The Seventh Circuit Court of Appeals has ruled in favor of Elanco US Inc. in a case concerning vacation pay filed by former employee Clayton Creason. The court's decision, issued on June 29, 2026, affects employees who participated in Elanco's vacation buy program and raises important questions about wage assignments and employee rights under Indiana law.
Creason worked as an engineer at Elanco from November 2017 until November 2021. During his employment, he participated in a vacation buy program that allowed employees to convert part of their salary into additional paid vacation time. Creason claimed that Elanco shorted his pay by $84 a week as part of this program and sought compensation through the Indiana Wage Payment Statute. His case, filed under docket number 25-1552, was removed to federal court by Elanco, which argued that the case met the criteria for a class action.
The dispute began when Creason filed a lawsuit in state court, asserting that Elanco did not properly document the wage assignment required by Indiana law. The case was removed to federal court under the Class Action Fairness Act (CAFA). Elanco argued that the case should remain in federal court, while Creason sought to have it remanded back to state court. The district court ruled against Creason, stating that the case had progressed too far in federal court for a remand to be appropriate.
The Seventh Circuit, led by Judge Frank Easterbrook, upheld the lower court's decision. The court noted that the district court acted within its discretion in denying Creason's motion to remand. The judges pointed out that both parties had ignored the home-state exemption in CAFA, which could have allowed Creason to successfully argue for a remand if he had acted sooner.
The court ruled, "The problem with Creason’s motion to remand is not that it came after 30 days but that it came almost a year after the removal—and Creason lacks a cogent explanation for the delay."
On the merits of the case, the court also sided with Elanco regarding the vacation buy program. The judges concluded that the program did not constitute an assignment of wages as defined by Indiana law. Creason argued that the program required a formal assignment of wages, including a notice of the right to rescind. However, the court found that the vacation buy program did not involve any deductions from Creason's wages, which is a key factor in determining whether a wage assignment exists.
The court stated, "Elanco did not deduct anything from Creason’s pay, and the statute applies only to deductions from wages."
Additionally, the court addressed the issue of unused vacation hours that Creason had accrued during his employment. Elanco had a policy that allowed employees to carry over a limited number of vacation hours due to the COVID-19 pandemic. However, Creason was not entitled to payment for unused vacation hours because Indiana law does not require employers to pay for unused vacation time unless there is an agreement to do so.
The court's ruling has significant implications for employees participating in similar vacation buy programs. It clarifies that such programs may not necessarily fall under the wage assignment regulations of Indiana law, potentially affecting how employers structure their vacation policies. This case also highlights the importance of timely legal action when it comes to jurisdictional issues in class action lawsuits.
Going forward, this ruling may influence how other companies implement vacation buy programs and how they communicate these policies to employees. It also serves as a reminder for employees to be vigilant about their rights and the legal implications of their employment agreements.
As for next steps, it is unclear whether Creason will appeal the decision to the U.S. Supreme Court or pursue any related cases. Details were not available in the court filing regarding any plans for an appeal or further legal action.