SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This matter comes before me upon request of Henry L. Parr, owner of Headspring Farm ("Respondent"), seeking a contested case hearing. The Department of Labor, Licensing and Regulation, Division of Labor ("Petitioner") issued a penalty citation to the Respondent for alleged violations of the payment of wages statutes contained in Chapter 10, Title 41 of the 1976 South Carolina Code of Laws. Respondent denies any penalties are due and asserts it has complied with all applicable statutes and regulations.

After notice to the parties, a contested case hearing was held at the Administrative Law Judge Division ("Division") offices in Columbia, South Carolina on October 29, 1997. Based upon the evidence presented, I find that a fine in the amount of $200.00 is imposed upon Respondent.

EVIDENCE

Petitioner placed into evidence, without objection, a total of twenty three (23) exhibits which consisted of documents obtained from Respondent. Petitioner also presented testimony of Ms. Gwen Morris, an investigator with its office.

Respondent presented as witnesses its secretary, Ms. Kay Frances Parker; Calhoun Bryan Parr, the son of its owner; and its owner, Henry L. Parr. Respondent did not offer any exhibits into evidence.

FINDINGS OF FACT

After consideration and review of all the evidence and testimony, and having judged the credibility of the witnesses, by a preponderance of the evidence, I make the following findings:

This Division has personal and subject matter jurisdiction.

2. Notice of the date, time, place and nature of the hearing was timely given to the parties.

3. Headspring Farm is a sole proprietorship consisting of a dairy farm and other farming operations owned and operated by Henry L. Parr ("Mr. Parr") in Newberry County, South Carolina.

4. There are approximately five hundred (500) milking cows on the farm. Mr. Parr also grows crops on the farm. Both Mr. Parr and his son, Calhoun Parr, own houses and mobile homes which are rented to employees of the farm.

Due to his failing health, Mr. Parr transferred much of the day-to-day supervision of the farm and its employees to his son, Calhoun Parr.

Ms. Kay Parker has been Respondent's secretary for the last seven (7) years.

It is Ms. Parker's responsibility to fill out an employment contract and surety bond agreement with each new employee. Ms. Parker is also responsible for explaining all of the provisions of these documents to each new employee.

Violation as to Jeff Foote

Jeff Foote ("Mr. Foote") was hired by Respondent on August 15, 1996. He signed an Employment Agreement ("Agreement") on that date.

Paragraph 3 of the Agreement is entitled "Compensation of Employee." Pursuant to the Agreement, Mr. Foote was to receive $6.00 an hour as compensation for services rendered and was to be paid on Saturdays. See Petitioner's Exhibit # 6.

Pursuant to the provisions contained in paragraph 3, Mr. Foote also had a right to participate in a profit sharing plan maintained by Respondent.

Pursuant to Paragraph 4 of the Agreement, entitled "Work Hours," Mr. Foote agreed to work approximately ten hours per day and six days per week.

Paragraph 5 of the Agreement, titled "Options of Housing, Medical and Life Insurance, Utilities, Milk and Meat Available to Employee," provides that Mr. Foote could elect one or more of the available options. However, Respondent had the right to charge for any such option selected and to deduct the charges from the employee's gross monthly earnings.

Also pursuant to paragraph 5, Mr. Foote agreed that if he rented a house from Respondent, he would keep it in a state of good housekeeping and be responsible for leaving it in a clean condition upon vacating it. According to the Agreement, if the rental house was not left in a proper state of repair, Respondent had the right to clean

and/or repair it and deduct the cleaning and repair costs from any outstanding wages due to the employee.

Mr. Foote rented a house from Respondent.

Paragraph 6 of the Agreement provides that the employee must participate in a "Surety Bond Plan" ("Plan") as set forth on an attached sheet. The attachment to the Agreement was a one sheet document on Respondent's letterhead, containing seven provisions under the heading "SURETY BOND FOR HEADSPRING FARM EMPLOYEES COMING TO JOB AFTER 1-1-92." See Petitioner's Exhibit # 4.

The Plan is a program devised by Respondent which provides for deductions from an employee's paychecks, not to exceed a sum of Fifty ($50.00) Dollars for monthly paid employees nor Ten ($10.00) Dollars a week for weekly paid employees. The monies placed in this security account will be in the name of Respondent but will have a number identifying the employee who has contributed the funds therein. The account draws interest at not less than money market rates. The account never exceeds the sum of Five Hundred ($500.00) Dollars.

Pursuant to paragraph 6 of the Plan, Respondent is authorized to levy against this account for any outstanding obligations owed it due to the employee's breach of the employment agreement or of any "rules" applying to employees.

A "Summary of "Policies," dated January 20, 1993, was attached to Mr. Foote's employment agreement. Generally, it provides incremental penalties when employees fail to return or lose farm tools, when employees are late in coming to work, when employees fail to report to work, and when employees engage in careless actions. The penalties consist of deductions in varying amounts from the employee's worked hours. See Petitioner's Exhibit # 5.

