|Hearings Unit: Final Order
In the Matter of
Case Number 35-96
MARK A. JOHNSON and April J. Johnson
dba Budget Carpet Cleaning
FINDINGS OF FACT
ULTIMATE FINDINGS OF FACT
CONCLUSIONS OF LAW
Respondents failed to pay Claimant all wages due upon termination, in violation of ORS 652.140(1). Respondents´ failure to pay the wages was willful, and the Commissioner ordered Respondents to pay civil penalty wages, pursuant to ORS 652.150. ORS 652.140(1), 652.150.
Pursuant to notice, a hearing was convened on Wednesday, July 17, 1996, in Eugene, Oregon, before Administrative Law Judge Douglas A. McKean. The Bureau of Labor and Industries (the Agency) was represented by Alan McCullough, a Case Presenter with the Agency. Linda L. Maxwell (Claimant) was present throughout the hearing. Mark A. Johnson and April J. Johnson (Respondents), after being duly notified of the time and place of this hearing, failed to appear in person or through a representative.
The Agency called as witnesses the Claimant and Lynne Sheppard, a Compliance Specialist with the Wage and Hour Division of the Agency. Administrative exhibits X-1 through X-5 and Agency exhibits A-1 through A-9 were offered and received into evidence. Following the receipt of a Statement of Agency Policy, the record closed on July 29, 1996.
Having fully considered the entire record in this matter, I, Jack Roberts, Commissioner of the Bureau of Labor and Industries, hereby make the following Findings of Fact (Procedural and on the Merits), Ultimate Finding of Fact, Conclusions of Law and Opinion, and Order.
FINDINGS OF FACT -- PROCEDURAL
1) On October 20, 1995, Claimant filed a wage claim with the Agency. She alleged that she had been employed by Respondents and that they had failed to pay wages earned and due to her. Claimant assigned to the Commissioner of Labor, in trust for Claimant, all wages due from Respondents. (Testimony of Claimant; Exhibits A-1, A-2)
2) On March 25, 1996, the Agency served on Respondents an Order of Determination based upon the wage claim filed by Claimant and the Agency´s investigation. The Order of Determination asserted that Respondents owed Claimant a total of $158 in wages and $1,740 in civil penalty wages. The Order of Determination required that, within 20 days, Respondents either pay these sums in trust to the Agency or request an administrative hearing and submit an answer to the charges. (Exhibits X-2; X-3)
3) On April 11, 1996, Respondent Mark Johnson filed an answer to the Order of Determination. He requested a contested case hearing and asserted that Claimant was paid in full for all services performed. (Exhibit X-4)
4) On June 19, 1996, the Hearings Unit issued a Notice of Hearing to the Respondents and the Agency indicating the time and place of the hearing. On July 10, 1996, the Agency personally served a copy of the Notice of Hearing on Respondent April Johnson. (Testimony of Sheppard; Exhibits X-5, A-7)
5) At the time and place set forth in the Notice of Hearing for this matter, Respondents did not appear or contact the Agency or the Hearings Unit. Pursuant to OAR 839-50-330(2), the Administrative Law Judge waited 30 minutes before resuming the hearing. At that time, Respondents had still not appeared or contacted the Agency or the Hearings Unit. The Administrative Law Judge then found Respondents in default as to the Order of Determination and proceeded with the hearing.
6) The Administrative Law Judge left the record open until July 31, 1996, to allow the Agency to submit a Statement of Agency Policy. The document submitted by the Agency was received as an exhibit on July 29, 1996. (Exhibit A-9)
7) On July 30, 1996, the Administrative Law Judge issued a Proposed Order in this matter. Included in the Proposed Order was an Exceptions Notice that allowed ten days for filing exceptions. The Hearings Unit received no exceptions.
