Every year, around this time we start to get calls from employees who have not only lost their jobs but have also been denied their year-end bonus, which so many families depend on in budgeting their lives.  Employers use all kinds of tricks to withhold what employees rightly feel they have earned such as calling the bonuses “discretionary,” saying the employees must be employed on the date bonuses are paid, or that unless the employees worked the entire year they are not entitled to their bonuses.  While many of these issues are dictated by the terms of an employee’s bonus agreement, Illinois courts have put some limits on an employer’s ability to deny an earned bonus. 

1. Discretionary Language
 
While many employment agreements state that bonuses are discretionary and entirely at the will of the employer, Illinois courts have held that that discretionary language will not always be enforced.  For instance, where an employer has paid all other employees under a bonus agreement, the employer cannot rely on the discretionary language as an excuse to deny just one employee his or her bonus.  Therefore, if an employer withholds the bonus of just one laid off employee, but pays all others, that employee may have good reason to demand payment. 
 
Similarly, where a bonus agreement allows the employer discretion solely in deciding whether an employee can be a part of a bonus program in the first place, it does not give the employer discretion to withhold a bonus to an employee already participating in that bonus program.  Thus, the mere inclusion of discretionary language in a bonus contract will not automatically give an employer the right to withhold an employee’s bonus.  The court will look beyond the specific discretionary terms to the rest of the agreement, as well as to the practice of the employer.   It is important to carefully review the terms of a bonus agreement to determine whether or not the discretionary language of that agreement will be enforced.

2. Employment on the Date Bonuses are Paid

Generally, courts have held that employees need not have worked an entire continuous year or be employed on the date bonuses are paid to receive a bonus they are entitled to under contract.  This may be true even where the terms of the bonus plan explicitly require year-long employment or employment on the date of bonus payments. 

For instance, where a bonus agreement explicitly requires year long employment, but the employment is terminated by mutual consent of employee and employer or by the act of the employer through no fault of the employee, the employee will be entitled to a proportionate share of the earned bonus.  Significantly, whether an employee is at-will is irrelevant to this issue. 
 
Some courts have even held that an employee is entitled to a proportionate share of the earned bonus, despite not satisfying year-long or date of payment requirements, where that employee voluntarily resigned.  Courts have explained that withholding a resigned employee’s bonus unfairly allows the employer to keep all the benefits of its bonus plan, namely the added effort an employee puts forth to ensure his or her bonus, without sharing those benefits with the employee.   

3. How Much Must an Employer Pay

First, where the terms of the bonus plan are discretionary, although an employer may have to pay some amount of bonus, generally the employer is entitled to determine how much that payment should be.  Thus, under a discretionary bonus plan an employee is often not entitled to challenge the quantity of the bonus awarded.

That said, where the bonus agreement does not provide for discretionary awards and an employee leaves prior to completing a full year, courts have held that the employer must pay a pro rata share of the bonus which would have been awarded according to the agreement.  Bonuses provided for under a bonus or employment agreement are considered “earned wages” under the Illinois Wage Payment & Collection Act; thus, they must be paid upon termination.  Therefore, regardless of the terms of a bonus agreement, where an employee has worked a portion of the year prior to being terminated, that employee is entitled to a proportionate share of the bonus which would have been awarded had he or she remained employed. 

For instance, if according to a valid bonus agreement an employee’s year-end bonus would have been $10,000 and that employee is terminated after working six months, the employee is entitled to $5,000.  Unfortunately, whether an employee is entitled to a pro rata share after voluntarily resigning is not as clear cut.  Some courts say they are and others disagree. 

Conclusion

It is important to note that all of this depends upon the existence, in the first place, of a valid contract making the employee eligible for a bonus.  That contract may be oral or written, it may come in the form of an offer letter, an employee handbook, a bonus agreement or an employment agreement, but unfortunately, absent such a contract it is difficult to enforce payment of withheld bonuses. 

If you have questions about the validity of your bonus agreement or whether your employer was unjustified in withholding your yearly bonus, please call The Case Law Firm @ 1-312-920-0400 and we can discuss the specifics of your situation.

Kate Sedey
Associate
The Case Law Firm, LLC.
Chicago, Illinois
312-920-0400
www.thecaselawfirm.com

        

13th Annual Labor and Employment Law Update

March 19, 2009 Chicago, UBS Conference Center

Kristin Case of The Case Law Firm is scheduled to speak at the Illinois Institute for Continuing Legal Education's 13th Annual Employment Law Update on March 19, 2010. 

Ms. Case will be speaking about the benefits and risks to employees who are using social media in the workplace.  

