WA Supreme Court: Non-Vested Investment in Sister Company Not Violation of WRA
LaCoursier (hereinafter known as Frenchy, which is easier to type), was working, and under the agreement, had to invest some portion of his bonus to another company. Essentially, as part of the bonus, he got an interest in another company. He left, and the investments had not vested. Held: The non-vested investments were not wrongfully withheld wages.
First, were the bonuses wages? Yes:
We hold that bonuses, once paid for work performed, are wages. The WRA does not define "wage." To give undefined terms meaning, this court may look to dictionary definitions and related statutes. Garrison v. Wash. State Nursing Bd., 87 Wn.2d 195, 196, 550 P.2d 7 (1976) (dictionary); Dep't of Ecology v. Campbell & Gwinn, LLC, 146 Wn.2d 1, 10, 43 P.3d 4 (2002) (related statutes). "Ultimately, in resolving a question of statutory construction, this court will adopt the interpretation which best advances the legislative purpose." Bennett v. Hardy, 113 Wn.2d 912, 928, 784 P.2d1258 (1990). . . .
LaCoursiere's bonuses are, in important respects, analogous to the promised bonus in Flower v. T.R.A. Industries, Inc., 127 Wn. App. 13, 35, 111 P.3d 1192 (2005). Flower entered into an employment agreement that granted him moving expenses and a $10,000 signing bonus. Id. at 23. After moving and two months of work, the employer fired Flower and refused to pay the signing bonus. Id. at 24. Among other claims, Flower filed suit for the $10,000 signing bonus, arguing that it was due to him as a wage. After looking at the employment agreement, the court held that the signing bonus was due under the terms of the agreement and not subject to repayment of any sort. Noting that wages are "moneys due "'by reason of employment,""' the court held further that "[t]here [was] no doubt that the bonus was to be paid 'by reason of employment."' Id. at 34-35 (quoting Hayes v. Trulock, 51 Wn. App. 795, 806, 755 P.2d 830 (1988) (quoting RCW 49.46.010(2))).
Second, was their a rebate in violation of the act? No. This was not the employer receiving the money, but a third party LLC.
Here, the contributions were not a "rebate" because LaCoursiere's investment was made in the LLC and not in LaCoursiere's employer, CamWest. Under the employment agreement, LaCoursiere agreed to contribute part of his bonus money to the LLC. 3 The LLC did not employ LaCoursiere, nor did it pay LaCoursiere any wages. The LLC was not an agent or principal of CamWest and did not act on behalf of CamWest. All the LLC property was owned by the LLC entity and not by CamWest or any other individual member. Thus, the contributions do not constitute a return of wages to the employer, CamWest. . . .
Here, LaCoursiere's membership in the LLC was subject to a vesting schedule. Nothing was "rebated" when LaCoursiere forfeited the
unvested portion (40 percent) of his investment at his termination. LaCoursiere might have received the full value of his investment had he stayed with the company for five years. LaCoursiere received only 60 percent of his investme_nt in the LLC because
his persistent tardiness to work resulted in his termination before he could fully vest. Under the LLC agreement, his units were then sold according to certain rules-rules that make it impossible to predict where the units would end up at the time wages are paid. The unvested portion may be purchased by CamWest 1 but it may also be purchased by Campbell or the other LLC members. This uncertainty makes it impossible to label the forfeiture of the unvested portion of LaCoursiere's investment a "rebate."
Dangit, I never once got to use the word Frenchy! Well, until just then.
Also, I should note, this was a 5-4 decision. While they were wages, the dissent would disagree that Frenchy knowingly entered into anything, as waiver wasn’t proven. The dissent would also hold that there was an issue of fact as to whether the LLC was essentially the Corporation for rebate law purposes.
Yay! I got to use the word Frenchy! TWICE…errrr…Three times!