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Israel v. Voya Institutional Plan Services, LLC

United States District Court, D. Massachusetts

March 16, 2017

JOEL B. ISRAEL, Plaintiff,
v.
VOYA INSTITUTIONAL PLAN SERVICES, LLC, Defendant.

          MEMORANDUM AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT

          ALLISON D. BURROUGHS U.S. DISTRICT JUDGE.

         Plaintiff Joel Israel filed this suit seeking approximately $32, 000 in unpaid wages and commissions that he alleges Defendant Voya Institutional Plan Services, LLC (“Voya”) unlawfully withheld from him in violation of the Massachusetts Wage Act, Mass. Gen. Laws ch.149, § 148. The Court previously denied Voya's Motion to Dismiss and to Compel Arbitration on October 26, 2015. [ECF No. 26]. Now before the Court are motions for summary judgment filed on May 11, 2016 by Israel [ECF No. 48] and Voya [ECF No. 49]. Voya argues that because Israel resigned voluntarily, he is not entitled to compensation under the terms of the employment agreement. Israel claims he was involuntarily terminated and also argues that the compensation constituted “commissions” which were withheld in violation of the Massachusetts Wage Act. Voya responds that the compensation was a bonus and therefore not protected by the Wage Act. For the reasons set forth below, Israel's motion is granted, and Voya's motion is denied. In addition, Israel's pending motion to strike [ECF No. 60] is denied as moot.

         I. FACTUAL BACKGROUND[1]

         A. Relevant Events

         Israel began working for ING Institutional Plan Services, LLC on November 11, 2013. Voya Institutional Plan Services, LLC is the successor-in-interest to ING Institutional Plan Services, LLC, and Voya and ING are treated as the same entity for the purposes of this proceeding. Israel was employed by ING (hereinafter referred to as Voya) as a “Sales Rep-Retirement Services.” He was an employee at will. Israel was paid a fixed annual income of $50, 000, plus a variable amount based on sales. His variable compensation was determined according to a policy set forth in a document entitled Advisor Production Compensation Plan Summary (the “Plan”), which is discussed in more detail below.

         In order to be employed as a “Sales Rep-Retirement Services, ” Israel was required to register as a “registered representative” with the Financial Industry Regulatory Authority (“FINRA”). When Israel applied to be a “registered representative, ” Voya submitted a form known as the U-4 to FINRA. When Israel ceased to be employed by Voya, it was required to submit a form known as the U-5 to FINRA.

         Israel applied to transfer to a similar position at a different Voya entity in July 2014. Upon consideration of Israel's application, Voya came to believe that, in his initial application for employment, Israel had not been truthful about his reason for leaving his previous employer. On September 26, 2014, Voya informed Israel that it would not allow him to transfer, and furthermore, that it planned to terminate his employment. At that time, Voya presented Israel with the option of submitting a letter of resignation, which would allow Voya to report on the U-5 that Israel's termination was “voluntary, ” rather than firing him, which would require the involuntary termination to be reported on the U-5. Israel elected to resign, and submitted a letter of resignation the same day. The letter read as follows: “Effective 9/26/2014 I am tendering my resignation. I am willing to continue to work until I am told my services are no longer needed. I expect to be paid for all my work, unused vacation, commissions earned, and expenses (travel) incurred within the legally allowable period.”

         B. The Plan

         According to the terms of the Plan, the variable component of Israel's compensation consisted of three parts: the Individual Component, the Discretionary Component, and the Forfeiture Component.

         The Individual Component was a percentage of revenue generated by an “eligible” employee. Israel was considered an “eligible” employee for most of his employment and received payments accordingly, except for the compensation in dispute. Israel generated revenue for Voya when individual participants in defined contribution benefit plans, such as 401(k) plans, consulted with Israel and then authorized Voya to make investment decisions on their behalf instead of self-directing their investments. In order for revenue to be included in the Individual Component, the authorization given to Voya had to remain in effect for at least three consecutive months.

         During the course of his employment, Israel was never entitled to receive a payment from the Discretionary Component, and for purposes of this motion, the Discretionary Component is not relevant.

         The Forfeiture Component was based on the compensation generated by Voya employees who were no longer eligible to participate in the Plan. The amount that would have been paid to the employee was forfeited and distributed to remaining Plan participants on a per-capita basis. The Plan document explained that current Plan participants receive this compensation because “the participants and accounts associated with the forfeited production compensation represent a service commitment for the remaining eligible participants.” Part of the variable compensation that Israel seeks comes from the forfeiture component.

         Beyond the three categories of compensation, under the heading “Payments, ” the Plan document stated: “Payments under this program are paid in the payroll immediately following the third month after the month that production activity occurred (i.e. Payments in respect to enrollment activity in January, will be paid in the May 15th pay period). In order for a participant to qualify for a production bonus, the participant must achieve certain levels of performance, as described above, and fulfill his/her duties satisfactorily and in a manner that enhances the image and reputation of [Voya], each determined by [Voya] in its sole discretion.”

         The Plan provided that a “participant who accepts a non-eligible position within [Voya], involuntarily terminates, becomes permanently disabled, retires, or dies shall receive any bonus earned under this Program prior to such event, provided all requirements are met. In the event of death, payment will be issued in the name of the deceased and forwarded to his/her estate. Employee should be actively employed (not on a leave of absence or terminated) to receive payment. Employee who resigns (voluntary termination) will not be entitled to any pro-rated payment.”

         The Plan specified that Voya reserved the authority to “decide all questions and matters relating to the interpretation and administration of the Plan.” It also stated that “no person shall have any claim or right to be granted a bonus award under this Plan, ” and that “decisions to pay or not to pay an award, [and] the amount of the award to be paid . . ...


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