Regions

New York Appellate Division Revisits Post-Termination Payment Of Commissions

by Dean L. SilverbergJeffrey M. Landes and Anna A. Cohen

February 2010


The New York Appellate Division, First Judicial Department’s recent decision in Arbeeny v. Kennedy Executive Search, Inc., — N.Y.S.2d —-, 2010 WL 114948 (1st Dept. Jan. 14, 2010), serves as a valuable lesson to employers with commissioned employees. When drafting written commission agreements, as required by N.Y. Labor Law § 191(c), employers must ensure that they clearly define when a commission is considered “earned.” In Arbeeny, the Appellate Division reinforced the long-standing policy that once a commission is earned, it cannot be forfeited, even if the employee who earned the commission is no longer employed when the commission is payable and the commission agreement provides that commissions are only paid if the employee is still employed when the commissions are due to be paid.

In Arbeeny, the plaintiff was employed by Kennedy Executive Search (“KES”), an executive recruitment firm, as a Senior Executive Search Consultant. Plaintiff’s commission agreement provided that he was eligible “to earn commission compensation in respect of placements arranged by Employee on behalf of KES.” (Emphasis added.) According to the wording of arrangement, the commission was earned at the time it was arranged. Payment of the commissions was to be made in the calendar month following the month in which KES received payment from the client, provided KES recovered certain costs. The commission agreement also provided, “[n]o commission shall be due” in the event plaintiff “is not in the employ of KES at the date the commission payment would otherwise be made.”

KES terminated plaintiff’s employment in March 28, 2007. KES received payment from a client in March for a placement that plaintiff had arranged; however, pursuant to plaintiff’s commission agreement, plaintiff’s commission would have been payable in April, after plaintiff’s termination date. As plaintiff was no longer employed by KES when the commission was due, KES attempted to avoid a dispute with plaintiff by paying him a portion of the commission, but did not pay plaintiff the entire amount due. The court noted that after plaintiff’s termination, KES received other fees from placements also arranged by plaintiff; however, KES did not pay any further commissions to plaintiff.

Although the lower court dismissed plaintiff’s complaint with respect to his claim for unpaid commissions, noting that “the employment agreement expressly deprives plaintiff of post-termination commissions,” and there was “no allegation that [KES] failed to pay to [plaintiff] commissions for placements he finalized and for which fees were received prior to his termination,” the Appellate Division reversed this decision and found that plaintiff “has sufficiently stated a breach of contract claim for unpaid earned commissions that he ‘arranged’ prior to his termination.”

While Arbeeny does not prohibit employers from foreclosing the possibility of an employee earning a post-termination commission, to do so, employers should explicitly state that commissions only become earned by the employee if (i) the entire transaction is completed during the employee’s employment, and (ii) the employee remains employed by the company on the date the commissions are due to be paid. To ensure that existing commission agreements are enforceable in the manner intended by the employer, we recommend that employers consult with their Employment Law attorneys to review all commission agreements.

For more information about this Client Alert, please contact:

Dean L. Silverberg
New York
(212) 351-4642
Dsilverberg@ebglaw.com
Jeffrey M. Landes
New York
(212) 351-4601
Jlandes@ebglaw.com
Anna A. Cohen
New York
(212) 351-4922
Acohen@ebglaw.com


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DAVIS MALM ATTORNEY PAUL L. FELDMAN PARTICIPATES IN MCLE ZONING PRACTICE SEMINAR

February 03, 2010 – Boston, MA
For more information contact: Jeanie Griggs
(617) 589-3895; jgriggs@davismalm.com

On January 26, Davis Malm attorney Paul L. Feldman participated in the “Zoning Practice: MCLE BasicsPlus” seminar. This seminar was designed for the practitioner who needs a solid understanding of zoning including the basics for both residential and commercial properties, handling issues that arise when special permits or variances are required, dealing with nonconforming uses and structures, and dealing with municipalities. Updated information on recent important legislative changes and important judicial changes were also discussed during the seminar. Mr. Feldman was part of a faculty comprised of experienced real estate experts.

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How Can You Telemarket? The OIG Adds a New Twist to DME Suppliers’ Telemarketing Prohibition

by Jana Kolarik Anderson and George B. Breen

February 2010


On January 13, 2010, the Office of Inspector General (“OIG”) revised and reissued its 2003 Special Fraud Alert regarding prohibited telemarketing conduct by durable medical equipment (“DME”) suppliers. There is a new twist.

