Robertson v. Opequon Motors, Inc.
519 S.E.2d 843, 205 W. Va. 560 (1999)
Rule of Law:
Under the West Virginia Wage Payment and Collection Act, an employer may not deduct business expenses from an employee's commissions without a statutorily compliant wage assignment. Furthermore, promised fringe benefits, such as vacation and holiday pay, are considered wages that must be paid in a timely manner as they accrue according to the employment agreement.
Facts:
- Opequon Motors, Inc., a car dealership, hired salespeople and agreed to compensate them with a commission based on a percentage of the 'gross profit' from each vehicle sale.
- Opequon's employment policy provided for paid holidays, with compensation based on the employee's daily draw amount, but the dealership failed to pay its employees for these holidays.
- The dealership's policy also provided for paid vacation but stipulated that payment for vacation days taken in one year would not be made until February 15 of the following year, and was contingent on the person still being employed.
- Opequon Motors regularly deducted costs from salespeople's commissions to cover fees associated with a customer's use of a credit card.
- The dealership also made deductions from salespeople's commissions to pay for vehicle repairs that were performed after a sale was completed.
- The salespeople did not execute formal, notarized wage assignments authorizing the deductions for credit card fees or post-sale repairs.
- Opequon Motors would arbitrarily increase a vehicle's 'cost basis' with additions that had no relation to actual costs, which reduced the calculated 'gross profit' and, consequently, the salesperson's commission.
Procedural Posture:
- A class of commissioned salespeople sued Opequon Motors, Inc. and its president, Ellen Parsons, in the Circuit Court of Berkeley County (trial court) for violations of the West Virginia Wage Payment and Collection Act.
- The trial court certified the employees' claim as a class action.
- At trial, the court granted a directed verdict for the employees on their claims regarding illegal deductions for repair and credit card costs, and the failure to pay vacation pay.
- A jury returned a verdict in favor of the employees on the remaining claims concerning the calculation of vehicle profit and the failure to pay holiday pay.
- The trial court denied a post-trial motion by Opequon Motors for judgment notwithstanding the verdict or, in the alternative, for a new trial.
- Opequon Motors, Inc. and Ellen Parsons, as appellants, appealed the trial court's judgment to the Supreme Court of Appeals of West Virginia.
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Issue:
Do an employer's practices of deducting business costs like credit card fees and post-sale repairs from employee commissions, failing to pay promised holiday pay, delaying payment of accrued vacation pay, and arbitrarily inflating a vehicle's cost basis to reduce commissions, violate the West Virginia Wage Payment and Collection Act?
Opinions:
Majority - Per Curiam
Yes. The employer's practices violate the West Virginia Wage Payment and Collection Act (“the Act”). The court reasoned that deductions for business expenses like credit card fees and post-sale repairs constitute illegal wage assignments under W. Va. Code § 21-5-3 because they were made without a valid, notarized assignment executed by the employee; compliance with the Act's assignment formalities is mandatory. The court also held that fringe benefits like holiday and vacation pay, once promised by an employer in an employee handbook, become 'wages' under the Act as defined in W. Va. Code § 21-5-1. Opequon's failure to pay for holidays and its policy of delaying vacation pay until the following year violated the Act's requirement to pay accrued wages in a timely manner. Finally, the practice of arbitrarily inflating a vehicle's cost basis effectively altered the employees' rate of pay without notice, which is a violation of W. Va. Code § 21-5-9.
Analysis:
This decision reinforces the protective purpose of the West Virginia Wage Payment and Collection Act, establishing that its provisions will be strictly construed in favor of the employee. It clarifies that employers cannot creatively define 'commission' or 'profit' to pass on ordinary business expenses to employees without meeting the Act's stringent wage assignment requirements. The case sets a firm precedent that benefits promised in an employee handbook are not discretionary but become legally enforceable 'wages' that must be paid promptly as they are earned, significantly limiting an employer's ability to impose forfeiture conditions on accrued benefits.
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