FINDINGS OF FACT -- THE MERITS
1) Respondents, husband and wife, operated a carpet cleaning business together as partners, doing business as Budget Carpet Cleaning. They employed Claimant in 1994 as a telemarketer. Her job duties included calling potential customers from a list supplied by Respondents, taking orders, and making appointments for carpet cleaning. (Testimony of Claimant; Exhibits A-1, A-5)
2) In May 1995, Respondent Mark Johnson again hired Claimant as a telemarketer. Her job duties and her compensation agreement were the same as they had been in 1994. She worked in Respondents´ office and used Respondents´ supplies and telephones. Respondents exercised control over the scope and method of Claimant´s solicitation. She derived no benefits other than wages and bonuses for her work. (Testimony of Claimant; Exhibit A-8)
3) Under their employment agreement, Respondents paid Claimant $4.75 per hour during weeks that she solicited fewer than 10 orders. They paid her $5.25 per hour during weeks that she solicited between 10 and 14 orders, $6.25 per hour during weeks that she solicited between 15 and 19 orders, $7.25 per hour during weeks that she solicited between 20 and 24 orders, and $10 per hour during weeks that she solicited 25 or more orders. In addition, she received a bonus of $1 for each order in which the carpet cleaning was scheduled for the next business day. She also received a $5 bonus each day that she solicited 5 or more orders. Orders that were canceled did not count. (Testimony of Claimant; Exhibits A-4, A-5, A-8)
4) Respondents´ manager, Bill Barth, discharged Claimant on September 25, 1995. During the week of September 18 to 22, 1995, Claimant worked 19.5 hours and took 23 orders. Thus, for that week her rate of pay was $7.25 per hour and she earned $141.38 (19.5 hours times $7.25 per hour). In addition, she earned $13 in bonuses during that week. On September 25, 1995, she worked for one half hour. Thus her rate of pay was $4.75 per hour and she earned $2.38. The total amount earned from September 18 to 25, 1995, was $156.76 ($141.38 plus $13 plus $2.38). Respondents have not paid Claimant anything for her work during the period September 18 to 25, 1995, despite her demands to an office manager and Respondent Mark Johnson. (Testimony of Claimant; Exhibits A-1, A-3, A-4)
5) Claimant´s testimony was credible based on her attitude, appearance, and demeanor. She had the facts readily at her command and her statements were supported by documentary records.
ULTIMATE FINDINGS OF FACT
1) Respondents, as partners, employed Claimant from September 18 to 25, 1995.
2) Respondents discharged Claimant on September 25, 1995. At that time, they owed Claimant $156.76 in earned and unpaid compensation for 20 hours´ work.
3) Respondents willfully failed to pay Claimant her earned, due, and payable compensation. They have not paid her the compensation owed and more than 30 days have elapsed from the due date of those wages.
CONCLUSIONS OF LAW and OPINION
Default The Respondents failed to appear at the hearing and thus defaulted to the charges set forth in the Order of Determination. In a default situation, pursuant to ORS 183.415(5) and (6), the task of this Forum is to determine whether a prima facie case supporting the Agency´s Order of Determination has been made on the record. See also OAR 839-50-330. In addition, where a respondent´s total contribution to the record is his or her request for a hearing and an answer that contains nothing other than unsworn and unsubstantiated assertions, those assertions are overcome wherever they are controverted by other credible evidence on the record. In the Matter of Jack Mongeon, 6 BOLI 194, 201 (1987).
ORS 652.140(1) provides:
"Whenever an employer discharges an employee or where such employment is terminated by mutual agreement, all wages earned and unpaid at the time of such discharge or termination shall become due and payable not later than the end of the first business day after the discharge or termination."
The Agency has established a prima facie case. The preponderance of the credible evidence on the whole record shows that Respondents violated ORS 652.140(1) by failing to pay Claimant all wages earned and unpaid not later than the end of the first business day after the discharge, that is, not later than September 26, 1995. That evidence, which established that Respondents owe Claimant $156.76, was credible, persuasive, and the best evidence available, given Respondents´ failure to appear at the hearing. Having considered all the evidence on the record, the prima facie case has not been effectively contradicted or overcome.
