Bennett & Belfort P.C.
The B&B Docket Blog
Developments in the Dynamic World
of Business and Employment Law

Archive for February, 2020

Terminating Employee to Avoid Hefty Commission Amounts to a $1 Million Mistake

Posted on: February 20th, 2020 by admin

Francoise Parker marketed energy services for EnerNOC, Inc., for which she was paid a base salary and commissions. The Massachusetts Supreme Judicial Court has held that EnerNOC’s decision to withhold more nearly $350,000 in commissions because Ms. Parker was no longer employed by the Company subjected the Company to treble damages. In short, EnerNOC could not evade the Massachusetts Wage Act by terminating Ms. Parker to avoid paying her commissions.

In 2016, Ms. Parker negotiated a contract for EnerNOC that was the largest in the company’s history, worth more than $20 million.

Under EnerNOC’s commission policy, Ms. Parker was entitled to a commission to be paid on the first year value of the contract. Additionally, under EnerNOC’s “true-up” policy, an additional commission payment would be made based on the full value of the contract, if neither side opted out of the contract at the one-year mark. EnerNOC’s written policy made commissions contingent on an employee’s employment, regardless of the reason for an employee’s separation.

After EnerNOC secured its lucrative contract, Ms. Parker complained to management because the company failed to pay her full commission on the one-year guaranteed portion of the contract. EnerNOC then terminated her employment.

Because she was no longer its employee, EnerNOC also declined to pay Ms. Parker the “true up” portion of her commission a year later, even though neither side opted out of the contract and it was locked in for four additional years.  That “true up” commission payment was worth nearly $350,000.

At trial, the Jury found that the company failed to pay $25,000 in commissions that were owed to Ms. Parker as of her termination date, as well as the $350,000 in “true up” commissions that she would have received if EnerNOC had not unlawfully fired her.  Under the Massachusetts Wage Act, prevailing plaintiffs are entitled to collect treble (three times) the amount of any unpaid wages.  The trial judge awarded Ms. Parker three times the pre-termination commissions, but he did not award multiple damages on the “true up” commissions because they were not actually “due and payable” when she was terminated.

According to the Supreme Judicial Court, that decision was wrong.  The SJC held that commissions are “wages” under the Wage Act and should be trebled, even if they become due after the employee’s termination, when the employer’s decision to fire the employee is itself a violation of the Wage Act.  In Ms. Parker’s case, the Jury had found that EnerNOC fired her as retaliation for her complaint about unfair pay and to avoid having to pay her the “true up” commission.

The SJC also ruled that continued employment can be a valid contingency to be eligible for commissions but that “such a contingency cannot be relied upon by an employer to create circumstances under which the contingency goes unfulfilled in order to deny a commission that otherwise would be due and payable to an employee.”  Since EnerNOC’s motivation for firing Ms. Parker was to keep her from collecting this commission, it could not hide behind a requirement that individuals must be active employees in order to receive commissions.

In Ms. Parker’s case, the SJC ruled that she was entitled to three times the amount of the “true up” commission – over $1 million.  This decision clarifies the scope of employers’ potential liability for retaliating against employees who complain about their pay, since future commissions that would become due and payable but for the retaliation are subject to automatic trebling.

Court Upholds Dismissal of Discrimination Claim Due to Employee’s Failure to Disclose Health Conditions

Posted on: February 11th, 2020 by admin

 

While it is important for employers to diligently engage in an interactive process with its employees, a recent case demonstrates the importance of the obligation of employees in certain situations to disclose medical diagnoses relevant to their ability to perform the essential functions of their job. In a December 23, 2019 decision, Flaherty v. Entergy Nuclear Operations, Inc., 946 F.3d 41 (1st Cir. 2019), the First Circuit upheld a summary judgment decision for an employer because the employee, a nuclear power plant security guard, repeatedly failed to disclose medical diagnoses. It was determined that because of these failures to disclose his diagnoses he was neither reliable nor trustworthy, qualities that were required by regulation for authorization to hold the safety sensitive position.

The employee worked at a nuclear power plant in Massachusetts which required certain clearance authorization because of the safety sensitive areas in the nuclear plant  including the nuclear reactors. This federally regulated certification process was rather extensive requiring “assessments of the applicant’s personal history, employment history, credit history, character and reputation, and criminal history, along with psychological and behavioral tests.”

The employee suffered from several disabilities, including but not limited to symptoms relating to Chronic Fatigue Syndrome (“CFS”) and Post Traumatic Stress Disorder (“PTSD”), which he reported to Veteran’s Affairs following tours in Iraq prior to 2004. However, the employee failed to report any of these disabilities on multiple medical questionnaires during the employer’s certification process and throughout his employment.  He also failed to report CFS on an application for a short term medical leave in 2014.

In early 2015, the employee refused to work a mandatory overtime shift stating that he would be too fatigued to work. Following his refusal to work this mandatory shift, he was suspended. In response, the employee filed an ethics complaint with the Company relating to his suspension stating that he was disabled and suspended despite this fact. During that process, he then provided the Company with his VA medical records which detailed his disabilities, including his CFS. After further evaluation, the employer found that because the employee withheld information relating to these medical diagnoses,  he was not trustworthy or reliable as required by regulations for the certification process to access the safety sensitive areas at nuclear power plants and the employee was terminated.

The First Circuit confirmed the District Court’s decision that the employee failed to show that he was qualified individual capable of performing the essential functions of the position; because the employee failed to disclose his CFS made him untrustworthy and unreliable, the employer was entitled to revoke his clearance authorization which the employee needed to perform the essential functions of the position.

Important for employers to note however, is that this finding does not allow employers to suggest that any time an employee withholds medical diagnoses, they are not qualified to hold a position; in the case of Flaherty, there were federal regulations which required certain standards relating to character and reputation in order to retain safety clearance.