Sick or Vacation Pay

An unusual claim until the last few years, when I have seen it crop up every now and then. My consciousness on the claim was dependent upon the nature of the accumulation. If, on one hand, the employee had done nothing other than accumulate ordinary sick and vacation banks, my perception has been that there was nothing to divide. People get sick. Taking vacations is healthy and an ordinary part of what is perceived as an employee’s "right". In this, ordinary sick and vacation banks are nothing other than a "salary replacement" for those times when an employee is ill or otherwise taking a legitimate leave from work. [Note that the employee may be charged child support or alimony upon the "replacement" monies".] 

On the other hand if (a) termination from employment results in some "return" of the unused sick or vacation days in cash and (b) the accumulation/return is well beyond what seems "normal" or useful to the employee and (particularly) (c) if it was part of a family severance plan, a plan to have a "bonus" at the time of termination, the contention seems completely legit. 

But what do we say to the 56 year old employee with a history of heart troubles who asserts that his plan has been to save sick days because he knew, at some point, he would need them to maintain his salary? You tell me. Can he or she procure child support relief during this period because his sick days have already been (say) 50% transferred to his or her ex-spouse? Or take two employees. Employee A uses her sick and vacation days as they accrue to (of course) eat bon bons and meet her lover. She owes nothing. Employee B saves her sick and vacation days "for a rainy day" so that she will always be able to pay her child support and meet her children’s special needs. She owes her spouse half. Is this right?

The foregoing said, I can perceive some similarity (and differences) with pension plans or (indeed) any other asset. Janice Cunningham, in her article in the 2001 Family Law Journal Special Edition, takes the view that sick and vacation pay should be generally divided, concluding (without limitation) "the value should be considered a divisible marital asset." See "An Asset By Any Other Name:" at p. 4 of the edition. She cites Lesko v. Lesko, 184 Mich App 395, 402 (1990) holding that "balancing all of the factors, we find that such banked leave days are a divisible marriage asset." Lesko, however, seems a somewhat shaky basis for a bright line test. First, the court finds the "issue not so easily decided", 184 Mich App at 402 and it is certain the decision is a close one for that panel. Second, an important factor for the Lesko court seems to be the existence of Schober v Schober, 692 P. 2d 267 (1984), the only case the court seems able to find on point. In that case the Alaska Supreme Court announced the rule that the sick and vacation banks of an employee are divisible. Yet, prior to Lesko, Schober was expressly rejected in Maryland. See Thomasian v. Thomasian, 79 Md App 188, 556 A 2nd 675 (1989) holding that that sick and vacation banks are a mere "replacements" or "alternatives" for ordinary wages.

For whatever reason, the Lesko court missed this precedent. The court also missed a California case that seems to agree with Thomasian. See In re Marriage of Lorenz, 146 Call App 3rd 464, 194 Cal Rptr 237 (1983). On the other hand, more recent opinions in New York, Washington and Florida appear to agree with the Lesko decision. Third, the major issue for me, is the extraction of a bright line test from the case where Mr. Lesko could be paid for 89 sick days---the amount that was to be valued---but was holding 200. See 184 Mich App at 201, n.1. Thus, even upon payment of the 44.5 days, Mr. Lesko was still holding 156.5 sick days, about 80% of an ordinary work year and a "buffer" of 67.5 more than what he could be paid for. The "replacement" notion in Lesko is less prominent than the plan to "bank" days for purposes of an ultimate severance. [Lesko does not speak to the facts of any vacation holdings or accruals.]

I would argue for something other than a bright line test, regardless of Lesko. I contend that the better rule is that accruals or sick or vacation time may be divisible, based upon the equitable discretion of the trial court.

Of course, any accumulation that is valued must adjusted for FICA, federal and state taxes.