|Hearings Unit: Final Order
In the Matter of
DANNY R. JONES,
dba J.J.J. Security & Patrol, Respondent.
Case Number 48-95
Final Order of the Commissioner
Issued June 12, 1996.
FINDINGS OF FACT
ULTIMATE FINDINGS OF FACT
CONCLUSIONS OF LAW
Respondent willfully failed to pay Claimants all wages due upon termination. The Commissioner ordered Respondent to pay the wages owed plus civil penalty wages. ORS 652.140(1); 652.150; OAR 839-20-030.
The above-entitled contested case came on regularly for hearing before Warner W. Gregg, designated as Administrative Law Judge (ALJ) by Jack Roberts, Commissioner of the Bureau of Labor and Industries for the State of Oregon. The hearing was held on September 21, 1995, in Room 1004 of the Portland State Office Building, 800 NE Oregon Street, Portland, Oregon, beginning at 9:05 a.m.
The Bureau of Labor and Industries (the Agency) was represented by Alan McCullough, an employee of the Agency. Arthur Murphy (Claimant Murphy) and Gloria James (Claimant James) were present and testified. Danny R. Jones (Respondent), was present for a portion of the hearing and not represented by counsel. He left the hearing before it was concluded, as hereinafter recited.
The Agency called as witnesses Claimant James, Claimant Murphy, and Agency Compliance Specialist Margaret Trotman. Respondent called former employee Jeffrey S. Jones.
Having fully considered the entire record in this matter, I, Jack Roberts, Commissioner of the Bureau of Labor and Industries, make the following Findings of Fact (Procedural and on the Merits), Ultimate Findings of Fact, Conclusions of Law, Opinion, and Order.
1) On July 28, 1994, Claimant Murphy filed a wage claim with the Agency in which he alleged that he had been employed by Respondent, who had failed to pay wages earned and due to him. At the same time he filed the wage claim, Claimant Murphy assigned to the Commissioner of the Bureau of Labor and Industries, in trust for Claimant, all wages due from Respondent.
2) On October 30, 1994, Claimant Melvin Meaney filed a wage claim with the Agency in which he alleged that he had been employed by Respondent, who had failed to pay wages earned and due to him. At the same time he filed the wage claim, Claimant Meaney assigned to the Commissioner, in trust for Claimant, all wages due from Respondent.
3) On December 24, 1994, Claimant James filed a wage claim with the Agency in which she alleged that she had been employed by Respondent, who had failed to pay wages earned and due to her. At the same time she filed the wage claim, Claimant James assigned to the Commissioner, in trust for Claimant, all wages due from Respondent.
4) On February 28, 1995, through the Sheriff of Multnomah County, the Agency served on Respondent at 5229 N Cecelia Street, Portland, Order of Determination number 95-014 (Determination Order), based upon the wage claims filed by Claimants and the Agency´s investigation. On March 8, 1995, through the Sheriff of Multnomah County, the Agency served Determination Order 95-014 on Respondent at 9945 SE Oak, Portland. The Determination Order found that Respondent owed a total of $16 in wages and $1,020 in civil penalty wages to Claimant Murphy, $32.50 in wages and $788 in civil penalty wages to Claimant Meaney, and $328.20 in wages and $981 in civil penalty wages to Claimant James. The Determination Order required that, within 20 days, Respondent either pay these sums in trust to the Agency or request an administrative hearing and submit an answer to the charges.
5) In early March 1995, Respondent filed a document presumed to be an answer to the Determination Order and requested a contested case hearing. The document was on letterhead of "J. J. J. Security & Patrol, 9945 SE Oak Street, Suite 106, Portland, Oregon 97216-2341" and asserted:
"1. I [,] J.J.J. Security Request A Hearing On Melvin Eric Meaney was paid. Melvin cash the check. No paper work on the rest.
"2. Arthur E. Murphy was paid. Wage and Hour got the money order. No paper work on the rest.
"3. Gloria Kaye James was not paid because key to build Gloria got. Uniform not clean. Request ful [sic] hearing.
The allegations in the Determination Order are presumed to be denied.
