“When a bonus that is an integral part of a compensation package has already been earned by the time the employer decides not to pay it, the latter can no longer argue that such bonus is discretionary; at that point, failure to pay it constitutes a breach of the contract of employment.” Simpson v. Lakeside Engineering, P.C., 809 N.Y.S.2d 710, 711 (N.Y.App.Div. 2006) (quoting Sipkin v. Major League Baseball Advance Media, No. 570623, 2005 WL 2653955, at *1 (N.Y. App. Term. Oct. 17, 2005)).
While New York has a six-year statute of limitations for recovery of wage claims, N.Y. Labor Law § 198, that statutory section only applies to "claims based upon substantive violations of [New York] Labor Law article 6." Simpson v. Lakeside Eng'g, P.C., 809 N.Y.S.2d 710, 712 (App.Div. 2006) (citation omitted). Article 6 concerns "the rights of employees to the payment of wages,"Gottlieb v. Kenneth D. Laub Co., 626 N.E.2d 29, 31 (N.Y. 1993), and includes provisions on topics such as the prompt payment of wages, deductions, and the prohibition of a differential in rate of pay because of sex.
Kenneth D. Laub Co., 82 N.Y.2d 457, 464-65, 626 N.E.2d 29, 33-34, 605 N.Y.S.2d 213, 217-18 (1993); Simpson v. Lakeside Eng'g, P.C., 26 A.D.3d 882, 883, 809 N.Y.S.2d 710, 712 (4th Dep't 2006); Carlson v. Katonah Capital, L.L.C., No. 602831/05 (BJF), 2006 WL 273548 at *2 (N.Y.Sup.Ct. Jan. 27, 2006); see Chu Chung v. New Silver Palace Restaurants, Inc., 272 F. Supp.2d 314, 317 (S.D.N.Y. 2003).
It is elementary, in New York and elsewhere, that the failure to pay wages can simultaneously give rise to both a breach of contract claim and a statutory claim. See, e.g., Simpson v. Lakeside Eng'g, P.C., 26 A.D.3d 882, 883, 809 N.Y.S.2d 710 (N.Y.2006) (breach of contract claim for nonpayment of wages distinct from alleged violation of labor law; attorney's fees applicable only to latter). Cf. Karlin v. IVF Am., Inc., 93 N.Y.2d 282, 293, 690 N.Y.S.2d 495, 712 N.E.2d 662 (1999) (same actions support common-law claim for lack of informed consent and statutory claim for deceptive advertising).
Decided June 29, 2006. Appeal from the 4th Dept: 26 AD3d 882. Motions For Leave To Appeal. Denied.
Section 198"is not a substantive provision, but [rather] provides for remedies available to a prevailing employee" ( Villacorta v. Saks Inc., 32 Misc.3d 1203[A], 2011 N.Y. Slip Op. 51160[U], *3, 2011 WL 2535058 [Sup. Ct., N.Y. County 2011] ; seeGottlieb v. Kenneth D. Laub & Co., 82 N.Y.2d 457, 459–465, 605 N.Y.S.2d 213, 626 N.E.2d 29 [1993], rearg. denied 83 N.Y.2d 801, 611 N.Y.S.2d 136, 633 N.E.2d 491 [1994] ; Simpson v. Lakeside Eng'g, P.C., 26 A.D.3d 882, 883, 809 N.Y.S.2d 710 [4th Dept. 2006], lv denied 7 N.Y.3d 704, 819 N.Y.S.2d 871, 853 N.E.2d 242 [2006] ). Thus, Massaro's standalone counterclaim under section 198 should have been dismissed (seeAPF Mgt. Co., LLC v. Munn, 151 A.D.3d 668, 671, 56 N.Y.S.3d 514 [2d Dept. 2017] ).
The governing employment agreement unambiguously provided for payment of a “one-time guaranteed minimum bonus of $50,000, payable in March 2011.” Inasmuch as this bonus was guaranteed and non-discretionary, defendant's failure to pay it when due constituted a breach of the contract of employment (see Simpson v. Lakeside Eng'g, P.C., 26 AD3d 882, 882–883 2006, lv denied 7 NY3d 704 2006 ). In opposition, defendant failed to raise a triable issue that the bonus was conditioned on plaintiff's performance.
The employer cannot argue that the bonus is discretionary when it is an integral part of the compensation package and it has already been earned by the time the employer decides not to pay it. At that point, the failure to pay it constitutes a breach of the contract of employment (Simpson v Lakeside Engineering, 26 AD3d 882, 882-883 [and cases cited therein]). Most alleges that he had an enforceable employment agreement with Franklin First based upon the offer and acceptance of quarterly bonus payments, which were an integral part of his compensation package.
Employees in this State may enforce an agreement to pay an annual bonus made at the onset of the employment relationship where such bonus constitutes an integral part of plaintiff's compensation package" Id. at. 389. See also, Sipkin v. Major League Baseball Advance Media, 9 Misc. 3d 133(A), 2005 N.Y. Slip Op. 51648, at *1 [S.Ct. App. T. 1st Dep't 2005] ["When a bonus that is an integral part of a compensation package has already been earned by the time the employer decides not to pay it, the latter can no longer argue that such bonus is discretionary; at that point, failure to pay it constitutes a breach of the contract of employment"]; Simpson v. Lakeside Engineering, 26 AD 3d 882 [4th Dept 2006] [holding that an at-will employee is entitled to payment of a bonus as her compensation was unequivocally defined in terms of both salary and bonus].
While ordinarily, a question of fact is raised as to whether unpaid compensation constitutes a discretionary bonus or earned wages (Doolittle, 126 AD3d at 1521; Kaplan v Capital Co. of Am. LLC, 298 AD2d 110, 111 [1st Dept 2002], lv denied 99 NY2d 510 [2003]), here, the emails exchanged between the parties in 2005 and in 2012 reflect that they specifically and unambiguously agreed that the award of a bonus was within the discretion of defendant's president. (See Kaplan v Capital Co. of Am., 298 AD2d 110, 111 [1st Dept 2002] [employee handbook clearly stated that bonus compensation was to be discretionary]; Smalley v Dreyfus Corp., 40 AD3d 99, 106 [1st Dept 2007], revd on other grounds 10 NY3d 55 [2008] [written incentive compensation plan specifically stated that employer had authority to modify or annul bonuses based on its sole discretion]; cf. Simpson v Lakeside Eng'g, P.C., 26 AD3d 882, 883 [4th Dept 2006], lv denied 7 NY3d 704 [employment offer letter contained no indication that bonus would be discretionary]).