Employee’s Contact & Wage Pay Law Claims Proceed: Ambiguous Contract Provisions Construed Against Employer

When an employment contract or other document is drafted by an employer, any ambiguity in the contract is constructed against the employer. In Thureen v. Computer Sciences Corp. (E. D. Pa. no. 15-4292) (Savage J.) (November 9, 2016), the court applied this principle and denied the employer’s motion to dismiss the employee’s claims for breach of contract and violation of the Pennsylvania Wage Payment and Collection Law.

In Thureen, the employee was promoted several times, ultimately achieving the position of President. After being diagnosed with cancer, the employee took a one-year medical leave of absence; requested an extension of her leave using accrued sick and vacation time, and ultimately the employer refused her request and instead terminated her employment. The employee sued her former employer, alleging breach of contract and violation of the Pennsylvania Wage Payment and Collection Law (“WPCL”), claiming the employer did not award the employee all of the shares of stock to which the employee was entitled under a stock award agreement. The employer argued that under the terms of the agreement the employee waived her right to sue for breach of contract and that the payments under the stock award agreement do not constitute wages for purposes of the WPCL.

The employer granted the employee restricted stock units (RSUs) to vest in stages over three years provided specified earning targets were met with a multiplier that could be applied. Under the stock award agreement, in the event of termination for disability, the award was to be pro-rated. The employer did not apply the multiplier and argued that because the employee was terminated before the end of fiscal year, she was entitled only to a pro-rata distribution and the multiplier did not apply. The employee claimed that she was entitled to a full, rather than a pro-rated, distribution because her accrued vacation and sick leave extended her employment through the end of the fiscal year.

When an employee contends that there is a breach of contract, a court interprets the contract by determining the intent of the parties. When the contract language is clear and unambiguous, the court construes the contract as a matter of law. In determining the parties’ intent, the trier of fact must construe the contract as a whole, considering the contract’s subject matter and objective, the circumstances of its drafting and execution, and the parties’ subsequent conduct. Only where different constructions are reasonably capable of more than one understanding is a contract ambiguous. Further, when a contract term is ambiguous, it is construed against the drafter.

In Thureen, applying principles of contract interpretation, the court held that the agreement’s language covering waiver of the right to sue was ambiguous and capable of two reasonable interpretations. One interpretation was that the agreement bars suit only where the claim is based on the forfeiture of the award, while the second interpretation was that the agreement precludes all actions, no matter the basis. Thus, the court found that the agreement must be construed against the employer as the ambiguity raises a question regarding the parties’ reasonable expectations. Given the ambiguity, the court could not construe the provision as a matter of law and held that the fact finder would have to determine the parties’ intent.

The Pennsylvania Wage Payment and Collection Law (WPCL) provides employees with a legal remedy to recover wages and other employment benefits not paid by an employer that are contractually due. The WPCL provides a basis for an employee to enforce payment of wages and compensation to which an employee is entitled by the terms of an oral or written agreement. While the title of the law refers only to wages, the WPCL defines the term, wages, to include fringe benefits or wage supplements that may include separation pay; stock option wards, unpaid vacation time and other similar benefits. Under the WPCL, in addition to the amount due to the employee, an employee can also recover liquidated damages (an additional 25% of the total amount due) plus attorneys’ fees and costs.

In Thureen, the court held that the stock units were a benefit related to employment. Further, since rights under the WPCL cannot be contravened or set aside by private agreement, an employer cannot have an employee waive an employee’s WPCL rights. Because the employee’s award was a benefit covered by the WPCL and could not be waived, the court found that the employee has stated a cause of action under the WPCL.

For more information on breach of employment contracts, the Pennsylvania Wage Payment and Collection Law and Abramson Employment Law, see http://www.job-discrimination.com/lawyer-attorney-2122062.html, http://www.job-discrimination.com/lawyer-attorney-2122061.html

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Filed under Breach of Contract, Pennsylvania Wage Payment and Collection Law

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