Our colleagues Gregory Keating and Francesco DeLuca of Epstein Becker Green have a new post on Workforce Bulletin that will be of interest to our readers: “Massachusetts Case Highlights Importance of Clear Communication in Compensation Plans.”
The following is an excerpt:
Preparing the terms of employee compensation can be a resource-intensive task requiring input from stakeholders across numerous departments, including human resources, finance, and legal. However, as the Massachusetts Appeals Court’s recent decision in Alfieri v. Merrimack Pharmaceuticals, Inc. demonstrates, investing those resources to complete the task will pay dividends when an employer is faced with a potentially costly claim for unpaid wages.
In May 2014, Merrimack Pharmaceuticals, Inc. sent Michael Alfieri a letter offering him the position of corporate controller. In its offer letter, Merrimack explained that it would compensate Alfieri using a “total target cash compensation (‘TTCC’)” method under which it would pay him a percentage of his total compensation in biweekly salary payments and would retain a percentage to be paid in the first quarter of the following year. The offer letter set out three conditions that had to be met for Alfieri to receive the retained portion of his TTCC: “(i) the employee is an active employee of the Company on the date that the retention is paid, (ii) the employee is continuing to meet expectations and (iii) the Company is performing adequately, as determined by the Company’s Board of Directors (the ‘Board’).” After explaining Alfieri’s proposed compensation, the letter expressly stated that it “superseded ‘all prior understandings, whether written or oral, relating to the terms of [Alfieri’s] employment.’” Alfieri accepted the offer by signing the letter and began working for Merrimack in July 2014.
Click here to read the full post and more on Workforce Bulletin.