Newsom v. Global Data Systems, Inc.
107 So. 3d 781
La. Ct. App.2012Background
- Newsom and Pavlu, former GDS employees, signed an employment agreement and handbook containing an education/training reimbursement provision applicable to the twelve months before separation.
- Newsom and Pavlu were at-will employees; no definite term was established by the contract to modify at-will status.
- GDS sent employees to vendor events (Cisco/Microsoft) necessary for business and for maintaining partnerships, including discounts and certifications.
- Discharged in April 2008; final wages were withheld and replaced with bills demanding reimbursement for training/education expenses.
- Trial court found the agreement valid and used offset provisions to require reimbursement; appellate court reversed, holding the expense provisions void and wage penalties applicable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the employment agreement creates a valid contract | Newsom/Pavlu: contract terms bind them | GDS: at-will default remains; contract does not modify termination rights | Contract not enforceable; at-will status preserved |
| Whether the education/training reimbursement provision is valid in an at-will contract | Provision is void as it violates at-will/public policy | Provision valid as part of contract terms | Provision void; prohibits offset against final wages per La.R.S. 23:631 et seq. |
| Whether setoff/offset against final wages is permissible or constitutes unlawful deduction | Setoff violates statutory wage- payment duties | Offset authorized by contract | Setoff invalid under public policy; wages owed must be paid promptly; penalties apply for failure to pay; contract terms cannot override statute |
Key Cases Cited
- Fauntleroy v. Rainbow Marketers, 888 So.2d 1045 (La.App. 3 Cir. 2004) (default at-will regime; wages must be paid under statute)
- Martin v. Sterling Associates, 72 So.3d 411 (La.App. 2 Cir. 2011) (employee may quit at any time; withholding pay is unreasonable)
- Winkle v. Advance Products & Systems, 721 So.2d 983 (La.App. 3 Cir. 1998) (penalty wages require demand and failure to pay; strict construction)
- Brown v. Navarre Chevrolet, Inc., 610 So.2d 165 (La.App. 3 Cir. 1992) (setoffs against wages; must follow statutory limits; illegality of certain deductions)
- King v. American Rice Growers Exchange, 417 So.2d 904 (La.App. 3 Cir. 1982) (last-week deduction issues; impact of policy and notices)
- Scully, Service Investors Ltd. v. Scully, 9 So.3d 910 (La.App. 3 Cir. 2009) (contracts with term may violate public policy; not controlling where no term exists)
- Goulas v. B&B Oilfield Services, Inc., 69 So.3d 750 (La.App. 3 Cir. 2011) (contracts imposing post-resignation commissions void against public policy)
- Becht v. Morgan Buildings & Spas, Inc., 822 So.2d 56 (La.App. 1 Cir. 2002) (public policy protects statutory wage rights; private contracts cannot override)