In McCleary v. Wells Fargo Securities, LLC, the Illinois Appellate Court for the First District held that a former employee sufficiently stated a claim for an unpaid bonus under a written bonus plan that expressly stated that bonuses were made at the sole discretion of the plan administrator, that bonuses were not guaranteed, and that bonuses could be awarded or denied for any reason.

The bonus plan provided that former employees who were discharged for non-performance reasons, had worked at least three months during the bonus period and met their performance objectives, would remain eligible to receive pro-rated bonuses. Although the bonus plan could be amended or terminated at any time pursuant to its terms, the bonus plan also stated that no amendment to the bonus plan would adversely affect bonuses earned prior to the effective date of the amendment.

The former employee had worked for more than three months of the bonus plan year and alleged that he met his performance goals before his discharge. The company exercised its discretion not to pay bonuses to any former employees who had not worked at least six months during the plan year.

The Appellate Court held that the former employee had alleged sufficient facts to state claims under the Illinois Wage Payment and Collection Act, and for breach of contract and unjust enrichment, because he had a reasonable expectation to receive a bonus and the company had abused its contractual discretion by increasing the bonus eligibility requirement from three months to six months of employment during the bonus plan year.

To discuss your company’s employment agreements, bonus plans, or employment law generally, please contact:

Mitchell S. Chaban at:

mchaban@lgattorneys.com or 312-368-0100