This blog has stressed (most recently here and here) the importance of carefully drafting incentive compensations plans to avoid unintentionally converting incentive compensation into earned “wages” protected under state law. Another recent decision, this one from the Court of Appeals for the Seventh Circuit reinforces the employer benefits of careful drafting. Lawson v. Sun
incentive compensation
Manhattan Federal Court: Financial Firm Retained Discretion to Award or Not Award Bonus
As we recently noted in our discussion of Massachusetts law, incentive compensation has the potential to become “wages” protected by state labor law once it is “earned.” However, when an employer conveys to the employee that it retains discretion to award or not award incentive compensation in any specific amount, such potential incentive compensation…
Massachusetts Federal Court: Discretionary Bonus Not “Earned” Commission Protected by Massachusetts Minimum Wage Act
An employee’s entitlement to incentive compensation continues to be a litigation issue. Recently, a Massachusetts federal district court held that an employer’s refusal to award an employee a discretionary bonus does not violate the Massachusetts Wage Act. Comley v. Media Planning Grp., No. 14-10032, 2015 U.S. Dist. LEXIS 76383 (D. Mass. June…
District Court Affirms: Business Not Obligated to Pay $350,000 Performance Bonus to Employee Who Never Worked a Day
The importance of detailed drafting of employment documents – particularly those calling for commissions, bonuses or other types of incentive compensation – was highlighted recently by a plaintiff’s claim that, as a conditional hire who never worked a day at now-defunct Lehman Brothers, the Bank’s rescinding of her employment offer triggered its obligation to pay…
Indiana Appeals Court: Club Not “Employer” For Purposes of Commissions Claim
While wage-and-hour laws, like other employment laws. are generally “broad” and intended to foster the goal of worker protection, the scope of such laws is not limitless, as demonstrated by a recent decision from an Indiana appeals court addressing an alleged multiple or joint employer scenario. Rodriguez v. S. Dunes Golf, LLC, 2014 Ind.…
New York State Court Reiterates That Commissions Are Not Wages Until Earned
Ensuring contracts and agreements reflect when incentive compensation – usually “commissions” – is earned is of paramount importance to New York employers who wish to maximize their rights, as evidenced by a recent decision from New York County Supreme Court Justice Ellen M. Coin. Sherwin v Mestel & Co. N.Y., LLC, 2014 N.Y. Misc.…
Clarifying Recent Legislative Amendment, Nebraska Supreme Court Addresses Entitlement To Commissions Under State Law, Contract
As we recently discussed, while the FLSA does not regulate the payment of incentive compensation (such as, for example, commissions and bonuses), many state laws do. In Nebraska, an employee’s right to commissions is governed by a recently amended statute, Nebraska Revised Statute § 48-1229(4). A new decision from that state’s highest court addresses…
New York Federal Court Upholds Payment of Overtime Pursuant to Fluctuating Workweek Method Notwithstanding Bonus Pay
Uncertainty and litigation have ensued in the wake of the Department of Labor’s May 5, 2011 Final Rule regarding application of the fluctuating workweek method of overtime compensation (FWW) authorized by 29 CFR § 778.114, specifically the Rule’s commentary on the payment of incentive compensation to employees compensated via FWW. In a thorough recent decision,…
New York’s Highest Court Addresses Liability for Bonuses
An unsettled fertile area of litigation in New York has been the circumstances under which various types of incentive compensation—such as bonuses—become “earned” as wages and thus entitled to the protections of the New York Labor Law, which provide greater remedies than common law claims for breach of contract. In a recent decision, New York’s…
Manhattan Appeals Court Rejects Senior Executive’s Claim for Alleged Unpaid Incentive Compensation
Pursuant to New York State Department of Labor guidance and New York case law, incentive compensation is not considered “wages” unless it is “earned.” See generally Truelove v. Northeast Capital & Advisory, Inc., 95 N.Y.2d 220, 225 (2000). Accordingly, disputes over an employee’s entitlement to incentive compensation in New York often turn on whether a…