ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This matter is before the Administrative Law Judge Division (Division or ALJD) for a contested case hearing pursuant to
S.C. Code Ann. §§ 41-10-40 and 41-10-80 (1986 and Supp. 1998) and S.C. Code Ann. §§ 1-23-310, et seq. (1986 and
Supp. 1998). The South Carolina Department of Labor, Licensing and Regulation - Division of Labor (Department)
contends that the Respondent Friendship Center (The Center) improperly withheld or diverted money from the wages of
one of its employees in violation of S.C. Code Ann. § 41-10-40(C) and (D) (1986 and Supp. 1998). More specifically, the
Department alleges that The Center withheld accrued vacation pay due an employee that properly followed The Center's
employment policy when the employee tendered her resignation. Pursuant to S.C. Code Ann. § 41-10-80 (1986 and Supp.
1998), the Department seeks the levy of a fine of Seventy-five ($75.00) Dollars against The Center. A hearing on this
matter was held on October 14, 1999 at the offices of the Division in Columbia, South Carolina.
The issues before this Division are: (1) whether the Respondent violated S.C. Code Ann.
§ 41-10-40, and (2) if so, whether a fine of Seventy-five ($75.00) Dollars is the appropriate sanction for this violation.
Based on the following Findings of Fact and Conclusions of Law, I find that The Center did indeed violate S.C. Code § 41-10-40(C) and (D) (1986 and Supp. 1998). However, I find that no fine shall be imposed by the Department against The
Friendship Center for this violation.
FINDINGS OF FACT
Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into
consideration the burden of persuasion by the parties, I make the following Findings of Fact by a preponderance of the
evidence:
1. Notice of the date, time, place and nature of this hearing was timely and properly given to all parties.
2. The Friendship Center, physically located at 1135 Carter Street, Columbia, South Carolina, is a nonprofit corporation
organized under the laws of the State of South Carolina. The Center is closely affiliated with the United Way and provides
social rehabilitation services for persons recovering from various mental illnesses. Julie Ann Avin is the Executive Director
of The Center.
3. Vicki Walker was hired as The Center's business manager on March 11, 1996.
4. As business manager, Ms. Walker was responsible for all bookkeeping tasks, including accounts receivable, payable and
reconciliations. She was also in charge of all aspects of The Center's payroll, including the payment of state and federal
payroll taxes.
5. Pursuant to S.C. Code § 41-10-30 (1986 and Supp. 1998), The Center issued written notice to Ms. Walker, through its
employee handbook, of the time and place of payment of wages when she was hired. The Center also issued written notice
to Ms. Walker that accrued vacation would be paid to employees who voluntarily terminated their employment. Finally,
The Center issued written notice to Ms. Walker that accrued vacation would not be paid to employees who were
terminated for cause.
6. On December 21, 1998, after being issued a written reprimand for unsatisfactory job performance, Ms. Walker submitted
her resignation in writing to Ms. Avin. Based on The Center's written employee policy which requires 30 days notice of
voluntary termination, Ms. Walker set forth in her letter that her last day of employment would be January 21, 1999. Ms.
Walker's resignation was accepted by Ms. Avin.
7. On January 21, 1999, The Center's payroll records indicated that Ms. Walker had accrued 192.94 hours of unpaid
vacation.
8. On or about February 1, 1999, The Center began to discover various irregularities in the financial records maintained by
Ms. Walker on its behalf. These irregularities included, among other things, IRS liens for failure to file appropriate reports
and payments of payroll taxes. As a result of nonpayment of payroll taxes, the IRS also levied The Center's bank account.
9. Contrary to The Center's written policy, on February 16, 1999, Ms. Walker was paid for only 45 hours of her 192.94
hours of accrued vacation.
10. In accordance with the terms of the employee handbook, Ms. Walker utilized The Center's grievance procedure
because of The Center's failure to pay the full amount of accrued vacation hours. The Center conducted a grievance
hearing on March 5, 1999. After that hearing, The Center notified Ms. Walker in writing that her "voluntary termination"
had been converted to a "termination for misconduct." (1)
11. Ms. Walker filed a complaint concerning the nonpayment of her accrued vacation hours with the South Carolina
Department of Labor, Licensing and Regulation - Division of Labor on or about March 25, 1999. After an investigation,
the Department issued a citation for a penalty and fine of Seventy-five ($75.00) Dollars against The Center.
12. On April 26, 1999, Ms. Avin appealed the Department's citation.
CONCLUSIONS OF LAW AND ANALYSIS
Based on the foregoing Findings of Fact, I conclude the following as a matter of law:
1. Pursuant to S.C. Code Ann. §§ 1-23-310, et seq., (1986 and Supp. 1998) and S.C. Code Ann. § 41-10-80 (1986 and
Supp. 1998), the Administrative Law Judge Division has jurisdiction to hear this contested case.
2. In weighing the evidence and deciding a contested case on the merits, the Administrative Law Judge must make findings
of fact and conclusions of law by a preponderance of the evidence. Anonymous (M-156-90) v. State Bd. of Medical
Examiners, 329 S.C. 371, 496 S.E. 2d 17 (1998).
3. Chapter 10 of Title 41 of the South Carolina Code, entitled "Payment of Wages," applies to all employers in South
Carolina except that § 41-10-30 does not apply to employers of domestic labor in private homes or employers employing
fewer than five employees at all times during the preceding twelve months. S.C. Code Ann. § 41-10-20 (1986 and Supp.
1998). Therefore, Chapter 10 of Title 41 is applicable to The Friendship Center.