6) On April 4, 1995, at the Agency´s request, the Hearings Unit issued a Notice of Hearing to Respondent, Claimants, and the Agency indicating the time and place of hearing. With the Notice of Hearing, the Forum sent Respondent a document entitled "Notice of Contested Case Rights and Procedures" containing the information required by ORS 183.413, and a copy of the Forum´s contested case hearing rules, OAR 839-50-000 to 839-50-420.
7) The hearing was postponed and on August 10, 1995, an amended notice of hearing was issued setting a new time and place of hearing.
8) Pursuant to OAR 839-50-210 (1), the Agency filed a Summary of the Case on September 5, 1995. Respondent did not file a case summary.
9) At the commencement of the hearing, Respondent stated he had received the Notice of Contested Case Rights and Procedures and had no questions about it.
10) At the commencement of the hearing, pursuant to ORS 183.415(7), the ALJ explained the issues involved in the hearing, the matters to be proved or disproved, and the procedures governing the conduct of the hearing.
11) During the hearing, in order to accommodate the work schedule of a witness, the ALJ allowed Respondent to present the witness, Jeffrey Jones, out of order during the Agency´s case.
12) A proposed order, which contained an exceptions notice, was issued April 19, 1996. Exceptions were due April 30, 1996. No exceptions were received.
FINDINGS OF FACT -- THE MERITS
1) During times material herein, Respondent, an individual, did business as J.J.J. Security & Patrol, a personal services business located in Portland, Oregon. He utilized the personal services one or more persons in the State of Oregon.
2) From on or about May 27, 1994, to on or about July 2, 1994, Claimant Murphy worked for Respondent as a security guard. Respondent furnished the equipment and the uniform Claimant used on the job. Respondent detailed and controlled how Claimant was to perform his duties. Some of his work for Respondent was by car and some on foot. He was not paid for the period June 21 through July 2, 1994.
3) Claimant Murphy worked 10 p.m. to 4 a.m., 6 hours on June 21; 10 p.m. to 4 a.m., 6 hours on June 22; 10 p.m. to 6 a.m., 8 hours on June 25; 10 p.m. to 6 a.m., 8 Hours on July 1; and 10 p.m. to 6 a.m., 8 hours on July 2. June 21 and 22 were in a car, doing "drive by" checks of client businesses in northeast Portland. June 25 and July 1 and 2 were on site at a marina in northeast Portland.
4) Jeffrey S. Jones (no relation to Respondent) worked for Respondent at times material as a site supervisor with the title of lieutenant. He did some patrol duty and checked on other officers to make sure they were doing their jobs and correctly filling out paperwork. He acknowledged that officers recording "drive bys" had several different locations per shift to check and that the record of only one client did not reflect total hours worked on that shift.
5) Forms entitled "Officer´s Daily Report" (referred to in testimony as "shift reports") were used by Respondent´s officers to record activity during their shifts. They included spaces for entry of client, location, officer´s name and station, hours, and various activities.
6) Shift reports which Claimant Murphy submitted to Respondent were changed by Respondent to reflect fewer hours than Claimant stated he had worked.
7) Claimant Murphy was discharged on July 2, 1994. On or about November 23, 1994, through the Agency, he received a money order in the amount of $108.36 from Respondent, which contained the notation "32 hours."
8) From on or about October 24, 1994, to on or about October 26, 1994, Claimant Meaney worked for Respondent as a security guard. Respondent furnished the equipment and the uniform Claimant used on the job. Respondent detailed and controlled how Claimant was to perform his duties. Some of his work for Respondent was by car and some on foot.
9) Claimant Meaney worked 9:30 p.m. October 24 to 3 a.m., October 25, 5 hours, and 10 p.m. October 25 to 3 a.m., October 26, 5 hours. He was to be paid $5.00 an hour. Claimant Meaney was discharged on October 26, 1994. Respondent paid him $20.00 in a check dated October 31, 1994.
10) Meaney worked with Jeffrey Jones on October 24 on what Jeffrey Jones described as a "ride along." By that was meant that Meaney would just learn the route, observe what Jeffrey Jones did, and would not be paid. Respondent did not pay untrained new employees for this training time. Respondent did not retain an untrained new employee without such training.
