Employment-New York Court Of Appeals Rules That A Promised Bonus Constitutes “Wages” For Purposes Of NYS Labor Law § 190, So The Employer Cannot Withhold Payment

In Ryan v. Kellogg Partners Institutional Services, 2012 NY Slip Op 02248 (Court of Appeals of NY 2012), the plaintiff, Daniel Ryan (“Ryan”), received a job offer of floor broker from the defendant, Kellogg Partners Institutional Services (“Kellogg”), in early 2003. This job offer included a guarantee to pay Ryan a non-discretionary bonus of $175,000 in late 2003 or early 2004 in order to attract him from an established securities firm to Kellogg, a start-up venture at the time. Ryan accepted the job offer. In early 2004, the managing partner of Kellogg asked for and received Ryan’s consent to delay this bonus payment for a year until late 2004 or early 2005 on the understanding that Ryan would remain at Kellogg through 2004.Kellogg fired Ryan in 2005. The question, among others, for the Court: does the bonus constitute “wages” for purposes of NYS Labor Law § 190 (1)?

The Court found that Ryan’s bonus was expressly linked to his labor or services personally rendered, namely, his work as a floor broker for Kellogg. Further, Ryan’s bonus had been earned and was vested before he was terminated by Kellogg. Its payment was guaranteed and non-discretionary as a term and condition of his employment. The bonus was not discretionary additional remuneration, as, for example, a share in a reward to all employees for the success of the employer’s business. As such, the Court ruled that Ryan’s bonus constitutes “wages” within the meaning of Labor Law § 190 (1). Consequently, under Labor Law § 193, Kellogg may not withhold payment of the bonus. Further, under Labor Law § 198 (1-a), Ryan is entitle to an award of attorney’s fees for prevailing in this suit for a wage claim.