St. Louis County District Court File No. 69-C1-05-600719.
1. When used in Minn. Stat. § 181.13(a) (2004), the term "wages" includes compensation for accrued vacation time that an employee has earned under the terms of an employment contract at the time the employee is discharged.
2. A contract provision that makes an employee who is discharged for misconduct ineligible for compensation for accrued vacation time that is earned and unpaid at the time the employee is discharged has no legal effect because Minn. Stat. § 181.13(a) requires an employer to pay a discharged employee wages that are earned and unpaid at the time of the discharge, and parties cannot provide by contract what is prohibited by statute.
The opinion of the court was delivered by: Peterson, Judge
Considered and decided by Toussaint, Chief Judge; Peterson, Judge; and Minge, Judge.
This appeal is from a summary judgment that appellant Susan Lee is not entitled to be paid for unused vacation time that she had earned at the time she was discharged because Lee's employment contract included a provision that an employee who is terminated for misconduct is not eligible for payment of earned but unused vacation time, and Lee was discharged for misconduct. We reverse and remand.
Appellant Susan Lee began working at the Miller-Dwan dialysis center in Duluth in 1991 and became an employee of respondent Fresenius Medical Care, Inc. in August 2000 when Miller-Dwan sold its dialysis center to Fresenius. On August 31, 2000, Lee signed an acknowledgement stating that she received a copy of the Fresenius employee handbook. The handbook states the company policy that an employee who leaves employment is eligible to be paid for earned but unused vacation time,*fn1 if the employee gives proper notice. The handbook also states, "In addition, if your employment is terminated for misconduct, you will not be eligible for . . . payment of earned but unused [paid time off] unless required by state law."
In 2002, Fresenius terminated Lee's employment.*fn2 Fresenius paid Lee her accumulated wages, but it did not pay her for earned but unused vacation time. Lee brought an action in conciliation court seeking compensation for 181.86 hours of vacation time that she claimed she had earned but had not used when Fresenius terminated her employment. The conciliation court awarded Lee vacation pay, and Fresenius removed the case to the district court. Fresenius moved for summary judgment, and the district court determined that under her employment contract, Lee was not entitled to be paid for her earned but unused vacation time. Based on this determination, the district court granted the motion for summary judgment. This appeal followed.
Is Lee entitled to be paid for vacation time that she had earned and had not used at the ...