January 19, 2011
Last week, both the Seventh Circuit and the Indiana Court of Appeals issued decisions dealing with
I.C. § 22-2-5-1, et seq., Indiana's Wage Payment Statute. This post will address the Indiana Court of Appeals's decision in
Quezare v. Byrider Finance, Inc., 941 N.E.2d 510 (Ind. Ct. App. 2011), Case No. 29A02-1008-PL-944, decided on January 14, 2011. The Seventh Circuit's case is discussed
here. In this case, the central question was whether certain bonus payments were wages under the Wage Payment Statute.
less..
The Wage Payment Statute requires that employers pay "wages" within ten days after they are earned. The statute does not define "wages," which forces courts to engage in a multi-factor test to determine whether a particular form of compensation qualifies as "wages" under the statute.
The plaintiff worked for Byrider as a collections account representative. When Byrider hired plaintiff, he signed a pay plan that set forth the criteria for earning certain monthly bonuses based on the percentages of his accounts that were delinquent. Many of the plaintiff's bonuses were not paid within ten business days of the end of the month for which the bonus was earned and the plaintiff filed an action under the Wage Payment Statute. Byrider moved for summary judgment and the trial court granted that motion.
On appeal, the Court addressed whether Byrider's bonuses qualified as "wages" under the statute. Those portions of the bonuses which were tied to the performance of the plaintiff's "team" were not wages, precisely because they were dependent upon the performance of a team. The portions that were based on the plaintiff's individual performance were also not wages.
Here, even though the bonuses are calculated on a weekly basis, they are not earned merely by working for a week. Rather, the bonuses are awarded only if the account delinquency goals are met. Thus, they are not necessarily paid on a regular basis. If the delinquency rate of an employee's accounts is greater than the bonus percentage month after month, that employee will not earn any bonuses. Indiana courts have consistently stated that a bonus is a wage under the Wage Payment Statute if the bonus directly relates to the time that an employee works, is paid with regularity, and is not dictated by the employer's financial success.
In addition, we note that Byrider's bonus plan is purely discretionary. Both pay plans provided that Byrider had the right to alter, adjust, or terminate the plan at any time, without notice. The discretionary nature of the plan also leads us to conclude that the bonus payments are not wages for purposes of the Wage Payment Statute.
This decision further enforces that a "bonus" will not qualify as wages under the Wage Payment Statute if it is not directly relates to the time that an employee works, is not paid with regularity, or is dictated by the employer's financial success. Attorneys who consider bringing an action under this statute for the failure to pay bonuses in a timely manner should carefully review these factors when assessing the potential case.
Lessons:
- A "bonus" will not qualify as wages under the Wage Payment Statute if it is not directly relates to the time that an employee works, is not paid with regularity, or is dictated by the employer's financial success.
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