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Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: May 4, 2016

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).

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