In a 5-4 decision, the Washington Supreme Court has ruled in an employer’s favor and clarified what are, and are not, statutory “wages” and unlawful wage “rebates” under Washington State’s Wage Rebate Act (“WRA”), RCW 49.52 et seq. The case is LaCoursiere v. CamWest Development, No. 88298-3 (Wash. Oct. 23, 2014) (slip op.). Camwest Development (“CamWest”) was represented by Stoel Rives attorneys Jim Shore and Karin Jones.
CamWest, a real estate development company, created an optional bonus program via individual written contracts with its participating managers. The bonus program was intended to provide the potential for larger manager bonuses in profitable years, but it also carried a downside risk of smaller, or no, bonuses in leaner years. Participating managers’ contracts made expressly clear that the decision whether or not to award an annual bonus, and the amount of any bonus, was in CamWest’s discretion. Managers did not have to participate in this higher reward/higher risk bonus program and could instead choose to receive a safer, set bonus. Managers who chose to participate in the optional bonus program were required by its terms to contribute a percentage of each annual bonus into a capital account in a separately formed managers LLC. The LLC would in turn loan money to CamWest to be invested in real estate projects that CamWest would develop. The hope and intention at the time was that this arrangement would yield higher profit and bonuses for participating managers. Manager contributions to the LLC vested at 20% per year.