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People ex rel Illinois Department of Labor v. General Electric Company

March 09, 2004


[6] Appeal from the Circuit Court of Cook County. Honorable Richard William Austin, Judge Presiding.

[7] The opinion of the court was delivered by: Justice Burke

[8]  Plaintiff, the People of the State of Illinois ex rel. the Illinois Department of Labor (Department) appeals from an order of the circuit court entering summary judgment in favor of defendant General Electric Company, concluding that two former General Electric employees were not entitled to additional pay for vacation time. On appeal, the Department contends that General Electric was not entitled to summary judgment because it failed to demonstrate that its practice of precluding employees from taking vacation days during the first year of employment was not a subterfuge to avoid making payment to its employees for vacation days earned. For the reasons set forth below, we reverse and remand.


[10]   Ronald Hogue worked for General Electric from August 12, 1961, until August 1, 1998, when he retired. At this time, Hogue was entitled to 30 days' vacation, he had taken 12 days, and General Electric paid him for 18 days, the unused portion of his allotted vacation time. Hogue believed, however, that he was entitled to 7/12ths additional time for the period he worked in 1998. Priscilla Scott worked for General Electric from March 1, 1973, until November 30, 1999, when she retired. At this time, Scott was entitled to 25 days' vacation, but she had taken all 25 days prior to her retirement. Scott believed, however, that she was entitled to 11/12ths additional time for the period she worked in 1999. Both Hogue and Scott worked at General Electric's Morrison, Illinois plant.

[11]   On July 30, 1999, the Department issued a wage payment demand to General Electric, with respect to Hogue, seeking payment for vacation time during the seven months he worked in 1998, in the amount of $2,187.50. Because General Electric did not pay this amount, on July 13, 2000, the Department filed a complaint against General Electric, alleging that General Electric violated section 5 of the Wage Payment and Collection Act (820 ILCS 115/5 (West 2002)) by refusing to pay Hogue for the additional vacation time. On December 29, the Department issued a wage payment demand to General Electric on behalf of Scott in the amount of $3,244 for vacation time for the period she worked in 1999. Because General Electric refused to pay Scott the additional amount, the Department amended its complaint on July 6, 2001, to add a claim on her behalf. In both complaints, the Department sought the amount due and owing Hogue and Scott, as well as penalties as provided for by statute.

[12]   On February 14, 2002, General Electric filed a motion for summary judgment. Attached to the motion was the "Declaration of James Shires," in which Shires stated that he was the human resource manager for General Electric at the Morrison plant from June 1998 to April 2000. According to him, a vacation policy was in effect from January 1, 1995, to January 1, 1998, and another in effect from January 1, 1998, until January 1, 2001. Both of these policies, contained in General Electric's employee handbooks, were attached to General Electric's motion for summary judgment. Shires declared that, although the language of the two policies were different, they meant the same thing and were administered in the same way. Shires further declared that employees were not entitled to and did not earn vacation benefits until after one year of service. Once an employee completed the one year of service, he or she was awarded all of that year's vacation time in advance on January 1. Shires also declared that if there was a gap between an employee's first anniversary and January 1, the employee was awarded one week vacation during that gap period. Shires further acknowledged that employees received additional vacation time based on their length of service. *fn1

[13]   Also attached to General Electric's motion were the deposition transcripts of Shires and Harold Wickler, General Electric's human resource specialist, as well as excerpts from Hogue and Scott's depositions. Hogue testified that it was his understanding, from reading the employee handbooks, that employees worked one year to earn vacation for the next year. Hogue admitted that, over the years, a lot of his friends retired and did not get paid for the next year's vacation time. However, Hogue stated that he did not think about this until he retired and, after he learned the law in Illinois, he came to believe this policy was wrong.

[14]   Priscilla Scott testified that when she was hired in 1973, Bud Claven of General Electric's human resource department told her that employees worked one year for the next year's vacation. Scott further stated that, over the years, she had general conversations with over 100 people who had talked about how employees worked that year to get vacation time next year. Scott admitted that she never read the vacation policy in General Electric's employee handbooks until she retired.

[15]   James Shires testified that he was the human resource manager for General Electric's Morrison plant from June 1998 to May 2000. At the time of his deposition, he was a vice president of human resources. According to Shires, in both positions he did the same work: administered personnel policies, including vacation policies. When asked how the terms "earned" and "eligible" differed, Shires stated that he could not say and that he did not use the term "earn." *fn2 With respect to General Electric's vacation policy, Shires stated that as of January 1 each year, any employee who received income in the last week of the previous year was eligible to take all of his or her vacation days immediately. However, an employee who was going to pass an anniversary date that year would have to await that date to take the additional time. The following colloquy then occurred between the Department's attorney and Shires:

"Q: [Ms. Nguyen:] Is it your understanding for the first six months that you worked there at General Electric, were you earning vacation?

[17]   A: No.

Q: You simply became eligible after six months to take vacation?

[19]   A: Yes.

Q: When would you start earning that one-week vacation that you say that you're eligible for after six months?

[21]   ***

A: I don't know that I'd ever say--I would never say that I was earning some vacation. I would say when I would be able to take vacation." *fn3

[23]   Harold Wickler testified that "eligible" meant that an employee was actively on the payroll in January of each year. According to Wickler, an employee needed one year of continuous service to become eligible for vacation time. Wickler stated that if someone worked continuously through December 31, and retired that day, he or she would be eligible for the next year's vacation allotment. Wickler then testified as follows as to the meaning of earn and eligibility:

"When you earn something, you have done something, and after you have done that, you get a reward. At the end of a week, you get paid. You've earned it, therefore you get paid.

[25]   ***

And eligible, you have met certain requirements but you have to be within certain parameters to be eligible."

[27]   Wickler further testified, in response to the Department's attorney's questions, as follows:

"Q: [Ms. Nguyen:] In the years with General Electric and in your position as a human resource specialist, were you ever told that your vacation that you're allotted at the beginning of the year is an inducement for future services?

[29]   A. No.

[30]   Q: That term was never used?

[31]   A: Never used.

Q: Were you ever told that on January 1st all the vacation that you were allotted was vacation that was advanced to you?

[33]   A: No." Wickler, when later questioned, responded that after one year a person starts earning vacation time.

[34]   The two General Electric vacation policies offered (1995 to 1998 and 1998 to 2001) were the same or similar in certain respects and, thus, only the differences are detailed below. The second vacation policy, contained in the employee handbook effective January 1, 1998, to January 1, 2001, provided:

"You are eligible for paid vacation if you are a full-time Company employee and have at least one ...

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