Truelove v. Northeast Capital & Advisory, Inc.

95 N.Y.2d 220, 738 N.E.2d 770, 715 N.Y.S.2d 366 (2000)

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Truelove v. Northeast Capital & Advisory, Inc.

New York Court of Appeals
95 N.Y.2d 220, 738 N.E.2d 770, 715 N.Y.S.2d 366 (2000)

Facts

William Truelove (plaintiff) began working for the investment-banking firm Northeast Capital & Advisory, Inc. (Northeast) (defendant) in June of 1996. Truelove elected to receive a $40,000 annual salary with eligibility for a bonus/profit-sharing pool. Truelove’s employment offer from Northeast explained that any bonus paid to Truelove would reflect a combination of Truelove’s performance and Northeast’s performance. Northeast’s chief executive officer (CEO) issued memos explaining that the bonus/profit-sharing pool would be created only if Northeast met a minimum revenue target and would be calculated using a graduated percentage schedule of Northeast’s revenue. The memos also indicated that the CEO had the sole discretion to allocate bonuses, that bonuses would be paid in quarterly installments, and that each installment payment was contingent on the receiving employee still being employed at Northeast. In 1997, Northeast established a bonus pool of $240,000. Northeast’s CEO allocated $160,000 from the bonus pool to Truelove, and Northeast paid Truelove his first quarterly bonus installment of $40,000. However, Truelove subsequently resigned from Northeast, and Northeast refused to pay Truelove the three remaining bonus installments. Truelove sued Northeast in New York state court, alleging a violation of article 6 of New York’s Labor Law. Specifically, Truelove asserted that his bonus payments constituted wages under Labor Law § 190(1), which defined wages as an employee’s earnings for labor or services rendered. According to Truelove, Northeast’s refusal to pay the remaining bonus installments was an unlawful deduction from his wages. The trial court concluded that Truelove’s bonus could not be considered wages under article 6 and granted summary judgment for Northeast. The appellate division affirmed. Truelove appealed to the New York Court of Appeals.

Rule of Law

Issue

Holding and Reasoning (Levine, J.)

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