ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This matter is before the Administrative Law Judge Division (Division) for a contested
case hearing. The South Carolina Department of Labor, Licensing and Regulation, Division of
Labor (Department) contends that Respondent Advanced Automation violated the South Carolina
Payment of Wages Act. More specifically, the Department contends that the Respondent violated
certain provisions of S.C. Code Ann. § 41-10-40 (Supp. 2002), entitled “Medium of payment;
deposit of wages to employee's credit; prohibition against deductions in absence of written notice;
time and place of payment.” Pursuant to S.C. Code Ann. § 41-10-80 (Supp. 2002), the
Department seeks to levy a fine in the amount of One Hundred Dollars ($100.00) against the
Respondent.
In accordance with ALJD Rule 25(C), the parties submitted a Joint Stipulation of Facts
and Law to the Division on June 20, 2003. The parties also consented to the decision of this
matter without hearing, unless deemed necessary by the Division.
FINDINGS OF FACT
The parties stipulated to the following findings of fact, which I adopt as my own:
1.Mr. Luther Holland (Claimant) was employed by the Respondent as a Fabrication
Technician from July 1, 1997 to May 3, 2002. Effective May 3, 2002, the Claimant was
terminated due to a change in business circumstances requiring a “reduction in force.” At the
time of the Claimant’s termination from the Respondent’s employment, written vacation and sick
leave policies were in effect and applicable to all of the Respondent’s employees, including the
Claimant.
2. The Respondent’s vacation policy provided in part that: “If an employee
terminates during the year any unused and accrued vacation will be paid to the employee.” The
Respondent’s sick leave policy provided, in part, that:
Sick time may be accumulated; however, eligible sick leave may not exceed 45
days. We encourage employees to maintain 45 days of sick leave so it is available
to help in the event of a long illness. Employees may also use their unused
vacation as sick time, should the need arise. Time paid for sick leave does not
count as time worked in calculating overtime for the week. . . .
Sick leave may be used to cover medical exams, dental visits, and other health-related appointments that can be normally scheduled only during working hours.
Sick leave may also be used to take care of dependents who are sick or to take
them to medical or dental related appointments that can be normally scheduled
only during working hours. . . .
Sick leave is for genuine illness and medical appointments. Sick leave is not to be
considered as additional vacation or paid time off.
3.The Respondent’s sick leave policy does not contain an express provision
regarding payment or nonpayment of unused and accumulated sick leave eligibility such as the
policy regarding payment for unused accrued vacation. Nevertheless, there is no evidence that the
Respondent has ever paid unused accumulated sick leave eligibility to its employees upon
termination or at any other time.
4.As of the date of the Claimant’s termination from Advanced Automation, Inc., he
had accumulated up to 179 hours of sick leave eligibility.
5.On May 10, 2002, the Respondent timely paid the Claimant all wages owed and
not in dispute, which included payment for his accrued yet unused vacation time. However, the
Respondent did not pay the Claimant for the 179 hours of accumulated sick leave eligibility.
6. On January 9, 2003, the Department cited the Respondent for violating S.C. Code
Ann. § 41-10-40(D) (Supp. 2002) by not paying the Claimant all wages due, specifically,
accumulated sick leave, on the sole ground that the Respondent’s sick leave policy did not contain
an express written waiver or forfeiture clause regarding treatment of sick leave upon termination.
7.It is the present unwritten policy and practice of the Department that accumulated
sick leave constitutes “wages” as defined by S.C. Code Ann. § 41-10-10(2) (Supp. 2002) that are
payable upon termination unless the regulated employer’s policy explicitly provides for an express
waiver or forfeiture of such sick leave upon termination or otherwise. However, the Department
has not issued a regulation or a written administrative policy directive expressly stating that
policy.
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. 2002), S.C. Code
Ann. § 41-3-610 (Supp. 2002), and S.C. Code Ann. § 41-10-80 (Supp. 2002), 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.The issue in this case involves the interpretation of the South Carolina Payment of
Wages laws (S.C. Wages Law), S. C. Code Ann. §§ 41-10-10 et seq. (Supp. 2002), The S.C.
Wages Law is remedial legislation. Dumas v. InfoSafe Corp., 320 S.C. 188, 463 S.E.2d 641 (Ct.
App. 1995). Remedial legislation is “entitled to a liberal construction in order to accomplish the
ends and purposes for which it was enacted.” Booth v. Midland Trane Heating and Air
Conditioning, 298 S.C. 251, 254, 379 S.E.2d 730, 731 (1989). Furthermore, any reasonable
doubt as to the Act’s construction should be resolved in favor of employees seeking withheld
compensation. Id.
The issue in this case is whether the Respondent had to include in its sick leave policy an
express written forfeiture or waiver provision in order to avoid timely payment of accumulated
sick leave eligibility to the Claimant without violating the S.C. Wages Law. The Respondent’s
sick leave policy requires the satisfaction of two separate and independent conditions in order for
an employee to receive payment for sick leave: 1) the employee must have “accumulated”
sufficient hours of eligibility to use sick leave; and 2) the leave may be used for a “genuine illness”
or “medical appointment” of the employee or his/her dependents. The Respondent did not pay
the Claimant for accumulated yet unused hours of sick leave eligibility because he did not satisfy
the express terms of the Respondent’s sick leave policy that the absence is due to a genuine health
related need. He thus had no sick leave due him that was subject to forfeiture upon termination.
