On 22 September 2023, the US Court of Appeals for the Ninth Circuit partially overturned the district court's summary judgment that favored Hyatt Corporation in a class action lawsuit filed by former California employees of Hyatt, i.e. a hotel corporation.

The employees were laid off due to the COVID-19 pandemic and claimed that Hyatt violated California law by not promptly paying them for their accrued vacation time and failing to compensate them for the value of complimentary hotel rooms they received annually.

Hyatt argued that it was not obligated to provide the accrued vacation pay until June 2020 when the employees' terminations became official. However, the panel determined that California's Labor Code's prompt payment provisions (under which if an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately) required Hyatt to pay the plaintiffs their accrued vacation pay in March 2020. This conclusion was based on the guidance from the California Division of Labor Standards Enforcement, which stated that a temporary layoff without a specific return date within the normal pay period constituted a discharge triggering prompt payment provisions.

As a result, the Ninth Circuit Court reversed the district court's decision to grant summary judgment in favor of Hyatt regarding the vacation pay claim. The case was remanded to the district court to assess whether Hyatt's noncompliance with the prompt payment provisions was willful.

Reference: Hartstein v. Hyatt corporation, US Court of Appeals for the Ninth Circuit, 22 September 2023.

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