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Employer put stop payment on severance check

Discussion in 'Small Claims & Municipal Court' started by slar44, May 9, 2009.

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  1. slar44

    slar44 Law Topic Starter New Member

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    My former employer paid me severance under an oral agreement, then became angry that I asked him for vacation pay that he still owed me, and subsequently put a stop payment on the check. I have a complaint with the labor department for the vacation pay, which they inform me I am likely to win. But since there was no contract or written agreement for the severance pay, I was advised to go to small claims court for the stopped check. What are the laws around stopped checks? Does his writing it in the first place indicate his intention to pay me, in the absence of a written agreement?

    Thank you so much. I have the hearing on Tuesday so any information would be greatly appreciated.
     
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  2. dee_dub

    dee_dub Moderator

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    His writing the cheque is a promise to pay. If he stopped payment, he broke the promise. He's liable to make good on it. Depending on your jurisdiction, he may have certain defences (like he received absolutely nothing in return for the cheque, or you obtained the cheque by fraudulent means). Failing those, you should succeed.
     
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  3. cbg

    cbg Super Moderator

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    In what state did this occur?

    Dee Dub, from your spelling I suspect that you are not in the US. US law and UK/Canadian law are very different, and I do not believe that US law would agree with your interpretation.
     
  4. dee_dub

    dee_dub Moderator

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    I am in Canada, and I take your point.
     
  5. slar44

    slar44 Law Topic Starter New Member

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    This was in New York...
     
  6. Green_Hornet

    Green_Hornet New Member

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    Dee Dub is correct even if he is Canadian. The employer can not give money under oral terms; cut a check, then welch with a stop payment order in the U.S, Canada, or any where else that is civilized. If the amount is under your jurisdictions small claims award threshold file in small claims court. Otherwise contact an attorney. The only evidence required is the canceled check. This is basic contact law. Once an agreement with consideration is entered, and a party performs, the other party owes the consideration as agreed. A party cannot unilaterally change the terms of an agreement with consideration after one party has performed.
     
    Last edited: May 10, 2009
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  7. Green_Hornet

    Green_Hornet New Member

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    Your welcome.
     
  8. FlaRiptide

    FlaRiptide New Member

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    Since New York is an "At Will" state, would the severance pay be considered a "Gift"?

    If it is a gift, then the employer has every right to place a stop payment. There is no broken contract.
     
  9. Green_Hornet

    Green_Hornet New Member

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    No its not a gift once mutual assent and performance has occurred. There was a meeting of the minds the employer agreed to severance pay then wrote a check. That creates a contract. At-will just means you can be fired for any reason it does not mean they cant pay you or live up to the terms of hire at-will. Otherwise the you could pick up your pay check at the end of the week, get shorted a hundred bucks, and the employer can claim at-will.

    Thats not how that works.
     
    Last edited: May 11, 2009
  10. cbg

    cbg Super Moderator

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    I seriously doubt that simply writing a check constitutes a legally binding contract to pay severance. Wages are due by law. Severance is not.
     
  11. Green_Hornet

    Green_Hornet New Member

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    Then you don't grasp basic contract law. Severance is due by law once it is agreed to by both party's. In the posters case not only was severance agreed to the employer cut a check for it.

    An offer and acceptance makes an agreement with consideration. If not written, the agreement is oral. Oral (parol) contracts are legal and may be enforced by a court action.
     
  12. dee_dub

    dee_dub Moderator

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    For my money, the employment law issue is secondary. It's not a question of whether the person is entitled to severance; it's a question of whether the employer agreed to pay him severance and reneged. And as far as bank/contract law goes, if you stop payment on a cheque, you are liable to make good on it unless there is some good reason why you should not. Granted, this is Canadian law I am speaking of. I would speculate that US law is not significantly different. I am advised that in some US jurisdictions the test is whether you stopped payment "in good faith". Y'all know what "good faith" means - honourable intent, lack of attempt to deceive, that sort of thing. I'd like to see how the employer argues that reneging on the agreement was done in good faith.
     
  13. Green_Hornet

    Green_Hornet New Member

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    You got it right Ah. Duty Of Good Faith And Fair Dealing is covered in the U.S under Restatement (Second) of Contracts § 205.
    I am sure all the common law English speaking country's have similar type wording somewhere. Employment law has bubcas to do with the posters problem.

