First, I am based in the state of California. My company is based in
Massachusetts I have taken a position with a new company. I have
resigned and given 2 weeks notice. This question concerns my final
paycheck.

First, my salary is composed of 2 pieces: base salary + "Variable
Compensation" The variable compensation is paid 1x per year, in
February, for the previous year, and is about 20% of my salary. For
example, this variable component will be paid Feb 2005 for work
performed in 2004. I have been employed during the entire period of
performance during 2004, however, will leave before the payment of the
variable compensation in 2005. This money has ALWAYS been paid for the
5+ years I have been with the company. It is stated in plan
documentation that this amount is "optional" but in the history of the
company, has never NOT been paid. Additionally, there is an agreement
in place that states the employee should be employed at the time of
payment to be paid this money. 

Lastly, all firm benefits are based off
of what is called "model compensation" which is the entire salary +
variable compensation (or commission, if in a sales role)

Since our firm is based in MA, but I am in CA, I believe there are
some differences in the labor law. Before contacting an attorney, I
thought I would check here first.

1. How is my vacation payout going to be calculated? Is it on base? Is
it on model compensation? Is it on some historical earning average
over the last 3 years? My company has said it would be BASE/2080 hours
for my hourly rate.

2. Is the company obliged to pay me the variable compensation for the
year 2004? I have been told I will not receive this money.

Thanks!

Vacation pay is a matter of company policy as set forth in the
employee handbook.  This is not set by law.  Also, same goes for the
payment of bonus, or what you called "variable compensation."  If it
is the company's policy that you must be employed at the time of
payment, then you must be employed at the time of payment.  By the
way, this is nothing unusual, as it has been the same policy at all
companies I have known.  It is somewhat of an incentive for you to
stay longer.

Please check your stats on CA, the law is different here. Payment of
vacation in CA is required upon leaving a company. No offense, but I'm
looking for someone with experience in California labor law to
respond.

Pardon me, I didn't realize CA was no longer considered part of the
USA and subject to federal laws.  I hope someone will be able to
provide you with the exact answer you are looking for.

I'm not going to debate this, so please do not respond to this. I am
hoping someone with experience with the CA labor code will answer.
FYI, California has much stricter employee regulations than general
federal labor code. Now, my question is NOT IF I'M GOING TO RECEIVE
COMPENSATION. It is HOW do they determine my prevailing wage.

From the CA labor code, "if an employer does have an established
policy, practice, or agreement to provide paid vacation, then certain
restrictions are placed on the employer as to how it fulfills its
obligation to provide vacation pay. Under California law, earned
vacation time is considered wages, and vacation time is earned, or
vests, as labor is performed. For example, if an employee is entitled
to two weeks (10 work days) of vacation per year, after six months of
work he or she will have earned five days of vacation. Vacation pay
accrues (adds up) as it is earned, and cannot be forfeited, even upon
termination of employment, regardless of the reason for the
termination."

"Under California law, unless otherwise stipulated by a collective
bargaining agreement, whenever the employment relationship ends, for
any reason whatsoever, and the employee has not used all of his or her
earned and accrued vacation, the employer must pay the employee at his
or her final rate of pay for all of his or her earned and accrued and
unused vacation days."