ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This matter is before this tribunal for a contested case hearing pursuant to S.C. Code Ann. § 41-10-80(D) (Supp.1998) and
S.C. Code Ann. §§ 1-23-310 et seq. (Supp.1998). The South Carolina Department of Labor Licensing and Regulation
(Department) contends that the Respondent Cloud's Sanitation Service (Cloud's Sanitation), (1) failed at the time of hiring
to notify an employee of his normal hours and wages and the deductions to be made from the wages, (2) improperly
withheld or diverted wages of the employee, and (3) failed to pay wages due to the employee in violation of S.C. Code Ann.
§§ 41-10-30(A), 41-10-40(C) and 41-10-40(D) (Supp.1998), respectively. For these violations, the Department seeks to
impose a $350 fine against Cloud's Sanitation.
After timely notice, the hearing on this matter was held on September 22, 1999 at the Administrative Law Judge Division,
1205 Pendleton Street, Columbia, South Carolina. The issues before this tribunal are: (1) whether the Respondent violated
the aforementioned code sections, and (2) if so, whether $350 is the proper penalty for such violations. Based upon the
following Findings of Fact and Conclusions of Law, this tribunal concludes that: (1) the Respondent violated S.C. Code
Ann. § 41-10-30(A) by failing to notify, in writing, an employee of the normal hours and wages and deductions on two
separate occasions, and (2) the Respondent violated S.C. Code Ann. §41-10-40(C) by improperly diverting wages of the
employee. Additionally, this tribunal finds that the proper penalty in this case is $175, instead of $350.
FINDINGS OF FACT
Having carefully considered all testimony and arguments presented at the hearing of this matter, and taking into account the
credibility and accuracy of the evidence, I make the following Findings of Fact by a preponderance of the evidence:
1. Cloud's Sanitation is a garbage collection "service" company located at 10340 Farrow Road, Blythewood, South
Carolina. Isaac K. Cloud owns the company. The number of employees at the company varies between twelve and fifteen.
2. Charles Williams (Williams) was an employee of Cloud's Sanitation for approximately two and one-half months, beginning
in November 1998 and ending in January 1999.
3. Cloud's Sanitation paid its employees on a weekly basis. At the time of hiring Williams, the terms of employment were
written on a standard form, which was ostensibly provided by the Department. See Petitioner's Exhibit #2. The rate of pay
indicated for Williams was $250 per week. The form provided the following boilerplate: " Normal hours of work: (i.e.,
number or range of hours) per week, day, other, etc.-----------------------------." In this entry, Cloud's Sanitation specified
Williams' hours to be: "as needed by management." Cloud's Sanitation and Williams orally agreed to specific terms of
employment, such as hourly or daily pay rate, but they did not commit or reduce their agreement to writing.
4. On two occasions, Cloud's Sanitation deducted certain amounts from Williams' wages for advances for cigarettes.
Cloud's Sanitation did not give written notice of these deductions to Williams at the time of hiring or seven days prior to the
deductions being effectuated.
5. Cloud's Sanitation terminated Williams' employment on Friday, January 15, 1999. As of that date, Williams was owed
wages of $158.50. Williams requested that his wages be transmitted to him through Jeremiah Fogle (Fogle), his supervisor
while at Cloud's Sanitation. As requested, Barbara Carson, who was the business manager for and the daughter of the
owner of Cloud's Sanitation, gave an envelope containing $158.50 in cash to Fogle with instructions to deliver the money to
Williams.
6. Fogle, without the knowledge or consent of Barbara Carson, removed certain amounts of money from the envelope prior
to delivering the envelope to Williams. First, Fogle removed $10 from the envelope to pay a van driver who customarily
picked up and dropped off workers of Cloud's Sanitation, including Williams, at the Oliver Gospel Mission. Fogle also
removed $148 from the envelope for himself as payment towards a $300 loan he contends that he previously had made to
Williams, leaving a balance of 50 cents in the envelope. Fogle then delivered the envelope containing the 50 cents to
Roderick Watts (Watts), who was also employed by Cloud's Sanitation, and Watts, in turn, delivered the envelope to
Williams.
7. While Carson did not know of Fogle's intentions to remove the $148 from Williams' wages, Fogle did inform her
approximately two weeks later that he had removed that amount from the envelope. Carson did not take any steps to
recover the money from Fogle or to reimburse Williams.
