Arrez v. Kelly Services, Inc.

• Decision Date: 29 October 2007
• Docket Number: Case No. 07 C 1289.
• Citation: 522 F.Supp.2d 997
• Court: U.S. District Court — Northern District of Illinois
• Parties: Estella ARREZ and Erica Alonso, on Behalf of Themselves and All Other Persons Similarly Situated, Known and Unknown, Plaintiffs, v. KELLY SERVICES, INC., Defendant.

522 F.Supp.2d 997

Estella ARREZ and Erica Alonso, on Behalf of Themselves and All Other Persons Similarly Situated, Known and Unknown, Plaintiffs, v. KELLY SERVICES, INC., Defendant.

Case No. 07 C 1289.

United States District Court, N.D. Illinois, Eastern Division.

October 29, 2007.

COPYRIGHT MATERIAL OMITTED

Aaron D. Kaufmann, Hinton, Alfert & Sumner, Walnut Creek, CA, Christopher John Williams, John Edward Untereker, Workers' Law Office, P.C., Douglas M. Werman, Maureen Ann Bantz, Werman Law Office, P.C., Chicago, IL, Daniel M. Feinberg, Lewis, Feinberg, Lee, Renaker & Jackson, PC, Oakland, CA, for Plaintiffs.

Gerald L. Maatman, Jr., Miriam B. Geraghty, Steven J. Pearlman, Seyfarth Shaw LLP, Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

HARRY D. LEINENWEBER, District Judge.

Plaintiffs Estella Arrez and Erica Alonso (hereinafter, the "Plaintiffs"), bring this action under the Illinois Wage Payment and Collection Act, 820 ILCS 115/1 et seq. (the "IWPCA") and the Illinois Day and Temporary Labor Services Act, 820 ILCS 175/1 et seq. (the "IDTLSA"), on behalf of themselves and other persons who are or have been employed by Kelly Services, Inc. (hereinafter, the "Defendant" or "KSI") as temporary employees in Illinois and who (1) left Defendant's employ at any time during the five years prior to the filing of this action and who were not paid all earned vacation pay as part of their final compensation and/or (2) have been employed by Defendant at any time during the five years prior to the filing of this action and who have not been paid all earned holiday pay. Plaintiffs also allege that KSI failed to provide proper Wage Payment and Notice required by the IDTLSA, 820 ILCS 175/30. Defendant KSI has moved to dismiss the Plaintiffs' Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).

Plaintiffs originally brought this action in state court, and Defendant removed to this Court pursuant to 28 U.S.C. §§ 1332 and 1441. Under the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d), this Court has jurisdiction over this action because the "matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs," 28 U.S.C. § 1332(d)(2), and at least one member of the proposed class is a citizen of a State different from Defendant KSI.

For the following reasons, Defendant's motion is denied.

I. BACKGROUND

The Court derives the following facts from the pleadings, including all attached documents. The Court resolves all reasonable inferences and factual conflicts in Plaintiffs' favor. Though the complaint contains class allegations, no class has yet, been certified. Thus, the Court limits its discussion to the allegations of the named Plaintiffs.

At least since June 2003; when Plaintiff Alonso became employed with KSI, KSI has maintained a "Vacation Benefit Plan" for its temporary employees. This vacation pay policy provides, in relevant part:

To qualify for a vacation benefit payment, you must meet all of the following criteria:

• Work, and be paid for, 1,500 hours within the vacation benefit year. These hours must appear on paychecks from January through December.

• Be an active Kelly employee at the end of the vacation benefit year (i.e., receive a paycheck dated in December). ....

A vacation benefit payment will be issued automatically in January of the following year. It will be equivalent to 40 hours at your average pay rate for the year. Do not record vacation hours on your time card or other timekeeping systems....

The Vacation Benefit Plan may be cancelled or modified at any time at the discretion of Kelly Services.

Def.'s Mem. in Support of its Mot. to Dismiss ("Def.'s Mem."), Ex. A. At least since December 2005, when Plaintiff Arrez became employed with KSI, KSI has maintained a "Holiday Benefit Plan" for its temporary employees. This holiday pay policy provides, in relevant part:

You may be eligible for as many as six paid holidays per year: New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

To qualify for a holiday benefit payment, you must meet all of the following requirements:

• Work, and be paid for, 960 hours during the 26 weeks immediately prior to the holiday....

• Work, and be paid for, 30 hours during the week immediately prior to the holiday week. For New Year's Day, however, work, and be paid for, 30 hours during the week immediately prior to Christmas Day.

• Be available to work during the holiday week.