4. Wages are afforded a special "protected" status under the law. The South Carolina Payment of Wages Act (Wage Act)
is "remedial legislation designed to protect working people and assist them in collecting compensation wrongfully
withheld." Dumas v. InfoSafe Corp., 320 S.C. 188,194, 463 S.E.2d 641, 645 (Ct. App. 1995).
5. As defined by S.C. Code Ann. § 41-10-10(2) (1986 and Supp. 1998):
"Wages" means all amounts at which labor rendered is recompensed, whether the amount is fixed or ascertained on a time,
task, piece, or commission basis, or other method of calculating the amount and includes vacation, holiday, and sick leave
payments which are due to an employee under any employer policy or employment contract. Funds placed in pension plans
or profit sharing plans are not wages subject to this chapter.
(Emphasis added). Therefore, according to The Center's written policy, accrued vacation is considered "wages" under
South Carolina law.
6. S.C. Code Ann. § 41-10-30 (1986 and Supp. 1998) sets forth, in relevant part, that "[e]very employer shall notify each
employee in writing at the time of hiring of the normal hours and wages agreed upon, the time and place of payment, and
the deductions which will be made from the wages, including payments to insurance programs."
7. The Department contends that The Center improperly withheld money from the wages of Vicki Walker without
providing her written notification of those deductions prior to making such deductions, and thus, violated S.C. Code Ann. §
41-10-40(C) and (D) (1986 and Supp. 1998). Section 41-10-40(C) provides:
An employer shall not withhold or divert any portion of an employee's wages unless the employer is required or permitted
to do so by state or federal law or the employer has given written notification to the employee of the amount and terms of
deductions as required by subsection (A) of § 41-10-30. (Emphasis added).
Section 41-10-40(D) sets forth that, "[e]very employer in the State shall pay all wages due at the time and place designated
as required by subsection (A) of § 41-10-30."
Deductions from an employee's wages other than those allowed by Section 41-10-40(C) are improper without written
notification. See Bennett v. Lambroukos, 303 S.C. 481, 401 S.E.2d 428 (Ct. App. 1991) (deductions from the wages of a
dishwasher for broken dishes were improper because employer did not give employee written notification at the time and
place of hiring that such deductions would be made). Furthermore, as previously set forth in Section 41-10-30(A), "[a]ny
changes in.... terms must be made in writing at least seven calendar days before they become effective." (1986 and Supp.
1998).
8. Because Ms. Walker properly tendered her resignation pursuant to The Center's policy and because her voluntary
termination was accepted by The Center, those wages owed to her in the form of accrued vacation were protected under
S.C. Code Ann. §§ 41-10-40(C), (D), and 41-10-30(A). Based upon The Center's own employment policy, Ms. Walker
was owed the full amount of her accrued vacation on February 16, 1999. When The Center elected to pay Ms. Walker only
a portion of the wages it owed her without giving her at least seven days notice in writing, The Center violated the South
Carolina Payment of Wages Act.
9. It is a generally recognized principle of administrative law that the fact-finder has the authority to impose an
administrative penalty after the parties have had an opportunity to have a hearing and be heard on the issues. See Ohio
Real Estate Comm'n v. Aqua Sun Investments, 655 N.E. 2d 266 (Ohio 1995); Shadow Lake of Noel, Inc. v. Supervisor of
Liquor Control, 893 S.W. 2d 835 (Mo. App. S.D. 1995); Matter of Henry Youth Hockey Ass'n, 511 N.W. 2d 452 (Minn.
App. 1994); Vermont Agency of Natural Resources v. Duranleau, 617 A.2d 143 (Vt. 1992); City of Louisville v. Milligan,
798 S.W. 2d 454 (Ky. 1990); Com., Dept. of Transp. v. Slipp, 550 A.2d 838 (Pa. 1988); Dept. of Transp. v. Miller, 528
A.2d 1030 (Pa. 1987); State Police v. Cantina Gloria's, 639 A.2d 14 (Pa. 1994).
An administrative law judge, as the fact-finder, must determine an appropriate penalty based on the facts presented at the
contested case hearing. Parties are entitled to present evidence on all issues arising out of the contested agency action.
Additionally, the tribunal responsible for conducting the contested case proceeding has the authority to decide the issues
based on the facts presented, and to make the final decision on all the issues, including the appropriate penalty.
In this case, The Center's payment of only a portion of Ms. Walker's wages was an understandable reaction to Ms.
Walker's gross negligence in her job performance. If the Wage Act granted me any latitude in finding a violation of the
Wage Act and, specifically, in considering employee disloyalty, I would find that the conversion of Ms. Walker's
resignation to a termination was proper and warranted. Therefore, though I find that The Center violated the Wage Act, I
find that the imposition of a fine in this case would be a miscarriage of justice.
ORDER
Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby:
ORDERED that no fine shall be imposed by the Department against The Friendship Center for the violation of S.C. Code
Ann. § 41-10-40(C) and (D) (1986 and Supp. 1998).
AND IT IS SO ORDERED.
______________________________
Ralph King Anderson, III
Administrative Law Judge
April 11, 2000
Columbia, South Carolina
1. The Friendship Center presented "employee disloyalty" as a legal defense to The Center's alteration of Ms. Walker's "voluntary termination"
to "termination for misconduct." See Futch v. McAllister Towing of Georgetown, Inc., 518 S.E. 2d 591 (1999). However, any alleged
misconduct of Ms. Walker while employed by The Center is not before this Division. This case is a review of a citation for failure to comply
with a regulatory scheme. |