In Lorie Deisenroth v. City of San Jose, the Santa Clara County Superior Court ruled an employee had a vested right to sick leave cashout once she retired and therefore "the City could not unilaterally eliminate her right to a payout for sick leave hours."
The City claimed it could change the rules for sick leave cashout after the employee banked the sick leave hours because ti hadn't paid the cashout yet. The Court rejected that claim, deciding the right to a sick leave cashout vested after 15 years of service under the employee's MOU, even though the cash out did not mature until the employee retired. The Court explained "the 'vesting' of a benefit must be distinguished from the 'maturing' of those benefits, which occurs after the conditions precedent to the payment of the benefits have taken place..." As a result, the Court found that sick leave cashout is a form of deferred compensation and retroactive revocation of that right would be unjust and inequitable.
