Can at-will employees recover compensation after termination under the implied covenant? Vander Veur v. Groove Entertainment Technologies Explained

The Utah Court of Appeals addressed a case of first impression regarding whether at-will employees can recover compensation after termination under the implied covenant of good faith and fair dealing.

Background and Facts: Mike Vander Veur worked as a sales representative for Groove Entertainment Technologies under an at-will employment relationship. In October 2012, he entered into a Sales Representative Compensation Agreement providing commissions for “Qualifying Sales” where installations were complete. Groove terminated Vander Veur in June 2013 while six sales he had procured were awaiting installation and before he received a promised Showtime bonus. All six installations occurred within three months of termination, but Groove paid no commissions to Vander Veur.

Key Legal Issues: The primary issue was whether the implied covenant of good faith and fair dealing can protect at-will employees from terminations designed to avoid paying compensation benefits under attendant agreements. The court also addressed Groove’s unjust enrichment counterclaim for commission draws that exceeded Vander Veur’s earned commissions.

Court’s Analysis and Holding: The Court of Appeals extended the reasoning from Cook v. Zions First National Bank, holding that the implied covenant may protect at-will employees’ “justified expectations in receiving the fruits of a compensation agreement” after termination. The court emphasized this protection is narrow—it does not affect employers’ rights to terminate at-will relationships but prevents opportunistic interference with compensation agreements. The court vacated dismissal of Vander Veur’s implied covenant claims while affirming Groove’s unjust enrichment recovery.

Practice Implications: This decision provides a limited avenue for at-will employees to recover compensation when employers terminate them specifically to avoid paying benefits under existing agreements. Practitioners should focus on demonstrating (1) bad faith termination to deprive benefits and (2) justified expectations under compensation agreements. The decision does not alter at-will employment principles but creates protection against bad faith interference with attendant compensation contracts.