11) The $20.00 check which Respondent paid to Meaney dated October 31, 1994, was noted "One Day Work" and "Sub Contract Labor." Respondent sometimes paid individuals as subcontractors, or independent contractors, so that he did not have to take out state and federal withholding or FICA.
12) From on or about December 1, 1994, to on or about December 16, 1994, Claimant James worked for Respondent as a security guard. Respondent furnished the equipment and the uniform Claimant used on the job. Respondent detailed and controlled how Claimant was to perform her duties. Some of her work for Respondent was by car and some on foot.
13) Claimant James worked 8 a.m. to 2:30 p.m. December 1, 2, 3, 4, 5, 6, and 8, six hours each; 11 a.m. to 5:30 p.m., December 9, 10, 11, 12, 13, 14, and 16, six hours each; total 84 hours. She was to be paid $5.45 an hour. Respondent paid her through December 4. She was not paid for the period December 5 through 16, 1994, a total of 60 hours. Claimant James was discharged on December 18, 1994.
14) Claimant James signed no documents allowing deductions from her pay for cleaning. She signed a W-4 claiming to be exempt from state and federal withholding. The only deduction she anticipated was for social security. She signed a receipt for uniform items, but not a statement that she would pay for cleaning. The W-4 form she signed had been altered after she signed it.
15) During the Agency´s examination of Claimant James, Respondent interrupted the proceedings with the following statements:
"Uh, excuse me, your honor. We don´t have to go through Gloria. I know I owe Gloria some money. I owe her her whole check. To save time, her check is right here. We don´t have to go through all this. I´m going to state this one time: Gloria is not getting her check until I get $9.00 for cleaning fee. Her check is right here, your honor, so we can save time." and
"Her check came to $286.10; it´s been sitting in my office since 12-23-94 and she´s not gettin´ it ´til I get my cleaning fee."
16) Following those statements, Respondent stated he would stipulate that the gross amount of Claimant James´s wages owed was $359.10.
17) During the hearing, Respondent was advised that a deduction for cleaning fee was not a legal deduction. Respondent stated he would not change his policy.
18) During the hearing, at approximately 11:15 a.m., Respondent left the hearings room voluntarily, stating that he had a company to run and that he didn´t like liars. The ALJ stated that the hearing would continue for the purpose of making a record.
19) At times material, Margaret Trotman was a Compliance Specialist for the Wage and Hour Division of the Agency. She investigated the wage claims of the three claimants herein. She obtained documents and corresponded with Respondent.
20) On January 26, 1995, Trotman returned two keys, two badges, one coat, and one shirt to Respondent on behalf of Claimant James by certified mail. She also sent a letter listing those items and advising Respondent that deductions for cleaning are illegal. Trotman´s letter made demand for $328.20. She received the letter back with the following notation:
"P.S. I got the keys 2 badge. there will not be a check Shirt not clean Coat not clean 9 dollars to clean"
21) Claimant Murphy´s records and testimony show the following information, which is accepted as fact. He worked 36 total hours. He earned $180 in wages (36 hours x $5.00 = $180). Claimant Murphy was paid on or about November 23, 1994, for 32 hours (net money order $108.36 on a gross of $160 less $6 for cleaning and uniform); the balance of earned, unpaid, due, and owing wages equals $26.00.
22) Civil penalty wages due Claimant Murphy, computed in accordance with Agency policy, are as follows: $180 (the total wages earned) divided by 5 (the number of days worked during the claim period) equals $36.00 (the average daily rate of pay). This figure of $36.00 is multiplied by 30 (the number of days for which civil penalty wages continued to accrue) for a total of $1,080.
23) Claimant Meaney´s records and the testimony show the following information, which is accepted as fact. He worked 10 total hours. He earned $52.50 in wages (10 hours x $5.00 = $52.50). Claimant Meaney was paid $20.00 on or about October 31, 1994. The balance of earned, unpaid, due and owing wages equals $32.50.
