In a decision certified for publication on September 28 (Barbara J. Neisendorf v. Levi Strauss & Co., et al., Case No. A109826), the Court of Appeal of the State of California, First Appellate District, ruled that, where company policy provides that bonuses are payable only to employees still employed as of the payment date, an employee who is involuntarily discharged prior to that date is not entitled to payment, even if the employee was employed during the time period on which the bonus is based.
In Neisendorf, the plaintiff was an employee of Levi Strauss & Co. (“LS&Co.”) who was terminated in late November 2002 following a medical leave of absence. She asserted numerous claims against LS&Co. based on, among other things, the California Family Rights Act and the California Fair Employment and Housing Act. At trial, all of her claims were dismissed.
Ms. Neisendorf appealed on two narrow issues, including her claim for entitlement to bonuses for calendar year 2002 under LS&Co.’s “Annual Incentive Plan” (“AIP”) and “Leadership Shares Plan” (“LSP”). The AIP provided that “. . . a participant must be an active employee of the company on payment date in order to receive an AIP payment.” The LSP provided that “If a Participant’s employment is terminated for unsatisfactory performance or for gross misconduct . . . prior to any Award Payment Date, the Participant will not be entitled to receive any Leadership Shares, vested or otherwise, and no additional payouts will be made.”
Ms. Neisendorf did not dispute that, pursuant to the language of the two plans, she was not entitled to bonuses because she was not employed on the payment dates in 2003. However, she asserted on appeal that the plans violated California Labor Code Section 200 because they deprived her of bargained-for compensation for services she performed in 2002. The Court of Appeal rejected this argument, finding that “there was no promise made to Neisendorf that she would earn the AIP and Leadership Shares bonuses simply by working for LS&Co. during the fiscal year [2002].” The Court further stated “[w]e find nothing in the public policy of this state concerning wages that transforms Neisendorf’s contingent expectation of receiving bonuses into an entitlement.”
Keesal, Young & Logan Employment Law Group