PHILLIP MURPHY
v
.
FIRST UNION CAPITAL MARKETS CORPORATION, WHEAT FIRST SECURITIES,
INC. and FIRST UNION CORPORATION
Mitchell, Rallings & Tissue, PLLC, by C. Spencer Alridge, II
for plaintiff-appellee.
Robinson, Bradshaw & Hinson, PA, by Charles E. Johnson and
Angelique R. Vincent for defendants-appellants.
THOMAS, Judge.
Defendants, First Union Capital Markets Corporation (FUCMC),
Wheat First Securities, Inc. (WFS), and First Union Corporation
(First Union), appeal from a grant of summary judgment on
plaintiff's claim that they improperly withheld part of his bonus.
Plaintiff, Phillip Murphy, appeals from a denial of liquidated
damages.
For reasons discussed herein, we reverse and remand.
The relevant facts are as follows: Plaintiff was employed by
First Union on 29 March 1993. Between then and when he resigned 21
May 1998, plaintiff worked for First Union or its subsidiaries,
FUCMC and WFS.
During 1996, plaintiff earned a one million dollar bonus,which was paid to him in its entirety. By the beginning of 1997,
however, First Union developed a Premium Stock Deferral Plan
(Plan), in which a portion of employees' bonuses would be converted
into restricted shares of First Union stock. Those shares vested
after three years of additional employment. First Union would then
add a 50% premium to the deferral. Plaintiff, however, stated he
did not want to participate in the Plan and never signed any
consenting document. Plaintiff's bonus for 1997 was $1.2 million.
He was paid $900,000 on 15 February 1998, with $300,000 placed in
the Plan.
Plaintiff was allegedly told by his immediate supervisor,
Steven Kohlhagan, that if plaintiff were to leave First Union,
plaintiff would receive all money withheld through the plan but
would not receive any of First Union's contributions.
Nevertheless, under the Plan's terms, if plaintiff were to
voluntarily terminate his employment with First Union, FUCMC, or
WFS, prior to the vesting of the stock for any reason other than
death or retirement, he would forfeit the full amount of what had
been placed in the Plan.
Plaintiff refused to sign an authorization for his
participation in the Plan but was then informed by his supervisors
that he had no choice--the Plan was going into effect and his
compensation would be paid accordingly.
Plaintiff resigned from First Union on 21 May 1998 and
accepted a similar position with NationsBank. Despite repeated
demands, defendants refused to pay the $300,000 which had beenplaced in the Plan. Plaintiff filed a complaint, alleging: (1)
improper wage withholding; (2) violation of N.C. Gen. Stat. § 95-
25.6; (3) civil conversion; (4) breach of contract; (5) detrimental
reliance; and (6) civil conspiracy. Plaintiff requested liquidated
and punitive damages.
Both parties filed summary judgment motions. The trial court
granted partial summary judgment to plaintiff for: (a) improper
wage withholding; (b) violation of section 95-25.6; and (c) parent
liability of First Union for wage violations by FUCMC and WFS. The
trial court granted defendant's summary judgment motion as to
plaintiff's claims for: (1) civil conversion; (2) punitive damages;
(3) breach of contract; (4) detrimental reliance; and (5) civil
conspiracy. Additionally, the trial court allowed plaintiff's
motion for interest pursuant to section 95-25.22(a), denied
plaintiff's motion for liquidated damages, and deferred and
reserved plaintiff's motion for costs and attorney fees. Pursuant
to Rule 54 of the North Carolina Rules of Civil Procedure, the
trial court certified the judgment for immediate appeal.
Before we consider defendants' arguments, we note the trial
court's order would not normally be immediately appealable because
it would be considered interlocutory. State ex rel. Employment
Security Commission v. IATSE Local 574, 114 N.C. App. 662, 663, 442
S.E.2d 339, 340 (1994). A ruling is interlocutory if it does not
determine the issues but directs some further proceeding
preliminary to a final decree. Blackwelder v. Dept. of Human
Resources, 60 N.C. App. 331, 299 S.E.2d 777 (1983). However, aninterlocutory order may be heard in appellate courts if it affects
a substantial right. See N.C. Gen. Stat. § 1-277(a) (1999). In
the instant case, there are factual claims common to the appealed
claim and the remaining claims, including defendants' counterclaims
against plaintiff. An appellant has a substantial right to avoid
two trials on the same question. See Davidson v. Knauff, 93 N.C.
App. 20, 24-27, 376 S.E.2d 488, 490-92, rev. denied, 324 N.C. 577,
381 S.E.2d 772 (1989). We therefore consider the appeal.
By defendants' first assignment of error, they initially argue
the trial court erred in granting summary judgment to plaintiff on
the issue of whether section 95-25.8 was violated because
plaintiff's bonus is not a wage.
