Dispute over bonus plan defeats wage and hour claim

After an employer changed the terms of an employee bonus plan, a misunderstanding developed and led to a finding that the employees' claimed wages hadn't been “agreed upon,” resulting in rejection of their wage and hour suit.

Facts

Patrick Bahil and John Faig worked for Flexsteel Industries, Inc., for many years. Each was paid under a compensation plan that included a base salary, as well as quarterly and annual bonuses tied to specified goals and benchmarks, which were subject to change. Some years they would receive handsome bonuses, and some years they would receive no bonus.

In 2014, Flexsteel adopted a new compensation plan that changed how bonuses would be calculated and paid. One change was that bonuses would no longer be paid quarterly, but instead only on an annual basis.

When they saw the new plan, Bahil rejected it outright, and Faig rejected it as written but proposed modifications. Flexsteel declined to accept his proposed modifications and told him the new plan's terms weren't negotiable.

Although the new plan didn't contemplate quarterly bonuses, Bahil and Faig continued to receive them. They assumed the continued quarterly bonuses meant they wouldn't be subject to the new compensation plan. Flexsteel, however, considered them to be subject to the new plan and continued the quarterly payments merely as a goodwill gesture to ease the transition from the old plan to the new. Although the company continued making the quarterly bonus payments, it treated them as an advance against the year-end bonus. The practice continued into 2015.