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Vested Sick Leave Can’t Be Denied By City, Judge Says

The City of San Jose had a sick leave policy that allowed workers who had been with the City for 15 or more years to bank up to 30 weeks of sick time that would be paid out upon retirement. The policy was a unique savings opportunity for City employees that allowed them to earn sick time throughout their careers that would be paid out at their final rate when they left the City.

But, under increasing pressure to control the City’s budget – the program had run up annual bills of $10 million in the last several years – the unused-sick-leave-payout program was discontinued by the City. But Lorie Deisenroth, a now-retired former San Jose employee who had intended to use her sick leave payout to help pay for her children’s education, fought back.

She filed suit against the City, asserting that she was entitled to the $28,080 that she had banked over her career and that the City was illegally withholding a benefit from her that had already vested. The Santa Clara County Judge who heard the case agreed and has ordered the City to pay Ms. Deisenroth the full value of her unused sick days.

Neither side has said that they would appeal the decision. The City asserts that the decision does not challenge their right to end the sick-leave accrual program, which was its goal in the first place. It will likely have to honor sick leave that has already been accrued under the existing payout plan but may be able to cap the rate at which it will be paid.

The police and fire unions have negotiated their own sick-leave payout program, separate from what was at issue in Deisenroth’s case. Police officers agreed to cap the rate at which sick leave would be paid out as well as to halt the accrual of additional sick time.

In the private sector, sick leave is typically considered a use-it-or-lose-it benefit.

Source: Mercury News, “Judge says San Jose owes retired librarian $28,000 for unused sick leave,” April 10, 2013

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