SIGNIFICANCE OF ADDITIONAL VACATION LEAVE FOR STATE EMPLOYEES UNDER CHAPTER 283, LAWS OF 1983

EMPLOYEES ‑- STATE ‑- ANNUAL LEAVE ‑- SIGNIFICANCE OF ADDITIONAL VACATION LEAVE FOR STATE EMPLOYEES UNDER CHAPTER 283, LAWS OF 1983

 (1) Annual leave accumulated under § 1, chapter 283, Laws of 1983, by state employees, constitutes a separate and distinct class of annual leave for those employees‑-other than that provided for in RCW 41.01.040 [43.01.040]‑-and, therefore, it is not subject to RCW 43.01.041 or to any other statute providing for lump sum payments upon termination of employment.

 (2) Additional vacation leave which is acquired and accumulated in excess of thirty days through the alternative procedure provided for in § 1, chapter 283, Laws of 1983 may not be transferred to, or commingled with, vacation days accumulated in excess of thirty days under the preexisting provisions of RCW 43.01.040.

 (3) An employer may not defer the necessity for taking additional vacation leave earned pursuant to § 1, chapter 283, Laws of 1983, beyond the subject employee's next ensuing anniversary date.

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                                                              November 18, 1983

 Honorable Leonard Nord
Director
Department of Personnel
600 S. Franklin
Olympia, Washington 98504
Honorable John Spitz
Director
Higher Education Personnel Board
1202 Black Lake Boulevard
Olympia, Washington 98504 

Cite as:  AGO 1983 No. 25                                                                                                                

 Gentlemen:

             This is written in response to your recent request for our opinion on several questions concerning additional vacation leave for state employees under chapter 283, Laws of 1983 (SHB 129).  We paraphrase your questions as follows:

              [[Orig. Op. Page 2]]

            (1) To what extent, if at all, does additional vacation leave earned and accumulated by a state employee under § 1, chapter 283, Laws of 1983 have a "cash out" value upon termination of employment?

             (2) Can vacation leave which is acquired and accumulated in excess of thirty days through the alternative procedure provided for in § 1, chapter 283,supra, be transferred to or commingled with vacation days accumulated in excess of thirty days under the preexisting provisions of RCW 43.01.040?

             (3) May an employer defer the necessity for taking additional vacation leave earned pursuant to § 1, chapter 283, supra, beyond the subject employee's next ensuing anniversary date?

             We answer your second and third questions in the negative for the reasons set for [forth] in our analysis and respond to your first question in the manner stated therein.

                                                                      ANALYSIS

             Prior to the enactment of chapter 283, Laws of 1983 (SHB 129), the basic entitlement of state employees to annual (or vacation) leave was set forth in RCW 43.01.040.  Under that statute, state employees were (and remain) entitled to at least one day of such leave for each month of employment ". . . if said employment is continuous for six months."  There was, however, also a limitation on the total amount of leave which could be earned and accumulated;i.e., thirty days.  In turn, that limitation was subject to a qualification, as set forth in the following proviso to the statute:

             ". . . PROVIDED, That if a subordinate officer's or employee's request for vacation leave is deferred by reason of the convenience of the employing office, department or institution, and a statement of the necessity therefor is filed by such employing office, department or institution with the appropriate personnel board or other state agency or officer, then the aforesaid maximum thirty working days of accrued unused vacation leave shall be extended for each month said leave is so deferred."

              [[Orig. Op. Page 3]]

            Prior to July 1, 1982, when an amendment contained in § 3, chapter 51, Laws of 1982, 1st Ex. Sess. took effect, all such accumulated leave not taken by the employee prior to termination had a "cash out" value in accordance with the then existing provisions of RCW 43.01.041 which read:

             "Officers and employees referred to in RCW 43.01.040 whose employment is terminated by their death; reduction in force; resignation; dismissal; or by retirement and who have accrued vacation leave as specified in RCW 43.01.040, shall be paid therefor under their contract of employment, or their estate if they are deceased, or if the employee in case of voluntary resignation has provided adequate notice of termination."

             The 1982 amendment, however, significantly modified this provision.  Set forth in bill form for ease of reference, § 3, chapter 51, supra, amended RCW 43.01.041 to read as follows:

             "Officers and employees referred to in RCW 43.01.040 whose employment is terminated by their death ((;reeducation in force; resignation; dismissal; or by retirement)) and who have accrued vacation leave as specified in RCW 43.01.040, shall ((be))have such accrued vacation leave paid ((therefor under their contract of employment, or))to their estate ((if they are deceased, or if the employee in case of voluntary resignation has provided adequate notice of termination))."

