Almost every employer offers some form of vacation leave to its employees. Some employers, following the lead of academia, also offer long-term employees sabbatical leaves so that they can “recharge their batteries” and hopefully return to work more productive and creative.

Employers must ensure that they have proper policies in place in characterizing sabbatical leave to avoid it from being considered as vacation leave. The difference is important: Vacation leave that has been earned but not used must be paid out at the time the employee’s employment ends; whereas, sabbatical leave does not.

In Paton v. Advanced Micro Devices, Inc., the plaintiff sued his former employer claiming that the eight weeks of sabbatical leave that he had accrued was actually vacation time that needed to be paid out to him when his employment ended. Plaintiff argued that the sabbatical program was essentially extra vacation leave and that, under section 227.3 of the Labor Code, his employer could not require him to forfeit such pay. 

Although the trial court granted the former employer’s motion for summary adjudication, the California Court of Appeals reversed and adopted a four-part test for determining whether leave should be considered sabbatical leave or vacation leave. The four factors adopted by the Court are:

(1)        Whether the leave is granted infrequently. This tends to support the assertion that the leave is sabbatical in nature and intended to retain experienced employees who have devoted a significant period of service to the employer. The Court recognized that offering sabbatical leave every seven years would appear to be an appropriate starting point for assessing corporate sabbaticals;

(2)        Whether the length of the leave is adequate to achieve the employer’s purpose, which typically requires that the length of leave be longer than that “normally” offered as vacation leave;

(3)        Whether the sabbatical leave is offered in addition to regular vacation leave; and

(4)        Whether a sabbatical program incorporates some feature demonstrating the employer’s intent that the employee is expected to return to work after the sabbatical is over.

The Court made clear that no single factor would be dispositive. Rather, the court emphasized that it was important to determine whether the sabbatical leave was intended as an incentive to induce experienced employees to continue working for defendant and increase the productivity or creativity upon their return to work as opposed to merely providing additional vacation for longer-term employees.

Employers who offer or intend to offer sabbatical leaves to their employees should review such plans with legal counsel to avoid incurring additional, unintended liabilities.