Sutula-Johnson v. Office Depot, Inc.
893 F.3d 967
7th Cir.2018Background
- Sutula-Johnson sold office furniture for Boise Cascade → OfficeMax; OfficeMax had a written commission-only plan (27% or 20%) that she negotiated to vest commissions on invoicing.
- OfficeMax merged with Office Depot (2013); Office Depot announced a new compensation plan on July 14, 2014 that replaced commission-only pay with a salary plus quarterly "incentive payments" at lower percentage rates (13.5% or 10%).
- The new plan stated incentive payments "accrued" on invoicing but were not "earned" until actual payment on quarterly payout dates; unpaid incentive payments were forfeited if an employee left before payout.
- Sutula-Johnson objected, continued working, signed an acknowledgment in March 2015, then sued (breach of contract, Illinois Wage Payment and Collection Act claims); she later amended to add claim for unpaid incentive payments on invoices issued before her December 2015 resignation.
- District court granted summary judgment to Office Depot on all claims; Seventh Circuit affirmed as to breach of contract but reversed as to Illinois Wage Act claims and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether OfficeMax plan created binding contractual rights preventing unilateral change without consideration | OfficeMax plan created contractual commission rights that couldn't be changed without new consideration | OfficeMax plan expressly disclaimed contractual status and reserved right to amend; no binding promise existed | Held for defendant: plan disclaimers precluded treating it as a binding contract (no consideration issue) |
| Whether Sutula-Johnson rejected the new Office Depot plan (mutual assent) | She orally objected and refused to sign; thus she did not accept the new terms until March 2, 2015 | Continued work after notice and payment under new terms constituted acceptance | Held for defendant: continued work after notice and payment of reduced compensation manifested acceptance |
| Whether Office Depot retroactively reduced commissions on sales invoiced before July 14, 2014 | Office Depot retroactively cut commissions for pipeline sales not yet invoiced | Neither plan entitled her to higher OfficeMax rates for un-invoiced pipeline sales | Held for defendant: no contractual entitlement to higher rates for un-invoiced pipeline sales |
| Whether the "incentive payments" are "commissions" under the Illinois Wage Act and if Office Depot violated the Act by paying quarterly and forfeiting unpaid amounts at separation | Incentive payments are commissions; thus must be paid at least monthly and earned upon invoicing; quarterly payment schedule and forfeiture violated the Wage Act | Payments were bonuses/behavioral incentives and not subject to the monthly-commissions rule; draws and salary satisfied payment obligations | Held for plaintiff on statutory claims: payments are commissions under Illinois law; employer cannot deem wages unearned until payout and quarterly scheme plus forfeiture violated the Wage Act; summary judgment for defendant reversed and remanded |
Key Cases Cited
- Doyle v. Holy Cross Hosp., 186 Ill.2d 104 (Ill. 1999) (employer policy disclaimers and consideration for unilateral changes)
- Duldulao v. St. Mary of Nazareth Hospital Ctr., 115 Ill.2d 482 (Ill. 1987) (when an employer policy creates contractual rights and acceptance by continued work)
- Robinson v. Ada S. McKinley Cmty. Servs., 19 F.3d 359 (7th Cir.) (distinguished; continued work did not infer acceptance where manual created binding protections)
- Bock v. Computer Associates Int'l, Inc., 257 F.3d 700 (7th Cir.) (commissions as paradigmatic incentive compensation for salespersons)
- Perugini-Christen v. Homestead Mortgage Co., 287 F.3d 624 (7th Cir.) (distinguishing bonuses from commissions in ERISA context)
- Watts v. ADDO Mgmt., L.L.C., 97 N.E.3d 75 (Ill. 2018) (Wage Act protects timely and complete payment of earned wages)