In Fortune v. National Cash Register Co., 373 Mass. 96, 364 N.E.2d 1251 (1977), the Supreme Judicial Court of Massachusetts held that an employer breaches the implied covenant of good faith and fair dealing by terminating an at-will sales employee in order to deprive him or her of the opportunity to earn commissions, such as in a situation where the employee is discharged on the brink of completing a commissionable sale. Nearly forty years later, the Supreme Court of Connecticut has followed suit, recognizing in Geysen v. Securitas Security Services USA, Inc., __ Conn. __, __ A.3d __, 2016 WL 4141090 (Aug. 9, 2016) “the availability of a breach of the covenant of good faith and fair dealing contract claim when the termination of an employee was done with the intent to avoid the payment of commissions.”
In arriving at this conclusion, the Court rejected the notion that in the at-will employment context a claim for breach of the covenant of good faith and fair dealing is coextensive with a claim for wrongful discharge, reasoning that “the former focuses on the fulfillment of the parties’ reasonable expectations rather than on a violation of public policy.” The Court noted that “although an employer may terminate the employee at will” and “an employer does not act in bad faith solely by refusing to pay commissions on sales invoiced after an employee’s termination if that obligation is an express contract term,” “the employer may not act in bad faith to prevent paying the employee commissions he reasonably expected to receive for services rendered under the contract.”
On a more positive note, the Court rejected the plaintiff’s claim under Connecticut’s wage payment statutes, reiterating that the wage laws leave the timing of accrual of earned compensation to the determination of the wage agreement between the employer and employee, and holding that a “contract provision providing that commissions will be paid only if the work had been invoiced prior to termination of the employee does not violate public policy and is enforceable.” The Court also affirmed dismissal of the plaintiff’s public policy-based wrongful discharge claim, ruling “that the parameters of the public policy of this state with regard to the payment of wages is reflected in the wage statutes and that an employee cannot use the nonpayment of wages that have not accrued as the basis for a wrongful discharge claim.”
All in all then, the Geysen decision is a mixed bag. However, by recognizing the equivalent of a Fortune claim the Court has undoubtedly opened the door to further litigation.
Wiggin and Dana LLP