Opinion
No. CV09-5005082S
October 29, 2009
MEMORANDUM OF DECISION RE MOTION FOR JUDGMENT
The plaintiff in the instant matter was hired by the defendants as a construction superintendent pursuant to an employment contract in 2006. The contract provided for a bonus to be paid to the plaintiff at the end of the contract in the amount of twenty-five (25%) percent of his total salary/wages paid ($1,000 per week). Although the plaintiff was paid his weekly salary/wages, he was never paid the bonus at the end of the contract in the amount of $28,600.
The defendants were defaulted for failure to appear on October 6, 2009. A hearing in damages was held before the court on November 30, 2009.
The plaintiff is claiming that he is entitled to double damages, costs and attorneys fees pursuant to General Statute § 31-72 due to the defendant's failure to pay the agreed upon bonus.
On July 7, 2009, the plaintiff, Wayne Richard, filed a four-count complaint against the defendants, Michael Barrett, doing business as Barrett Company, and Barrett Company, Inc. The complaint alleges the following facts. The parties entered into an employment agreement on or about February 6, 2006, whereby the plaintiff agreed to do work for the defendants as a construction superintendent and project manager in exchange for compensation according to the agreement between the parties. On or about July 2008, the defendants breached the employment agreement by failing, refusing and/or neglecting to pay wages to the plaintiff in the amount of $28,600, the incentive bonus that was agreed upon if projects the plaintiff managed were completed on time and on budget. The plaintiff further alleges that due to the defendants' failure to pay the incentive bonus to the plaintiff, pursuant to § 31-72, the plaintiff is entitled to twice the full amount of the unpaid wages plus costs and reasonable attorneys fees.
On October 6, 2009, the court granted the plaintiff's motion for a default to be entered against the defendants for failure to appear. The case proceeded to a hearing in damages to the court on November 30, 2009.
General Statutes § 31-72 provides in relevant part: "When any employer fails to pay an employee wages in accordance with the provisions of sections 31-71a to 31-71i, inclusive, or fails to compensate an employee in accordance with section 31-76k . . . such employee . . . may recover, in a civil action, twice the full amount of such wages, with costs and such reasonable attorneys fees as may be allowed by the court, and any agreement between him and his employer for payment of wages other than as specified in said sections shall be no defense to such action . . ." General Statutes § 31-71a(3) provides in relevant part: "`Wages' means compensation for labor or services rendered by an employee, whether the amount is determined on a time, task, piece, commission or other basis of calculation . . ."
"[T]he legislative history from when § 31-71a(3) was enacted . . . is silent about whether a bonus constitutes a wage." Weems v. Citigroup, Inc., 289 Conn. 769, 780, 961 A.2d 349 (2008). The Connecticut Supreme Court, relying on a New York case, Truelove v. Northeast Capital Advisory, Inc., 95 N.Y.2d 220, 738 N.E.2d 770, 715 N.Y.S.2d 366 (2000), has held that "bonuses that are awarded solely on a discretionary basis, and are not linked solely to the ascertainable efforts of the particular employee, are not wages under § 31-71a(3)." Weems v. Citigroup, Inc., supra, 782.
In Truelove, "the plaintiff brought an action against his former employer to recover the unpaid balance of a profit sharing bonus . . . The distribution of the bonus was subject to the chief executive officer's sole discretion, with the payments contingent on the recipient's continued employment with the firm . . . After the plaintiff had resigned from the firm, the firm refused to make any further bonus payments, and the plaintiff brought an action claiming that the firm had violated New York's wage statutes by failing to pay him." (Citations omitted.) Weems v. Citigroup, supra, 289 Conn. 780.
The Weems court noted that, in Truelove, "[t]he court concluded that the plaintiff's bonus was not subject to the wage statutes because it was not a wage, as defined by N.Y. Labor Law § 190(1) (McKinney 2002), which is similar to § 31-71a(3), in that it defines wages, in relevant part, as `the earnings of an employee for labor or services rendered, regardless of whether the amount of earnings is determined on a time, piece, commission or other basis . . .' (Emphasis added.) The court emphasized that the terms of the [firm's] bonus compensation plan did not predicate bonus payments upon [the employee's] own personal productivity nor give [the employee] 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, [the employee's] share in the bonus pool was entirely discretionary and subject to the non-reviewable determination of his employer . . . Thus, the court concluded that the wording of the statute, in expressly linking earnings to an employee's labor or services personally rendered, contemplates a more direct relationship between an employee's own performance and the compensation to which that employee is entitled. Discretionary additional remuneration, as a share in a reward to all employees for the success of the employer's entrepreneurship, falls outside the protection of the statute." (Citation omitted; internal quotation marks omitted.) Id., 780-81.