ORS 652.150 provides:
"If an employer willfully fails to pay any wages or compensation of any employee whose employment ceases, as provided in ORS 652.140 and 652.145, then, as a penalty for such nonpayment, the wages or compensation of such employee shall continue from the due date thereof at the same hourly rate for eight hours per day until paid or until action therefor is commenced; provided, that in no case shall such wages or compensation continue for more than 30 days from the due date; and provided further, the employer may avoid liability for the penalty by showing financial inability to pay the wages or compensation at the time they accrued."
Awarding penalty wages turns on the issue of willfulness. Willfulness does not imply or require blame, malice, wrong, perversion or moral delinquency, but only requires that that which is done or omitted is intentionally done with knowledge of what is being done and that the actor or omittor be a free agent. Sabin v. Willamette Western Corp., 276 Or 1083, 557 P2d 1344 (1976). As employers, Respondents had a duty to know the amount of wages due their employee. McGinnis v. Keen, 189 Or 445, 221 P2d 907 (1950); In the Matter of Jack Coke, 3 BOLI 238, 242 (1983).
Claimant testified credibly that she asked the office manager for her pay on Friday, September 29, 1995 (the next regular payday after her discharge) and refused to accept only $90 as her final pay. The next Wednesday she talked with Respondent Mark Johnson about her final pay. He refused to pay her anything, claiming that she had come back to work late after a break and that she had already received her final pay. All of the persuasive evidence contradicts those claims. The record establishes that Respondents either knew or, by exercising reasonable diligence, should have known that they had not paid Claimant all earned wages when due as provided in ORS 652.140. Respondents intentionally did not pay Claimant her final pay and they acted as free agents. Respondents must be deemed to have acted willfully under this test, and thus they are liable for penalty wages under ORS 652.150.
Claimant earned $156.76 (including the $13 bonus) by working 20 hours during the wage claim period (September 18 to 25, 1995). It is the Agency´s policy to include the amount of bonuses earned during the wage claim period in civil penalty computations.
"The previous version of ORS 652.150 specified that, where civil penalty wages were appropriate, ´the wages or compensation * * * shall continue * * * at the same rate until paid´. Under this language, Agency policy was to include bonuses as ´compensation´ earned over the period of the wage claim in calculating average daily earnings, which were then multiplied by 30 to arrive at the civil penalty wages due. See [Agency Field Operations Manual, ´Penalty Wage Computation,´ dated 12/9/94]. ORS 652.150 was amended in 1995 to limit the amount of daily earnings that could be used in computing civil penalty wages. However, the former language describing the type of earnings that were to form the basis of civil penalty wage calculations -- ´wages or compensation´ -- remained unchanged. Likewise, the Agency´s policy of considering bonuses as ´compensation´ under the statute and including them in calculating civil penalty wages due remains unchanged." Statement of Agency Policy, July 23, 1996 (Exhibit A-9).
In addition to her bonus, Claimant earned wages during the wage claim period at two different hourly rates: 19.5 hours at $7.25 per hour and 0.5 hours at $4.75 per hour. To calculate the civil penalty under ORS 652.150 (1995), Claimant´s compensation "shall continue from the due date thereof at the same hourly rate for eight hours per day until paid or until action therefor is commenced[,]" for up to 30 days. When more than one hourly rate is paid during a wage claim period (and, as here, when a bonus is paid in addition to the hourly rate of pay), the Agency´s policy is to calculate an average hourly wage as a base factor for computing the civil penalty wage.