             Thereafter, a question arose regarding the constitutional applicability of this 1982 amendment to state retirement system members who were entitled to have their annual leave cash out payments taken into account in the computation of any service or disability retirement allowances they might be eligible to receive.1/   Following issuance of an attorney general's letter opinion on the question the issue was litigated and, in Washington Federation of State Employees, et al. v. State, 98 Wn.2d 677, 658 P.2d 634 (1983), the State Supreme Court ruled thatthose state employees (e.g., state employees covered by PERS Plan I) remained entitled to cash out their leave under the pre‑1982 version of RCW 43.01.041,supra‑-notwithstanding the 1982 amendment to that statute.  The Court reasoned that since the lump sum payments of  [[Orig. Op. Page 4]] accrued vacation leave were, and had been, used in the calculation of those employees' retirement benefits any application of the amended version of RCW 43.01.041 to them would result in an impairment of the contractual retirement rights vested in those employees under the so-called Bakenhus rule which was promulgated by the Court in Bakenhus v. Seattle, 48 Wn.2d 695, 296 P.2d 536 (1956).  Thus, the Court inWashington Federation of State Employees, supra, said at p. 688:

             ". . . Therefore, under the Bakenhus rule, SSB 5007 is unconstitutional as applied to the pension rights of PERS I personnel."

             It is important to note and understand, however, that the foregoing Supreme Court decision did not invalidate the 1982 amendment, per se.  Rather, it merely precluded the application of that amendment to those employees (e.g., PERS I members) who were deemed to be contractually entitled to have their lump sum payments for accumulated annual leave taken into account in the computation of their retirement allowances.  Conversely, state employees covered under PERS Plan II (i.e., those initially employed on or after October 1, 1977 in accordance with RCW 41.40.610, et. seq.) have no such right, or entitlement, under their pension law.2/   Therefore, the 1982 amended version of RCW 43.01.041, supra, is unquestionably applicable to the latter class of state employees.

             The 1983 Legislation:

             It is against this backdrop that chapter 283, Laws of 1983, supra, was enacted.  By § 1 thereof the legislature added the following new section to chapter 43.01 RCW:

             "As an alternative, in addition to the provisions of RCW 43.01.040 authorizing the accumulation of vacation leave in excess of thirty days with the filing of a statement of necessity, vacation leave in excess of thirty days may also be accumulated as provided in this section but without the filing of a statement of necessity.  The  [[Orig. Op. Page 5]] accumulation of leave under this alternative method shall be governed by the following provisions:

             "(1) Each subordinate officer and employee of the several offices, departments, and institutions of state government may accumulate the vacation leave days between the time thirty days is accrued and his or her anniversary date of state employment.

             "(2) All vacation days accumulated under this section shall be used by the anniversary date and at a time convenient to the employing office, department, or institution.  If an officer or employee does not use the excess leave by the anniversary date, then such leave shall be automatically extinguished and considered to have never existed.

             "(3) This section shall not result in any increase in a retirement allowance under any public retirement system in this state.

             "(4) Should the legislature revoke any benefits or rights provided under this section, no affected officer or employee shall be entitled thereafter to receive such benefits or exercise such rights as a matter of contractual right.

             "(5) Vacation leave credit acquired and accumulated under this section shall never, regardless of circumstances, be deferred by the employing office, department or institution by filing a statement of necessity under the provisions of RCW 43.01.040.

            "(6) Notwithstanding any other provision of this chapter, on or after the effective date of this act, a statement of necessity for excess leave, shall as a minimum, include the following:  (a) the specific number of days of excess leave; and (b) the date on which it was authorized.  A copy of any such authorization shall be sent to the department of retirement systems."

             And then, by § § 2, 3, 4 and 5 of that act the legislature added the following additional language to each of the several chapters codifying the various state retirement systems (LEOFF, TRS, PERS, and WSPRS):

              [[Orig. Op. Page 6]]

            "Section 1 of this 1983 act shall not result in any increase in retirement benefits.  The rights extended to state officers and employees under section 1 of this 1983 act are not intended to and shall not have any effect on retirement benefits under this chapter."

