It is common in employment litigation for a plaintiff-employee to rely on so-called comparator evidence—that is, evidence assessing whether comparably positioned employees may have been treated differently based on improper criteria like race, gender and other protected categories, or for having complained about discrimination or illegal conduct. The plaintiff-employee seeks evidence of how the employer treated similarly situated employees to smoke out the employer’s alleged illegal motivation.
At least some New York case law also makes motivation relevant to employment contract disputes—for example, the determination whether an employee applied a “cause” termination provision arbitrarily or in bad faith. However, hardly any New York cases address comparator evidence in employment contract disputes. This article describes the limited New York law on the subject and suggests how employer-side and employee-side counsel might maneuver to their advantage.
Comparator Evidence
The legal standard for determining the relevance of comparator evidence in employment litigation is vague. The comparator and the plaintiff-employee need not be identical, but a comparator must be “similarly situated to the plaintiff in all material respects.” Ruiz v. County of Rockland, 609 F.3d 486, 493-94 (2d Cir. 2010).
In other words, the other employees “must have a situation sufficiently similar to plaintiff’s to support at least a minimal inference that the difference of treatment may be attributable to discrimination.” Harding v. Dorilton Cap. Advisors LLC, 635 F. Supp. 3d 286, 299 (S.D.N.Y. 2022) “In undertaking their analysis, courts generally look to whether a plaintiff and her competitors [, i.e., the comparators,] were (1) subject to the same performance evaluation and discipline standards and (2) engaged in comparable conduct.”
Motive in Employment Contract Disputes
A previous New York Law Journal column that one of us wrote, “Litigating Cause Under New York Employment Contracts,” explains that New York law is mixed on whether an employer’s motivation is relevant to the application of a “cause” provision in an employment contract. At least some case law indicates that an employer’s subjective motivation for taking an adverse action—not just objective facts about what the employee did or did not do—is relevant to the existence of “cause.”
Similarly, the Restatement of Employment states that a “cause” termination “normally requires the employer to give reasons for the dismissal,” and “also requires the employer to apply the grounds for termination in a regular and even-handed manner.” Under this standard, a termination decision is not for “cause” if the decision “was arbitrary or in bad faith” or “pretextual.” Tischmann v. ITT/Sheraton Corp., No. 92 CIV. 2505, 1997 WL 195477 (S.D.N.Y. Apr. 22, 1997).
Even if, standing alone, the employee’s conduct would provide sufficient “cause” for adverse action under an employment contract, this authority may permit the plaintiff-employee to argue that the employer’s bad faith and/or arbitrary application of a “cause” provision was a breach of contract. In the Restatement’s terms, “tolerance of comparable conduct by other employees is relevant to whether there is cause to terminate… and raises an issue for the trier of fact.”
Comparator Evidence in Employment Contract Disputes
Notwithstanding the Restatement’s guidance that “tolerance of comparable conduct by other employees is relevant,” very little New York case law evaluates comparator evidence in the context of contract disputes. Counsel should be aware of a few examples:
In Lucente v. Int’l Bus. Machines Corp., 262 F. Supp. 2d 109 (S.D.N.Y. 2003), a former IBM executive participated in an incentive compensation plan that permitted IBM to cancel his shares if he left to work for a “competitor.” The plan did not specify the meaning of a competitor. IBM cancelled the employee’s shares under the plan when the employee went to work for a company IBM considered a competitor. The employee claimed that IBM violated the terms of the plan.
The executive sought discovery regarding IBM’s application of the plan to other IBM executives. The court held that “IBM’s treatment of former employees who were similarly situated” was discoverable:
The information Lucente seeks is relevant to whether IBM acted arbitrarily, in bad faith, or fraudulently in determining that Digital [Lucente’s post-IBM employer] was a competitor and thereby divesting Lucente of his stock options and restricted stock. Let’s assume, for example, that the information Lucente seeks demonstrates the following: (1) ten executives left IBM at approximately the same time; (2) while at IBM, those executives had experiences and responsibilities similar to Lucente; (3) six months after they left IBM, those executives went to work for companies substantially similar to the company Lucente eventually went to work for (Digital Equipment Corporation); and (4) IBM chose not to divest them of their stock options. That evidence would support an inference that IBM acted arbitrarily or in bad faith in deeming Digital to be a competitor.
In another case, Tischmann, cited above, an employer terminated an employee “for cause… assertedly because he had sexually harassed two female employees,” and as a result, denied him benefits under an executive severance plan. The employee challenged the denial of benefits. The jury found that the employer’s “decision to terminate [the plaintiff] for cause was arbitrary or in bad faith.” The court then held that sufficient evidence supported the jury’s finding based on, among other things, comparator evidence—namely, “a few other ITT/Sheraton employees accused of sexual harassment had been treated more leniently than [the plaintiff.]” (The court ultimately vacated the judgment on other grounds).
Is Comparator Evidence Relevant?
Employer counsel confronted with Tischmann or Lucente might try to limit their reach by arguing that the “comparator” employees were parties to the very same contract as the plaintiff employee. Thus, their argument might be that these cases do not apply to disputes over standalone contracts between the company and the employee.
Employee counsel might question why this distinction matters. Under New York law, “the parties’ course of performance under the contract is considered to be the most persuasive evidence of the agreed intention of the parties.” Fed. Ins. Co. v. Americas Ins. Co., 258 A.D. 2d 39, 44 (1st Dep’t 1999). “The practical interpretation of a contract by the parties to it for any considerable period of time before it comes to be the subject of controversy is deemed of great, if not controlling, influence.”
If a company has a similar “cause” termination or “forfeiture for competition” provisions for multiple executives, the argument runs, the company’s “practical interpretation” of those provisions for similarly situated employees may be evidence of what the company intended, or at least evidence that the company applied the provision in an arbitrary or bad faith manner.
Employer counsel could reply that identical “cause” or forfeiture provisions in contracts for different employees need not have the same meaning because, in textual interpretation, context is everything. These provisions “must be read, like any other portion of the instrument, not in isolation, but in the context of the instrument as a whole” Vill. of Walden v. Teamsters Loc. Union No. 445, 241 A.D.3d 1573 (2nd Dep’t 2025).
The differing roles, responsibilities, and conduct of different employees are part of that context. Moreover, even assuming provisions in the employment contracts of the employee and her comparators have precisely the same meaning, the employer could argue that it is within its discretion to treat a comparator differently. After all, contracts often indicate that failing to exercise a right does not constitute a waiver of that right.
Employee counsel could riposte that the judgment whether comparators are “similarly situated” enough to be relevant is typical in employment litigation—and a similar evaluation can be made in a contract dispute. The line between a permissible exercise of discretion under a contract and bad faith, the Restatement suggests, “raises an issue for the trier of fact.”
Uncertain Terrain
There is little New York authority available to resolve these competing arguments—affording judges, and especially arbitrators, latitude in regard to comparator evidence. Counsel for both sides should take notice and lean on basic contract law principles to advance their position on comparators.
Curtis B. Leitner is a business litigation partner in McCarter & English. Gabriel N. Slamovits is a litigation associate with the firm.
Reprinted with permission from the Dec. 17, 2025 edition of “New York Law Journal” © 2025 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.