Paragraph 8 of the agreement, titled "Termination," provides that the agreement may be terminated by either party on two (2) months' written notice to the other. It further provides that upon any violation of the terms of the Agreement, Respondent may terminate the employment without notice. There is no corresponding right granted to the employee to terminate the Agreement if Respondent violates any of its terms.

On May 13, 1997, Mr. Foote moved out of the house he was renting from Respondent.

On April 27, 1997, Mr. Foote quit his job with Respondent when he did not show up for work. He did not work any more after that date.

At the time Mr. Foote terminated his employment with Respondent, he was renting a stove and refrigerator from Respondent. The rental for these appliances was Four and 62/100 ($4.62) Dollars weekly. Respondent deducted from the final wages due Mr. Foote the sum of Thirty Six and 96/100 ($36.96) Dollars (eight weeks' rental at $4.62 per week) for Mr. Foote's failure to give two months' written notice of his intent to stop working on the farm.

Department asserts that Respondent improperly deducted sums for appliance rental after Mr. Foote had vacated the rental house and, by failing to remit the sums

deducted as a part of the wages due to Mr. Foote on his last payday, the Respondent violated S.C. Code Ann. § 41-10-40 (D).

Petitioner owed the amount of Four and 62/100 ($4.62) Dollars for rental of the appliances through May 13, 1997.

There is no provision contained within the Agreement or any attachment incorporated by reference which authorizes Respondent to deduct any amounts for rental of appliances after the date the employee vacates the rented premises.

26. Gary Dean Taft ("Mr. Taft") was hired by Respondent on November 25, 1996. He signed an employment agreement on that date; it is in the same format as the agreement Jeff Foote signed. See Petitioner's Exhibit # 11.

Under paragraph 3 of the Agreement titled "Compensation of Employee," Mr. Taft agreed to a compensation rate of Six ($6.00) Dollars per hour with wages to be paid weekly on each Saturday.

The Agreement provided under paragraph 4, titled "Work Hours," that Mr. Taft would work approximately ten (10) hours per day for six (6) days each week.

Paragraph 5 provided for several options, including rental of Respondent's housing, medical and life insurance, usage of utilities, and the purchase of milk and meat.

Paragraph 6 of the Agreement provided that Mr. Taft "shall participate in Surety Bond Plan set forth in attached sheet."

Paragraph 8 of the Agreement, titled "Termination," provided for two months' written notice by either party for termination of the Agreement.

Mr. Taft and his wife, Jacqueline Taft, were employees on the farm.

Mr. Taft and his wife rented a house from Respondent.

On March 19, 1997, the Tafts gave a written statement to Respondent that they wished to terminate their employment on April 2, 1997. They agreed to give up "our profit share money due and our security Bond money". See Petitioner's Exhibit # 14.

The Tafts' last day of employment on the farm was March 30, 1997.

The Tafts felt threatened by other employees on the farm, and on Monday, April 2, 1997, they moved off the farm and out of the rental house, returning to their native state of Iowa.

Respondent did not immediately know the whereabouts of Mr. and Mrs. Taft. When Respondent ascertained the Tafts' mailing address, it immediately forwarded to Mrs. Taft the entire amount of wages owed her, without any deductions.

Respondent also mailed a check for wages to Mr. Taft. However, Respondent deducted from Mr. Taft's total wages of Four Hundred Eleven and 60/100 ($411.60), a sum for rent for a period of seven weeks at Fifty and 76/100 ($50.76) Dollars per week, totaling Three Hundred Fifty and 56/100 ($350.56) Dollars.

Respondent asserts that the deduction is authorized under the terms of the Agreement, since Mr. Taft failed to provide a two month termination notice.

The Agreement contains no provision authorizing Respondent to make deductions from wages as a penalty upon an employee's failure to provide two months' written notice of termination.

When Mr. Taft moved out of the rental house, he owed rent for one week from March 27, 1997 to April 2, 1997.

Deductions were withheld from Mr. Taft's final check for electricity and gas charges. These deductions are not disputed.

Petitioner asserts that Respondent is in violation of S.C. Code Ann. § 41-10-40 (D) for failure to pay Mr. Taft the full amount of wages owed him in his final paycheck.

Violations as to Bill Mintch

Bill Mintch ("Mr. Mintch") was hired by Respondent on December 2, 1996. His compensation was set at Five and no/100 ($5.00) Dollars per hour under paragraph 3 of the Employment Agreement ("Agreement"). See Petitioner's Exhibit # 16.

The "Work Hours" provision of the Agreement was not completed, and no set hours of work or days for working each week were included in the Agreement.

