Radio Shack to Settle Vacation-Pay Lawsuit

Tandy Corp., owner of Radio Shack electronics stores, agreed Tuesday to pay up to $16 million to former California employees to settle charges that it illegally withheld vacation pay due departing workers.

Lawyers said the settlement, one of the largest of its kind, covers an estimated 25,000 people in California who left Tandy between Oct. 12, 1983, and last Nov. 15. Most employees worked at Radio Shack.

“It’s a significant settlement,” said John True, an attorney at the Employment Law Center in San Francisco who was not involved in the case. “Tandy must have misread the law, because they are coughing up a lot of money.”

In a class-action suit in San Francisco Superior Court, the Ft. Worth-based company was charged with violating California law by not paying departing employees for unused vacation time.

“The key principal is that it’s your time and your money,” True said. “If you leave the employer, you’ve got to be cashed out.”

Angel Gomez, a partner in the Los Angeles law firm of Hill, Wynne, Troop & Meisinger, said California workers accrue vacation pay and time on a daily basis, beginning with their first day of employment. In most states, workers earn vacation pay only after being employed a year.

“The law is unique to California, as far as I know, and a very large number of out-of-state employers are not familiar with the rule and end up paying penalties,” said Gomez, who represents employers. Violators face penalties for failing to pay former employees with 72 hours of their departure.