2. Labor and Employment § 56 (NCI4th)— unused vacation days — change in policy — termination of plaintiffs The trial court properly found that defendant’s refusal to pay plaintiffs for vacation days earned under defendant’s old policy prior to 1 January 1989 was a violation of the Wage and Hour Act where defendant changed its policy on 21 December 1988 from earning vacation days one year for use in the next to advancing days on 1 January for use in that year, subject only to working for the company for six months before using vacation days; defendant terminated plaintiffs after changing the policy; and defendant refused to pay plaintiffs for vacation days accrued under the old policy. Once the employee has earned wages and benefits under the Wage and Hour Act the employer may not rescind them, except that certain benefits including vacation pay may be made subject to forfeiture so long as the employer notifies the employee of the conditions of such a forfeiture prior to the time he or she earns such benefits. N.C.G.S. § 95-25.1 et seq. Am Jur 2d, Master and Servant § 80. 3. Labor and Employment § 56 (NCI4th)— unused vacation days — unilateral contract The trial court did not err in an action to recover payment for unused vacation time lost when defendant changed its vacation accrual policy and then terminated plaintiffs by finding, as an alternative basis for its judgment, that defendant had breached a unilateral contract with plaintiffs. Defendant’s old policy constituted a unilateral promise to grant an employee vacation in the next year if he worked in the previous one, which all of the plaintiffs accepted by working in 1988 and continuing to work through 1 January 1989. Am Jur 2d, Master and Servant § 80. 4. Labor and Employment § 56 (NCI4th)— unused vacation days — employees terminated after change The trial court erred by holding defendant liable for unused vacation time for employees terminated after 31 December 1989 (some plaintiffs were terminated before that time) where defendant changed its vacation policy from accumulating vacation days one year for use in the next to advancing vacation days on 1 January for use that year, with no carryover without permission, subject only to working for the company for six months, and with the change announced in a memorandum on 21 December 1988. Defendant’s policies concerning the carryover of vacation were valid and enforceable under the Wage and Hour Act; each policy was in place before the employees earned the vacation days thereby affected; none of the employees still employed after 31 December 1989 had any vacation days to carry over; and those employees suffered no loss when defendant paid them only for the days they had accrued in the year of their termination. Am Jur 2d, Master and Servant § 80. 5. Labor and Employment § 56 (NCI4th)— unused vacation days — determination of damages during liability phase of trial The trial court did not err in an action to recover the value of unused vacation days for which defendant refused to pay plaintiffs when they were terminated by making determinations of damages during the liability phase of the trial. Defendant offers no theory of how it was prejudiced by the court’s consideration of these matters during the liability phase; moreover, these matters all concern defendant’s liability to the class and do not involve defendant’s liability to any particular plaintiff. Am Jur 2d, Master and Servant § 80. 6. Labor and Employment § 56 (NCI4th)— unused vacation days — pay rates — date of termination The trial court did not err in an action to recover the value of unused vacation days by concluding that plaintiffs were entitled to recover payment for their unused days at their respective pay rates on the date of termination, rather than the rates at the earlier date when defendant’s policy on vacation accrual was changed. Plaintiffs’ injury was defendant’s failure to pay them for those days upon their termination and their action accrued on their respective dates of termination. Also, defendant’s policy explicitly provided that vacation days would be paid “at the current base rate.” Am Jur 2d, Master and Servant § 80. 7. Labor and Employment § 56 (NCI4th)— unused vacation days — six month employment limitation The trial court did not err in an action by terminated employees to recover the value of unused vacation days by awarding damages to employees who had begun their employment within six months of 1 January 1989 but who had been employed by defendant for at least six months prior to their termination, where defendant’s new vacation policy advancing leave for the year conditioned on six months employment took effect on 1 ■ January 1989. Although the court may have erred in drafting its finding of fact regarding the policy, the plain meaning of defendant’s policy is that an employee may not take vacation until he has worked for six months. Am Jur 2d, Master and Servant § 80. 