How An Improperly Drafted Employment Contract Allowed Employee’s Claim To Collect Post-Termination Commissions To Survive Dismissal in New York

Jonathan Cooper — Sun, 17 Jan 2010 16:05:36 +0000

In a hot-off-the-presses decision that was handed down this past Thursday, and is scheduled to appear in Tuesday’s New York Law Journal, New York’s Appellate Division, First Department (which covers New York and Bronx Counties) reversed that portion of a trial court’s decision that dismissed a former at-will employee’s claims under Labor Law §§191 and 198 and Business Corporation Law §630, holding that although the plaintiff’s claim for unpaid salary was correctly dismissed (his employment contract allowed management to adjust his salary at their sole discretion), he had sufficiently stated a breach of contract claim for unpaid earned commissions that he “arranged” prior to his termination. In particular, the Appellate Court stated as follows:

“Once the commission is earned, it cannot be forfeited (see Davidson v. Regan Fund Mgt. Ltd., 13 AD3d 117 [2004];⁴ Yudell, 248 AD2d 189, supra). There is a long-standing policy against the forfeiture of earned wages, and this applies to earned, uncollected commissions as well (Weiner v. Diebold Group, Inc., 166, 166-167[1991]) …”

On the other hand, “although generally an at-will employee is not entitled to post-termination commissions, the parties are certainly free to provide otherwise in a written agreement.”

There is another important rule to consider, however. And that is the doctrine of contra proferentem, which states that an employment agreement should be construed against the drafter. In this case, the Court held that had Management “meant to foreclose the possibility that plaintiff might earn a post-termination commission on a placement” arranged by plaintiff, it “could have said so explicitly.” And this they clearly failed to do.

The moral of the story is obvious: be very, very careful in drafting your employment agreements.

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Why Most Employment Contract Breach/Wrongful Termination Claims Are Doomed In NY

Jonathan Cooper — Tue, 29 Dec 2009 16:36:44 +0000

Before addressing the merits of a breach of contract/wrongful termination claim against an employer, the threshold question that must be asked is “if I win, is a judgment against my former employer collectible?” Unfortunately, in this economy, the answer to this question is increasingly “no.” Consequently, even if you have the most meritorious claim, external economic factors may render the claim moot before it even begins.

But assuming you clear that first hurdle, there is a second question that may prove even more daunting: Did you have a contract, or were you an “at-will” employee? And the answer to this question is critical, because absent a written contract, the agreement “is presumed to be a hiring at will that may be freely terminated by either party at any time for any reason or even for no reason. Lobosco v. New York Telephone Co./NYNEX, 96 NY2d 312, 316 (2001). Furthermore, there is no exception for firings that violate public policy such as, for example, discharge for exposing an employer’s illegal activities, UNLESS the employee made its employer aware of an express written policy limiting the right of discharge and the employee detrimentally relied on that policy in accepting employment. See, Weiner v. McGraw Hill, Inc., 57 NY2d 458 (1982).

As you might well surmise, this condition is rare indeed.

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New York Business Litigation Attorney | New York Breach of Contract Attorney » at-will employment

How An Improperly Drafted Employment Contract Allowed Employee’s Claim To Collect Post-Termination Commissions To Survive Dismissal in New York

Why Most Employment Contract Breach/Wrongful Termination Claims Are Doomed In NY