The Department, nevertheless, asserts that the Claimant is entitled to payment for the
accumulated yet unused hours of sick leave upon his termination from employment, even if the
Claimant never required the leave for health-related reasons. The Department argues the
Claimant’s right to payment for unused sick leave exists because the Respondent’s policy does not
contain an express written forfeiture or waiver provision. In other words, the Department
propounds that the failure to expressly state that accumulated sick leave is not payable as wages
upon an employee’s termination results in the negative inference that it is wages.
S.C. Code Ann. § 41-10-40 (Supp. 2002) sets forth that: “When an employer separates an
employee from the payroll for any reason, the employer shall pay all wages due to the employee
within forty-eight hours of the time of separation or the next regular payday which may not
exceed thirty days.” In pertinent part, Section 41-10-10(2) defines “wages” as follows: “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.” However, under South Carolina law, there is no case, statute,
regulation or written administrative policy expressly stating that accumulated potential eligibility
to be paid for qualifying sick leave constitutes “wages” as defined by S.C. Code Ann. § 41-10-10(2) that are payable upon termination unless the regulated employer’s policy explicitly provides
for an express waiver or forfeiture of such sick leave eligibility upon termination or otherwise. In
fact, the Department has never issued an administrative policy stating that accumulated sick leave
eligibility constitutes “wages” as defined by S. C. Code Ann. § 41-10-10(2) and are payable upon
termination unless the employer’s policy explicitly provides for an express waiver or forfeiture of
such sick leave upon termination or otherwise.
Additionally, in Simpson v. City of Blanchard, 797 P.2d 346 (Okla. App.1990), the
Appellant argued that the employer was obligated to pay an employee for unused sick leave
because the Oklahoma Protection of Labor statutes did not expressly provide to the contrary.
There, the Court found that the employer’s sick leave policy, although it clearly provided for
earning and accruing sick days as a benefit of employment and did not indicate that the benefit had
a value independent of an employee's need to miss work due to illness or injury, did not allow
employees to "cash-out" unused sick days before terminating employment. The Court held that
in order for those sick days to be wages due upon termination, they had to have been used, or
“cashed in,” for bona fide illness or injury in lieu of working days during the pay period preceding
termination.
Furthermore, in Meadows v. Wal-Mart Stores, Inc., 207 W. Va. 203, 530 S.E.2d 676
(1999), the West Virginia Supreme Court of Appeals addressed an issue similar to the issue in this
case. There, the Petitioners argued that the employers were required to pay the employees for
unused sick leave in the same manner as wages upon separation from employment. The Court
recognized that the West Virginia Wage Payment and Collection Act (W. Va. Wage Act) required
an employer to pay an employee “accrued” wages and fringe benefits upon the employee’s
discharge. The Court further acknowledged that under the W. Va. Wage Act that “if under the
terms of employment an employee is entitled to the payment of fringe benefits, the payment of
these benefits has the same status as unpaid wages.” However, the Court held that the terms of
employment must expressly and specifically vest a fringe benefit right on some eligibility
requirement in addition to the performance of services, “so that employees understand the
amount, if any, of the fringe benefits owed to them upon separation from employment.”
Meadows, 207 W. Va. at 690. “Accrue” is defined as “to come into existence as a legally
enforceable claim.” Merriam-Webster OnLine (2002), available at http://www.m-w.com/.
Likewise, the term “due” used in the South Carolina Wages Act is defined, in part, as “having
reached the date at which payment is required: PAYABLE.” Id. Therefore, the reasoning of
Meadows is a persuasive authority.
In order for sick leave to constitute “wages” under South Carolina Code Section 41-10-10(2), it must be “due to an employee under an employer policy or employment contract.”
Because the Claimant did not meet the first condition for the payment of sick leave time, it was
not an amount due under the terms of the Respondent’s policy. In order for sick leave to
constitute “wages” under Section 41-10-10(2), it must be “due to an employee under an employer
policy or employment contract.” Because the Claimant did not meet the first condition for the
payment of sick leave time, it was not an amount due under the terms of Advanced Automation’s
policy. Accordingly, it cannot fall within the definition of “wages” under Section 41-10-10(2).
Furthermore, I find that the Department’s negative inference that in the absence of a forfeiture or
waiver provision the Claimant is entitled to sick leave payments is not supported by the case law
or a proper reading of the S.C. Wages Law.
Thus, no forfeiture or waiver provision was
required, and the absence of such a provision does not entitle an employee to sick leave payments.
4.The above holding is further supported by contrasting the Respondent’s sick leave
policy to its vacation policy. Under the Respondent’s vacation policy, an employee’s entitlement
to vacation leave is only contingent on one condition – accrual of such leave that is based on
length of service. Therefore, an employee is entitled to such leave unless otherwise forfeited.
Although the Respondent could require the forfeiture of such accrued vacation time upon
termination, it does not do so and in fact, explicitly provides that such unused accrual of vacation
time will be paid out upon termination. It is undisputed that the Claimant received all unused but
accrued vacation time following his termination.
ORDER
Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby:
ORDERED that this case is dismissed.
AND IT IS SO ORDERED.
__________________________________
Ralph King Anderson, III
Administrative Law Judge
July 23, 2003
Columbia, South Carolina |
