## Facts

- Northeast Capital & Advisory, Inc. hired William B. Truelove, Jr. in 1996 as a financial analyst in a non–revenue-generating support role.
- Truelove’s compensation included a $40,000 annual salary and eligibility for a bonus/profit-sharing pool tied to both individual and firm performance.
- Company memoranda stated the firm would create a bonus/profit-sharing pool only if it met minimum revenue thresholds; the pool size would be based on a percentage of overall firm revenues.
- The CEO had sole discretion to allocate the pool among employees, subject to general conditions such as an at-least-acceptable performance rating.
- Any allocated bonus would be paid in four quarterly installments; continued employment through September 30 of the following year was a condition to receive later installments, with forfeiture upon earlier departure.
- After 1997 revenues of about $1.6 million, the firm created a $240,000 pool; the CEO allocated $160,000 to Truelove.
- Truelove received the first $40,000 installment, resigned, and the firm refused to pay the remaining three installments totaling $120,000 based on the forfeiture provision.

## Issues

1. Whether a discretionary bonus/profit-sharing award tied to overall firm performance and conditioned on continued employment constitutes “wages” under New York Labor Law § 190(1).
2. If the bonus is “wages,” whether withholding unpaid installments after resignation is an unlawful “deduction” under New York Labor Law § 193.

## Decision

- The New York Court of Appeals affirmed summary judgment for the employer and dismissal of the complaint.
- The court held the bonus/profit-sharing award was not “wages” under Labor Law § 190(1).
- Because the payment was not “wages,” Labor Law § 193 did not apply, and nonpayment of later installments was not an unlawful wage deduction.

## Legal Principles

- Labor Law article 6 protects fixed or earned compensation for labor or services rendered; its protections do not extend to every form of contingent incentive compensation.
- A bonus is not “wages” under § 190(1) when it depends on (i) the employer’s overall financial performance and revenue thresholds and (ii) discretionary allocation by management, rather than being a nondiscretionary payment directly earned by the employee’s own production.
- An explicit continued-employment condition and forfeiture term may define the employee’s entitlement to a bonus; nonpayment following resignation is not treated as a “deduction” from earned wages when the payment is outside article 6.

## Conclusion

A discretionary, profit-based bonus allocated from a firmwide pool and conditioned on continued employment is not “wages” under New York Labor Law § 190(1), so withholding unpaid installments after an employee resigns does not violate § 193.


Truelove v. Ne. Cap. & Advisory, Inc., 95 N.Y.2d 220 (2000)