In Weems, the plaintiffs were a class of former employees of the defendants who claimed, inter alia, that the forfeiture provisions of three different capital accumulation plans that the defendants offered to their employees violated Connecticut's wage statutes because the provisions "enable the defendants to withhold accrued wages, including bonuses, from their employees." Id., 772. Applying the rationale articulated in Truelove, the court in Weems held that the unpaid regular and branch manager bonuses at issue were not wages subject to Connecticut's wage statutes because the bonus awards were "tied to subjective factors such as diversity within a branch, and the profitability of the particular branches, which are factors not entirely predictable or within the control of the specific employee." Id., 782.
The present case is distinguishable from Weems. The Appellate Court's opinion in Ziotas v. Reardon Law Firm, P.C., 111 Conn.App. 287, 959 A.2d 1013 (2008), cert. granted, 290 Conn. 903, 962 A.2d 796 (2009), supports the plaintiff's argument that some bonuses may be considered wages under § 31-71a(3). In Ziotas, the plaintiff brought action against his former employer, the defendant law firm, alleging breach of contract and violation of § 31-72 due to the defendant's failure to pay a bonus to the plaintiff for the calendar year in which the plaintiff left the defendant's employ. Id., 292. The plaintiff and defendant executed a written employment contract, in February 1993, which provided that the plaintiff's annual compensation would be based, in part, on eight criteria, including business generation, business productivity and work profitability. Id., 291. From 1993 through 1997, the amount of the plaintiff's base salary and bonuses increased annually and bonuses were paid to the plaintiff each December. Id., 291-92. The plaintiff left the defendant's firm in October 1998, and did not receive his bonus
in December 1998. Id., 292.
The Appellate Court concluded that the trial court improperly overruled the plaintiff's objection to the defendant's request to revise the count in the complaint pertaining to an alleged violation of § 31-72 because "the plaintiff pleaded a valid cause of action for the wrongful withholding of wages." Id., 313. The court reasoned that if the plaintiff proved his allegations, that the parties' employment contract provided for a bonus that fairly reflected the plaintiff's contribution to the defendant's success and that the plaintiff contributed to the defendant's success by providing legal services to the defendant's clients and by generating fees, then "the bonus alleged by the plaintiff represented compensation for [his] labor or services. It is not relevant whether the amount of that bonus was calculated on the basis of the number of hours worked, as a percentage of the defendant's net income or on some other basis of calculation, which may or may not incorporate the efforts of others. The issue instead is whether the terms of the parties' employment agreement, as alleged in the complaint, vested in the plaintiff a right to compensation in the form of a bonus in exchange for the services that he had provided . . . [S]tatutes do not dictate the manner in which wages are calculated . . . Instead, courts are to focus on the agreement between the employer and employee." (Citations omitted; internal quotation marks omitted.) Id. Under these facts and circumstances, the Appellate Court concluded that "the bonus could have been classified as wages for purposes of § 31-71a(3)." Id., 313-14.
In Edwards v. Edwards Wines, LLC, Superior Court, judicial district of New London, Docket No. CV 08 5008054 (January 15, 2009, Martin, J.), the plaintiff, an employee of the defendant winery, "alleged a wage agreement with the defendants that provided her with a bonus for increasing the winery's productivity and profitability." "Under the plaintiff's direction, the winery's sales increased by 17 percent in 2007 . . . Although the winery's staff was paid a bonus for their success in 2007, the plaintiff did not receive a bonus that year." Id. Applying the principal from Ziotas, that a bonus constitutes a wage if the bonus is "compensation for labor or services personally rendered," the Edwards court concluded that since the wage agreement provided a bonus in exchange for services rendered, namely, increasing productivity and profitability, the bonus "is properly considered a wage under § 31-71a(3)." Id.
