SC Administrative Law Court Decisions

This matter comes before me as a contested case pursuant to S.C. Code Ann. § 41-10-80(D) (Supp. 1997), 26 S.C. Code Ann. Regs. 71-6000 (Supp. 1997), and S.C. Code Ann. § 1-23-600(B) (Supp. 1997), upon the request for a hearing made by Respondent Jerman Personnel Services, Inc. ("Jerman") after being issued a citation by the South Carolina Department of Labor, Licensing and Regulation, Division of Labor ("LLR") for an alleged violation of the wage payment law. LLR seeks assessment of a $75.00 penalty against Jerman under S.C. Code Ann. § 41-10-80 (Supp. 1997). Jerman denies a violation occurred. The contested case hearing was conducted on August 14, 1998. Upon a review of the relevant and probative evidence and applicable law, the citation issued is dismissed.

LLR asserts that an employer must pay all wages due at the time and place designated as required by S.C. Code Ann. § 41-10-30(A) (Supp. 1997), and any failure to do so is a prima facie violation of S. C. Code Ann. § 41-10-40(D) (Supp. 1997) which requires the mandatory imposition of a fine against the employer under S. C. Code Ann. § 41-10-80(B) (Supp. 1997). LLR claims that

Jerman violated § 41-10-40(D) by not paying employee, Robert Goins, the full wages due for the week of February 15, 1998, with Goins being underpaid a total of $23.00.

Jerman does not dispute that an employer is obligated to "pay all wages due at the time and place designated" as set forth in § 41-10-40(D) and admits to the wage shortfall in this case. Jerman strenuously argues that no civil penalty is warranted here because the shortfall was promptly brought to Jerman's attention by Goins, and Jerman corrected the payment error without argument or delay prior to LLR's involvement in the matter.

At the heart of this case is a statutory construction issue: whether the administrative penalty provision of the South Carolina Payment of Wages Act, § 41-10-80(B), requires LLR to issue a formal citation and impose a monetary penalty in every instance in which an employer makes a payroll error, regardless of the circumstances. In interpreting a statute, its language must be read as a whole and construed together with other statutes which are part of the same statutory scheme, if it can be done by any reasonable construction. The statute must be considered in light of its manifest purpose, and must receive a practical, reasonable, and fair interpretation that is consonant with the purpose, design, and policy of the legislature.

The primary purpose of the South Carolina Payment of Wages Act is to protect employees from employers which wrongfully fail to timely and fully pay their employees, not to punish employers which make minor bookkeeping errors acting in good faith. Accordingly, the main goal of LLR in wage payment enforcement cases should be to act on behalf of aggrieved employees seeking collection of their rightful pay. The issuance of formal citations against employers is not of as great a priority as the assuring the payment of wages to employees. For that reason, the General Assembly included S. C. Code Ann. § 41-10-70 (Supp. 1997) in the Act. To facilitate its primary mission of assisting workers in receiving their rightful pay, LLR is vested with the ability to resolve all wage payment violation issues informally by means of mediation and conciliation. While § 41-10-80(B) is couched in mandatory terms, § 41-10-70 makes it clear that informal settlement of wage disputes is favored.

Read as a whole, in context with the entire South Carolina Payment of Wages Act, and specifically in concert with § 41-10-70, a practical, reasonable, and fair interpretation § 41-10-80(B) does not mandate the imposition of a fine against an employer which swiftly and voluntarily, without

threat of administrative action by the employee or State, corrects an honest, minor payroll. In such cases, informal disposition is consonant with the purpose, design, and policy of the legislature.

In the present case, there is absolutely no evidence that the shortfall was intentional or that Jerman attempted to deny the existence or refuse payment of the shortfall once the error was discovered. Immediately upon being made aware of the shortfall, Jerman agreed to pay Goins. Jerman then freely corrected the oversight without the threat of governmental action and corrected the wage shortfall within six days of when full wages were due and payable. Goins made a wage claim with LLR, but that claim was filed subsequent to Jerman's assurance that the matter would be quickly resolved. By the time LLR commenced its investigation of Goins' claim in April of 1998, two months had already elapsed since Jerman had fully paid Goins.

Jerman failed to timely pay full wages due, contrary to the technical requirements of § 41-10-40(D), but in light of Jerman's swift and full correction of the payment shortfall, that omission warranted summary dismissal of the wage claim filed by Goins under § 41-10-70, rather than the imposition of a fine under 41-10-80(B). There is no evidence that LLR attempted to resolve the present matter with Jerman by the informal methods of mediation and conciliation pursuant to § 41-10-70.

The wage laws of South Carolina are designed to protect working people from wrongful withholding of compensation and assist them in collecting their rightful wages. They should not be used as a punitive instrument against an employer acting in good faith with due diligence. Situations involving an employer's honest mistake and voluntary remedy does not warrant issuance of a citation. Jerman and most other temporary personnel services admittedly make clerical and mathematical paycheck errors on a consistent basis by virtue of the nature of their business. Employees work varying jobs on different shifts at different pay rates. Minor mistakes are bound to occur. As long as those mistakes are promptly discovered and fixed without the employee having to resort to formal action to spur the correction, issuance of a citation and imposition of a fine is a superfluous governmental action to cure a self-corrected problem.