A holiday benefit payment will be issued automatically the week following the holiday. It will be equivalent to eight hours to your current pay rate. Do not record holiday hours on your time card or other timekeeping systems.

The Holiday Benefit Plan may be cancelled or modified at any time at the discretion of Kelly Services.

Def.'s Mem., Ex. B. Defendant KSI maintained these vacation and holiday pay policies, or substantially similar policies, for at least five years prior to the filing of this action.

Plaintiff Arrez was employed by KSI from approximately December 2005 to October 2006. She was employed as a temporary worker, assigned to work as a laborer at a third-party client company, paid on an hourly basis, and treated as an employee for purposes of KSI's vacation and holiday policies. Arrez worked more than 1,500 hours for KSI in 2006, but, in accordance with KSI's Vacation Benefit Plan, she did not receive a vacation payment for her hours worked during calender years 2005 and 2006. Arrez also met the conditions of KSI's Holiday Benefit Plan, but she was denied holiday pay in 2006.

Plaintiff Alonso was employed by KSI from approximately June 2003 to July 2004. Like Arrez, she was employed as a temporary worker, assigned to work at various third-party client companies, paid on an hourly basis, and treated as an employee for purposes of KSI's vacation and holiday policies. Alonso worked for KSI continuously between June 2003 and December 2003 and between January 2004 and July 2004, but in accordance with KSI's Vacation Policy, she did not receive a vacation payment for her hours worked during calendar years 2003 and 2004.

Since January 1, 2006, KSI did not provide Plaintiff Arrez with Wage Payment and "Notice in the form of an itemized statement on her paycheck stub or form approved by the Illinois Department of Labor listing at least (a) the name, address, and telephone number of each third party client at which she worked, and (b) the number of hours she worked at each third party client each day during the pay period.

Count I of the Complaint alleges that KSI's vacation pay policy violates the IWPCA by, among other things, denying employees the right to have vacation time vest proportionally as they work and causing a forfeiture of vested vacation for employees who do not work in December of any calendar year. Plaintiffs allege that they have been denied earned or vested vacation pay throughout the course of their employment. Count II alleges that Plaintiff Arrez satisfied the conditions of KSI's holiday pay policy, but that KSI failed to compensate her all of her earned holiday pay, in violation of the IWPCA. Count III alleges that KSI failed to provide Plaintiff Arrez with proper Wage and Payment Notice, in violation of the IDTLSA.

II. DISCUSSION

A. Vacation Pay Claim Under the IWPCA

The IWPCA provides that:

Every employer shall pay the final compensation of separated employees in full, at the time of separation, if possible, but in no case later than the next regularly scheduled payday for such employee. ... Unless otherwise provided in a collective bargaining agreement, whenever a contract of employment or employment policy provides for paid vacations, and an employee resigns or is terminated without having taken all vacation time earned in accordance with such contract of employment or employment policy, the monetary equivalent of all earned vacation shall be paid to him or her as part of his or her final compensation at his or her final rate of pay and no employment contract or employment policy shall provide for forfeiture of earned vacation time upon separation.

820 ILCS 115/5. "Final compensation" is defined as "wages, salaries, earned commissions, earned bonuses, and the monetary equivalent of earned vacation and earned holidays, and any other compensation owed the employee by, the employer pursuant to an employment contract or agreement between the 2 parties." 820 ILCS 115/2.

Defendant KSI argues that (1) its vacation pay policy does not enable employees to earn vacation pay proportionately as work is performed, and that employees must meet the 1,500 hour and active employment in December requirements before they "may be eligible for vacation benefits," Def.'s Mem. at 5; (2) since its vacation pay policy is an inducement for future services rather than compensation for past services, Plaintiffs could not have been deprived of any earned vacation benefit; and (3) the vacation benefit is actually a bonus to which Plaintiffs are not entitled because KSI's policy does not unequivocally confer such a benefit.

Plaintiffs respond, first, that under Golden Bear Family Restaurants, Inc. v. Murray, 144 Ill.App.3d 616, 98 Ill.Dec. 459, 494 N.E.2d 581 (1986), and Mueller Co. v. Department of Labor, 187 Ill.App.3d 519, 135 Ill.Dec. 135, 543 N.E.2d 518 (1989), employees earn vacation benefits pro rata where the employer's vacation policy provides for vacation accrued by length of service, and KSI's policy is a length-of-service plan. Second, Plaintiffs argue that KSI's policy clearly provides for a vacation benefit payment as compensation for past service because employees must meet the 1,500 hour requirement in a given year before a vacation benefit payment equivalent to 40 hours at the employee's average pay rate for the year will be issued in the January of the-following year. Employees who are not paid this benefit after meeting these requirements are thus...