8. During the course of Williams' employment with Cloud's Sanitation, he voluntarily participated in the company's
Christmas Club Savings. A total of $165 was deducted from Williams' wages for the Christmas Club. The written rules of
the Christmas Club, to which Williams had consented, provided that employees who resigned or who were terminated would
have their money refunded within two weeks from the final date of employment. Although Williams had requested his wages
due from Cloud's Sanitation, he did not request a refund of his Christmas Club Savings. The record does not indicate the
date Williams' wages were actually delivered to him. Therefore, it cannot be determined whether two weeks had elapsed
between the final date of Williams' employment and the time the wages were delivered to Williams, such that it would have
been possible for Cloud's Sanitation to deliver simultaneously his Christmas Club Savings with his wages.
9. Many sanitation workers are transient and without permanent addresses, as was the case with Williams. Cloud's
Sanitation did not have a permanent address or telephone number for Williams; moreover, on a 'Terms of Employment
Notice,' Williams' address was listed as the Salvation Army. As a result, Cloud's Sanitation was unable to contact him after
his employment terminated. Consequently, Williams' Christmas Club Savings has remained in the account along with the
savings of other employees. In any event, the place of payment indicated on the 'Terms of Employment Notice' was Cloud's
Sanitation; Cloud's Sanitation was not obligated to deliver to Williams his contributions to the Christmas Club.
10. Prior to citing Cloud's Sanitation concerning the aforementioned events, on March 26, 1998, the Department issued a
Warning to Cloud's Sanitation concerning its alleged failure to comply with section 41-10-30(A), pertaining to notifying
employees of wages and hours.
11. On April 1, 1999, the Department issued a citation to Cloud's Sanitation concerning the aforementioned alleged
violations. The Department sought $200 for two violations of section 41-10-30(A), $75 for a violation of section 41-10-40(C), and $75 for a violation of section 41-10-40(D), for a total penalty of $350.
CONCLUSIONS OF LAW AND ANALYSIS
A. Jurisdiction
1. Pursuant to S.C. Code Ann. §§ 1-23-310, et seq. and S.C. Code Ann. § 41-10-80(D), the Administrative Law Judge
Division has jurisdiction to hear this matter.
2. Chapter 10, Title 41 of the South Carolina Code applies to all employers in South Carolina, except that section 41-10-30
does not apply to employers of domestic labor in private homes or employers of fewer than five persons at all times during
the preceding twelve months. S.C. Code Ann. § 41-10-20 (Supp.1998).
B. Burden of Proof
3. In civil cases, generally, the burden of proof rests upon the party who asserts the affirmative of an issue. 29 AM. JUR. 2d
Evidence § 127 (1994); ALEX SANDERS ET AL., South Carolina Trial Handbook § 9:3 Party With Burden, Civil Cases
(1994). The Department is the party asserting the affirmative in this case; therefore, the Department must prove by a
preponderance of the evidence that Respondent (1) failed to notify in writing Charles Williams at the time of hiring of his
normal hours, wages and deductions, (2) improperly withheld or diverted money from his wages, and (3) failed to pay
wages due to him in violation of S.C. Code Ann. §§ 41-10-30(A), 41-10-40(C) and 41-10-40(D), respectively. The
preponderance of the evidence "is evidence which is of the greater weight or more convincing than the evidence which is
offered in opposition to it . . .." Black's Law Dictionary 1182 (6th ed. 1990). "The preponderance of the evidence means
such evidence as, when considered and compared with that opposed to it, has more convincing force and produces in the
mind the belief that what is sought to be proved is more likely true than not true." Sanders, supra, § 9:5 Quantum of
Evidence in Civil Cases (1994), citing, Frazier v. Frazier, 228 S.C. 149, 89 S.E.2d 225 (1955).
4. The weight and credibility assigned to evidence presented at the hearing of a matter is within the province of the trier of
fact. See South Carolina Cable Television Ass'n v. Southern Bell Telephone and Telegraph Co., 308 S.C. 216, 417 S.E.2d
586 (1992). Furthermore, a trial judge, who observes a witness, is in the better position to judge the witness's demeanor and
veracity and evaluate their testimony. See McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Peay v. Peay, 260
S.C. 108, 194 S.E.2d 392 (1973); see also Mann v. Walker, 285 S.C. 194, 328 S.E.2d 659 (Ct. App. 1985); Marshall v.
Marshall, 282 S.C. 534, 320 S.E.2d 44 (Ct. App. 1984).