If there were any evidence or even a hint of any impropriety on Jerman's part, whether intentional or dilatory, I would not hesitate to impose the fine sought by LLR. The uncontroverted facts exist, however, that Jerman made an understandable error and corrected the problem as soon as it was brought to its attention. There was no attempt to cheat the employee out of his pay nor to deny or delay payment once the shortfall was discovered. The citation should therefore be dismissed and no fine levied.

I find, by a preponderance of the evidence, the following facts:

1. Jerman Personnel Services, Inc. is a commercial personnel service which hires and places temporary employees in jobs with a variety of businesses.
2. Jerman employees are paid weekly.
3. Jerman issues approximately 300 to 400 paychecks per week to its employees.
4. Wage rates for Jerman employees vary according to assignment.
5. Robert Goins was employed by Jerman on December 2, 1997.
6. Under the terms of his employment contract, Goins was to be paid weekly at Jerman's office, by mail, or by direct deposit, as requested by the employee. Payment in person or direct deposit was due on Friday, and payment by mail on Friday or Saturday.
7. On February 2, 1998, Jerman offered Goins an assignment which paid $7.00 per hour.
8. Goins accepted the assignment, but demanded $7.50 per hour, which Jerman agreed to pay.
9. On or about February 12, 1998, Goins was timely paid $7.50 per hour for four days work on the assignment for the week ending February 8, 1998.
10. Goins continued the same assignment the following week, which ended on February 15, 1998.
11. On or about Thursday, February 19, 1998, Goins was paid $7.00 per hour for the week ending February 15, 1998.
12. The amount of the February 19, 1998 paycheck to Goins was incorrectly calculated and mistakenly deficient, based upon the prior agreement to pay him $7.50 per hour rather than $7.00 per hour.
13. The net amount underpaid Goins for the week of February 15, 1998, was $23.00.
14. The after tax amount of the wage shortfall was $19.60.
15. On Tuesday, February 24, 1998, Robert Goins filed a claim with LLR for unpaid wages by Jerman for the pay period ending February 20, 1998.
16. Subsequent to receiving his paycheck on Thursday, February 19, 1998, but prior to filing the claim with LLR on Tuesday, February 24, 1998, Robert Goins brought the underpayment error to Jerman's attention, and Jerman informed Goins that the wage shortfall would be made up on his next paycheck.
17. On Thursday, February 26, 1998, Jerman issued a check to Goins for $19.60, payment in full of the wage shortfall from the pay period ending February 15, 1998.
18. After receiving full payment of wages from Jerman, Goins contacted LLR Investigator Sinway Young and informed Young of the payment and supplied Young with the paycheck stub.
19. On or about April 6, 1998, LLR Investigator Sinway Young commenced his investigation of the Goins wage claim against Jerman by obtaining and reviewing Jerman's payroll records.
20. By letter from Jerman's legal counsel Julian Gignilliat to LLR Investigator Sinway Young dated April 20, 1998, Jerman attempted to informally resolve the matter with LLR.
21. On or about May 7, 1998, LLR issued Citation and Notice of Penalty #638-98 to Jerman for a violation of § 41-10-40(D) for failure to pay wages due Robert Goins in the approximate amount of $23.00 by the regular pay day of February 19, 1998, assessing a total penalty of $75.00.
22. Jerman timely requested a contested case hearing and the matter was transmitted to the ALJD for hearing.

Based on the Findings of Fact and Discussion, I conclude the following as a matter of law:

1. Jerman Personnel Services, Inc. is an employer within the meaning of S.C. Code Ann. § 41-10-10(1) (Supp. 1997), and subject to wage payment laws of South Carolina provided for in Chapter 10 of Title 41 of the South Carolina Code.

2. The South Carolina Department of Labor, Licensing, and Regulation is responsible for administering the provisions of Chapter 10 of Title 41.

3. Robert Goins was an employee of Jerman during February, 1998.

4. At the time of hiring, an employer must notify each employee in writing of the normal work hours and wages agreed upon and the time and place of payment. S.C. Code Ann. § 41-10-30(A) (Supp. 1997).

5. Jerman properly provided Goins with written notice of the terms of his employment, as required by S.C. Code Ann. § 41-10-30 (Supp. 1997).

6. An employer shall pay all wages due at the time and place designated as required by subsection (A) of Section 41-10-30 and S.C. Code Ann. § 41-10-40(D) (Supp. 1997).

7. S.C. Code Ann. § 41-10-80(B) provides: "Any employer who violates the provisions of § 41-10-40 must be assessed a civil penalty of not more than one hundred dollars for each violation. Each failure to pay constitutes a separate offense."

