Employer Agreement Forced on Terminated Employee Found to Violate Wage Payment Statute

55For some people, getting fired from work is like receiving the death sentence.  In the following case, an employee was fired without any reason by his employer. The employer also tried to shortchange him by not giving him his earned wages. However, the employer fought back and, more or less, was vindicated under Louisiana law.

Ralph J. Hanks worked at Louisiana Companies as an insurance producer for more than two decades. However, on November 10, 2009, his employer terminated him without any explanation. As part of his termination, he was given a Separation Agreement (“Agreement”) to sign, which stated that Louisiana Companies would pay the wages he had thus far earned. The Agreement also stated that Hanks would sell his Louisiana Companies stocks to Louisiana Companies. Furthermore, Hanks would agree not to sue Louisiana Companies or solicit current Louisiana Companies employees. If Hanks were to sue or solicit customers, then Louisiana Companies stated that it would not pay the wages he had earned.

Hanks signed the Agreement on December 1, 2009. In February 2010, Hanks began working for another employer, First Federal. First Federal shared that it had hired Hanks through a local billboard and newspapers. As a result, some of Louisiana Companies’ customers moved to First Federal for their business. Soon after, Louisiana Companies notified Hanks that he had violated the Agreement and stated that it would not pay his earned wages. Hanks sued Louisiana Companies. The district court found that Louisiana Companies’ Separation Agreement was null and void because Louisiana Companies, by making Hanks sign the Agreement, violated Louisiana’s wage payment statute. Louisiana Companies appealed. 

Louisiana has a wage payment statute which states that an employer must pay a discharged employee the amount due to the employee before the next regular payday, or within fifteen days after the discharge. La. R.S. 23:631. Louisiana courts define wages as any amount earned during a pay period. Williams v. Dolgencorp, Inc., 888 So.2d 260, 263 (La. Ct. App. 2004). An employer that conditions the payment of wages to a discharged employee by asking the employee to sign an agreement in which the employee releases all of his or her rights against the employer violates La. R.S. 23:631. Rush v. Ryan Chevrolet, Inc., 408 So.2d 984, 986 (La. Ct. App. 1981)

Though Louisiana Companies argued that Hanks voluntarily signed the Agreement knowing its ramifications, the Court of Appeal did not buy the argument. The Court of Appeal looked at the record and found that Louisiana Companies pressured Hanks to sign the Agreement, pointing to email evidence where Louisiana Companies essentially threatened Hanks by saying that if he did not sign the Agreement, he would be terminated without any benefits. Furthermore, Hanks testified that he had signed the Agreement under economic duress. Because of the above, the Appellate Court ruled that Louisiana Companies violated 23:631 by asking Hanks to sign the agreement. 

Though Hanks was able to show that his former employer had essentially coerced him and shortchanged him, winning an employment case is not always easy. To battle against an employer is an uphill battle, but an experienced lawyer can help with the process. 

Additional Sources: Hanks v. Louisiana Companies 

Written by Berniard Law Firm Blog Writer: Peter Lee

Additional Berniard Law Firm Articles on Employment Termination: Louisiana First Circuit Court of Appeal Discusses Supplemental Earnings Benefits Following Termination of Employment