8. Parties § 80 (NCI4th)— failure to pay for unused vacation days — class action — notice The trial court did not err by including in its judgment in a class action to recover the value of unused vacation days those class members whose notices were returned undelivered. Considering the number of plaintiffs involved and the availability of the plaintiffs’ addresses from the company file, in addition to the fact that it is the defendant who disputed the notice, the notice was in accord with applicable class action law, providing for the best notice practical under the circumstances and being reasonably certain to inform those involved, affording each member the chance to opt out of the class. The form of the notice was not substantially less likely to bring home notice than any other feasible alternative. Am Jur 2d, Parties §§ 50 et seq. 9. Labor and Employment § 56 (NCI4th)— failure to pay for unused vacation days — liquidated damages — interest The trial court did not err by awarding liquidated damages to plaintiffs in an action to recover the value of unused vacation days lost when defendant changed its vacation policy and subsequently terminated plaintiffs where defendant argued, that there was evidence to show that it changed the vacation policy solely for the purposes of accounting and that the change was an utterly proper, prospective alteration to its benefit scheme, so that it should not have to pay liquidated damages under N.C.G.S. § 95-25.22. However, the act that constituted the violation was the failure to pay plaintiffs for their vacation upon their termination, not the change in policy. Defendant pointed to no evidence to show that the failure to pay plaintiffs for their vacation days was done in good faith or in the belief that it was not a violation of the Wage and Hour Act and N.C.G.S. § 95-22 mandated that the trial court award liquidated damages. The trial court erred, however, in awarding interest on the liquidated damages. While N.C.G.S. § 95-25.22 states that interest may be recovered on unpaid wages, it does not provide that interest is payable on liquidated damages. Am Jur 2d, Master and Servant § 80. 10. Labor and Employment § 56 (NCI4th)— class action— unused vacation days — terminated employees — common law contract claim — attorney fees The trial court did not err in allowing attorneys’ fees for parties who recovered in a class action on common law contract claims but not on Wage and Hour Act claims for unused vacation days for which they were not paid on termination. The attorneys’ work was not divisible between Wage and Hour claims and contract claims; the two claims were based on the same fundamental legal theory and, because the claims were similar, time spent litigating the contract claim directly benefitted those whose Wage and Hour claims were not time-barred. Am Jur 2d, Master and Servant § 80. 11. Discovery and Depositions § 55 (NCI4tli)— class action— discovery — defendant ordered to produce information The trial court erred in a class action seeking compensation for vacation days lost when plaintiffs were terminated by compelling discovery when there was no outstanding discovery request. Plaintiffs had sent an interrogatory to defendant seeking information on all members of its class which was a continuing request, but plaintiffs did not contend that defendant failed to provide any information concerning members of the class as it was defined in the 18 November 1991 order certifying the class. Therefore, so long as the class continued to be defined as it was in the 18 November 1991 order, there were no unsatisfied discovery requests and the trial court erred by ordering defendant to produce information regarding people who were terminated. N.C.G.S. § 1A-1, Rule 37. Am Jur 2d, Depositions and Discovery §§ 361 et seq. 12. Labor and Employment § 56 (NCX4th)— unused vacation days — measure of damages The trial court erred in an action to recover the value of unused vacation days after defendant changed its vacation policy and terminated plaintiffs by failing to order defendant to pay employees terminated prior to 1 January 1990 the vacation leave pay promised under the old and new policies. By working in 1988, plaintiffs earned an allotment of vacation that could only be taken in 1989 and, under the new policy, plaintiffs earned vacation days that could be taken in that year. The two allotments were separate awards for separate periods of work, performed pursuant to two separate contracts. Am Jur 2d, Master and Servant § 80. Appeal by defendant from order entered 25 November 1991 by Judge Dexter Brooks, from order entered 18 December 1992 by Judge F. Gordon Battle, and from order and judgment entered 