24) Civil penalty wages due Claimant Meaney, computed in accordance with Agency policy, are as follows: $52.50 (the total wages earned) divided by 2 (the number of days worked during the claim period) equals $26.25 (the average daily rate of pay). This figure of $26.25 is multiplied by 30 (the number of days for which civil penalty wages continued to accrue) for a total of $787.50, rounded to $787 pursuant to Agency policy.
25) Claimant James´s records and testimony show the following information, which is accepted as fact. She worked 84 total hours during the claim period. She earned $457.80 in wages (84 hours x $5.45 = $457.80). Claimant James was paid $129.60 gross; the balance of earned, unpaid, due, and owing wages equals $328.20 ($457.80 - $129.60 = $328.20).
26) Civil penalty wages due Claimant James, computed in accordance with Agency policy, are as follows: $457.80 (the total wages earned) divided by 14 (the number of days worked during the claim period) equals $32.70 (the average daily rate of pay). This figure of $32.70 is multiplied by 30 (the number of days for which civil penalty wages continued to accrue) for a total of $981.
27) Respondent did not allege in his answer an affirmative defense of financial inability to pay the wages due at the time they accrued nor did he provide any such evidence for the record.
28) The testimony of Claimants Murphy and James, in general, was found to be credible. Their statements were supported by other credible testimony and documents. There is no reason to determine the testimony of either Claimant to be anything except reliable and credible.
29) In general, the testimony of Jeffrey Jones, most of which was elicited by Respondent, was found to be credible. At Respondent´s urging, he clearly outlined employment practices of Respondent, which the ALJ found were in violation of the wage statutes involved in this proceeding.
1) During all times material herein, Respondent, an individual, utilized and controlled the personal services of one or more persons in the State of Oregon who were not co-partners or independent contractors. ORS 652.310(1) and (2); 653.010(3) and (4).
2) Respondent employed Claimant Murphy as a security guard from May 27, 1994, to on or about July 2, 1994, at $5.00 per hour. Claimant Murphy worked 36 hours in five days, earning $180.
3) Respondent paid Claimant Murphy for 32 hours less deductions for cleaning. Respondent owes Claimant Murphy $26.00 in earned, unpaid, due, and owing wages and more than 30 days have elapsed from the due date of those wages.
4) Respondent employed Claimant Meaney as a security guard on October 24 and 25, 1994, at $5.00 per hour. Claimant Meaney worked 10 hours in two days, earning $52.50.
5) Respondent owes Claimant Meaney $52.50 in earned, unpaid, due, and owing wages and more than 30 days have elapsed from the due date of those wages.
6) Respondent employed Claimant James as a security guard from December 1 to 16, 1994, at $5.45 per hour. Claimant James worked 84 hours in 14 days, earning $457.80, of which 129.60 was paid.
7) Respondent owes Claimant James $328.20 in earned, unpaid, due, and owing wages and more than 30 days have elapsed from the due date of those wages.
8) Respondent attempted to withhold from these employees´ wages his costs for uniform cleaning.
9) Civil penalty wages, computed pursuant to ORS 652.150 and agency policy, total $1080 for Claimant Murphy.
10) Civil penalty wages, computed pursuant to ORS 652.150 and agency policy, total $787 for Claimant Meaney.
11) Civil penalty wages, computed pursuant to ORS 652.150 and agency policy, total $981 for Claimant James.
12) There was no evidence that Respondent was financially unable to pay the wages of the respective Claimants at the time they accrued.
1) During all times material herein, Respondent was an employer and Claimants were employees subject to the provisions of ORS 652.110 to 652.200 and 652.310 to 652.405.
2) The Commissioner of the Bureau of Labor and Industries has jurisdiction over the subject matter and the Respondent herein. ORS 652.310 to 652.405.
3) At times material herein, ORS 652.140 provided in part:
"(1) 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 shall become due and payable immediately."
"(3) For the purpose of this section, if employment termination occurs on a Saturday, Sunday or holiday, payment of wages is made "immediately" if made no later than the end of the first business day after the employment termination * * *."
Respondent violated ORS 652.140(1) by failing to pay Claimant Murphy all wages earned and unpaid no later than Tuesday, July 5, 1994, which was the first business day after Claimant´s employment was terminated.
