SC Administrative Law Court Decisions

This matter is a protest by James Island Cleaners (Cleaners), the Respondent, to citation 463-97 dated February 7, 1997 and issued by the South Carolina Department of Labor, Licensing and Regulation, Division of Labor (Division). The Division seeks a penalty of $150.00 under S.C. Code Ann. § 41-10-80 (Supp. 1996) for two violations of the wage payment laws. Cleaners denies any penalties are due. This matter was heard on July 30, 1997, with jurisdiction granted the Administrative Law Judge Division under § 41-10-80(D), 26 S.C. Code Regs. 71-6000 (contested case hearing granted), and the contested case provisions of S.C. Code Ann. § 1-23-600(B) (Supp. 1996). In this case a penalty of $ 75.00 is due for improper withholding, but no penalty is due for wages involving Thanksgiving Day.

Is Cleaners liable for civil penalties under § 41-10-80 for violations of § 41-10-40(C) and § 41-10-40(D)?

1. Positions of Parties:

Cleaners asserts § 41-10-40(C) is not applicable since no funds of an employee were improperly withheld or diverted. Cleaners asserts § 41-10-40(D) is also not applicable since all wages due have been paid. Division, on the other hand, asserts § 41-10-40(C) has been violated since Cleaners deducted $23 from an employee's paycheck without giving the employee notice that such charges could be deducted from her paycheck. Further, Division asserts Cleaners violated § 41-10-40(D) by not paying an employee the wages due for a Thanksgiving Holiday.

2. Findings of Fact:

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

1. Sylvia Buggs (Buggs) was employed by Cleaners from 1992 until her resignation on December 7, 1996.

2. Under the terms of her employment contract, Buggs was to be paid weekly on Friday mornings at her place of work.

3. By the written terms of her employment contract, Buggs was entitled to a paid holiday for Thanksgiving Day.

4. The last day upon which Buggs' performed work for Cleaners was Friday, November 29, 1996.

5. Cleaners employs two different pay periods: the stated pay period and the normal pay period.

6. The stated pay period for Cleaners' employees begins at the start of the work day on Thursday morning and concludes at the end of the work day on Wednesday evening.

7. The stated pay period is not followed on a regular basis.

8. The stated pay period is followed only on unusual occasions with such occasions occurring approximately two or three times a year.

9. The normal pay period for Cleaners' employees begins at the start of the work day on Friday morning and concludes at the end of the work day on Thursday evening.

10. Regardless of whether the pay period is the stated pay period or the normal pay period, Cleaners pays its employees on the Friday morning immediately following the end of the pay period.

11. For the payday of Friday, November 22, 1996, Cleaners employed the normal pay period and paid wages to its employees for the work days of Friday, November 15, 1996 through Thursday, November 21, 1996.

12. As the result of an emergency, for the payday of Friday, November 29, 1996, Cleaners did not use the normal pay period but instead used the stated pay period.

13. In using the stated pay period for the payday of Friday, November 29, 1996, wages had already been paid for Thursday, November 21, 1996. Thus wages were not paid again for that day, but wages were paid for Friday, November 22, 1996 through the end of the work day of Wednesday, November 27, 1996.

14. On November 29, 1996, Buggs was paid wages of $168.06 for the pay period of Friday, November 22 through Wednesday, November 27.

15. At some point on the date of November 29, 1996, Buggs lost or misplaced her paycheck to a degree that the check was considered lost.

16. Buggs asked Cleaners for a replacement check.

17. Larry Beldner (Beldner) on behalf of Cleaners was authorized to issue payroll checks.

18. Beldner was out of town in St. Louis, Missouri.

19. Beldner was contacted by telephone in St. Louis, Missouri, and Beldner authorized an employee of Cleaners to pay Buggs $165 as a rough replacement for the lost paycheck.

20. The payment of $165 was made since at the time of the telephone call on November 29, 1997 no one could establish the exact amount of the missing payroll check with certainty.

21. Beldner intended to more precisely determine the amount upon his return from St. Louis.

22. Cleaners placed a stop payment order on the missing check and incurred a $23.00 cost for the stop payment service.

23. For the pay day of Friday, December 6, 1996, wages were paid for the holiday of Thanksgiving, Thursday, November 28, 1996 and for the work days of Friday, November 29, 1996 through the end of the work day of Thursday, December 5, 1996.

24. Buggs did not return to work after Friday, November 29, 1996 and thus did not work any of the days from Saturday, November 30, 1996 through Thursday, December 5, 1996.

25. Buggs was not physically present at her former employment on the pay day of December 6, 1996 and thus did not collect her paycheck for the holiday of Thanksgiving and the previously worked day of Friday, November 29.

26. Buggs made no contact with Cleaners after November 29, 1996 until she called to resign as of December 7, 1996.

27. On December 11, 1996, Cleaners mailed a check to Buggs for $47.25 as the payment for the pay day of December 6, 1996.

28. The $47.25 payment was determined as follows:

*FICA, Federal, and State taxes

**Stop payment charge on lost check of $23.00 and clothes cleaning charge of $5.07

30. The $47.25 included wages paid for the Thanksgiving Holiday of November 28.

31. The deduction of $23.00 from Buggs' paycheck by Cleaners on December 6, 1996, resulted from a stop payment charge resulting from an earlier paycheck lost by Buggs, and the $5.07 resulted from a clothes cleaning charge.

