The complaint alleges that, under the group’s Capital Appreciation Plan (CAP), the defendants withheld up to 25% of certain employees’ earned wages.
Under the plan, Citigroup would return the wages in the form of Travelers or Citigroup stock after a two or three year period – but only to those employees who were still employed by the financial giant.
According to Boston-based law firm Dwyer & Collora, the only way for employees in the CAP Plan to avoid wage forfeiture was to die, become totally disabled, retire, or be terminated without cause.
The former employees charge that the CAP Plan’s wage forfeiture plan has resulted in millions of dollars in windfall profits for Citigroup in the form of wages that were earned but never paid to employees.
According to the employees’ lawyers, this is a violation of New York Labor Law.
The CAP plan has been at the center of a number of class action suits filed against Citigroup in a number of states. In a similar case in August last year, a state judge in California granted class-action status to a suit brought against Salomon Smith Barney.