UTC sued over employee education incentive plan
HARTFORD, Conn.—United Technologies Corp., based here, is facing a federal class-action lawsuit that claims the company reneged on stock awards it promised some employees for furthering their education. The employees completed their training, but UTC says they’re not eligible for the shares because it subsequently laid them off, according to the lawsuit.
The lead plaintiff is a New Jersey engineer, Richard Grisafi, who since 2007 had worked for UTC’s Fire & Security division, which in 2011 became part of UTC Climate, Controls and Security. Grisafi earned a master’s degree in 2010 through the company’s Employee Scholar Program and was due to receive 141 shares of stock in October 2013. However, UTC laid him off in August as part of a work-force reduction plan, the lawsuit says. Now Grisafi is suing because he says he is being unfairly denied his shares—worth about $13,000 at current prices.
UTC contends shares aren’t owed to employees who didn’t stay with the company the stipulated three years after earning their degrees—whether they left voluntarily or involuntarily.
However, Grisafi’s attorney, Gary Martin Meyers of Denville, N.J., points to a 2010 Employee Scholar Program document which states that recipients of the program won’t get shares “if the recipient terminates employment for any reason other than death or disability.”
“It doesn’t say, ‘if either the recipient or UTC terminates,’” Meyers told Security Systems News. “It says, ‘if the recipient terminates.’”
He said it “doesn’t make any sense that you lose your award if the company suddenly decides that they’re going to do some sort of restructuring that eliminates you as an employee and terminates you—not having anything to do with your performance but just because you happen to be in the wrong unit at the wrong time.”
In the lawsuit, Grisafi, 31, also contends that UTC retroactively extended the amount of time UTC employee scholars had to remain employed with the company after earning a degree in order to receive the stock. The minimum time was one year when Grisafi signed up with the program in 2007, but was subsequently extended to three years, the lawsuit says.
The lawsuit was filed in March in U.S. District Court in New Jersey. The filing is on behalf of Grisafi and a class of more than 5,000 other UTC Employee Scholar Program participants who didn't get their promised shares because they were either laid off without cause or had their time of eligibility retroactively altered. The scholar program was offered to “a select number of highly trained employees,” according to the lawsuit.
Ian Race, a UTC spokesman, told SSN on March 29 that the company had not yet been served with the lawsuit and can’t respond without knowing the details.
However, in a letter UTC sent to Grisafi in November, a company lawyer pointed out that a 2010 “frequently asked questions” document about the scholar program stated that an involuntary layoff was a reason for the stock award to be canceled.
Meyers contends that the document was not widely circulated among employees and “is not one of the controlling plan documents.”
Race provided a brief statement about UTC’s education incentive program.
“UTC's Employee Scholar Program has been widely recognized as one of the most successful and generous corporate education programs in existence,” he said. “Since its founding more than 15 years ago, UTC employees have earned more than 34,500 degrees and the company has spent more than $1 billion on employee education.”
The company says it has approximately 8,000 current enrollees in the program, which allows employees to study at any accredited university and study any program they want, whether it applies to their job or not. UTC says the company also “covers the cost of tuition, books and fees upfront.”
Meyers acknowledged UTC paid Grisafi’s tuition, but added, “part of the payment so to speak for undertaking to advance employees’ education was that they would get this stock award.”
UTC says it provides employees “with paid time off to study.” But Meyers says Grisafi and other class members gave up their nights, weekends and holidays to participate in the program and put in a lot of effort. The lawsuit says they also refrained from looking “for other employment after the attainment of their degrees.”
At various times during the past several years, UTC—a highly diversified company—announced plans to lay off thousands of employees. UTC ended 2012 with a 4 percent increase in sales revenue to $57.7 billion. In a 10-year period ending December 2012, the corporation’s stock price climbed an average of 13 percent per year, according to a recent report in the Journal Inquirer, a newspaper based in Manchester, Conn.
Meyers said the company had a right to downsize to increase profits but not at the expense of employees like Grisafi, who Meyers said is still unemployed.
“Do your reduction in force. OK, that’s fine,” Meyers said. “You have every right to do that, but you don’t have a right to trample on the rights of your employees who you happen to be terminating.”
The plaintiffs are seeking compensatory and punitive damages, as well as costs and attorneys’ fees.