32. Cleaners gave Buggs no written notice that a deduction for a lost paycheck could be made against her wages.

3. Discussion

Two violations are in dispute here. First, the Division points out that an employer shall not withhold 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 the deductions as required by subsection (A) of Section 41-10-30. See § 41-10-40(C) (Supp. 1996). Second, the Division also points out that an employer shall pay all wages due at the time and place designated as required by subsection (A) of Section 41-10-30. See § 41-10-40(D) (Supp. 1996). The Division asserts the $23.00 charged against Buggs for the stop payment order on a paycheck lost by Buggs violates § 41-10-40(C) and a failure to pay Buggs for Thanksgiving violates § 41-10-40(D).

A relevant factor is that the wage laws of South Carolina are designed to protect working people and assist them in collecting wrongfully withheld compensation. Dumas v. Infosafe Corp., ___ S.C. ___, 463 S.E.2d 641 (Ct. App. 1995). In an effort to define the employers duty to pay the proper amount of wages, the law explains two circumstances allowing an employer to deduct charges from the employee's wages. § 41-10-40(C). First, the employer may be required or permitted by state or federal law to make the deduction. Second, the employer may make a deduction after giving written notification to the employee of the amount and terms of the deductions so long as the notice is given at least seven days before the terms of the deduction become effective. § 41-10-30(A). The issue here is whether a deduction of $23.00 was properly made from the wages of Buggs.

Here no state or federal law allows or requires an employer to charge an employee for a stop payment order on a payroll check. Thus, reliance upon a state or federal requirement cannot justify the $23.00 deduction. Likewise, no written notice was given to Buggs informing her or any other employee that charges for a stop payment order would be deducted from the employee's wages. While the employer may impose such a rule, the rule cannot be applied until the seven day written notice is satisfied. § 41-10-30(A). Accordingly, the $23.00 deduction does not comply with the written notice requirement of a proper deduction from wages. Under such circumstances, Cleaners violated § 41-10-10(C) and is liable for a penalty of $75. § 40-10-80(B)(Supp. 1996). See, Bennett v. Lambroukos, 303 S.C. 481, 401 S.E.2d 428 (Ct. App. 1991) (a deduction from wages of a dishwasher for breakage of dishes without written notice that a deduction would be made constitutes a violation of the notice requirements of the South Carolina wage law).

An employer is obligated to "pay all wages due at the time and place designated." S.C. Code Ann. § 41-10-40(D). Wages due include payments for holidays where an employer policy or employment contract establishes such payments are to be made. § 41-10-10(2). Here, Cleaners, by contract, agreed to pay its employees holiday pay for the day of Thanksgiving. Thus, if Buggs was an employee on Thanksgiving of 1996, she was entitled to payment.

Buggs was an employee on Thanksgiving Day since she worked the week before Thanksgiving, worked on Friday, November 29 (the day after Thanksgiving) and did not resign until December 7, 1997. Accordingly, Buggs was entitled to payment of wages for the holiday. The facts here prove, however, that Buggs was paid for the Thanksgiving holiday. The payroll records identify a payment for Thanksgiving Day of six hours at $ 6.75 per hour less deductions for state and federal taxes. The payment of wages for Thanksgiving Day was included in a check of $47.25 mailed to Buggs on December 11, 1996. Accordingly, Cleaners did not fail to pay Buggs wages due for Thanksgiving Day and is not liable for a penalty for failure to pay wages due.

4. Conclusions of Law

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

1. The wage laws of South Carolina are designed to protect working people and assist them in collecting wrongfully withheld compensation. Dumas v. Infosafe Corp., ___ S.C. ___, 463 S.E.2d 641 (Ct. App. 1995).

2. An employer shall not withhold 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 the deductions as required by subsection (A) of Section 41-10-30. § 41-10-40(C) (Supp. 1996).

3. A deduction from wages without written notice to the employee that a deduction will be made is a violation of the notice requirements of the South Carolina wage law and is an improper withholding of an employee's wages. See Bennett v. Lambroukos, 303 S.C. 481, 401 S.E.2d 428 (Ct. App. 1991).

4. Improperly withholding any portion of an employee's wages in violation of § 41-10-40(C) subjects the employer to a penalty of up to $100. § 40-10-80(B)(Supp. 1996).

5. The $23.00 charged against Buggs for the stop payment order on a paycheck lost by Buggs violates § 41-10-40(C) and warrants a penalty of $ 75. § 40-10-80(B)(Supp. 1996).

6. An employer shall pay all wages due at the time and place designated as required by subsection (A) of Section 41-10-30. See § 41-10-40(D) (Supp. 1996).

7. Cleaners' payment of wages to Buggs on December 11, 1997 included a payment of wages for Thanksgiving Day so as not to constitute a failure to pay wages due and is not an act warranting a fine. § 41-10-40(D) and 41-10-80(B) (Supp. 1996).

Cleaners is ordered to pay a penalty of $75.00 for improperly withholding $23.00 from Buggs' paycheck. No penalty is due for an alleged failure to pay wages to Buggs for a Thanksgiving Holiday.

AND IT IS SO ORDERED.

___________________________

RAY N. STEVENS

Administrative Law Judge

This 19th day of August, 1997