Employers should take great care in crafting their contracts, agreements, and benefits plans with their employees, or they could wind up owing them a lot of money.
A JP Morgan Chase Bank, N.A. employee recently sued the company to recover an unpaid bonus. The employee received a base salary of $200,000. In addition, in his thirteen years of employment, he also received bonuses ranging from $45,000 to $210,500. Chase has a bonus program in which if certain criteria are met, the bonus increases in value. The employee was terminated from Chase on January 13, 2012. The bonuses for 2011 were not approved until January 17, 2012 and were paid on January 24, 2012. Therefore, Chase refused to pay the employee his bonus for the 2011 calendar year. Based on the bonus program criteria, the employee was due $247,500.
The bonus program is maintained internally by Chase. It is not signed by anyone at Chase, nor is it countersigned by any Chase employees. Further, the program is completely discretionary and subject to the determination of the Board of Directors. Whether or not individuals satisfy the criteria, is at the sole discretion of Chase. This particular employee testified that he never even saw a copy of the handbook.
Ohio’s Tenth Appellate District recently held that this bonus program was effectively an illusory contract. They have determined that there are genuine issues of material fact, and the employee’s claim has survived summary judgment. We’ll see whether Court ultimately awards the bonus to the employee.
Ohio employers need to be aware of the importance of contracts. In this case, the bonus plan was not signed by anyone, was in the total discretion of the employer, and employees hadn’t even seen the policy. Yet, it’s possible the employee may still be able to recover the benefit. Employers should consider this when drafting employment contracts and benefits packages.
Lardiere McNair LLC has a practice which advises and assists both employers and employees with their employment concerns. If you have any questions about the above, please contact an attorney.
For more information about the above case, please see the following case: Pohmer v. JPMorgan Chase Bank, N.A. 2015-Ohio-1229.
Chad Stonebrook is an Associate Attorney at Lardiere McNair LLC. To read more about Chad, please visit http://www.lmcounsel.com/chads-bio.html.
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