January 21, 2008 Source:
WorkInjury.com
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CA/2:
Is Forcing Return of Worker's Stock a Failure to Pay Compensation (LC 201/2)?
Labor Code Sections 201 and 202 require that, upon an employee's termination - be it a firing or voluntary quit - the employer is obligated to pay the worker for all earned but unpaid wages and other compensation due.
In this published case, Schachter v. Citigroup. Inc., the employee voluntarily quit work at a financial brokerage company. Before quitting he participated in a company incentive program whereby he was given the option of using a portion of his annual earnings to purchase shares in the company's stock at a price below the stock's publicly-traded market price.
However, the plan required that if the employee resigned or was terminated within the first two years, he forfeited both the stock and the money used to purchase it.
The employee claimed that this provision violated these Labor Code sections requiring an employer to pay all earned compensation at the time of termination. The Second District Court of Appeal disagreed.
"Do the forfeiture provisions of this voluntary incentive compensation plan violate Labor Code sections 201 and 202, which require an employer to pay its employee all earned but unpaid compensation following the employee's discharge or his or her voluntary termination of employment?
"As a matter of economic reality, employees who elect to participate in the plan's stock-purchase program are paid all the wages they designate to invest in company stock. Thus, the plan's forfeiture provisions do not violate the Labor Code..."
The Court affirmed the trial court's summary judgment in favor of the company.
To read the full certified-for-publication opinion,
- Help for the Injured Worker
