News
April 23, 2008
Morgan, Brown & Joy, LLP Files Amicus Brief on Behalf of National Retail Federation In Potentially Far Reaching New York Commission Case
In March 2008, Morgan, Brown & Joy, LLP filed an amicus curiae brief on behalf of the National Retail Federation with the New York Court of Appeals in the case of Pachter v. Bernard Hodes Group, Inc.
In a decision dated October 12, 2007, the United States Court of Appeals for the Second Circuit (Docket No. 06-3344-cv) took the unusual step of requesting that the Court of Appeals answer the question of when wages are earned for purposes of New York Labor Law §193 where there is no written commission agreement between the employer and employee. The Second Circuit also requested that the Court of Appeals answer the question of whether an “executive” is considered an employee for purposes of the New York Labor Law. In Pachter, an executive is challenging her employer’s practice of taking into account various business expenses, including the cost of her assistant, in the calculation of her commission wages. The employee argues that the application of the employer’s commission formula, which allowed for the allocation of such expenses, amounts to an unlawful deduction from wages in violation of Labor Law §193.
At issue in the Pachter case is whether or not the New York common law presumption that commissions are earned at the point of sale is applicable in a deduction from wages case where there is no written commission agreement between the employer and employee regarding when wages are earned. If the Court of Appeals determines that commissions are earned at the point of sale in the absence of a written agreement, many deductions made as part of the formula for calculating commissions could be open to challenge. The implication of such a decision would have far-reaching impact on employers who do not have written commission agreements with their employees. (Note: Pursuant to an amendment to the law in October 2007, all employers in New York are now required to have written commission agreements with their employees. See N.Y. Labor Law §191(c).) The Court of Appeals in Pachter may also reach the issue of whether employers are permitted to make deductions for items such as expenses and returns as part of their commission formulas. A decision limiting the permissible components of an employer’s commission formula will undoubtedly be of concern to employers in New York with commissioned employees.
Also of importance to employers is the question of whether executives are considered employees for the purposes of New York Labor Law §193. Under most current cases, executives are not treated as covered by this section. As with the deduction issue, an adverse decision in Pachter could extend coverage to a whole category of employees who are not currently assumed to be entitled to coverage, and could provide a basis for liability to those employees.
Morgan, Brown & Joy, LLP filed an amicus curiae brief in support of the employer, Bernard Hodes Group, Inc. Oral argument before the New York Court of Appeals was held on April 23, 2008. On the brief were Diane Saunders and Laura Raisty, both of whom are admitted to practice in New York.
In a decision dated October 12, 2007, the United States Court of Appeals for the Second Circuit (Docket No. 06-3344-cv) took the unusual step of requesting that the Court of Appeals answer the question of when wages are earned for purposes of New York Labor Law §193 where there is no written commission agreement between the employer and employee. The Second Circuit also requested that the Court of Appeals answer the question of whether an “executive” is considered an employee for purposes of the New York Labor Law. In Pachter, an executive is challenging her employer’s practice of taking into account various business expenses, including the cost of her assistant, in the calculation of her commission wages. The employee argues that the application of the employer’s commission formula, which allowed for the allocation of such expenses, amounts to an unlawful deduction from wages in violation of Labor Law §193.
At issue in the Pachter case is whether or not the New York common law presumption that commissions are earned at the point of sale is applicable in a deduction from wages case where there is no written commission agreement between the employer and employee regarding when wages are earned. If the Court of Appeals determines that commissions are earned at the point of sale in the absence of a written agreement, many deductions made as part of the formula for calculating commissions could be open to challenge. The implication of such a decision would have far-reaching impact on employers who do not have written commission agreements with their employees. (Note: Pursuant to an amendment to the law in October 2007, all employers in New York are now required to have written commission agreements with their employees. See N.Y. Labor Law §191(c).) The Court of Appeals in Pachter may also reach the issue of whether employers are permitted to make deductions for items such as expenses and returns as part of their commission formulas. A decision limiting the permissible components of an employer’s commission formula will undoubtedly be of concern to employers in New York with commissioned employees.
Also of importance to employers is the question of whether executives are considered employees for the purposes of New York Labor Law §193. Under most current cases, executives are not treated as covered by this section. As with the deduction issue, an adverse decision in Pachter could extend coverage to a whole category of employees who are not currently assumed to be entitled to coverage, and could provide a basis for liability to those employees.
Morgan, Brown & Joy, LLP filed an amicus curiae brief in support of the employer, Bernard Hodes Group, Inc. Oral argument before the New York Court of Appeals was held on April 23, 2008. On the brief were Diane Saunders and Laura Raisty, both of whom are admitted to practice in New York.
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