339 P.3d 963
Wash.2014Background
- Shaun LaCoursiere was a CamWest project manager who received discretionary after-tax bonuses; his employment agreement directed 56% of each bonus to be paid directly into CamWest Managers LLC (LLC) as capital, with 44% to him.
- LaCoursiere became an LLC member; units vested 20% per year. Upon termination for cause, unvested units were sold and member could receive only vested portion; CamWest (and others) had purchase rights under the LLC agreement.
- CamWest terminated LaCoursiere before full vesting (he was 60% vested); he received payment for vested units but sued under Washington’s Wage Rebate Act (WRA), RCW chapter 49.52, claiming the bonus contributions were wages rebated back to his employer.
- Trial court granted summary judgment for CamWest; Court of Appeals affirmed summary judgment but awarded attorney fees to CamWest under the employment agreement; this Court granted review.
- The Supreme Court held the paid bonuses were "wages" but there was no unlawful rebate because the funds went to the separate LLC (not CamWest or its agent); it reversed the award of attorney fees to CamWest because WRA authorizes fees only for prevailing employees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether bonuses already paid for work are "wages" under the WRA | Bonuses paid for work are compensation due by reason of employment and thus are wages | Bonuses are discretionary and not necessarily wages | Held: Bonuses paid for work are wages under the WRA |
| Whether the LLC contributions constituted an unlawful "rebate" to the employer or its agent | The bonus payments, though paid, were funneled back to employer via the LLC and thus rebated wages | Contributions went to a separate LLC, not the employer or its agent, so no rebate occurred | Held: No rebate — funds went to LLC, not CamWest or its agent |
| Whether forfeiture of unvested LLC units upon termination is a prohibited rebate | Forfeiture equates to employer recouping wages through the LLC structure | Forfeiture followed an agreed vesting schedule; units and proceeds belonged to the LLC, not employer; purchaser of unvested units could be members other than CamWest | Held: Forfeiture of unvested interest did not establish a rebate; summary judgment for employer affirmed |
| Whether defendant is entitled to attorney fees under the employment agreement | Employment agreement’s prevailing-party clause allows CamWest to recover fees | WRA authorizes attorney fees only to prevailing employees; contractual fee clause cannot override statutory scheme | Held: CamWest not entitled to fees; award reversed and trial court order denying fees reinstated |
Key Cases Cited
- Ellerman v. Centerpoint Prepress, Inc., 143 Wn.2d 514 (2001) (WRA’s remedial purpose to protect employee wages from employer diminishment)
- Schilling v. Radio Holdings, Inc., 136 Wn.2d 152 (1998) (WRA construed liberally to protect wages)
- State v. Carter, 18 Wn.2d 590 (1943) (definition of rebate and protective purpose of WRA)
- Rekhter v. Dep’t of Soc. & Health Servs., 180 Wn.2d 102 (2014) (party claiming improper wage practice must show recipient was agent with control over wage payment)
- Flower v. T.R.A. Industries, Inc., 127 Wn. App. 13 (2005) (bonuses due by reason of employment qualify as wages)
- Brown v. MHN Gov’t Servs., Inc., 178 Wn.2d 258 (2013) (statutory fee-shifting for employees can render contractual reciprocal fee clauses unconscionable)
- Powell v. Republic Creosoting Co., 172 Wash. 155 (1933) (longstanding practice of bonus payments can make future bonuses part of compensation)
