Are bonuses wages? – Part III

On November 24, 2008, I posted a report on the case of Ziotas v. Reardon Law Firm which held that a bonus due an employee was considered a wage and enforceable under our wage enforcement laws (C.G.S. Section 31-72), which include the remedies of double damages and attorneys fees.  I reported that it was shaping up to be a banner year for employees.

On December 19, 2008, a fellow blogger from the dark side of employment law reported about the Connecticut Supreme Court case of Weems v. Citigroup, Inc., in which it held that a discretionary bonus was not a wage under that statute.  Attorney Schwartz indicated that employers could “breath a sigh of relief” because of this ruling.

Not so fast, Attorney Schwartz!  Sometimes we have to wait and see how the Superior Court judges are applying these holdings.  On January 15, 2009, Judge Robert Martin of New London had a chance to deal with these two seemingly contradictory rulings, and he chose to apply Ziotas and to read Weems narrowly.  

In the new case of Edwards v. Edwards Wines, LLC, an employee brought a claim for, among other things, unpaid bonus compensation.  She claimed that she was due a bonus because of an agreement that she would be paid a bonus for increasing the winery’s productivity and profitability.  Judge Martin squarely addressed the tension between Ziotas and Weems and chose Ziotas.   He pointed out that in Weems, the Supreme Court held that “bonuses that are awarded solely on a discretionary basis, and are not liked solely to teh ascertainable efforts of the particular employee, are not wages under Section 31-71a(3).”  He refused to strike Edwards claim because she alleged that her bonus was dependent on her efforts to increase productivity and profitability.

This is a good first indication for employees that the Superior Courts will interpret Weems narrowly and apply Ziotas.  This writer agrees and in fact, would have gone further.  How can any money that an employer pays an employee not be a wage?  Will employers invoking Weems pay discretionary bonuses without withholdings?  Will they issue 1099 forms?  Does such a payment turn the employee into an independent contractor?

Weems was wrongly decided.  All bonuses are wages and employers should not be allowed to avoid the enforcement provisions of our laws by saying otherwise.  Our legislature should address this issue by rewriting the definition of wages to overturn Weems.

CVS sued in Connecticut for overtime violations

An Assistant Manager in Connecticut has sued CVS Caremark Corporation for unpaid overtime in violation of the federal Fair Labor Standards Act.  In her complaint, she claims that she was illegally classified as exempt and denied overtime pay despite the fact that her primary duty was not management.  She has included in her suit a claim on behalf of other Assistant Managers around the country, since they, like her, have been classified as exempt pursuant to the same illegal policy.  If her request is granted, CVS Assistant Managers around the country will receive notice of this lawsuit and be invited to join.

This lawsuit follows on the heels of similar claims against Family Dollar Stores and Staples.  Nationwide retailers frequently classify assistant managers and managers as exempt without giving them enough management authority for them to fairly and legally be considered managers under the law. 

The most recent ruling on this issue comes from the Eleventh Circuit Court of Appeals.  In its ruling upholding a $35,000,000 verdict against Family Dollar, that court wrote:

“The overwhelming evidence showed that Plaintiff store managers exercise little discretion and spend 80 to 90% of their time performing manual labor tasks, such as stocking shelves, running the cash registers, unloading trucks, and cleaning the parking lots, floors, and bathrooms. Even as to the assigned management tasks, such as paperwork, bank deposits, and petty cash, the store manual strictly prescribes them. And district managers closely scrutinize store managers to ensure compliance with the manual and corporate directives.” 

For these reasons, the jury’s verdict was affirmed.  Many other retailers follow a similar business plan which usually entails such severe micromanagement that the “manager” doesn’t truly manage as his or her primary duty. 

Plaintiffs are represented by the Hayber Law Firm and by Siegel, Brill, Greupner, Duffy & Foster, P.A.