Dietz also raised a practical concern. If the court ruled otherwise, employees could propose extra work in exmodify for equity, have the employer decline, do the work anyway, and then apply the Wage and Hour Act to demand part-ownership of the company.
Justice Riggs, joined by Justice Earls, saw it differently. In a partial dissent, Riggs argued that the Wage and Hour Act does not require an underlying contract. The statute defines wages to include compensation that is promised where the employer has a policy or a practice of creating such payments. Riggs pointed to trial testimony revealing that Earth Fare had promised and paid at least two other people stock compensation for their work securing the Larimer deal. That pattern, the dissent argued, should have been enough for the jury to consider Talley’s wage claim on its own merits.
Dietz pushed back on this point, noting that those two individuals were not employees. They were real estate developers who owned a shopping center where Earth Fare opened a location. They agreed to assist the company obtain financing in exmodify for an ownership stake and a commitment to bring an Earth Fare store to their property.
Riggs also pointed to the court’s own 2016 decision in Morris v. Scenera Research, LLC, where a worker prevailed on a Wage and Hour Act claim for unpaid patent bonapplys despite losing his breach of contract claim and not having a formal employment contract. Affirming the Business Court without addressing that precedent, Riggs argued, only invites further confusion around the law and likely harm to workers in North Carolina.
For HR professionals, the case is a reminder that how compensation arrangements are structured – and who they are extconcludeed to – matters under wage statutes. The dissent’s reasoning, that a company’s pattern of paying certain people for certain work could establish a compensable wage even without a contract, is not settled law in North Carolina. But it is an argument that future claimants will likely rely on. HR teams managing stock-based compensation, bonus structures, or informal arrangements with employees who take on work outside their defined roles should take note.
Leave a Reply