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Employer Not Liable for Retaliatory Discharge Under Kansas Wage Payment Act

In Deeds v. Waddell & Reed Investment Management Co., 47 Kan.App.2d 499, 280 P.3d 786 (2012), the Kansas Court of Appeals considered whether an employee could maintain a claim for retaliatory discharge where the employer terminates the employee to avoid paying commissions owed pursuant to the Kansas Wage Payment Act. The court held that such a claim could not be sustained.

In 2007, Waddell & Reed fired Charles Deeds from his position as a sales marketing executive. The parties agreed that Deeds was an employee at-will. A year later in 2008, Deeds filed a claim under the Kansas Wage Payment Act with the Kansas Department of Labor seeking more than $1 million in commissions he said he had earned that had not been paid to him. In 2009, Deeds sued Waddell & Reed, alleging that it had fired him in retaliation for exercising his rights under the Kansas Wage Payment Act.

First, the court held that a person cannot be fired in retaliation for exercising rights under the Kansas Wage Payment Act unless the employee has given some indication that he or she is acting under its provisions. The court found that Deeds complained to Waddell & Reed about changes in the compensation system but that he was personally unaware of the Kansas Wage Payment Act and never suggested he was making a claim under its provisions during his employment. Accordingly, the court held that Deeds could not maintain a lawsuit alleging that he was terminated for exercising rights under the Kansas Wage Payment Act.

The court also rejected an additional theory of liability advanced by Deeds: that an employer cannot fire an employee to avoid paying a commission that has already been earned. The court stated that Deeds had not cited any Kansas constitutional provision, statute, or court opinion showing a strong public policy forbidding the firing of an employee for the purpose of avoiding the payment of commissions already earned. The court further stated that it did not believe such a policy existed. Specifically, it stated that if the commissions have been earned, the employee can make a claim for them either under the Kansas Wage Payment Act or in a breach-of-contract action.

The court noted that by terminating the employee, the employer should be able to limit its exposure only to what it was already legally obligated to pay. The court stated that one of the benefits of the employment-at-will rule is that an employer can terminate employees to cut payroll and expenses when necessary to maintain a viable business until expansion is again possible. Thus, permitting a retaliatory discharge claim under these circumstances would expose the employer to additional liability, such as punitive damages. Accordingly, the court of appeals affirmed the district court’s order granting summary judgment in favor of Waddell & Reed.