Continuing a very busy Wednesday in employment law (where were all these cases earlier this month?), the Connecticut Supreme Court issued a noteworthy decision on a few different wage issues. Because of time limitations, I’ll address the case in a few separate posts.

The case, Ravetto v. Triton Thalassic Technologies, Inc. et al. , was argued to the Court in February 2007 (that is not a typo) and finally released on Wednesday (though it won’t be "official" until March 4, 2008). 

There are lots of interesting employment issues in the case, but what immediately jumps out at me is the court’s holding that an employee who is provided advances on commissions, does not need repay those advances when that employee’s employment ends, even if the actual commissions did not amount to the advances.  The Court’s ruling assumes that the employment agreement in place is silent on the issue of repayment.

The Court, in a 4-1 decision, adopts a view in a majority of other states that says that simply using the words "draw" or "advance" in an employment agreement is insufficient to establish a contractual obligation to repay those advances upon the end of employment.

We agree with the majority of courts that the mere use of the terms ‘‘draw’’ or ‘‘advance’’ in an employment agreement is not sufficient to establish the parties’ intent that the employee is obligated to repay the excess advances.

In arriving at the general rule that an employer may not recover excess advances unless an express or implied agreement to repay is established, many courts have reasoned that because the employer usually drafts the employment agreement, it easily may include language in the agreement obligating the employee to repay any advances that exceed commissions. …

We therefore agree with the majority of jurisdictions that ‘‘absent a contractual provision expressly holding [an employee] personally liable for advances, [an
employer] must show that [the employee], by his [or her] conduct, exhibited an intent to be held personally liable for the repayment of the advances.’’ …This rule is consistent with the ‘‘well settled judicial reluctance to cause a forfeiture of money already received unless it convincingly appears that such a result was intended by the parties. . . .’’

This decision has the potential to have a significant impact for employers in Connecticut.  What the court appears to be saying is that it is fine for an employer to say explicitly in an offer letter or employment agreement that the employee must repay the advances on commissions upon termination of employment, but in the absence of that provision, the employee is not obligated to do so. 

For employers in Connecticut, the case suggests an obvious course of action as well. Employers may want to consider having an explicit "repayment" provision in their offer letters and employment agreement for those employees who receive an advance or draw on commission.  Does this mean that existing agreements should be modified to add this provision? It may be something to consider.

There’s more to this topic, and the decision in general. And, when time permits, I’ll provide some additional thoughts.