ORAL AGREEMENTS FOR BONUSES ARE ENFORCEABLE

In a recent case, New York’s highest court decided that an oral bonus agreement is enforceable.  The court awarded the employee the amount of the bonus, interest and attorneys’ fees.  While working in the financial industry for a brokerage firm, the employee received a job offer from another employer, which was a broker-dealer.  As part of the compensation package offered, the employee was to be paid a bonus.  The agreement was not in writing, but was offered and accepted verbally.  Before he received his bonus payment, the employer terminated his employment.  Having not received his bonus upon his termination, the employee sued for breach of contract and various New York Labor Law violations.  The employer argued that the employee was not entitled to the bonus because he signed the employment application and the employee handbook.  Also, the employer argued that the bonus agreement must be in writing for it to be enforceable.  The Court rejected all of the employer’s arguments.  The court decided that the employment application and employee handbook did not mention anything about bonuses and only detailed that the employee was an “at-will” employee (meaning that the employment can be terminated at any time by any party for any reason or no reason at all).  Furthermore, the court decided that the oral bonus agreement was valid and enforceable because the plaintiff relied on the promises of the bonus when he left his previous job and since the obligations of the bonus agreement could be performed within one year, the agreement did not have to be in writing.  This court’s decision can have a tremendous impact on numerous employees in a wide range of industries whose employers have denied their bonuses because they were not in writing.