        

Fortune just published its annual 100 Best Companies to Work for.  Reading this article is a breath of fresh air in the midst of layoffs and the callous elimination of severance, pension and health benefits that we are seeing.  There is one thing stands out that seem to make almost all of these companies great places to work:  they make their employees feel valued.  

For instance, SAS, the top rated company, provides high-quality child care at only $410 a month, 90% coverage of the health insurance premium, unlimited sick days, a medical center staffed by four physicians and 10 nurse practitioners (at no cost to employees), a free 66,000-square-foot fitness center and natatorium, a lending library, and a summer camp for children. The company’s founder is quoted as saying the foundation of his business is "trust between our employees and the company.”  How often do you hear that?  Hardly ever. 

Far too many employer operate from an immediate suspicion and distrust of their employees.  And, in the era of company’s hacking away at employee benefits supposedly to “save money,” it is worth noting that SAS remains highly profitable and ranks as the world’s largest privately owned software company. Turnover is the industry’s lowest at 2%.  Google, the 4th best employer, allows its employees to devote 20% of their time to the project of their choosing, thereby instilling an unusual level of trust in their employees.  And Starbucks, who is number 93 on the list, provides part-time employees with health benefits. I have always believed that maintaining loyal employees and eliminating turnover is the best economic decision a company could make.  Imagine if all employers could be like these 100…

To read the full list CLICK HERE.

        

Kristin Case has been selected as an Illinois Rising Star by Superlawyers Magazine.  Click Here to read more.

        

Kristin Case is featured in The Journal of the DuPage County Bar Association writing about the Family and Medical Leave Act. 

Go to http://www.dcbabrief.org/vol220110art3.html to read her article.

        

Quick Pop Quiz for you:  Is the following statement True or False? 

"With equal job experiences and resumes mothers are hired 79% less of the time than non-mothers."

Wait a minute.... Think about the answer for a moment... Could it possibly be true?  Mothers a whole 79% less likely to be hired???

ANSWER: Sadly, the answer to this Pop Quiz question is True.1  No kidding.  I even called up the researcher myself to see if she was missing a decimal point somewhere.  No such luck.

Speaking of out-of-luck, moms in the workplace are getting a double whammy: You see, in addition to being discriminated against in hiring (79% less likely to be hired can definitely be categorized as discrimination!), mothers are also discriminated against in pay.  One study found that mothers are paid only 73 cents to a man's dollar, while single mothers are paid even less at about 60 cents to a man's dollar.2  Given that the U.S. Census reports over 80% of women in our nation become mothers by the time they're 44 years old, quite a lot of us are in deep trouble.

*Let's do something about it! Click here to send a letter via one-click email to your U.S. Senators now urging them to pass the Paycheck Fairness Act:
 http://momsrising.democracyinaction.org/o/1768/t/9251/campaign.jsp?campaign_KEY=27310

Clicked yet? (We're hoping so!) Now please take a moment to forward this Mama Pop Quiz to your friends, family, and everyone you know.  Some good old-fashioned consciousness raising is in order here.  With three-quarters of moms in the labor force now, and an increasing number of families relying on mom as the main breadwinner in this economic downturn, it's time to spread the word and raise the roof about our unfair pay.  After all, our children are counting on our paychecks so we can feed, clothe, and help keep the roof over their heads.

So, spread the word far and wide.  Forward the quiz to all you know. And invite folks to take action along with you.

What's the Paycheck Fairness Act (S. 182) do anyway?  While it doesn't fix all problems with hiring and pay discrimination, it definitely moves the ball forward by doing a much-needed update to the Equal Pay Act which has not been updated since it was enacted more than 40 years ago. As you may recall, the Lilly Ledbetter Fair Pay Act, which was signed into law on Jan. 29, 2009, restored the protection against pay discrimination that was stripped away by the Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber Co. This bill, the Paycheck Fairness Act, strengthens the Equal Pay Act by giving both employers and the Equal Employment Opportunity Commission (EEOC) the tools they need to ensure fair pay for women. The bill helps today's families by:

Closing the loophole in affirmative action defenses: Employers would be required to clarify acceptable reasons for differences in pay between men and women; employers must demonstrate wage gap is justifiable.
 
Prohibiting employer retaliation: The legislation would deter wage discrimination by prohibiting retaliation against workers who inquire about employers' wage practice or disclose their own wages.
 
Improving equal pay remedies: The bill would deter wage discrimination by strengthening penalties for equal pay violations by providing women with a fair option to proceed in an opt-out class action suit under the Equal Pay Act, and allowing women to receive punitive and compensatory damages for wage discrimination.
 
