A California federal district court granted summary judgment to Hyatt Corporation against a class of former employees who alleged that they were entitled to accrued vacation time from Hyatt after Hyatt laid them off, indefinitely, at the start of the COVID-19 pandemic. The judge found that by laying the employees off rather than terminating them, Hyatt had not severed the employer-employee relationship, and therefore they were not eligible for a payout of their accrued time. The case is Karen Hartstein v. Hyatt Corporation et al., case number 2:20-cv-04874, U.S. District Court for the Central District of California.
Due to the pandemic, Hyatt furloughed thousands of California workers in March 2020, offering to pay out their accrued vacation time and paid time off upon request. Employees also received cost-free health insurance coverage and access to the complimentary hotel room program, which provided a certain amount of free hotel stays per year. About three months after the layoffs, Hyatt terminated many employees.
Former employees sued Hyatt in April 2020 for failing to pay overtime, compensate them for unpaid wages while furloughed, and provide correct wage statements. The employees also brought claims alleging unfair business practices under the Private Attorneys General Act. In May, a California federal district court judge certified three subclasses of former employees, as follows:
- Furloughed employees who did not receive payment upon ending their jobs
- Furloughed employees who did not receive vested nondiscretionary hotel room bonuses
- Hourly employees who received the hotel bonuses but requested overtime compensation for those bonuses
Hyatt moved for summary judgment, arguing that state labor laws did not support the former employees’ requests for unpaid overtime or hotel room bonuses. The class also moved for summary judgment, claiming that the layoffs qualified as discharges under state labor law. They also argued that the hotel room bonus was a “wage” that the court could consider as a factor in computing overtime pay.
The court rejected the class’s arguments, finding that the hotel room bonus program was more similar to a gift or reward rather than a wage. As a result, the room bonus was not a factor to consider in calculating a worker’s pay rate.
The court ruled that pandemic-related layoffs did not fall within the definition of discharge under California labor laws. Instead, Hyatt maintained the employees’ health insurance benefits and room bonuses and continued accruing vacation time. These facts indicate that Hyatt did not entirely sever the employee-employer relationship, so the layoff was not a discharge.
An attorney for the class vowed to appeal the judge’s decision to the U.S. Court of Appeals for the Ninth Circuit.
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