5. Wages are afforded a special "protected" status under the law. The South Carolina Wages Act is "remedial legislation
designed to protect working people and assist them in collecting compensation wrongfully withheld." Dumas v. InfoSafe
Corp., 320 S.C. 88, 194, 463 S.E.2d 641, 645 (Ct. App. 1995) (referring to Mullins v. Venable, 297 S.E.2d 866, 871 (W.
Va. 1982) ("[P]ublic policy requires employers to pay the wages of working people who labor on their employer's behalf.
Wages have traditionally been afforded special protection under the law, in recognition of the fact that working people
depend on wages to furnish the basic necessities of life to themselves and their families.")).
6. The Department alleges that Cloud's Sanitation violated section 41-10-30(A) by failing at the time of hiring to give
Williams written notice of the normal hours and wages and the deductions which would be made from the wages. This
section provides:
Every 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. The employer has the option of giving written notification by posting the terms conspicuously at or near the place
of work. Any changes in these terms must be made in writing at least seven calendar days before they become effective.
This section does not apply to wage increases.
S.C. Code Ann. § 41-10-30(A) (emphasis added). It is clear from the evidence that Cloud's Sanitation attempted to indicate
the normal hours by stating on the 'Terms of Employment Notice' that such hours would be "as needed by management."
The underlying purpose of requiring that the terms of employment be specified in writing is to protect both the employer and
the employee, but more so to ensure that an employee's wages are not unjustifiably retained by the employer. See Futch v.
McAllister Towing of Georgetown, Inc., 328 S.C. 312, 491 S.E.2d 577 (S.C. App. 1997). Hence, the pay rate due an
employee should be easily determinable from the written 'Terms of Employment Notice.' In the present case, Williams and
Cloud's Sanitation agreed that Williams would be paid $250 per week. However, the number of hours Williams would be
required to work to earn these wages was not specified in writing. Accordingly, his pay rate is not contained in the available
writings, thus violating section 41-10-30(A).
7. In addition to failing to state in writing the normal hours and wages, Cloud's Sanitation violated section 41-10-30(A)
twice when it deducted amounts from Williams' wages to repay advances it made to him for cigarettes because Cloud's
Sanitation did not give Williams written notice of such deductions either at the time of hiring or at least seven days prior to
making these deductions. Deductions from an employee's wages, other than those allowed by 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
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).
8. The Department also alleges that Cloud's Sanitation improperly withheld or diverted the wages of Williams, thus
violating S.C. Code Ann. § 41-10-40(C). This section provides that:
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.
S.C. Code Ann. § 41-10-40(C) (emphasis added). Although Carson (the business manager for the company) gave Williams'
wages in an envelope to Fogle (Williams' supervisor while at Cloud's Sanitation) to deliver to Williams, Fogle diverted the
wages by both availing himself of $148 for his own purposes and paying $10 to the van driver that transported Williams and
other employees of Cloud's Sanitation to and from work.
9. Cloud's Sanitation (as principal) is bound by the actions of Fogle (as agent) because Cloud's Sanitation did not take any
corrective action upon learning that Fogle diverted Williams' wages. For example, in West v. Service Life & Health Ins.
Co., 220 S.C. 198, 66 S.E.2d 816, 817 (1951), the Supreme Court of South Carolina stated:
It is a general doctrine of law that although the principal is not ordinarily liable . . . in a criminal suit, for the acts or
misdeeds of his agent, unless, indeed, he has authorized or co-operated in them, yet he is held liable to third persons in a civil
suit for the frauds, deceits, concealments, misrepresentations, negligences, and other malfeasances and omissions of duty of
his agent in the course of his employment, although the principal did not authorize or justify or participate in, or indeed,
know of such misconduct, or even if he forbade the acts or disapproved of them.
The case against Cloud's Sanitation by the Department is quasi-criminal in nature. Analogizing this case to a criminal case,
under West, Cloud's Sanitation should be bound by the acts or misdeeds of Fogle if it "cooperated" with Fogle in the
diversion of Williams' wages. I find that, by failing to recover Williams' wages from Fogle or to pay Williams his wages on
its own account, Cloud's Sanitation "cooperated" with Fogel's misdeeds. See id. Therefore, Cloud's Sanitation is
responsible as a principal for the diversion of Williams' wages by its agent Fogle.
