US Supreme Court Steers Clear of Denny's Vacation Dispute

October 13, 2004 ( - The nation's highest court on Tuesday sidestepped an effort by a national restaurant company to rule on whether it must pay its workers for unused vacation time if they leave the company or are fired within their first 12 months.

>The US Supreme Court declined to accept an appeal by Denny’s Inc., aimed at stopping a lawsuit in California state court over the vacation time dispute, the Associated Press reported. California law guarantees payment of vested vacation when workers leave their jobs, and officials are seeking unpaid vacation wages for the employees.

>For its part, Denny’s has countered that its plan should be governed by the more lax Employee Retirement Income Security Act (ERISA), which allows the practice. The company asked that a South Carolina federal judge first rule on which law applies before the California court can consider the state law claims. The Denny’s vacation plan is administered in South Carolina.

>The US 4th Circuit Court of Appeals in April ruled the federal Anti-Injunction Act bars a federal judge from intervening in state cases involving ERISA, drawing the appeal and ire of restaurant groups who fear added exposure to lawsuits in state court.

>The issue at the heart of the dispute is the vacation benefits available for tens of thousands of workers in the fast-food industry and other high-turnover jobs. “In addition to litigation costs, employers may face substantial exposure to liability under pre-empted state laws,” the National Council of Chain Restaurants argued in its friend-of-the-court filing in support of Denny’s.