Ex-Worker Challenges Broadway Over Unused Vacation : Benefits: Retail chain’s policy on accrual of and compensation for paid time off is focus of class-action suit.

A Lake Forest woman fired from a Broadway department store has filed a class-action lawsuit that could expose the financially beleaguered company to hundreds, perhaps thousands, of claims for unpaid vacation days.

Maria Lombardo was refused payment of $740 for accrued vacation time when she was fired in January after 2 1/2 years of working as a hostess-waitress at a Broadway diner in the Laguna Hills Mall.

Her lawsuit, filed in Orange County Superior Court on behalf of all former Broadway employees who didn’t receive vacation pay upon termination, challenges the Los Angeles chain’s policy that requires employees to use their vacation time within specified time periods or lose it.

The lawsuit is aimed at assuring vacation rights not only for full-time, long-term employees, but also for those who work full-time, temporary jobs, such as during the Christmas season.

“This is a department store that historically hires a tremendous amount of seasonal employees,” said Paul W. Steinmetz of Santa Ana, Lombardo’s lawyer.

“They tell these people that they get a week’s vacation after a year, and they typically work four months before they’re laid off. [Broadway] didn’t pay any vacation benefits to them.”

But Douglas J. Muir, senior counsel for Broadway Stores Inc., asserted that seasonal employees aren’t eligible for vacation pay unless they work continuously for a year.

The lawsuit charges that Broadway has set up a trust based on federal law and has misused it to get around California’s ban on “use it or lose it” vacation policies. Muir contends that the trust is being used properly and that the case is “defensible.” If the trust were ruled invalid, he said, the company would “have some exposure” to possible damages.

Long-struggling Broadway, which agreed a month ago to be acquired by Federated Department Stores, has 70 of its 82 stores and the bulk of its 18,000 employees in California. It also operates in five other states in the West.

Lombardo was terminated allegedly for being rude to a customer. But Steinmetz said the store failed to protect her after the man grabbed her arm as he yelled impatiently to be seated.

The store had refused to provide her unemployment benefits because she was fired for cause, but the state unemployment agency ruled that the store had no cause to fire her. Broadway also lost its appeal of the decision, the lawyer said.

Steinmetz accused managers at the Laguna Hills Broadway of firing her in retaliation for her decision to report that a manager returned maternity clothes for full credit after the manager had worn the clothes throughout her pregnancy.

The lawyer said a wrongful termination lawsuit will be filed soon. Muir said the Los Angeles chain is expecting the suit, but he would not comment further.