8. In construing § 41-10-80(B), as it applies in the instant case, it is unclear on its face as to whether a violation has occurred and whether a penalty must be imposed against an employer if the employer voluntarily and swiftly makes full payment of wages due the employee prior to the commencement of administrative action.

The cardinal rule of statutory construction is to ascertain and effectuate the legislative intent whenever possible. Horn v. Davis Elec. Constructors, Inc., 307 S.C. 559, 416 S.E.2d 634 (1992). All rules of statutory construction are subservient to the one that the legislative intent must prevail if it reasonably can be discovered in the language used, and the language must be construed in the light of the intended purpose of the statute. Kiriakides v. United Artists Communications, Inc., 312 S.C. 271, 440 S.E.2d 364 (1994). The determination of legislative intent is a matter of law. Charleston County Parks & Recreation Comm'n v. Somers, 319 S.C. 65, 459 S.E.2d 841 (1995).

City of Sumter Police Dept. v. One 1992 Blue Mazda Truck, Court of Appeals of South Carolina Opinion No. 2808, filed March 16, 1998.

A statute as a whole must receive a practical, reasonable, and fair interpretation that is consonant with the purpose, design, and policy of the legislature. In interpreting a statute, the language of the statute must be read in a sense which harmonizes with its subject matter and accords with its general purpose. The statutory language as a whole should be considered in light of its manifest purpose. Any ambiguity in a statute should be resolved in favor of a just, equitable, and beneficial operation of the law. (Citations omitted)

Id.; City of Camden v. Brassell, 326 S.C. 556, 486 S.E.2d 492 (Ct. App. 1997).

9. Statutes must be read as a whole and sections which are part of the same general statutory scheme must be construed together and each given effect, if it can be done by any reasonable construction. Higgins v. State, 307 S.C. 446, 415 S.E.2d 799 (1992); see also The Lite House, Inc. v. J.C. Roy Co., 309 S.C. 50, 419 S.E.2d 817 (Ct.App.1992); State v. Black, 319 S.C. 515, 462 S.E.2d 311 (Ct.App.1995); Seckinger v. Vessel Excalibur, 326 S.C. 382, 483 S.E.2d 775 (Ct.App. 1997).

10. The South Carolina Payment of Wages Act is designed to protect working people and assist them in collecting compensation wrongfully withheld. Dumas v. InfoSafe Corp., 320 S.C. 188, 463 S.E.2d 641 (Ct. App. 1995).

11. The South Carolina Payment of Wages Act is a tool for workers to use in enforcing their contractual employment rights. The primary purpose of the Act is to insure that employees are timely and fully paid by their employers, not to penalize employers which make minor bookkeeping errors while acting in good faith.

12. S.C. Code Ann. § 41-10-70 (Supp. 1997) of The South Carolina Payment of Wages Act provides:

Upon written complaint of any employee alleging a violation of this chapter, the Director of the Department of Labor, Licensing, and Regulation or his designee may institute an investigation of the alleged violation. If the Director of the Department of Labor, Licensing, and Regulation or his determines that a violation exists, he shall endeavor to resolve all issues by informal methods of mediation and conciliation.

13. In interpreting a statute, the language of the statute must be read in a sense which harmonizes with its subject matter and accords with its general purpose. The statutory language as a whole should be considered in light of its manifest purpose. While § 41-10-80(B) is couched in mandatory terms, § 41-10-70 makes it clear that informal settlement of wage disputes is favored. Informal disposition is consonant with the purpose, design, and policy of the legislature.

14. There is no evidence that LLR attempted to resolve the present matter with Jerman by the informal methods of mediation and conciliation pursuant to § 41-10-70. Since Jerman's underpayment to Goins had long been corrected prior to the commencement of LLR's investigation, there was no pending wage dispute to resolve. The only issue remaining was whether Jerman was liable for a civil fine despite its corrective action,. and LLR refused to informally dispose of the matter.

15. Read as a whole, in context with the entire South Carolina Payment of Wages Act, and specifically § 41-10-70, a practical, reasonable, and fair interpretation § 41-10-80(B) does not mandate the imposition of a fine against an employer which swiftly and voluntarily, without threat of administrative action by the employee or State, corrects an honest, minor payroll error.

16. While Jerman failed to timely pay full wages due, contrary to the technical requirements of § 41-10-40(D), in light of Jerman's swift and full correction of the payment shortfall, that omission warranted summary dismissal of the wage claim filed by Goins under § 41-10-70, rather than the imposition of a fine under 41-10-80(B).

17. The just, equitable, and beneficial operation of the law requires dismissal of the citation against Jerman.

IT IS THEREFORE ORDERED that Citation and Notice of Penalty #638-98 is dismissed and no penalty is due.

AND IT IS SO ORDERED.

___________________________

STEPHEN P. BATES

ADMINISTRATIVE LAW JUDGE

August 26, 1998

Columbia, South Carolina