Labor & Employment Law

Can you be terminated just prior to vesting in your benefits?

By Michael Goldstein, Esq.

The Court held that the covenant of good faith and fair dealing is violated when an employer terminates an at-will employee without good cause and deprives the employee of a clearly identifiable future compensation reflective of the employee?s past services. Fortune v. Nat’l Cash Register Co., 373 Mass. 96, 104-05 (1977).Whether particular benefits relate to past or future services is a matter of law to be decided by the court where the contract terms agreed to by the parties are undisputed. Sargent v. Tenaska, Inc., 108 F.3d 5, 8 (1997). A cause of action might exist for an employee at will who was terminated in bad faith one month before his partial interest in a five year project was scheduled to vest. Id. Where benefits such as shares of stock are subject to a vesting schedule over time and vest only if the employee continues to be employed, such benefits are contingent on the employee providing future services for the employer and thus are generally not compensation for past services. Harrison v. NetCentric Corp., 433 Mass. at 473-474 (2001).

The Supreme Judicial Court has recognized an exception to the general rule allowing for termination of an at-will employee with or without cause, which states that an employer may not terminate an at-will employee ?if the termination violates a clearly established public policy.? King v. Driscoll, 418 Mass. 576, 582 (1994); Wright v. Shriner’s Hosp. for Crippled Children, 412 Mass. 469, 472 (1992). The determination of whether a ?public policy? is implicated in the discharge of an employee is a question of law for the court. ?It is not for the jury to define the public policy. The judge must determine whether, on the evidence, there is a basis for finding that a well-defined, important public policy has been violated.? Mello v. Stop & Shop. Co., 402 Mass. 555, 561(1988).

Full post as published by Massachusetts Employment Law Blog on April 02, 2008 (boomark / email).