Truelove v. Northeast Capital & Advisory, Inc

In Truelove v. Northeast Capital & Advisory, 95 NY 2d 220n (2000), the court held that the employee's bonus did not fall within the meaning of "wages" in section 190(1) because it constituted "discretionary additional remuneration, as a share in a reward to all employees for the success of the employer's entrepreneur-ship," whereas "the wording of the statute, in expressly linking earnings to an employee's labor or services person-ally rendered, contemplated a more direct relationship between an employee's own performance and the compensation to which that employee was entitled". Based on the facts in Ryan v. Kellogg Partners Inst. Servs., 19 NY 3d 1 (2012) the Court of Appeals decided that a bonus payment fell within the definition of wages, holding that "the employee's bonus was "expressly linked" to his "labor or services personally rendered...the employee's bonus had been earned and was vested before he left his job...; its payment was guaranteed and non-discretionary as a term and condition of his employment". Therefore, in New York, compensation -- including bonuses -- constitutes a "wage" once it is actually earned and vested. The Court of Appeals found that a bonus scheme, the payment of which was within the employer's discre-tion, predicated upon a combination of individual performance and corporate performance, and then based on the firm generating a set amount of revenue and establishing a bonus/profit sharing pool, was not a wage within the contemplation of the Labor Law. In so finding, the Court of Appeals stated: "The terms of defendant's bonus compensation plan did not predicate bonus payments upon plaintiff's own personal productivity nor give plaintiff a contractual right to bonus payments based upon his productivity. To the contrary, the declaration of a bonus pool was dependent solely upon his employer's overall financial success. In addition, plaintiff's share in the bonus pool was entirely discretionary and subject to the non-reviewable determination of his employer. These factors, we believe, take plaintiff's bonus payments out of the statutory definition of wages." (95 NY2d, at 224.) The Court of Appeals, in affirming the dismissal of plaintiff's claim for the balance of quarterly bonus installments under Labor Law 193 ("Deductions from wages"), determined that Truelove's claim did not meet the statutory definition of wages set forth in Labor Law 190. Labor Law 190 states that "as used in this article: (1) wages mean the earnings of an employee for labor or services rendered". In Truelove, the Court of Appeals stated that "Courts have construed this statutory definition as excluding certain forms of 'incentive compensation' that are more in the nature of a profit-sharing arrangement and are both contingent and dependent, at least in part, on the financial success of the business enterprise". The Court held that factors, including that "...the declaration of the bonus pool was solely dependent upon his employer's overall financial success... and that plaintiff's share in the bonus pool was entirely discretionary and subject to the non-reviewable determination of his employer... "take plaintiff's bonus payments out of the statutory definition of wages" under Article 6 of the Labor Law. (Id, at 224.)