Associate Salaries, Lawsuit of the Day

Lawsuit of the Day: Associate Takes Firm to Court Over Deferred Pay

Well, it’s about time. On April 13th, a small claims court in Florida will deal with a case where an associate is suing his former law firm over allegedly deferred compensation. Only $2,000 is at issue, but this is a battle of principle. The Daily Business Review (subscription) sets it up:

The salary deferral imposed by [Becker & Poliakoff] in May 2008 was temporary and necessary in order to avoid layoffs during the economic downturn, managing partner Alan Becker said….

Former Becker associate Richard Valuntas sued the firm last August, alleging Becker committed breach of contract and fraudulent misrepresentation by refusing to repay him the 12 percent deducted from his paycheck for several months. He also alleges Becker’s deferrals violated its own employment contract and policy manual.

You see, the firm promised restitution of the salary cut, and they did eliminate the cut in August of 2008 and gave associates make-whole payments. But only associates still at the firm received full restitution. Valuntas left Becker that August and apparently missed out on one of these restitution paychecks.

Despite the small amount of money involved, both litigants are going to the mattresses…

Is there bad blood between Valuntas and Becker & Poliakoff? You better believe it:

Becker said his firm repaid only “those who were loyal.” While others have complained about the deferrals, Becker said Valuntas is the only one who sued.

“I don’t care if they’re angry,” he said. Valuntas “thinks he’s entitled to $2,000, and we think he’s entitled to nothing.” …

Valuntas, who has three small children, said he had to borrow money to pay for child care due to the unexpected pay cut.

“That’s called stealing my money,” said the former attorney for the Florida attorney general’s office. “They basically took an interest-free loan off the backs of their associates.”

Valuntas is placing a lot of value on a podcast Becker used to announce the May 2008 cuts:

“It is intended that this be temporary, and by that I mean that as soon as the cash flow situation improves so that we are back on a stabilized revenue stream, it is our intention not only to resume the salaries to the original authorized salaries for this year but to restore retroactively the deferred portion to anybody who is here with the firm at the time we make the decision to do so,” Becker stated in the podcast.

Oh, Above the Law readers, how many times have we heard that before? Doesn’t Valuntas know that partners lie spin in their firm-wide statements? They’re not even under any obligation to feel bad about their material misrepresentations to their own employees:

In his complaint and in an interview, Valuntas also complained that Becker “misrepresented” the effect of deferrals on shareholders. While the podcast addressed “all attorneys and department heads,” it turned out shareholders were “frontloaded,” according to Becker. They missed one or more paychecks, representing 4 percent of their total salaries….

When asked why he didn’t correctly describe the effect on shareholders in the podcast, Becker said in a deposition, “I didn’t think there was any need to. Frankly, it’s nobody else’s business. The shareholders were taking a bigger hit.”

(Dear God, they’re taking depositions for a small claims proceeding.)

You get that, Valuntas and any other “uppity” associates out there? Partners might tell you that everybody is sharing the pain equally, but only a fool would believe it. The partners’ business is making money. Your business is doing what they say, not asking impertinent questions.

While it’s kind of nice to see an associate willing to litigate in order to punish his former firm for lying to his face … lying is not a crime when an employer does it to an at-will employee:

Brett Schneider, a labor lawyer with Weiss Serota Helfman Pastoriza Cole & Boniske in Fort Lauderdale, said the key to success in back pay suits for forced furloughs or salary deferrals hinges on employment contracts.

“My hunch would be these cases would have a difficult time succeeding unless there is an employment contract,” he said. “You have to look at the specifics of the contract. In the absence of a written agreement, telling employees on a going forward basis about furloughs or salary deferrals … the employer is in a good position to defend itself.”

It sucks to be told that you’ll get money and then not get it. It sucks to be told that partners will share in the salary cut and then told that it’s none of your business. It sucks to be lied to.

But lying is part of the business, especially during a recession. Employers can get away with it, employees can’t. Those are the rules. If you really want to hold your employer accountable, get it in writing.

And by “get it in writing,” I mean: ask your employer to put it in writing and try not to cry as they laugh at you while you’re being escorted from the building.

Compensation [Daily Business Review] (subsription)

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