27 July 1993 by Judge Wiley Bowen, and appeal by plaintiffs from order entered on 18 December 1992 by Judge F. Gordon Battle, and from order and judgment entered 27 July 1993 by Judge Wiley Bowen in Wake County Superior Court. Heard in the Court of Appeals 26 May 1994. Plaintiffs instituted this class action on 3 April 1991, to recover vacation pay defendant had allegedly failed to pay each of them upon the termination of their employment with defendant. Judge Brooks certified the class in an order entered 18 November 1991. The class consisted of individuals who: (1) were employed by defendant before 21 December 1988; (2) were terminated after 31 December 1988; and (3) were not paid for vacation time they allegedly earned in 1988, prior to the implementation of a new vacation policy. Upon a joint motion of the parties, the case was bifurcated as to issues of liability and damages. Following a trial on 2 and 3 December 1992, Judge F. Gordon Battle entered an order finding defendant liable for compensatory and liquidated damages, interest and attorneys’ fees. Plaintiffs filed a motion for summary judgment on damages and a motion for entry of judgment on 8 July 1993. Following a hearing on the matter, Judge Bowen granted the motions and entered judgment against defendant for $753,006.32 in damages and interest and $50,550.08 for attorneys’ fees and expenses. On that same day the court entered an order to compel defendant to provide information concerning employees terminated after 31 July 1992. Defendant and plaintiffs appeal. Patterson, Harkavy & Lawrence, by Donnell Van Noppen, III, and Gulley and Calhoun, by Michael D. Calhoun, for plaintiff-appellees. Poyner & Spruill, L.L.P., by Cecil W. Harrison, Jr., and Robin T. Morris, for defendant-appellant. Thomas A. Harris and Attorney General Michael F. Easley, by Associate Attorney General John A. Greenlee, for Commissioner of Labor Harry E. Payne, Jr., amicus curiae. ARNOLD, Chief Judge. Defendant presents eleven arguments based upon thirty assignments of error and plaintiffs offer one argument based upon two assignments of error. Plaintiffs are all former employees of defendant who had been employed by defendant at any time prior to 21 December 1988 and were terminated after 31 December of that year. Prior to 21 December 1988, the defendant’s vacation.policy (the old policy), which had been adopted in 1986, provided as follows: If an employee was hired prior to 1 August of a given year, the employee was entitled to five days of paid vacation during that year. However these days could not be taken until the employee had completed three months of continuous employment. If an employee was hired on or after 1 August, the employee was entitled to no vacation days in that year, but would be entitled to take ten days of vacation the next year, after completing six months of continuous employment. If an employee was terminated after completing six months of service, he would be paid for any unused vacation that was earned and payable on 1 January of that year. On 21 December 1988, defendant notified all of its employees that, as of 1 January 1989, the vacation policy (the new policy) would be as follows: Vacation would be advanced on 1 January for use in that year. Vacation days were available for immediate use, but were “earned” over the course of the year. Upon termination, employees would be paid for the unused days they had earned up to that point in the year. Plaintiffs contend that under the old policy they earned vacation in each year for use in the next. Thus, they contend that by working in 1988 they had earned their vacation for 1989, which would have vested on 1 January 1989. The change in policy meant that in 1989 they were entitled to those days they had earned in 1988, in addition to whatever days they earned in 1989 under the new policy. Plaintiffs contend that the defendant failed to pay them for the days they had accrued under the old policy when they were terminated. On the other hand, defendants maintain that under the old policy the employees earned the vacation for each year merely by being in its employ on 31 December of one year and working on the first day in January of the next year. Under that interpretation, vacation was advanced at the beginning of each year, not earned in the previous one. The change in policy reflected only an accounting change, allowing the defendant to take the charges on its accounts over the course of the year, rather than on 1 January of each year. Defendant’s Appeal I. First, defendant argues that the trial court erred in failing to determine that the statute of limitations barred plaintiffs’ claim under the North Carolina Wage and Hour Act (the Act), N.C. Gen. Stat. §§ 95-25.1 to -25.25 (1989). We disagree. Plaintiffs brought this action, at least