    Not every single problem that arises in the work place falls under employment law. If the employers argument is I don't have to pay severance because it is not required by Federal or state employment laws, so I promised to then cut a check after the employee performed. Then the judge certainly wont entertain that position.

    In fact if the employer tried it the judge has it in his discretion to consider it part of the employees wages entitling the employee to double damages under the Federal wage law or an additional 25% under New York law as well as a $500.00 civil penalty.

    Basically it is a wage if a judge declares it a wage, and a judge has the authority to declare it a wage, so I would be surprised if the employer would even take a cbg position like that in open court. It would only open the employer up to further problems than a make whole award provided for in contract law.
     
    Last edited: May 13, 2009
  14. cbg

    cbg Super Moderator

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    I'm not arguing that the severance isn't owed. I don't know if it is or not. It could be. We don't have all the details about any arrangments or agreements between the employer and employee. But if it is, it's not because the employer wrote a check.
     
  15. Green_Hornet

    Green_Hornet New Member

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    In fact slar44 cut and paste these, check the statutes to make sure they are still good law in case the employer wants to play cutesy like cbg post #10:
    The LawProfessor has a link here for N.Y law as well. http://www.thelaw.com/ny-law/index.php?law_id=13&art_id=397&dsc=1
     
    Last edited: May 12, 2009
  16. Green_Hornet

    Green_Hornet New Member

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    The check is the signature by both party's to the agreement that is the details and arrangements signed on the dotted line. I feel 99% certain only 1 person out of 1,000 would need more convincing there was a contract.
     
    Last edited: May 12, 2009
  17. FlaRiptide

    FlaRiptide New Member

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    Your analogy doesn't fit. The employer is required to pay wages, yet severance pay is not a requirement. Thus I was inquiring if it could be considered a gift. By offering the severance pay, what did the employee put on the table? How can this be considered a contract agreement? The employer had no obligation, thus I feel it is a gift and the gift was withdrawn.
     
  18. Green_Hornet

    Green_Hornet New Member

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    Thats an interesting theory it's a better argument than severance pay is not required by law. I doubt the judge would buy it, of course he could.

    It's still not a good reason not to file in court. It's pretty thin your arguing that there was not a quid pro quo, however there was a meeting of the minds and it was agreed that severance was in order for past or future performance before resigning.

    If the employer wrote a severance check in order to escape the amount of vacation pay that would be sham bargaining. A promise that is illusory can not serve as consideration.

    Therefore there will be no consideration issue if the party who made the illusory promise is trying to avoid performance. In that case the judge could order the employer to pay both, or throw the severance pay out as a sham in order to avoid performance on the vacation pay which is filed with commissioner. Hmmmm? I still think the poster has a very strong case with the canceled check. The reason being it was agreed to as severance by both party's, not in liu of vacation pay which would be illusory. I dont think your argument could work for the employer.
     
    Last edited: May 12, 2009
  19. cbg

    cbg Super Moderator

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    Severance ISN'T required by law. Not even you are trying to claim otherwise.

    But you're twisting what I said. You're trying to make it sound as if I'm saying, since it's not required by law, the employer isn't required to pay it, end of statement. That is NOT what I said. I acknowledge the possibility that a contract exists. But you have not convinced me that simply writing a check is what proves it. I could write a check made out to you today, then tear it up. That doesn't mean I owe you any money.
     
  20. Green_Hornet

    Green_Hornet New Member

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    It is required when agreed to by party's. As far as writing me a check: If you wrote me a check by accident thinking I was Kato that just mowed your lawn for $50.00 then you canceled payment because I was the Green Hornet who did not, your right you could legally rip up the check since there was no performance on my part.

    If you wrote me a check for no reason at all, it would be difficult for me to make a case for the money you wrote the check for. The judge would want to know why you wrote me a check if I filed in either scenario.

    However the posters case was no accident, the employer agreed cut a check for severance with the employee. Whether severance is required in employment law is completely irrelevant. What we are talking about here is what everyone else just calls CHEATING! Lawyers call what you just did the "nuh-uh" defense - -no logic, no authority, just don't want to agree.

    I am not twisting your words around they speak for them self.
     
    Last edited: May 12, 2009

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