California Labor and Employment Defense Blog

Class Action Lawsuit Against Heller Ehrman Alleges Failure to Pay Accrued Vacation

As many readers have no doubt heard the venerable law firm of Heller Ehrman recently dissolved after nearly one hundred years in business.  During this time it was intermittently the biggest firm in the Bay Area and close to the top in the state.

One unfortunate aspect of the dissolution is that the Firm apparently made a strategic decision not to pay accrued vacation to its terminated California employees.   Under California law (Labor Code section 227.3) such accrued payments are deemed to be earned wages which are property of the employee every bit as much as regular salary. As a result, a class action lawsuit has been filed by former Heller Ehrman employees to recover these and other amounts allegedly due at termination. 

The lawsuit is interesting on a number of levels.  It is a reminder to employers that California vacation wages are an accrued liability that must be taken into account.  

It is also a sad commentary on modern Big Firm economics.  A law firm, no matter how large, is essentially a collection of individuals working together.  The assets of the firm "leave the building every night" as the saying goes.  And if they don't return the next morning, there is really nothing left for creditors, including employees.  Clearly the plaintiffs challenge will not be establishing liability but satisfying any judgment from a defunct partnership. 



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Paladin - December 18, 2008 10:17 AM

Clear up a few inaccuracy for you. Heller Ehrman was almost 120 years old. The firm's inability to pay accrued vacation was due to Bank of America and Citibank's refusal to fund payment of such. The lesson here is not that employers need yet another reminder of their obligations under the law, but a big fat notice to California employees that labor laws do not, in fact, protect you when your employer goes bankrupt. The banks own whatever assets there are at that point. Banks, as lenders, have no responsibility towards the failed employer's employees at all. Labor laws are unenforceable against the owner of the assets--the banks.

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