• Terminated Employee Cannot State Claim Against Employer for Failure to Pay Discretionary Bonus: Barber v Deutsche Bank Securities, Inc.
  • August 11, 2011 | Author: Hillary A. Frommer
  • Law Firm: Farrell Fritz, P.C. - New York Office
  • In a July 14, 2011 decision by Justice Schweitzer, the court granted the defendants’ motion to dismiss the complaint which alleged that after the plaintiff agreed to a temporary two-year assignment in defendant Deutsche Bank Securities, Inc.’s Honk Kong office based on an oral promise that he would receive comparable compensation, his  employment was terminated one year after he began working in Hong Kong and he was not paid a discretionary bonus for that year. The complaint alleged breach of contract, breach of the implied covenant of good faith and fair dealing, and breach of New York Labor Law § 193.

    The court first rejected the defendants’ arguments that the claims were barred by the statute of frauds, finding that the plaintiff’s employment was at-will, because the plaintiff’s offer letter specifically provided that the plaintiff could be terminated at any time without cause, and therefore, was without the proscription of the statute of frauds concerning one-year performance. The court similarly rejected the defendants’ reliance on a no-oral-modification clause in the plaintiff’s offer letter, because it found that the plaintiff’s acceptance of the temporary assignment was partial performance “unequivocally referable” to the oral compensation promise which equitably estopped the defendants from relying on the clause. However, the court dismissed the complaint because the defendants’ oral promise was superseded by the offer letter and assignment contract entered into thereafter, and the court found that neither contract referred to the discretionary bonus to which an employee has no enforceable right.

    Determining the plaintiff’s employment was at-will, the court also dismissed the claim for breach of the implied covenant of good faith and fair dealing on the grounds that New York law does not recognize such covenant in at-will employment relationships, and because it found that an employer’s decision not to pay a purely discretionary bonus did not amount to a breach of the implied covenant, where the employee has no enforceable right under such plan.

    Finally, the court dismissed the claim under the NY Labor Law on the grounds that the discretionary bonus was not “wages” under the statute because it depended in part on the financial success of the employer and was paid at the employer’s sole discretion.

    Barber v Deutsche Bank Securities, Inc., Sup Ct NY County, July 14, 2011, Schweitzer, J, Index No. 100653/11