Let’s take a hypothetical scenario. You were promoted last year and have spent countless long days at the office since then orchestrating a multibillion dollar sale. You expect a handsome bonus as the head of this sale, consistent with what you understood your predecessors to have received. Finally, after just over a year of hard work, your boss hands over your bonus check for only a tenth of what you expected based on past bonuses. But things get worse from there when your employer fires you a month later. A single question now comes to mind: What can I do?
The scenario above is loosely based on what happened to Robert D. Schultz between 2007 through early 2009. While working for the Dutch bank ABN Amro, Schultz headed the sale of ABN’s North American Assets, valued at approximately $94 billion. Based on ABN’s bonus formula, Schultz was entitled to a bonus between $2 million and $5 million for his 2008 performance. However, when his bonus arrived, it was for just $200,000. His employer’s basis for this reduction in bonus was that it had changed the formula used to compute bonuses, something which ABN Amro never disclosed to Schultz. To make matters worse for Schultz, the guarantees of bonuses (and the formula used to calculate bonuses) were never put into writing, but rather, were orally agreed between the parties.
Schultz decided to sue his former employer, and was ultimately awarded $2.8 million in compensation for bonuses, severance pay, interest, and attorneys’ fees. His employer appealed. On appeal, ABN Amro argued that Schultz was never guaranteed a bonus in the first place because there was no written contract that entitled Schultz to receive that bonus. On review, the First District Appellate Court of Illinois found that the Illinois Wage Payment and Collection Act covers agreements beyond written contracts and can include oral agreements. The Appellate Court also found that there was overwhelming evidence showing that the former employer deviated from its standard practices regarding the computation of bonuses when calculating Schultz’s 2008 bonus, including failing to take into account Schultz’s predecessors’ bonuses. Ultimately, the Appellate Court upheld the lower court’s award of $2.8 million to Schultz.
Reliance and expectations for compensation is often based on more than just written contracts. As illustrated above, what is said, coupled together with past behavior, can also lead to a binding obligation, all the same as a written agreement. It is for this reason that legal professionals with experience in labor and employment issues in this evolving field, such as those you will find at Rock Fusco & Connelly, LLC, are an integral part of your business team.