The Colorado Supreme Court announced this week that it will hear a case involving whether an employment agreement that places conditions upon the payout of a departing employee’s unused vacation time violates state wage law.

Carmen Nieto was an employee of Clark’s Market, a chain of grocery stores on the Western Slope. She accrued vacation time, to which she was entitled per the company’s handbook to a payout if she quit voluntarily with two week’s notice. However, Clark’s employees forfeit the compensation if they quit without sufficient notice or are fired – the latter of which occurred .

She sued, claiming that her former employer denied payment of earned wages under the Colorado Wage Claim Act. The law mandates that upon separation, “the wages or compensation for labor or service earned, vested, determinable, and unpaid at the time of such discharge is due and payable immediately.” In addition, “wages” explicitly include vacation time, although only time that is “in accordance with the terms of any agreement between the employer and the employee.”

A state district court ruled against her, and the Colorado Court of Appeals affirmed that judgment. Writing for the three-member appeals panel, Judge Jerry N. Jones concluded that “Nothing in the CWCA creates a substantive right to payment for accrued but unused vacation time.”

Jones wrote that the conditions of compensation are matters of negotiation with employers. For questions of whether there is a payout for vacation time, such an agreement is the “sole potential source of any substantive right to payment.” The law, in the court’s view, did not provide an absolute right to receive money regardless of employment terms.

The case is Carmen Nieto v. Clark’s Market, Inc.