Authorizing additional training for EEOC staff to better identify and handle wage disputes: It would also aid in the enforcement of federal anti-pay discriminations laws by requiring EEOC to develop regulations directing employers to collect wage data.
The House has already passed the Paycheck Fairness Act, and the Senate must act to help women and families. MOMentum is on our side (Particularly if we moms raise a ruckus).

So please don't forget to contact your U.S. Senators now in one easy click: http://momsrising.democracyinaction.org/o/1768/t/9251/campaign.jsp?campaign_KEY=27310.  It take just one minute, but your emailed letter, combined with the letters of mothers across the nation, can move mountains.

Let's turn the Mama Pop Quiz answer above from True to False.

Thanks for all you do,

Kristin, Dionna, Joan, Mary, Donna, Sarah, Katie, Nanette, Ashley, Ariana, Anita & theMomsRising.org team

[1] Shelley Correll, Stephen Benard & In Paik, Getting a Job: Is there a Motherhood Penalty, 112 The Am. J. of  Soc. 1297 (2007).

[2]Jane Waldfogel, "Understanding the 'Family Gap' in Pay for Women with Children,"Journal of Economic Perspectives 12, no. 1 (1998): 137-56.

 

        

As a Plaintiff’s employment lawyer I am generally over the moon with Barack Obama’s presidency.  However, one area in which I am disappointed, along with many others, is President Obama’s inaction in the area of gay and lesbian rights.  In our practice we work a lot with gay and lesbian as well as transgendered issues in the workplace and it is glaringly clear how few protections these groups have compared to other minority groups. 

The Washington Post published an article today discussing President Obama’s action and what we may expect to see in the future.  Let’s hope we see some progress.  Click here to read article.

One way that the President and individuals could support better protections for these groups is by supporting the Employment Non Discrimination Act (“ENDA”) which is pending before Congress now. 

Kristin M. Case

The Case Law Firm, LLC

150 N. Michigan Ave., Suite 800

Chicago, Illinois 60601

312-920-0400

kcase@thecaselawfirm.com

www.thecaselawfirm.com

        

On August 25, 2009, Judge Blanche Manning of the Northern District of Illinois denied Defendant’s Motion for Summary Judgment, finding that a number of issues of fact precluded the dismissal of the case prior to trial.  

At issue in this case is whether or not the Plaintiff (who is represented by The Case Law Firm) was entitled to Family Medical Leave in order to care for her adult disabled daughter.  Defendant 3M terminated the Plaintiff after her absences to care for her daughter caused her to exceed 3M’s absentee policy.  The Court also held that there were issues of fact as to whether Plaintiff’s termination was in retaliation for requesting the FMLA leave.

The case will now be set for trial.

The Case Law Firm, LLC.
Chicago, Illinois
(312) 920-0400
www.thecaselawfirm.com

        

Four senators—two Democrat, two Republican—introduced the Employment Non Discrimination Act of 2009 (“ENDA”) in Congress on August 5, 2009.  This is an important bill in that it would provide anti-discrimination protection for gay or transgendered employees or those that are perceived to be gay or transgendered.   The perceived part of this Act is what is interesting to me in that while most people know or assume that openly gay individuals face discrimination in the workplace what many don’t know (unless of course you’re a plaintiff’s employment lawyer) is that employees regularly face termination or harassment in the workplace simply because a manager or co-worker (incorrectly) assumes they are gay when they really are not, i.e. the “butch” female stereotype or “overly-sensitive” male stereotype. 

This bill has not only bi-partisanship support but also bi-partisan sponsorship with two female Republican senators joining as co-sponsors. 

Currently 39 states still allow the discriminatory hiring or firing of gay or transgendered individuals.  This bill, of course, would change that.

If ever there was a year when a bill like this had a chance of passing this is it.  If you are interested in supporting this bill contact your representatives and encourage their support. 



Kristin Case
The Case Law Firm,LLC.
Chicago, Illinois
(312) 920-0400
kcase@thecaselawfirm.com
www.thecaselawfirm.com

        

 On May 18, 2009, the Supreme Court, in AT&T v. Hulteen, ruled against a small class of female workers on their pregnancy discrimination claim.  Four AT&T employees took maternity leave, and the company would not credit this time for pension eligibility.  The problem was that the women took leave and the company decided not awarded the time occurred before Congress enacted the Pregnancy Discrimination Act in 1979 to amend Title VII.  We consider this an unfortunate ruling and one that does not comply with the Spirit of the Act.  While the Court accepted Supplemental Briefing on whether the Lilly Ledbetter Fair Pay Act would support Plaintiff’s claim that each time a pension benefit was paid out, there was a “fresh act of discrimination,” the Court ultimately rejected the argument because AT&T’s plan was not intentionally discriminatory (such that Title VII would apply retroactively).