4) Respondent violated ORS 652.140(1) by failing to pay Claimant Meaney all wages earned and unpaid no later than Thursday, October 27, 1994, which was the first business day after Claimant´s employment was terminated.
5) Respondent violated ORS 652.140(1) by failing to pay Claimant James all wages earned and unpaid no later than Monday, December 19, 1994, which was the first business day after Claimant´s employment was terminated.
6) At times material herein, ORS 652.150 provided:
"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 rate 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."
Respondent is liable for a civil penalty under ORS 652.150 for willfully failing to pay all wages or compensation to each Claimant when due as provided in ORS 652.140.
7) At times material herein, ORS 652.610 provided in part:
"(3) No employer may withhold, deduct or divert any portion of an employee´s wages unless:
"(a) The employer is required to do so by law;
"(b) The deductions are authorized in writing by the employee, are for the employee´s benefit, and are recorded in the employer´s books;
"(c) The employee has voluntarily signed an authorization for a deduction for any other item, provided that the ultimate recipient of the money withheld is not the employer, and that such deduction is recorded in the employer´s books; or
"(d) The deduction is authorized by a collective bargaining agreement to which the employer is a party."
By withholding a portion of earned wages to reimburse the expense of uniform cleaning, Respondent violated ORS 652.610.
8) Under the facts and circumstances of this record, and according to the law applicable to this matter, the Commissioner of the Bureau of Labor and Industries has the authority to order Respondent to pay each Claimant´s respective earned, unpaid, due, and payable wages and the civil penalty wages, plus interest on both sums until paid. ORS 652.332.
Respondent chose to appear without counsel and to examine and cross-examine witnesses himself. In the course of questioning witnesses, despite cautions from the ALJ and the objections of the Agency, Respondent made declarative statements rather than asking questions. Respondent was not under oath and his self serving statements have been disregarded. But the Forum has taken as true those statements which were to Respondent´s economic disadvantage. Thus, the Forum finds as fact that Respondent made a practice of willfully delaying or denying payment of wages until uniforms were returned clean, of utilizing employee time as unpaid "training time," and of paying short-term employees as "independent contractors" in order to avoid withholding. Although he had asserted no counterclaim or offset, Respondent attempted to establish that Claimant Murphy had somehow come into possession of and was holding Respondents vehicle and cellular telephone, and that Claimants Murphy and Meaney had claimed more time than they had worked. The information he obtained in this regard was unpersuasive and had little to do with the failure to pay wages.
Prima Facie Case
If Respondent had not attended the hearing, the Forum´s task would have been to determine if a prima facie case supporting the Agency´s Determination Order was made on the record. ORS 183.415(5) and (6); OAR 839-50-330 (2); In the Matter of S.B.I., Inc., 12 BOLI 102 (1993); In the Matter of Mark Vetter, 11 BOLI 25 (1992). His presence for a portion of the hearing did not lessen the Agency´s burden in this regard.
The Agency established a prima facie case. A preponderance of credible evidence on the whole record showed Respondent employed each Claimant during the period of the respective wage claims and willfully failed to pay all the wages, earned and payable, when due.
Claimants as Employees
All of these Claimants were employees of Respondent working for an agreed fixed rate based on the time spent. By finding that Claimant Meaney was an employee, the Forum has necessarily found that he was not an independent contractor. Respondent controlled the hours, location, tasks, and the manner in which Claimant´s tasks were accomplished, and initially proposed an hourly rate. Respondent could not change the character of the employment relationship by noting "Sub Contract Labor" on a check.
The Agency´s evidence established, and Respondent´s statements verified, that Respondent habitually delayed or refused payment of wages to a departing employee until that employee´s uniforms were returned to him dry cleaned. That is a violation of ORS 652.610, about which this Forum has said:
"The legislature intended two things: (1) that any withholding beyond that required by law or bargaining agreement must be authorized in writing and be for the employee´s benefit; and (2) that the employer could not be the ultimate recipient. Those changes in the statutory language did not change the statutory intent enunciated by the Court of Appeals opinion and Judge Gillette´s concurrence in [Garvin v. Timber Cutters, Inc., 61 Or App 497, 658 P2d 1164 (1983)] that the duty on the employer to pay remains absolute. That is still the message of ORS 652.140." In the Matter of Handy Andy Towing, 12 BOLI 284, 295 (1994).