"Prior to the 1995 amendment, [ORS 652.150] provided for civil penalty wages up to 30 days of the employee´s average daily wage (´same rate´) during the wage claim period. Agency policy was to compute the average daily wage by determining the total wages earned over the period of the wage claim, dividing that figure by the number of days worked to arrive at the average daily wage, then multiplying that figure by 30. See [Agency Field Operations Manual, ´Penalty Wage Computation,´ dated 12/9/94]. The 1995 amendment requires that an average hourly wage (´same hourly rate´), in contrast to an average daily wage, be used as a base factor in computing civil penalty wages.
"Agency policy is to use the same equation to compute the average hourly wage during the wage claim period, no matter how many wage rates applied. As a starting point, only the wage rates used and wages earned during the actual wage claim period are used to determine the average hourly wage. The equation is as follows: Total earned during the wage claim period divided by the total number of hours worked during the wage claim period, multiplied by eight hours, multiplied by 30 days." (Emphasis original.) Statement of Agency Policy, July 23, 1996 (Exhibit A-9).
In this case then, civil penalties are calculated as follows: $156.76 (total earned during the wage claim period) divided by 20 hours (total number of hours worked during the wage claim period) equals $7.84 per hour (average hourly wage), multiplied by 8 (hours) equals $62.72. I conclude that this is "the same hourly rate for eight hours per day" as required by ORS 652.150. "[I]n no case shall such wages or compensation continue for more than 30 days from the due date." ORS 652.150. Respondents have failed to pay Claimant her earned compensation for more than 30 days from the due date, and therefore the penalty continues for the maximum 30 days. $62.72 times 30 (days) equals $1,881.60, rounded to the nearest dollar, $1,882, per Agency policy. In the Matter of Martin´s Mercantile, 12 BOLI 262, 275 (1994).
In its Order of Determination, however, the Agency proposed a civil penalty of $1,740 based on $7.25 per hour times 8 hours, which equals $58, times 30 days. See Exhibit 6. This computation is erroneous because it does not take into account the $13 bonus that Claimant earned, nor does it account for the half hour of work at the $4.75 hourly rate of pay. Even though the amount prayed for ($1,740) is $142 less than the correct civil penalty ($1,882) calculated under the facts found and Agency policy, it is well-settled that in a default situation the Order of Determination sets the limit on the relief the Forum can award. In the Matter of Jack Mongeon, 6 BOLI 194, 201 (1987).
Therefore, the maximum civil penalty the Forum can award is $1,740 as prayed for in the Order of Determination.
NOW, THEREFORE, as authorized by ORS 652.332, the Commissioner of the Bureau of Labor and Industries hereby orders MARK A. JOHNSON and APRIL J. JOHNSON to deliver to the Business Office of the Bureau of Labor and Industries, 800 NE Oregon Street, Portland, Oregon 97232-2109, the following:
1) A certified check payable to the Bureau of Labor and Industries IN TRUST FOR LINDA L. MAXWELL in the amount of ONE THOUSAND EIGHT HUNDRED NINETY SIX DOLLARS AND SEVENTY SIX CENTS ($1,896.76), less appropriate lawful deductions, representing $156.76 in gross earned, unpaid, due, and payable wages, and $1,740 in penalty wages; plus
2) Interest at the rate of nine percent per year on the sum of $156.76 from October 1, 1995, until paid; plus
3) Interest at the rate of nine percent per year on the sum of $1,740 from November 1, 1995, until paid.
DATED this day of _________________, 1996.
JACK ROBERTS, Commissioner
Bureau of Labor and Industries
Pursuant to ORS chapter 183, you are entitled to judicial review of this Final Order. To obtain judicial review, you must file a Petition for Judicial Review with the Court of Appeals in Salem, Oregon, within sixty (60) days of the issuance of this Order.
If you file a Petition for Judicial Review, YOU MUST ALSO SERVE A COPY OF THE PETITION FOR JUDICIAL REVIEW ON THIS AGENCY AT THE FOLLOWING ADDRESS:
Bureau of Labor and Industries
State Office Building, Ste. 1005
800 NE Oregon Street, # 32
Portland, Oregon 97232-2162