Under this framework, an employer cannot retroactively modify the terms of compensation for work that has already been completed. See Braun, 24 A.3d at 942; see also Green v. Edward J. Bettinger Co., 608 F.Supp. 35, 42 (E.D. Pa. 1984) (stating that under Pennsylvania law, "[t]he undoubted right to terminate an at-will contract necessarily includes the right to insist upon changes in the compensation arrangements as a condition of continued employment."). However, when an employer notifies an employee of changes to the at-will employment contract and the employee continues working with knowledge of the changes, the employee has accepted the changed terms.
ennsylvania law recognize that where an employment relationship is "at-will," an employer is free to unilaterally change the terms of employment. Compare Klein v. Torrey Point Grp., LLC, 979 F. Supp. 2d 417, 432 (S.D.N.Y. 2013) ("Under New York law, an employer is free to change the terms of at-will employment. . . prospectively, subject to the employee's right to leave such employment if the new terms are unacceptable."), and Bottini v. Lewis & Judge Co., 621 N.Y.S.2d 753, 754 (App. Div. 3d Dep't 1995) ("[Employer] was free to modify the terms of plaintiff's employment, subject only to plaintiff's right to leave his employment if he found the new terms unacceptable."), with Divenuta v. Bilcare, Inc., No. 09-cv-3657 (WHY), 2011 WL 1196703, at *3 (E.D. Pa. Mar. 30, 2011) ("[Under Pennsylvania law, the] power to terminate the employment relationship 'at-will' carries with it the power to dictate prospective changes in the terms of employment, including an employee's compensation."), and Green v. Bettinger Co., 608 F. Supp. 35, 42 (E.D. Pa. 1984) ("[Under Pennsylvania law, t]he undoubted right to terminate an at-will contract necessarily includes the right to insist upon changes in the compensation arrangements as a condition of continued employment."). Similarly, both New York and Pennsylvania courts construe an employee's decision to remain employed after the employer's unilateral modification of the employment terms as assent to the new terms.
This power to terminate the employment relationship "at will" carries with it the power to dictate prospective changes in the terms of employment, including an employee's compensation. See Green v. Edward J. Bettinger Co., 608 F. Supp. 35, 42 (E.D. Pa. 1984) ("The undoubted right to terminate an at-will contract necessarily includes the right to insist upon changes in the compensation arrangements as a condition of continued employment."), aff'd, 791 F.2d 917 (3d Cir. 1986) (table).
In the absence of an express agreement to the contrary, an employer is free to determine the terms and conditions of employment, and may terminate the relationship at will. Green v. Edward J. Bettinger Co., 608 F. Supp. 35, 40 (E.D.Pa. 1984). By the same token, if an employee is dissatisfied with the terms offered by the employer, the employee is free to resign.
In fact, nepotism has been employed as a successful defense to employment discrimination claims. See, e.g., Green v. Edward J. Bettinger Co., 608 F. Supp. 35 (E.D. Pa. 1984) judgment aff'd, 791 F.2d 917 (3d Cir. 1986) (holding that an employer did not violate an anti-discrimination statute by grooming his son to take over the business); see also 1 SUMM. PA. JUR. 2D TORTS § 12:38.
Mita v. Chubb Computer Serv., Inc., 767 A.2d 989, 994 (N.J. Super. Ct. App. Div. 2001). Courts in other states have reached a similar conclusion regarding at-will employees. See, e.g., Green v. Edward J. Bettinger Co., 608 F. Supp. 35, 41-42 (E.D. Pa. 1984), aff'd, 791 F.2d 917 (3rd Cir. 1986) ("The undoubted right to terminate an at-will contract necessarily includes the right to insist upon changes in the compensation arrangements as a condition of continued employment."); Cotter v. Desert Palace, Inc., 880 F.2d 1142, 1145 (9th Cir. 1989) (holding that an employee contract claim based on a change in the tip sharing policy failed because "[a]n employer privileged to terminate an employee at any time necessarily enjoys the lesser privilege of imposing prospective changes in the conditions of employment"). Intercall further argues that this is particularly true where, as here, the alleged agreement contains no duration and where the employee manual provides that the at-will nature of the employment may not be altered except by written agreement approved by the President or Board of Directors.
Since plaintiff has stated that Mr. Ackerman continued to represent that the rate was still 25% and he would resolve the discrepancy, it is reasonable to believe that plaintiff continued to perform under the unilateral contract with the expectation that she would be paid 25%. Green v. Edward J. Bettinger Co., 608 F. Supp. 35 (E.D. Pa. 1984) and Maloney v. Madrid Motor Corp., 385 Pa. 224 (Pa. 1956), upon which defendant relies, are distinguishable. First, neither case involved a unilateral agreement that required the mutual consent of the parties to terminate or modify it, and in both of those cases the notification of termination was clear and unambiguous. Similarly, EFCO Imps. V. Halsobrunn, 500 F. Supp. 152 (E.D. Pa. 1980), is distinguishable as it not only involves an express bilateral contract, but also a clear statement by the defendant to terminate the contract and statements by the plaintiff that it was dissatisfied with the contract.
Under Pennsylvania law, in the absence of an express agreement to the contrary, an employer is free to determine the terms and conditions of employment and may terminate the relationship at will. Gehin-Scott v. Newson, Inc., 848 F. Supp. 585, 589 (E.D. Pa. 1994) (citing Green v. Edward J. Bettinger Co., 608 F. Supp. 35, 40 (E.D. Pa. 1984)). However, assuming the facts alleged in the complaint to be true, the at-will employment doctrine does not bar Beauchamp's breach of contract claim.
DSI has easily satisfied its relatively light burden of proffering a non-discriminatory basis for the disparate commission rates and quotas. See, e.g., Komac v. Gordon Food Serv., 3 F. Supp.2d 850, 856 (N.D.Ohio. 1998) (finding that defendant proffered a legitimate non-discriminatory basis for plaintiff's rate of salary reduction by explaining that it reduced plaintiff's salary at a greater rate because she acquired a more profitable sales territory); Woodward v. Heritage Imports, 773 F. Supp. 306, 311 (D.Utah 1991) (finding defendant's objective of bringing plaintiff's salary into parity with industry standards constituted legitimate, non-discriminatory basis for its act); Green v. Edward J. Bettinger Co., 608 F. Supp. 35, 42 (E.D.Pa. 1984) (finding decision to reduce commission arrangement justified in order to preserve the morale of other similarly situated employees, and to head off a potential, undeserved, windfall for plaintiff). The burden now shifts to Mr. Hernandez to demonstrate that DSI's argument is a pretext for discrimination.
The employer's justification for the change — to maintain an appropriate relationship between plaintiff's compensation and the results of her efforts, to rationalize the compensation schedule in light of the changed circumstances, to preserve the morale of other similarly situated employees, and to head off a potential, undeserved, windfall for plaintiff — is eminently reasonable, and plaintiff has offered nothing to dispute it.Green v. Edward J. Bettinger Co., 608 F. Supp. 35, 42 (D.C.Pa. 1984) (granting defendant's motion for summary judgment in Title VII case), aff'd, 791 F.2d 917 (3d Cir. 1986). In the present case, the evidence of defendant's reasons for reducing Woodward's compensation suggested an eminently reasonable justification for the reduction in Woodward's pay.