The Agreement provided the same "options" in paragraph 5 as set forth in the employment agreements of Jeff Foote and Gary Taft. It also contained paragraph 6 which provided for the "Surety Bond Plan," and paragraph 8 which provided the termination provision.

Mr. Mintch's last day of work for Respondent was April 25, 1997. His last payday for payment of the wages owed him was May 3, 1997.

There was no dispute about the deductions from Mr. Mintch's last paycheck.

A check dated May 24, 1997 in the amount of Fifty Two and 33/100 ($52.33) Dollars was remitted to Mr. Mintch. Petitioner's Exhibit # 23.

Mr. Mintch did not provide the two month termination notice as required in the Agreement.

Mr. Mintch did not provide Respondent a forwarding address upon leaving employment. Respondent made a good faith effort to locate Mr. Mintch and to determine his mailing or work address.

On April 30, 1997, Respondent mailed a certified letter to Mr. Mintch at his last known address informing him to stay off Respondent's property and advising him to come pick up his final check. The envelope was returned to Respondent unopened.

When Respondent was able to locate Mr. Mintch, it immediately tendered to him a check dated May 24, 1997, representing the full amount of wages owed to him.

Petitioner asserts that since the check was not dated on May 3, 1997, the last pay date of the employee, that Respondent has violated S.C. Code Ann. § 41-10-40 (A).

CONCLUSIONS OF LAW

Based upon the foregoing Findings of Fact, I conclude, as a matter of law, the following:

1. S. C. Code Ann. §1-23-600 (Supp. 1996) grants jurisdiction to the Administrative Law Judge Division to hear contested cases under the Administrative Procedures Act.

2. S. C. Code Ann. §41-10-10, et seq. (Supp. 1996) governs payment of employee wages.

3. S. C. Code Ann. §41-10-40 (D) provides that employers shall pay all wages due at the time and place designated by subsection (A) of § 41-10-30.

4. S. C. Code Ann. § 41-10-20 provides that Chapter 10 of Title 41 applies to all employers in South Carolina except employers of domestic labor in private homes and employers employing fewer than five employees at all times during the preceding twelve months.

5. A civil penalty of up to One Hundred & no/100 ($100.00) Dollars may be imposed upon covered employers for each violation of the provisions of S. C. Code Ann. § 41-10-40. S. C. Code Ann. § 41-10-80 (B) (Supp. 1996). Each failure to pay wages when due constitutes a violation. Further, each failure to pay all wages in lawful United States money or by negotiable warrant or check bearing even date with the payday constitutes a violation.

6. The fact-finder in a contested case has the authority to impose a penalty consistent with the facts presented. Walker v. S. C. ABC Comm'n, 305 S. C. 209, 407 S. E. 2d 633 (1991).

7. Based upon the evidence presented, it is clear that Respondent failed to make payment of the correct amount of wages due to Mr. Taft and Mr. Foote at the regularly scheduled pay date. The termination provision in the employment agreement does not provide for the imposition of any penalty upon failure of an employee to provide two months' written notice of intent to terminate his employment with Respondent. Respondent deducted sums from the employees' final paychecks without authority or the employees' permission. Respondent's failure to pay the employees all wages owed to them violates S.C. Code Ann. § 41-10-40 (D). I conclude that the Respondent must be assessed a fine of One Hundred and no/100 ($100.00) Dollars for each violation.

8. The evidence is also clear that Respondent failed to pay the wages due to Mr. Mintch by a check bearing the date of the last pay date. At first blush, this appears to constitute a violation of § 41-10-40 (A). Respondent acted in a timely manner in ascertaining the whereabouts of Mr. Mintch and, upon doing so, in immediately forwarding a check for the wages owed. Respondent's failure to forward a check bearing the date of the last pay date was due to Mr. Mintch's failure to leave a forwarding address. There is no evidence that Respondent acted arbitrarily or refused to timely make payment. In this instance, Respondent exercised exceedingly good judgment and timely complied with the spirit of § 41-10-40 (A). Accordingly, I conclude that no penalty should be assessed against Respondent for failing to inscribe the correct date on the check tendered to Mr. Mintch.

8. Accordingly, I find and conclude that a civil penalty of Two Hundred & no/100 ($200.00) Dollars, is imposed against Respondent.

ORDER

Based upon the foregoing Findings of Facts and Conclusions of Law, it is hereby:

ORDERED that Respondent, Headspring Farm, violated the payment of wages statutes by failing to pay to its employees Jeff Foote and Gary Dean Taft all wages due to them at the date and time required according to the employment agreements, and that a fine in the amount of Two and no/100 ($200.00) Dollars is hereby imposed upon Respondent; and, it is further

ORDERED that Respondent shall make payment of this civil penalty to the Petitioner within thirty (30) days of the date of this Order.

AND IT IS SO ORDERED.

_________________________________

Marvin F. Kittrell

Chief Judge

Columbia, South Carolina

November 17, 1997