In an effort to keep our newsletter readers abreast of recent developments and legal trends, we are beginning a new feature – a \u201ctop five to ten\u201d list of cases of importance to executives and professionals.\u00a0 This quarter, we are covering cases in the following fields: contract, discrimination, executive compensation and wage act litigation.\u00a0 Included in our list are \u201cheads up\u201d regarding important cases likely to be decided soon.<\/p>\n
CONTRACT <\/u>\u2013 THERE IS NO SUCH THING AS BOILERPLATE, PART II<\/strong><\/p>\n We previously wrote about the Massachusetts Appeal Court\u2019s decision in MacDonald v. Jenzabar, Inc.,<\/em> wherein an executive, in signing a severance agreement, inadvertently waived his post-termination equity rights.\u00a0 We cautioned that there is no such thing as \u201cboilerplate\u201d and that legal counsel should be obtained to review anything you are asked to sign in exchange for severance.<\/p>\n The same is true for anything you are asked to sign when you begin employment \u2013 whether you are an employee or an employer.\u00a0 <\/em><\/p>\n In the MacCurtain<\/em> case, an employer bound itself to pay an employee a percentage of fees generated by work the employee brought to the employer \u2013 even after the employee had left the firm.\u00a0 As in the MacDonald<\/em> case, the Appeals Court found no ambiguity in the language of the agreement and, therefore, did not delve into what the parties may have or have not intended because, in such situations, the words \u201calone determine the meaning of the contract.\u201d<\/p>\n Furthermore, the Appeals Court held that, even if there were ambiguity in the language, it would be construed against the drafter (here, the employer) and the Court would not add terms that the drafter could have but did not include, e.g., that payments would end upon the end of employment.<\/p>\n CONTRACT <\/u>\u2013ENFORCING COMPENSATION TERMS<\/strong><\/p>\n Employment relationships, like other business relationships, are contractual \u2013 and even contracts terminable at will include fully enforceable terms, e.g., regarding compensation. \u00a0<\/em>In Grol<\/em>, a terminated employee asserted both discrimination and contract claims, including that she was entitled under contract to a 13% commission, one year of severance and a bonus to which she was entitled because her termination was not \u201cfor cause.\u201d\u00a0 The employer denied the existence of contract for both the 13% commission and the one year of severance, and asserted that there was \u201ccause\u201d for the termination so no bonus was owed.\u00a0 The employee also alleged breach of the implied covenant of good faith and fair dealing, alleging that the termination was timed to rob her of future bonuses, which the employer also denied.\u00a0 Finally, the employer argued that contract claims were preempted by the anti-discrimination laws.<\/p>\n The United States District Court held that genuine issue of material fact existed as to whether there were enforceable contract compensation terms, and as to whether the termination was not for \u201ccause\u201d or was otherwise timed so as to rob the employee of future bonuses.\u00a0 The Court also held that the employee had every right to pursue both contract claims and discrimination claims \u2013 and that the former were not preempted by the latter.\u00a0 In conclusion, the Court denied the employer\u2019s efforts to derail the employee\u2019s case before it was tried to a jury.<\/p>\n DISCRIMINATION<\/u> \u2013 GETTING TO THE JURY IS GETTING EASIER FOR EMPLOYEES<\/strong><\/p>\n We have written at length about the anticipated sea-change following the Supreme Judicial Court\u2019s 2016 decisions in Bulwer v. Mt. Auburn Hospital <\/em>and Verdrager v. Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C.<\/em>\u00a0 As anticipated, lower courts have gotten the reiterated message that summary judgment is a disfavored remedy, that the burden is on the employer as the moving party in a pre-trial dispositive motion (such as for summary judgment), that Massachusetts is a \u201cpretext only\u201d state, and that most discrimination cases should be decided by a jury after a full trial.\u00a0 When the message has gotten lost, the Appeals Court is stepping up as it did in Scarlett <\/em>to repeat the message and protect the employee\u2019s right to trial by jury by reversing the lower court\u2019s award of summary judgment to the employer.<\/p>\n DISCRIMINATION<\/u> \u2013 WHAT CONSTITUTES AN ACTIONABLE ADVERSE ACTION?<\/strong><\/p>\n EXECUTIVE COMPENSATION <\/u>\u2013 RESTRICTIVE COVENANTS DO NOT SAVE THE DAY IN THE BANKRUPTCY COURT<\/strong><\/p>\n When, as here, an employer files a voluntary petition for relief under Chapter 11 of the Bankruptcy Code, a claim may be made for the payment of \u201cadministrative expenses\u201d which are actual and necessary costs of preserving the bankruptcy estate and are therefore given payment priority.\u00a0 In this matter, a former executive sought payment of his pre-filing negotiated severance based on this post-filing compliance with certain covenants, e.g., those restricting competition and the disclosure of confidential information.\u00a0 However, the Bankruptcy Court held that continuing to abide by restriction to which one had agreed pre-filing is not the kind of benefit or service contemplated by the Code as being entitled to payment priority.<\/p>\n WAGE ACT<\/span> \u2013 WHAT IS A WAGE?<\/strong><\/p>\n Under the Massachusetts Wage Act, an employer may be liable for treble damages and attorneys\u2019 fees for non-payment of wages.\u00a0 Therefore, the question of what constitutes a wage under Massachusetts law is very important and heavily litigated.\u00a0 In Mui<\/em>, the Court determined that sick time was not a wage, even if the employer allowed employees to \u201cbank\u201d unused sick time and paid out a percentage of it upon termination from employment, provided the termination was not for cause.\u00a0 In Mui<\/em>, the employer took that position that the termination was for cause and did not pay the sick time.\u00a0 The termination was ultimately reversed in arbitration but the employee had retired.\u00a0 The employer then, a year later, paid the sick time and the employee sued for the earlier non-payment.\u00a0 The Court found that the designation of sick pay as wages under such circumstances would put the employer in an impossible position and reversed the lower court\u2019s judgment in favor of the employee.<\/p>\n WAGE ACT<\/span> \u2013 WHAT IS A WAGE?\u00a0 PART II<\/strong><\/p>\n In an effort to keep our newsletter readers abreast of recent developments and legal trends, we are beginning a new feature – a \u201ctop five to ten\u201d list of cases of importance to executives and professionals.\u00a0 This quarter, we are covering cases in the following fields: contract, discrimination, executive compensation and wage act litigation.\u00a0 Included […]<\/p>\n","protected":false},"author":9,"featured_media":137,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[],"tags":[],"class_list":["post-136","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\n\n
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