By: Alan E. Seneczko, Esq.
The Wisconsin Court of Appeals recently held that a Wisconsin employer may not avoid a contractual obligation to an at-will employee by terminating the employee for the sole purpose of avoiding the payment. In Phillips v. U.S. Bank, 2009 AP 246 (Wis. Ct. App. 2010), an employee had accrued certain benefits under two of the employer's incentive plans. One of the incentives required the employee to be employed as of the date of payment. The other required her to be in "good standing" when payment was made. The employee claimed that her employer terminated her so that it would not have to pay the benefits that had accrued to her under the incentive plans. The employer contended that it terminated her for violating the bank's ethics policy.
Recognizing the existence of a material dispute over the reason for the employee's termination, the court noted that an at-will employee may not be deprived of benefits that accrued before she was terminated - if the purpose of the discharge was to prevent payment of the benefits. In other words, although the employee could still be terminated "for any reason," the employer still owed the employee what it was contractually obligated to pay if the reason for the termination was to avoid the payment.
Questions? Please contact WS Shareholder and Senior Attorney Alan Seneczko at (262) 560-9696, or alseneczko@wesselssherman.com.
