ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This matter is before the Administrative Law Court
(ALC or Court) for a contested case
hearing pursuant to S.C. Code Ann. § 41-10-40 (D) (1986 & Supp. 2003) and
S.C. Code Ann. §§ 1-23-310, et seq. (1986 & Supp. 2003). The South Carolina Department of
Labor, Licensing and Regulation, Division of Labor (Department) contends Larmax Enterprises,
LLC (Respondent or Larmax) violated the South Carolina Payment of Wages Act (the Act).
More specifically, the Department contends that Larmax violated the provisions of S.C. Code
Ann. § 41-10-40 (D) (1986 & Supp. 2003) (entitled “Medium of payment; deposit of wages to
employee’s credit; prohibition against deductions in absence of written notice; time and place of
payment”). For that violation, the Department seeks to levy a fine in the amount of One Hundred
($100.00) Dollars against Respondent. A hearing on this matter was held on June 2, 2004 at the
ALC in Columbia, South Carolina.
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 time, date, place and nature of this hearing was timely and properly
given to all parties.
2.Larmax Enterprises is a business that operates McDonald’s restaurants. In
conducting that business, Larmax hires employees by the hour and by salary.
3.Timmie Kelly (Kelly) was hired on October 23, 2003 as an assistant manager for
one of Larmax’s restaurants. The employment agreement between Kelly and Larmax provided
for a rate of pay of $24,000 a year in salary contingent upon Kelly meeting the criteria of “open
availability.” “Open availability” meant that Kelly must be available to work at all times, including
scheduled days off. It also connoted that Kelly would provide Larmax a means to contact him by
telephone at all times. Furthermore, the employment agreement stated the rate of pay would be
changed to $5.15 per hour if Kelly failed to meet the open availability criteria. Kelly was well
aware of the significance of the “open availability” requirement because prior to his employment
with Larmax, he received training at Hamburger University, a McDonald’s management and
employee training venue, and had more than twenty (20) years experience working for
McDonald’s.
Kelly’s subsequent record with Larmax was discordant. In fact, before the disputed pay
period, Kelly had been suspended for two weeks until December 19, 2003. Afterwards, he was
scheduled to work during the week of December 21, 2003 on December 23 and December 26.
Mr. Young, the owner of Larmax, attempted to contact Kelly numerous times during the week of
December 21, 2003, at the telephone number Kelly gave to Larmax. Nevertheless, Kelly failed to
respond to those phone calls or request leave for that week and failed to work his scheduled work
days. Though Kelly later turned in a “Certificate to Return to Work” dated December 22, 2003
from Providence Hospital Northeast indicating Kelly was to return to work on December 28,
2003, the certificate was fraudulent. The actual certificate indicated Kelly could return to work
on December 23, 2004. Therefore, Kelly failed to meet his contractual obligation requirement to
be openly available to work when called.
As a result of Kelly’s failure to comply with his contractual requirement of “open
availability,” Mr. Young exercised his right under the contract to convert Kelly’s salary position
to a $5.15 per hour pay rate on December 26, 2003 and informed Kelly of that decision when he
finally contacted him. Therefore, when Kelly returned to work during the week of December 28,
2003, he was only paid $5.15 per hour for his services.
5.Kelly resigned his position on January 2, 2004. On January 20, 2004, Kelly filed a
complaint with the Department claiming he was owed two (2) days of wages in December 2003.
CONCLUSIONS OF LAW
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 & Supp. 2003), S.C.
Code Ann. § 41-3-610 (1986 & Supp. 2003), and S.C. Code Ann. § 41-10-80 (1986 & Supp.
2003), the Administrative Law Court has jurisdiction to hear this contested case.
2.In weighing the evidence and deciding a contested case on the merits, the
Administrative Law Court must make findings of fact and conclusions of law by a preponderance
of the evidence. Anonymous (M-156-90) v. State Board of Medical Examiners, 329 S.C. 371,
496 S.E. 2d 17 (1998).
3.The Department seeks to levy a fine in the amount of One Hundred ($100.00)
Dollars against Larmax pursuant to S.C. Code Ann. § 41-10-80 (B) (1986 & Supp. 2003).