             Question (1):

             Your first question, repeated for ease of reference, asks:

             To what extent, if at all, does additional vacation leave earned and accumulated by a state employee under § 1, chapter 283, Laws of 1983 have a "cash out" value upon termination of employment?

             Chapter 283, Laws of 1983, supra, makes no specific statement as to whether leave accumulated in excess of thirty days, under that law, is or is not eligible to be "cashed out" upon termination of employment.  The act does specifically say, however, that such additional leave "shall not result in increase in retirement benefits."   It thus follows, in our opinion, that the rationale of the Court inWashington Federation of State Employees, et al. v. State,supra, is inapplicable to this particular class of "excess" annual leave, as distinguished from excess annual leave earned and accumulated under the earlier enacted (above‑quoted) proviso to RCW 43.01.040,supra.

             In turn, once that point is understood the only remaining issue is whether or not theamended version of RCW 43.01.041, supra, is applicable to leave earned and accumulated under § 1, chapter 283,supra, as well as to that leave earned and accumulated under RCW 43.01.040, supra, itself.  Again, that version of RCW 43.01.041 reads as follows:

             "Officers and employees referred to in RCW 43.01.040 whose employment is terminated by their death and who have accured [accrued] vacation leave as specified in RCW 43.01.040, shall have such accrued vacation leave paid to their estate."

             We think the phrase "as specified in RCW 43.01.040" is determinative of this issue.  Section 1, chapter 283, Laws of 1983, supra, will constitute a new section of chapter 43.01 RCW and not an amendment to RCW 43.01.040.  Accordingly, excess annual leave earned and accumulated pursuant to § 1, chapter 283,supra, will  [[Orig. Op. Page 7]] not constitute a form of "accrued vacation as specified in RCW 43.01.040."

             The Washington Supreme Court has also ruled, however, that state employees may not receive cash payment for accrued but unused vacation leave upon termination of employment unless there is a specific statute authorizing it.  See, State ex rel. Bonsall v. Case, 172 Wash. 243, 19 P.2d 927 (1933).  It therefore follows, in our opinion, that your first question must be answered as follows:  Annual leave accumulated under § 1, chapter 283, supra, constitutes a separate and distinct class of annual leave for state employees‑-other than that provided for in RCW 43.01.040‑-and, therefore, it is not subject to RCW 43.01.041, supra, or to any other statute providing for lump sum payments upon termination of employment.3/

              Question (2):

             Your second question, also repeated for ease of reference, asks:

             Can vacation leave which is acquired and accumulated in excess of thirty days through the alternative procedure provided for in § 1, chapter 283,supra, be transferred to or commingled with vacation days accumulated in excess of thirty days under the preexisting provisions of RCW 43.01.040?

             Section 1(5) of chapter 283, Laws of 1983, supra, provides that:

             "Vacation leave credit acquired and accumulated under this section shall never, regardless of circumstances, be deferred by the employing office, department or institution by filing a statement of necessity under the provisions of RCW 43.01.040."

                          [[Orig. Op. Page 8]]

            In order to effectuate this result, and thereby carry out apparent legislative intent, we believe that your second question must also be answered in the negative.  In essence, based upon the distinct character of the two classes of leave, a separate account (if you will) must be maintained for each of the two classes.  The two classes of leave, therefore, may not be commingled for any purpose.

             Question (3):

             Lastly, you have asked:

             May an employer defer the necessity for taking additional vacation leave earned pursuant to § 1, chapter 283, supra, beyond the subject employee's next ensuing anniversary date?

             State agencies are required by RCW 43.01.040, supra, to provide a method whereby all accumulated vacation leave may be taken as vacation leave.

             Thus, if a timely request is made by the employee, the situation you have here hypothesized should be rare in its occurrence.   If such a situation nevertheless does occur, however, the consequence, while undeniably harsh, is expressly mandated by the statute.  Specifically, § 1(2) of chapter 283, supra, provides that:

             "All vacation days accumulated under this section shall be used by the anniversary date and at a time convenient to the employing office, department, or institution.  If an officer or employee does not use the excess leave by the anniversary date, then such leave shall be automatically extinguished and considered to have never existed."

             This completes our consideration of your questions.  We trust that the foregoing will be of assistance to you.

 Very truly yours,
KENNETH O. EIKENBERRY
Attorney General 

PHILIP H. AUSTIN
Senior Deputy Attorney General