Commissioner of Labor v. Chubb Group of Insurance Cos.
An award under an annual incentive compensation plan may not qualify as "wages" under Connecticut General Statutes §31-71a(3). Sean McMahon filed a complaint with the commissioner of labor of the State of Connecticut, alleging that the defendant, Chubb Group of Insurance Companies, failed to pay $37,700 in performance based incentive wages for work that McMahon performed in 2008, pursuant to Chubb's annual incentive compensation plan. The commissioner of labor brought a civil wage enforcement action against the defendant, Chubb, in Connecticut Superior Court, and Chubb removed the suit to the U.S. District Court. Chubb argued that an award under the annual incentive compensation plan does not qualify as "wages" under C.G.S. §31-71a(3). In Weems v. Citigroup Inc., a 2008 decision, the Connecticut Supreme Court held that "bonuses that are awarded solely on a discretionary basis, and are not linked solely to the ascertainable efforts of the particular employee, are not wages under §31-71a(3)." In Assn. Res. Inc. v. Wall, a 2010 decision, the Connecticut Supreme Court found that bonuses constituted "wages as defined by §31-71a(3) because, under the employment agreement, they were entirely nondiscretionary." Chubb's plan provided that a committee could reduce or eliminate any award under the plan. The District Court found that McMahon's bonus was discretionary and did not constitute wages. The commissioner of labor also argued that even if the bonus did not constitute wages, the commissioner can bring a common-law claim, because C.G.S. §31-72 permits the commissioner to "bring any legal action necessary to recover twice the full amount of unpaid wages, payments due to an employee welfare fund or arbitration award." The authority granted to the commissioner of labor in §31-72 is only with respect to unpaid wages. McMahon's bonus does not meet the statutory definition of wages, so the commissioner lacks the power to bring a legal action under §31-72. The court granted the defendants' motion to dismiss.