Commercial Division Blog

Posted: May 4, 2016 / Categories Commercial, Labor and Employment Law

Executive At Will Employee Despite Payment Schedules Showing Fixed Period of Employment

On April 13, 2016, Justice Bransten of the New York County Commercial Division issued a decision in Petitt v. LMZ Soluble Coffee, Inc., 2016 NY Slip Op. 30709(U), holding that an executive was an at-will employee, explaining:

In New York, it is well-settled that absent an agreement establishing a fixed duration, an employment relationship is presumed to be a hiring at will, terminable at any time by either party. The presumption may be triggered when an employment agreement fails to state a definite period of employment, fix employment of a definite duration, establish a fixed duration or is otherwise indefinite. . . . . A sensible path to declare New York law starts with these two steps: (1) if the duration is definite, the at-will doctrine is inapplicable, on the other hand, (2) if the employment term is indefinite or undefined, the rebuttable at-will presumption is operative and other factors come into the equation. Thus, the threshold determination is one of definiteness, and only if a court discerns no term of some definiteness, will it consider other factors to rebut the at-will presumption.

Here, the CEO Offer and Compensation package, read together, do not contain a term of some definiteness. First, the CEO Offer does not contain any language referencing duration of employment. Looking to the Compensation Package, there is, again, no language guaranteeing [the plaintiff] a five-year term of employment. Indeed, the language therein expressly contemplates her employment could end before the fifth year.

Nonetheless, [the plaintiff] maintains that the measure of her compensation, beginning in FY 2015 and ending in FY 2019 is pegged to a five-year term. She argues that the language providing for deferred compensation of up to $2.0MM earn-in over 5 years supports the proposition as well. Unfortunately for [the plaintiff], New York law is clear that payment schedules, measured yearly or otherwise, do not establish a fixed period of employment.

(Internal quotations and citations omitted) (emphasis added).