Opinion ID: 4212198
Heading Depth: 3
Heading Rank: 1

Heading: Cypress and the Bonus Plan

Text: Dietz was working for Ramtron International Corporation (Ramtron) when Cypress acquired Ramtron in November 2012. Cypress extended offers to some former Ramtron employees, including Dietz, inviting them to join the new company. The offer letters outlined the basic terms and conditions of employment, including expected salary and that the employment with Cypress would be at-will. Cypress also stated it would honor the Ramtron severance package if the employee chose to leave Cypress within one year. In other words, working for Cypress and quitting within one year would entitle the employee to the same benefits as if he turned down employment with Cypress in the first instance. Dietz accepted the offer to become a program manager at Cypress. The Cypress offer letters, however, omitted one important term of employment which is the focus of this lawsuit. Cypress did not reference or explain that some of 3 the former Ramtron employees would be subject to a unique compensation scheme called the Design Bonus Plan (Bonus Plan) created by one of Cypress’s cofounders. This Bonus Plan involved a mandatory wage deduction under which certain employees working on certain projects would forfeit ten percent of their salary until six weeks after the close of each quarter, at which time they would receive a bonus based on a review of their projects’ performance. If a qualifying project was behind schedule, then every eligible employee on the team would receive a bonus that was less than the initial deduction, resulting in a net loss in salary for that quarter; but if a project was ahead of schedule, the bonus would normally exceed the initial deduction—sometimes by a substantial margin—resulting in a net gain for the employees on the team. On average, bonus-eligible employees received a net salary that was twenty-seven percent higher than their pre-bonus salaries, although some employees ultimately lost money in certain quarters due to their projects’ underperformance. Further, the potential bonus was subject to forfeiture if an employee left before a quarterly payout. This scheme was not described in the offer letters given to Ramtron employees. A Cypress executive justified the omission on the ground that there was “no way of knowing which employees would be” subject to the Bonus Plan at the time Cypress acquired Ramtron. AR 1215. The Bonus Plan only applied to certain employees, normally design engineers, associated with certain launch projects. And because of what Cypress perceived as a lack of “management rigor” at Ramtron, Cypress was unable to clearly define at the time of acquisition which existing 4 projects at Ramtron would eventually be eligible for the Bonus Plan. Id. For this reason, it did not include the Bonus Plan details in the Ramtron offer letters. Nevertheless, Cypress did not start making deductions from the former Ramtron employees’ paychecks until August 2013—approximately nine months after the Ramtron employees came on board. That is because the first Bonus Plan-eligible project on which they would work did not launch until late March 2013, and Cypress’s policy was to pay the employees’ first 18 weeks’ contributions before beginning deductions from their paychecks. Before Cypress began making these compulsory deductions, it attempted to apprise Ramtron employees of the Bonus Plan’s details. In December 2012, a Design Center Manager named David Still met with them and explained the Bonus Plan. Then, in April 2013, the Design Bonus Administrator, Ryan Wellsman, conducted a training session for the Ramtron employees regarding the Bonus Plan. Further, at all relevant times Cypress described the Bonus Plan in detail on the company’s intranet, which was accessible by all employees. Cypress also required that any employee participating in a launched project acknowledge they have read a document known internally as the Design Governing Spec, which includes a discussion of the Bonus Plan. Then, as a condition of participating in a Bonus-Plan eligible project, each qualifying employee was required to write a memo acknowledging the aspects of the Bonus Plan that were relevant to the project team. All of this was done with respect to the Ramtron employees’ first 5 eligible project, the TR-20005, before Cypress started deducting anything from their paychecks around August 2013.