A startup employee advised his employer that it could withhold his and others’ wages until it secured future funding. The employee was a lawyer and drew up contracts to reflect this agreement. The employee later left the company on bad terms and demanded arbitration to recover his back wages. An arbitrator ruled for the employee, determining that the company had violated the Illinois Wage Payment and Collection Act because it had withheld wages beyond the statutorily allowed time period. The company later sued the employee, arguing that it was the employee’s own advice that led to the company’s liability. The district court granted the employee’s motion to dismiss, and the company appealed. The appellate panel affirmed the decision of the district court, finding that the company’s CEO had failed to show that the employee owed her a duty, and that the company had failed to show that the employee’s advice was the proximate cause of its actions.
UFT is a commercial finance company founded by Joanne Marlowe in 2008. Richard Fisher worked as a consultant with UFT from February 2013 to September 2013 and then became employed by UFT as its chief legal officer in October 2013. While he was employed at UFT, Fisher was the sole source of legal counsel to UFT and Marlowe regarding the company’s operations. Fisher also drafted the employment agreements between UFT and its employees, including both Marlowe’s and his own. The employment agreements included mandatory arbitration clauses.
During this time period, UFT’s revenues were inconsistent. The company therefore failed to pay Marlowe, Fisher, and all other employees their agreed salaries when they were due. Fisher and other employees continued to work at the company because they believed in its potential. At various times, Fisher recommended and drafted “supplemental agreements” allowing for the accrual of wages owed to various employees who could not be paid on schedule due to UFT’s revenue shortfalls. Continue reading ›