In the present case, the incentive bonus at issue constitutes a wage under § 31-71a(3). The agreement of the parties provided that the defendants would pay an incentive bonus to the plaintiff in the amount of twenty-five percent "of the gross yearly income paid by [the defendants to the plaintiff] on a per project basis for projects completed on time and on budget." The incentive bonus was not to be awarded on a discretionary basis, but was linked solely to the ascertainable efforts of the plaintiff. This provision of the wage agreement provides for a bonus only if the projects that the plaintiff personally managed were completed on time and at a cost no greater than that budgeted. Unlike the bonus compensation plans in Weems or Truelove, in the present case, the payment of the incentive bonus was predicated upon the plaintiff's own personal productivity and gave the plaintiff a contractual right to bonus payments based upon his productivity. The bonus was only payable if the projects managed by the plaintiff were completed on time and on budget. As in Ziotas and Edwards, the bonus in the present case represented compensation for a service provided by the plaintiff, namely, managing a construction project in a way that ensured the project would be completed in a timely and cost effective manner. For the foregoing reasons, the incentive bonus in the present case constitutes a wage under § 31-71a(3).
"Although § 31-72 does not set forth a standard by which to determine whether double damages should be awarded in particular cases, it is well established . . . that it is appropriate for a plaintiff to recover attorneys fees, and double damages under [§ 31-72], only when the trial court has found that the defendant acted with bad faith, arbitrariness or unreasonableness." (Internal quotation marks omitted.) Ravetto v. Triton Thalassic Technologies, Inc., 285 Conn. 716, 724, 941 A.2d 309 (2008).
The Connecticut Supreme Court affirmed a trial court award of double damages to a plaintiff employee who was not compensated for working overtime, concluding that the defendant employer had acted in bad faith, in Butler v. Hartford Technical Institute, Inc., 243 Conn. 454, 704 A.2d 222 (1997). The trial court found that the plaintiff was expected to work overtime and did so and that the defendant made representations to the plaintiff both before she was hired and during her employment that she would be compensated for her overtime hours. Id., 471. After submitting documentation of her overtime hours, the plaintiff was told she would not be paid for overtime. Id. The Supreme Court found that "[t]he defendant's requests of [the plaintiff] to work additional hours, his assurances that she would be paid, coupled with his subsequent denial of payment support the trial court's decision to award double damages." Id., 471.
"Since the terms bad faith, arbitrariness or unreasonableness, are not defined in [§ 31-72], the court must look to the facts of the individual case to determine if the actions of the employer constitute such actions." Lloyd v. Kearing, Superior Court, judicial district of Waterbury, Docket No. CV 044001456 (July 14, 2006, Brunetti, J.). In Lloyd, the court found the actions of the defendant employer in not paying the plaintiff employee for his unused vacation and compensation time upon the plaintiff leaving the defendant's employ to be "arbitrary and unreasonable." Id. The court notes that "one of the inducements for the plaintiff to leave his employment and to come to work for [the defendants] was the promise of three weeks vacation. The court finds it unreasonable for the defendants to expect the plaintiff to work the hours he did without any expectation of compensation in the form of vacation pay and compensation time." Id.
The present case is analogous to Butler and Lloyd. The agreement between the parties in the present case provided that the plaintiff would be paid an additional incentive bonus if the projects under his management were completed on time and on budget. While performing his duties under the contract, the plaintiff presumably relied on this incentive bonus provision, just as the plaintiff in Butler relied on her employer's assurances that she would be compensated for her additional work and the plaintiff in Lloyd relied on his employer's assurances regarding paid vacation time. The defendants' failure to pay the incentive bonus despite the plaintiff's efforts to provide the defendants with a valuable service, the completion of construction projects on time and on budget, could support a finding by the court of bad faith, arbitrariness and unreasonableness and therefore could support an award of double damages, costs and reasonable attorneys fees.
The court finds that the plaintiff is entitled to double damages, costs and attorneys fees pursuant to General Statutes § 31-71a(3) and § 31-72.
Judgment may, therefore, enter for the plaintiff as follows:
x2 $ 2,415.00
1. Agreed upon bonus $ 28,600.00 $ 57,200.00 2. Costs $ 489.68 3. Attorney Fees TOTAL AMOUNT $ 60,104.68