partly, under the Act to recover for vacation days they had not taken before they were terminated. The Act provides: No employer is required to provide vacation for employees. However, if an employer provides vacation for employees, the employer shall give all vacation time off or payment in lieu of time off in accordance with the company policy or practice. Employees shall be notified in accordance with G.S. 95-25.13 of any policy or practice which requires or results in loss or forfeiture of vacation time or pay. N.C.G.S. § 95-25.12. “Employees whose employment is discontinued for any reason shall be paid all wages due on or before the next regular payday. . . .” N.C.G.S. § 95-25.7. Vacation pay is included within the definition of “wage.” N.C.G.S. § 95-25.2. Claims for unpaid wages and benefits under the Act are subject to a two year statute of limitations. N.C.G.S. § 95-25.22(f). Defendant contends that the statute started to run on 21 December 1988 when it gave notice of the change in the vacation policy in accordance with section 95-25.12. As was recently made plain in Glover v. First Union National Bank, 109 N.C. App. 451, 428 S.E.2d 206 (1993), defendant’s argument is meritless. In that case the plaintiff sued the defendant to recover retirement benefits he was allegedly owed. The defendant argued that the statute of limitations barred his claim because any loss the plaintiff had suffered had occurred over twenty years previously when the retirement plan was amended. This Court rejected that argument, stating: “The statute begins to run on the date the promise is broken. In no event can the limitations period begin to run until the injured party is at liberty to sue.” Id. at 455, 428 S.E.2d 208 (citation omitted). In this case, the plaintiffs suffered no injury until the defendant failed to pay them for the vacation days they had allegedly earned in 1988. Defendant’s policy did not require it to pay cash for any unused vacation days until the employment was terminated. Therefore, no individual plaintiff had a cause of action until the next pay day after termination. The trial court correctly found that only those plaintiffs whose pay date next following termination preceded 3 April 1989 (two years prior to the filing of this action) were barred by section 95-25.22. We reject defendant’s first argument. Secondly, defendant argues that the Act displaces all other remedies in this situation so that its statute of limitations, which is shorter than those for plaintiffs’ common law actions, bars the entire action. Having found that the Act’s statute of limitations does not bar this, action, we need not address the defendant’s preemption argument. II. Defendant next argues that the trial court erred in concluding that it had breached any obligation to the plaintiffs, because the old policy unambiguously provided that employees did not earn vacation in one year for use in the next. We disagree. Defendant’s old vacation policy provided: First Year of Employment If you are hired prior to August 1, you are eligible for five (5) days of vacation during the current caléndar year after you have completed three (3) months of continuous service. You may take ten (10) days of vacation during the following calendar year. If you are hired on or after August 1, you are eligible for ten (10) days of vacation to be taken during the following calendar year after you have completed six (6) months of continuous service. In the event your employment is terminated . . . you will be paid for any untaken vacation that was earned and payable on January 1 of that calendar year. First, the trial court properly found that the defendant violated the Act by failing to pay plaintiffs for vacation days they had earned in 1988. Interpreted in its natural and ordinary meaning: [T]he Wage and Hour Act requires an employer to notify the employee in advance of the wages and benefits which he will earn and the conditions which must be met to earn them, and to pay those wages and benefits due when the employee has actually performed the work required to earn them. Narron v. Hardee’s Food Systems, Inc., 75 N.C. App. 579, 583, 331 S.E.2d 205, 208, disc. rev
Similar Rulings
Browse Related
Facing something similar at work?
Court rulings like this one are useful, but every situation is different. Take 2 minutes to see which laws may protect you — it's free, private, and no account is required to start.
This ruling information is sourced from public court records via CourtListener.com. Case outcomes, claim types, and summaries are extracted using AI analysis and may be incomplete or inaccurate. It is provided for informational and educational purposes only and does not constitute legal advice.
See something wrong, or named in this ruling and want it corrected or redacted? Request a correction.