Section 41-1-80 (B) provides that: “Any employer who violates the provisions of Section 41-10-40 must be assessed a civil penalty of not more than one hundred dollars for each violation.”
Section 41-10-40 provides that: “Every employer in the State shall pay all wages due at the time
and place designated as required by subsection (A) of § 41-10-30.” Section 41-10-30 (A) sets
forth that:
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.
The employment agreement entered into by Kelly and Larmax made Kelly’s salary
contingent upon Kelly meeting the criteria of “open availability.” The Department concedes that
Kelly’s was correctly paid at $5.15 an hour for the week of December 21, 2003 pursuant to that
agreement because he did not meet the open availability criteria. Nevertheless, the Department
contends Kelly should have been paid for time worked during the following week of December
28, 2003 at a rate of pay commensurate with the salary terms of the agreement and not $5.15 an
hour. In other words, the Department contends that though Kelly did not meet the open
availability criteria during the week of December 21, 2003, when he subsequently made himself
available to work during the week of December 28, 2003, his rate of pay should have reverted
back to the original terms of $24,000 in salary because Kelly was once again openly available.
However, Section 41-10-30 does not set forth that wages which are properly reduced for
failure to meet the terms of an employment contract must be restored to the higher rate whenever
an employee begins to comply with the contract terms again. Rather, Sections 41-10-30 and -40
require that an employer must notify an employee in writing of the “wages agreed upon” and pay
those wages in keeping with the notification. Here, the employment agreement was the
notification of the “wages agreed upon.” That agreement does not call for Kelly’s rate of pay to
fluctuate from salary to hourly and then back to salary based upon whether Kelly is currently
meeting the criteria of open availability or that Kelly’s salary be restored to salary at any time he
subsequently meets the open availability criteria. There is no language in the employment
agreement from which to infer a concurrence that Kelly’s rate of pay could go from salary to
hourly to salary. Nor is there any evidence in the record showing that employment agreements
like Kelly’s customarily allow the rate of pay to change from salary to hourly and then back to
salary as an employee shifts from not openly available to openly available.
The Department contends that since the employment agreement does not contain a
prohibition against Kelly’s rate of pay reverting from salary to hourly and then back to salary
based upon Kelly meeting the criteria, the agreement is ambiguous and therefore required that
Kelly’s salary be restored. A contract is ambiguous when it may fairly and reasonably be
understood in more ways than one. Farr v. Duke Power Co., 265 S. C. 356, 218 S. E. 2d 431
(1975). However, even if this contract is ambiguous “parol evidence is admissible to explain
exactly what the parties intended.” Lewis v. Carnaggio, 257 S.C. 54, 183 S.E.2d 899 (1971); See
also, Lindsay v. Lindsay, 328 S.C. 329, 491 S.E.2d 583 (S.C. App.1997) (“where an agreement is
silent as to a particular matter and because of the nature and character of the transaction an
ambiguity arises, parol evidence may be admitted in order to supply a deficiency in the language
of the contract. In such instance, parol evidence is admissible not to contradict the terms of the
written agreement, but to determine the intent of the parties as to that particular matter.”). In this
case, Mr. Young testified it was the intent of the employment agreement that once Kelly’s rate of
pay changed to hourly it remained at an hourly rate. Furthermore, managers are instructed at
Hamburger University, which Kelly attended, that the rate of pay does not change back and forth
as an employee complies or does not comply with the open availability criteria. Therefore, Kelly
clearly understood that once his pay was reduced it would not revert back to the original salary
just because he made himself “openly available.”
6.Based upon the above reasoning, I find that the Department failed to establish that
Larmax did not pay Kelly’s wages in keeping with his employment agreement. Accordingly, no
violation of Sections 41-10-30 and -40 were established.
ORDER
Based upon the above Findings of Fact and Conclusions of Law, it is hereby:
ORDERED that the Department’s fine is rescinded and this case is dismissed.
AND IT IS SO ORDERED.
_________________________________
Ralph King Anderson, III
Administrative Law Judge
July 19, 2004
Columbia, South Carolina |