Marsh v. Prudential Securities Inc.
This case addresses whether Prudential Securities Incorporated's MasterShare Plan, an optional investment benefit for its financial advisors, violates New York Labor Law § 193. The plan involves voluntary wage deductions for investment in a public stock index fund, offering tax deferral and discounted share purchases, but includes provisions for temporary non-transferability and forfeiture upon termination for cause or resignation within three years. A former employee, whose MasterShare account was forfeited after his termination, initiated a class action, arguing the plan's deductions and forfeiture terms violate the 'benefit of the employee' requirement of Labor Law § 193. The United States Court of Appeals for the Third Circuit certified the question to the New York Court of Appeals. The Court of Appeals determined that the plan does not violate Labor Law § 193, concluding that such investment deductions are 'similar payments for the benefit of the employee' and that, given full disclosure and the sophisticated nature of the participating employees, the forfeiture provision does not negate the overall benefits of the plan when assessed in its entirety.