Sabbatical or Vacation? You Tell Me.

Most employers have some sort of vacation policy.  Under California law, if an employee has unused accrued vacation at the end of his/her employment, the employer must pay out the unused but accrued vacation.  Several companies also offer a sabbatical program, which typically offers a longer period of paid time off after a particular length of employment.  While traditionally sabbaticals were designed to allow professors and the like to gain new experiences and knowledge that would enhance the reputation of the colleges offering the sabbaticals, as private non-educational employers began offering sabbatical programs employees were allowed to take sabbaticals merely to “recharge their batteries.”  Unlike vacation plans, an employer can have a “use it or lose it” sabbatical policy.

So, what’s the difference between a sabbatical and vacation, and can employers simply call their vacation plan a sabbatical in order to avoid the end-of-employment payment required by vacation plans?  That’s what Paton v. Advanced Micro Devices, Inc. had to decide.

After going through a short history of the sabbaticals, as well as several DLSE opinion letters on the issue, the court announced a four-part test to determine whether a sabbatical really is a sabbatical:

1. The sabbatical leave should be granted infrequently and intended to retain experienced employees who have devoted a significant period of service to the employer.  The court suggested a 7-year rule, allowing employees to take sabbatical every 7 years, but acknowledged that greater or shorter periods might be appropriate depending on industry standards.
2. The length of sabbatical should be longer than that “normally” offered as vacation. Since regular vacation time may be used for rest, a sabbatical ought to provide the extended time off work that regular vacation does not. The court did not indicate what length of time would suffice, but in Paton the employee was entitled to a four-month sabbatical and the court believed there was sufficient question as to the validity of the sabbatical policy for a jury to decide the issue.
3. The sabbatical must be in addition to regular vacation.  According to the court, [b]ecause an employer could offer a minimal vacation plan and reward senior staff with sabbaticals as a way to avoid the financial liability of a more generous vacation plan, the employer’s regular vacation policy should be comparable to the average vacation benefit offered in the relevant market.”
4. The sabbatical program should incorporate some feature that demonstrates that the employee taking the sabbatical is expected to return to work for the employer after the leave is over. This was an element implied by the Labor Commissioner, but not explicitly enunciated as a requirement for a valid sabbatical program.

The court  rejected the idea that the sabbatical must be for specified purposes (i.e., continued education, career development, etc.) and be limited to upper management (an element previously identified by the Labor Commissioner as necessary for a true sabbatical.

Another interesting tidbit, while many recent decisions refuse to follow Labor Commissioner opinion letters, the Paton court acknowledged that the court is not required to reject those opinions.  Unfortunately, employers and employees won’t know which opinions are correct and which are not good law until the courts review each opinion letter.

If your company uses sabbaticals as a way to reward long-term employees, speak with an employment attorney to ensure the company policies follow the law.

Original article by Robert E. Nuddleman of Phillip J. Griego & Associates

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