Amendment of Claim
Respondent´s presentation of a defense was incomplete because he absented himself from the hearing before the Agency had completed its case. However, because he responded to the Determination Order and the Notice of Hearing, he was not in default. He had opportunity to cross-examine and even presented a witness. He was present when the testimony upon which the Forum bases the amendment of Claimant Murphy´s earnings was admitted.
Respondent was also present when Claimant James testified. His statement which suggested that he owed her approximately $30.00 more than either her testimony or the Agency´s documentation supported has been disregarded as an emotional misstatement.
An award of 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., 279 Or 1083, 557 P2d 1344 (1976); State ex rel Nilsen v. Johnson et ux, 233 Or 103, 377 P2d 331 (1962). Respondent, as an employer, had a duty to know the amount of wages due his employees. In the Matter of Handy Andy Towing, Inc., supra; In the Matter of Jack Coke, 3 BOLI 238 (1983); McGinnis v. Keen, 189 Or 445, 221 P2d 907 (1950). The evidence established that Respondent knew what he had paid each Claimant at the time each Claimant was terminated, and that he acted voluntarily and as a free agent. Accordingly, Respondent acted willfully. There was no defense of financial inability to pay when the wages came due, and Respondent is therefore liable for civil penalty wages under ORS 652.150 as outlined in the Order below.
NOW, THEREFORE, as authorized by ORS 652.332, the Commissioner of the Bureau of Labor and Industries hereby orders DANNY R. JONES, dba J.J.J. Security & Patrol, to deliver the following to Bureau of Labor and Industries, Fiscal Services Office Suite 1010, 800 NE Oregon Street #32, Portland, Oregon 97232-2109:
(1) A certified check payable to the Bureau of Labor and Industries IN TRUST FOR ARTHUR MURPHY in the amount of ONE THOUSAND ONE HUNDRED SIX DOLLARS ($1,106), less appropriate lawful deductions, representing $26.00 gross earned, unpaid, due, and payable wages and $1,080 in penalty wages; PLUS
(a) Interest at the rate of nine percent per year on the sum of $26.00 from July 5, 1994, until paid; PLUS
(b) Interest at the rate of nine percent per year on the sum of $1,106 from August 4, 1994, until paid; and
(2) A certified check payable to the Bureau of Labor and Industries IN TRUST FOR MELVIN MEANEY in the amount of EIGHT HUNDRED THIRTY-NINE DOLLARS AND FIFTY CENTS ($839.50), less appropriate lawful deductions, representing $52.50 in gross earned, unpaid, due, and payable wages and $787 in penalty wages; PLUS
(a) Interest at the rate of nine percent per year on the sum of $52.50 from October 27, 1994, until paid; PLUS
(b) Interest at the rate of nine percent per year on the sum of $787 from November 26, 1994, until paid; and
(3) A certified check payable to the Bureau of Labor and Industries IN TRUST FOR GLORIA JAMES in the amount of ONE THOUSAND THREE HUNDRED NINE DOLLARS AND TWENTY CENTS ($1,309.20), less appropriate lawful deductions, representing $328.20 in gross earned, unpaid, due, and payable wages and $981 in penalty wages; PLUS
(a) Interest at the rate of nine percent per year on the sum of $328.20 from December 19, 1994, until paid; PLUS
(b) Interest at the rate of nine percent per year on the sum of $981 from January 18, 1995, until paid.
This is more than Claimant James stated was owed; the Forum has disregarded this figure. See OPINION below.
There was an arithmetic error on the Agency Wage Transcription and Computation Sheet, crediting gross wages as $170, which resulted in reduced figures for the unpaid wages and for the civil penalty wages. The Forum has recalculated both and amended both to conform to the proof. See OPINION below.
Because the $129.60 paid did not entirely offset the earnings for December 1 to 4, the Forum has used the entire period in computing the wages still owed.