The Wage and Hour Act defines “wage” as:
compensation for labor or services rendered by
an employee whether determined on a time,
task, piece, job, day, commission, or other
basis of calculation . . . For the purposes of
G.S. 95-25.6 through 95-25.13 “wage” includes
sick pay, vacation pay, severance pay,
commissions, bonuses, and other amounts
promised when the employer has a policy or
practice of making such payments.
N.C. Gen. Stat. § 95-25.2(16) (1999) (Emphasis added).
Defendants contend the part of the bonus placed in the Plan is
not a wage because it has not yet vested. Therefore, it is not the
property of the employee. Under the Plan, 25% of the bonus must be
deferred into the stock plan. After three years, the stock benefit
vests. Nonetheless, nothing in the N.C. Wage and Hour Act limits
a wage to that which is vested. Under section 95-25.2(16), the
bonus is a promised amount that an employer has a practice ofdisbursing. The bonus at issue satisfies this definition. We
therefore hold that plaintiff's bonus, including that part put in
the Plan, was indeed a wage under section 95-25.2(16).
Defendants further argue, however, that plaintiff should be
estopped from prevailing on his claim because the Wage and Hour Act
expressly provides for forfeiture of earned bonuses. We agree.
Defendants contend plaintiff was put on notice that part of
his bonus would be diverted into a mandatory stock plan. North
Carolina's Wage and Hour Act, section 95-25.7 provides, in
pertinent part, that:
Wages based on bonuses, commissions or other
forms of calculation shall be paid on the
first regular payday after the amount becomes
calculable when a separation occurs. Such
wages may not be forfeited unless the employee
has been notified in accordance with G.S.
95-25.13 of the employer's policy or practice
which results in forfeiture. Employees not so
notified are not subject to such loss or
forfeiture.
N.C. Gen. Stat. § 95-25.7 (2001). Section 95-25.13, provides in
pertinent part, that an employer must:
Notify its employees, in writing or through a
posted notice maintained in a place accessible
to its employees, of any changes in promised
wages prior to the time of such changes except
that wages may be retroactively increased
without the prior notice required by this
subsection[.]
N.C. Gen. Stat. § 95-25.13(3) (2001).
The evidence shows that plaintiff was notified in writing that
75% of his bonus would be paid in cash. The remaining 25%, plus a
50% premium, would be paid as stock as long as he remained with the
corporation for at least three additional years. Plaintiff wasclearly notified that if he quit his job, he would forfeit the 25%
set aside.
The forfeiture provision of Chapter 95 has been construed by
this Court “to permit an employer to make changes in an employee's
benefits, but the change applies only to those benefits accruing
after written notice is given the employee or notice is posted in
a place accessible to the employees.” McCullough v. Branch Banking
& Trust Co., Inc., 136 N.C. App. 340, 349, 524 S.E.2d 569, 575
(2000). As defendants notified plaintiff in writing of the changes
to employee benefits prior to the implementation of the Plan, they
did not violate the Wage and Hour Act by forfeiting plaintiff's
stock when he left to work elsewhere.
Accordingly, we hold that although plaintiff's bonus is a wage
under section 95-25.2(16), it was properly forfeited under section
95-25.7. We therefore reverse the trial court's grant of summary
judgment and hold that the trial court should have granted summary
judgment in favor of defendants on this issue. See N.C. Gen. Stat.
§ 1A-1, Rule 56(c) (2001).
By defendants' second assignment of error, they argue the
trial court erred in granting summary judgment to plaintiff for
violation of section 95-25.6. We agree.
Section 95-25.6 states that:
Every employer shall pay every employee all
wages and tips accruing to the employee on the
regular payday. Pay periods may be daily,
weekly, bi-weekly, semi-monthly, or monthly.
Wages based upon bonuses, commissions, or
other forms of calculation may be paid as
infrequently as annually if prescribed in
advance.
N.C. Gen. Stat. § 95-25.6 (2001) (Emphasis added). Summary
judgment is appropriate when “the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that any party is entitled to a judgment as a
matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c).
Here, First Union informed plaintiff by letter that he would
receive his bonus on 15 February 1998, the regularly scheduled
payday. On that date, plaintiff received $900,000 in cash and
$300,000 in restricted stock, although the stock portion had not
yet vested. Plaintiff was informed about the plan in advance of
receiving the bonus. As with section 95-25.7, we do not find that
section 95-25.6 was violated. Plaintiff's summary judgment motion
should not have been granted.
By plaintiff's only assignment of error, he argues the trial
court erred in failing to award him liquidated damages pursuant to
N.C. Gen. Stat. § 95-25.22(a1). We do not address this issue
because of our aforementioned holdings.
Accordingly, we hold that the trial court improperly granted
plaintiff's summary judgment and improperly denied summary judgment
in favor of defendants. We remand this case to the trial court for
an entry of judgment consistent with this opinion.
REVERSED AND REMANDED.
Judges MARTIN and TYSON concur.
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