Both the previous and new OIG Special Fraud Alert explains that DME suppliers are statutorily prohibited from making unsolicited telephone calls to Medicare beneficiaries regarding the furnishing of a Medicare covered item, except in certain limited circumstances.[1] The OIG explained that the statute also prohibits payment to a supplier who “knowingly” submits a claim generated pursuant to a prohibited telephone solicitation and that such claims are false. Consequently, violators are potentially subject to criminal, civil and administrative penalties, including exclusion from the Federal health care programs.

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Vancouver’s Green Olympics

With the 2010 Winter Olympic Games set to leap out of the starting gate on February 12, we thought it would appropriate to highlight some of the initiatives that are helping make the 2010 Vancouver Games the “greenest” and most sustainable Olympic games ever.

As the Globe and Mail reported last week, in Whistler, BC, the sight of the alpine skiing and sliding events for the 2010 Winter Olympics, Innergex Renewable Energy Inc., is days away generating electricity from its $33 million 7.9 megawatt small-scale hydroelectric facility on Fitzsimmons Creek. Innergex signed a 40 year electricity purchase agreement with BC Hydro and the Fitzsimmons Creek Hydro Electric Project will generate an estimated 33,000 MWh annually of green electrons, enough to supply the two ski resorts at Whistler and Blackcomb.
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Clinical Research Regulatory Update: FDA Proposes Updates To Informed Consent Regulations, Issues Guidance On IRB Continuing Review

by Amy DowLeah Kendall and Lee Rosebush

February 2010


The U.S. Food and Drug Administration (“FDA”) continues to focus on clinical research activities. In this regard, FDA recently has taken two additional actions to regulate the conduct of clinical trials: (1) publishing a proposed rule updating informed consent regulations; and (2) issuing a draft guidance addressing Institutional Review Board (“IRB”) continuing review requirements. This Client Alert provides a high level summary of these recent FDA regulatory developments in the clinical research area. 

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NY Governor Paterson Introduces Bill Related To Interactions Between ‘Pharmaceutical Companies’ And Health Care Professionals

by Sarah Giesting and Wendy Goldstein

January 2010


On January 19, 2010, New York Governor David Paterson introduced Senate Bill 6608[i]as part of the 2010-11 New York State Executive Budget. Included in Senate Bill 6608 is a provision to add Section 279, “Interactions Between Pharmaceutical Companies and Health Care Professionals,” to the Public Health Law (“Section 279“). Similar bills are pending in the New York Senate and General Assembly.[ii]

If enacted, Section 279, like other current state marketing laws[iii] and industry codes,[iv]provides a code of conduct applicable to “all companies that sell or market prescription drugs, biologics or medical devices in the state” (“Pharmaceutical Company“).[v]Notably, Section 279 would be the first state law also to provide a code of conduct applicable to health care professionals (“HCP“) practicing in the state to whom such drugs, biologics or medical devices are sold or marketed.

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New Jersey Enacts Legislation Providing Job Protections To Volunteer Emergency Responders

January 2010


On January 14, 2010, acting Governor Steven M. Sweeney signed into law the New Jersey Emergency Responders Employment Protection Act. The Act prohibits employers from terminating, dismissing or suspending an employee who fails to report for work because he or she is serving as a “volunteer emergency responder” who is either: (1) actively engaged in responding to an emergency alarm; or (2) volunteering as an emergency responder during a state of emergency declared by the President of the United States or the Governor of the State of New Jersey. The Act will take effect on April 1, 2010.

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Lidings is becoming the partner of choice for businesses throughout Asia, Europe, and the United States

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New Statistics: Part-Time Lawyers Are Small in Number and Mostly Women

I just read a new press release by the National Association for Law Placement (NALP) that I would like to share with you. Entitled “Most Lawyers Working Part-time Are Women – Overall Number of Lawyers Working Part-time Remains Small,” the release highlighted statistics featured in the 2009-2010 edition of the NALP Directory of Legal Employers. NALP discovered that 5.9 percent of lawyers worked part-time in 2009, up from 5.6 percent in 2008. This information was based on data from 1,475 individual law offices and firms and more than 140,000 lawyers. (By the way, the percentage of part-time lawyers is far below the percentage of part-time employed individuals in the U.S. workforce as a whole, which was estimated to be nearly 14 percent in 2008.)

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Lidings’ attorneys have defended interests of Taiwanese company ASUSTeK in the Federal Antimonopoly Service (FAS)

Several leading manufacturers of notebooks sold throughout Russia (Асеr, ASUSTeK Computer Inc., Dell, Hewlett-Packard, Samsung Electronics, and Toshiba) were faced with an investigation by the Russian Federal Antimonopoly Service (FAS) in June 2009.

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