American Federation of State County & Municipal Employees AFL-CIO Local 2384 v. City of PhoenixAnnotate this Case
The Supreme Court held that a one-time payout for unused vacation leave does not form part of an employee's compensation for purposes of calculating that employee's pension benefit.
The City of Phoenix paid pension benefits to eligible retiring employees. The amount of that benefit partly depended on the employee's highest average annual compensation paid over a multi-year period, and the City also paid for unused accrued vacation leave upon retirement or separation from employment. Petitioners sued the City alleging that the City violated their constitutional rights by not using one-time accrued vacation leave payouts in calculating employees' final average compensation. The trial court granted summary judgment for the City. The Supreme Court affirmed, holding that one-time payouts for accrued vacation leave are not pensionable salary or wages.