10. Also, Cloud's Sanitation breached a duty of care owed to its employee Williams, and it breached its duty to supervise
properly its agent Fogle. For example, the Supreme Court of South Carolina has stated that:
An employer owes a duty of care to a third party arising when the possible harm resulting to the third party by the employee
could have been reasonably anticipated by the employer. [citation omitted]. In addition, any duty the principal owes a third
party arising from a contract between them is limited to an obligation on the part of the principal to use due care in
supervising the actions of the agent which are undertaken in his capacity as an agent for the principal and not in his individual
capacity.
Rickborn v. Liberty Life Ins. Co., 321 S.C. 291, 299, 468 S.E.2d 292 (1996) (an insurer breached a duty of care where it
knew its insurance agent's carelessness could cause a prospective insured to lose his life insurance coverage and insurer
failed to take actions to avoid such harm). In the present case, Williams is the third party to whom Cloud's Sanitation owed
a duty of care. Carson was aware of Fogle's diversion of wages approximately two weeks after the diversion. Nevertheless,
Carson failed to recover the money from Fogle or to compensate Williams' for his wages due. Cloud's Sanitation thereby
breached its duty of care owed to Williams. Further, when Carson learned that Fogle had not delivered Williams' wages but
failed to take actions to ensure that Fogle delivered the full amount to Williams, Cloud's Sanitation breached its duty of care
to supervise Fogle properly. Based on these breaches of duties, Cloud's Sanitation is directly responsible for the diversion of
Williams' wages by Fogle.
11. The Department also cited Cloud's Sanitation with violating section 41-10-40(D), as it contends the company failed to
pay Williams his Christmas Club Savings after the termination of his employment. This section provides 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."
S.C. Code Ann. § 41-10-40(D) (emphasis added). There is insufficient evidence in the record to establish that Cloud's
Sanitation failed to pay Williams' savings at the time and place specified in the 'Terms of Employment Notice.' The facts
clearly indicate that Williams' savings was available to him two weeks after his employment terminated. Furthermore, the
place of payment indicated in the 'Terms of Employment Notice' is "10340 Farrow Rd.," which is the address of Cloud's
Sanitation. The record supports that Williams never requested nor attempted to obtain his money from Cloud's Sanitation.
12. While this tribunal finds nothing before it that would call into question the integrity of the proprietors of Cloud's
Sanitation, the company is not excused from its duties under sections 41-10-30(A) and 41-10-40(C) to provide written
notification to an employee of normal hours and wages and deductions to be made from wages, and not to divert any portion
of an employee's wages without either state or federal authority or written notification to the employee.
C. Penalty
13. Section 41-10-80(B) provides that any employer who violates sections 41-10-30 and 41-10-40 is subject to a fine of not
more than one hundred dollars for each violation. S.C. Code Ann. § 41-10-80(B). There are three separate violations at
issue in the present case. These three violations include the two occasions when Cloud's Sanitation deducted money from
Williams' wages for cigarettes without written notification, and the one occasion when Cloud's Sanitation diverted Williams'
wages. Each of these three violations is subject to a penalty. The Department has assessed $100 for each occasion Cloud's
Sanitation improperly deducted amounts from Williams' wages for cigarettes and $75 for Cloud Sanitation's diversion of
wages from Williams.
14. 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. Walker v.
South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633 (1991); see Ohio Real Estate Comm'n v. Aqua Sun Inv., 655
N.E.2d 266 (Ohio 1995); Shadow Lake of Noel, Inc. v. Supervisor of Liquor Control, 893 S.W.2d 835 (Mo. Ct. App.
1995); Matter of Henry Youth Hockey Ass'n, 511 N.W.2d 452 (Minn. Ct. 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); 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 make the final decision on all the issues, including the appropriate penalty. In the present
case, I find that $175 is the proper total penalty for Cloud's Sanitation's three violations, $50 for each of the two violations
of § 41-10-30(A) and $75 for the violation of § 41-10-40(C).
ORDER
Based on the foregoing Findings of Fact and Conclusions of Law, IT IS HEREBY ORDERED that the Department shall
impose a total fine of $175 against Respondent Cloud's Sanitation for its violations of S.C. Code Ann. §§ 41-10-30(A) and
41-10-40(C).
AND IT IS SO ORDERED.
______________________________
JOHN D. GEATHERS
Administrative Law Judge
Post Office Box 11667
Columbia, South Carolina 29211-1667
October 8, 1999
Columbia, South Carolina |