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Lexmark to pay out millions in vacation ruling

Restrictive “use it or lose it” policy a violation of Calif. law

Vacation policy can be a touchy subject for any company, and with many businesses trying to do more with less there is often a temptation to sacrifice employee satisfaction at the benefit of productivity.

But for 178 current and former employees of Lexmark international who were subject to strict “use it or lose it” vacation policies, their sacrifice could be paid back with millions of dollars in damages.

The settlement is the result of a vacation policy that Lexmark implemented in the 90s requiring employees to forfeit all vacation and personal days if they were not used by the end of each year.  On Sept. 27, an appellate court ruled that this policy violated Calif. Labor Code section 227.3, which prevents employee forfeiture of time off and requires a payout for the time earned upon termination. Now the challenge is determining exactly how much the class is owed.

While the group of workers originally requested s sum over $13 million, the judge has requested that this figure be re-calculated, as it appears to be higher than estimates suggest it should be. The figure was the result of poor record keeping and calculations made using gross pay that included commissions rather than base pay.

In 2011, Lexmark appealed certification of the class and tried to get the case tossed out, arguing that its practices were legal. This appeal was rejected earlier this month and this case went forward to last week’s decision.

In a press release, Bonita D. Moore an attorney for the employees said, “The company changed a lawful policy to one that violated the California Labor Code in order to save money, and the damages awarded reflect the injustice inflicted on the class members by the company. As to current employees, the trial court also issued an injunction to bar the company from this type of behavior in the future.”

While the workers won’t get the $13 million plus they originally asked for, Lexmark will still have to pay an estimated $8 million.

Executive Editor

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Chris DiMarco

Chris DiMarco, Executive Editor of InsideCounsel magazine, has a background in multimedia production with previous involvement in projects in which he developed and created content...

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