Maisha Williams appeals from the grant of summary judgment in favor of her former employer, Riverside Community Corrections Corporation. After terminating Williams' employment, Riverside did not pay her for any accrued sick days or vacation days, and it reduced her hourly wage for her final pay period to the minimum wage rate of $5.15 per hour. Williams filed a claim with the trial court seeking damages under Indiana's Wage Claims Statute. The parties filed various motions with the trial court, including cross motions for summary judgment on the issues of the reduced hourly wage rate, vacation pay, and sick pay. The trial court found in favor of Riverside on each of these issues, and Williams appealed to this Court. We find, among other things, that Williams was entitled to summary judgment on the matter of the reduction in her hourly wage rate but that the trial court properly awarded summary judgment to Riverside regarding her claims for vacation and sick pay. Accordingly, we affirm in part, reverse in part, and remand the case to the trial court.
Facts and Procedural History
Riverside Community Corrections Corporation ("Riverside" or "RCCC") is a not-for-profit penal facility operating a residential work-release program that houses approximately 160 adult male offenders. Maisha Williams worked as a corrections officer at Riverside from September 3, 2003, through October 17, 2003, a total of forty-five days. Williams was hired as an at-will employee earning $9.25 per hour. Williams began accruing vacation and sick pay at the start of her employment but was told that she was ineligible to "use" those benefits until January 1, 2004. Williams was informed of this policy through Riverside's "New Employee and RCCC Hiring Agreement," which Williams reviewed and signed on her hire date. See Appellant's App. p. 193.
According to Riverside, all of its employees are provided with and subject to the
Id. at 208.
On her hire date, Williams met with Riverside's Human Resources Director, Lisa Gaus, and reviewed the Handbook. Williams signed the acknowledgment form at that time. The Handbook contained the following provisions relevant to the parties' dispute:
Id. at 197 (emphases in original).
Id. at 205-06.
Id. at 207 (emphases in original). In addition, the Handbook outlined permissible uses of sick time for reasons other than employee illness, noting that sick time could be taken "after 90 days of continuous regular employment," and, upon obtaining approval, an employee could use sick time "for bona fide medical appointments of the employee and the employee's dependents," "prior to or during a Medical or Personal Leave of absence," or, upon exhaustion of accrued vacation time, to care for a dependent or elderly parent. Id. at 205-06. The Handbook also states, "RCCC does not pay employees for unused sick time at the time of termination." Id. at 206.
Also on her hire date, Williams received and signed the "Riverside Community Corrections Corporation Statement of Understanding: Final Notification" (the "Final Wage Payment Notification form"). This form included the following provision with regard to involuntary terminations:
Id. at 209-10.
On October 17, 2003, Riverside terminated Williams' employment. Williams' last paycheck was for 34.5 hours of work paid at the minimum wage rate of $5.15 per hour. Williams does not dispute Riverside's right to terminate her as an at-will employee, nor does she dispute the cited reasons for her termination, which are irrelevant to our review.
On November 23, 2003, Williams filed suit against Riverside under Indiana Code § 22-2-9-1 et seq. (the "Wage Claims Statute"),
Discussion and Decision
Williams raises several issues, which we restate as follows: (1) whether the trial court erred in denying her motion for summary judgment and granting Riverside's cross-motion for summary judgment on Williams' claim for damages; (2) whether the trial court erred in granting summary judgment on Riverside's frivolous action counterclaim; and (3) whether the trial court erred in denying Williams' motion to strike the testimony obtained during her deposition. We address each issue in turn below.
I. Summary Judgment on Williams' Claims
Williams alleges that the trial court erred in denying her motion for summary judgment and granting summary judgment to Riverside on her claims regarding her hourly wage reduction, vacation pay, and sick pay under the Wage Claims Statute.
At the outset, we note that Williams' claims underscore certain differences between "present" and "deferred" compensation. See, e.g., Barker v. Kansas, 503 U.S. 594, 112 S.Ct. 1619, 118 L.Ed.2d 243 (1992) (debating the classification of military retirement benefits as either present or deferred compensation for purposes of Kansas' state income tax scheme); In re Hann, 655 N.E.2d 566, 571-74 (Ind.Ct. App.1996) (Chezem, J., dissenting) (distinguishing between present and deferred compensation for purposes of the division of stock options in a marriage dissolution proceeding), trans. denied. For our purposes, present compensation refers generally to the hourly or salaried wages of an employee, and it commonly constitutes the very consideration underlying the employment
A. Present Compensation
1. Reduction in Hourly Wage
We first address Williams' assertion that the trial court erred in denying her motion for summary judgment and granting summary judgment to Riverside with respect to the reduction of her hourly wages. She contends that her hourly wage was a contractual term of her employment and, therefore, that Riverside could not decrease that wage absent her express agreement. Additionally, Williams suggests that she acquired a vested interest in her hourly wages immediately upon rendering services to Riverside and that she was entitled to those wages at that time, albeit pursuant to the terms of the Wage Payment Statute.
Williams first argues that it was improper for Riverside to reduce her wage rate because that rate was part of her employment contract and she never contractually agreed to any reduction under Riverside's termination policy. In other words, she argues that her hourly wage, as present compensation, was a term of her employment contract and was thus subject to forfeiture only by way of a contractual agreement to that effect, which she did not have. In addressing this claim, then, we must determine (1) whether Williams' hourly wage was, indeed, a term of her employment contract and (2) if it was a term of her contract, whether it was subject to any contractual agreement providing for forfeiture upon involuntary termination.
The elements of an employment contract are established by "[employer's] (1) offer to pay (2) consideration for the Employee's services and (3) the Employee's acceptance through performance of services." Whinery v. Roberson, 819 N.E.2d 465, 473 (Ind.Ct.App.2004), trans. dismissed. Here, neither party disputes that the consideration offered to Williams included an hourly wage of $9.25 per hour; indeed, as no other evidence has been presented regarding other terms of the parties' contractual agreement, this hourly wage may have been the entire consideration offered. Williams' hourly wage rate, then, was a term of her employment contract with Riverside.
We next examine whether Williams agreed to forfeit part of her hourly wage in the event of involuntary termination. Riverside contends that its Final Wage Payment Notification Form constitutes such an agreement, and it directs us to Haxton to support its contention. In Haxton, this Court upheld a contractual agreement between the parties providing for a wage reduction similar to the reduction in this case. 697 N.E.2d at 1281. Our review of Riverside's Final Wage Payment Notification Form reveals, however, that Haxton is inapposite to the facts before us.
The Final Wage Payment Notification Form states at the top of the page and in large, bold text that it is a "Statement of Understanding." Appellant's App. p. 209. It includes the following pertinent language:
Riverside is, in part, correct here; Williams did know of and acknowledge Riverside's purported wage reduction policy. However, nothing in the record indicates that she agreed to this policy or that it was contractual in nature. Indeed, Riverside candidly admits that "Riverside's Notification policy is not designed to be a contract. . . ." Id. at 25 (emphasis added). Because the amount of Williams' wage was a contractual term constituting present compensation, any forfeiture of that amount must also have been contractually obtained. It follows that since Williams did not, in fact, agree to a contractual reduction of her hourly wage, Riverside cannot reduce it under the cover of mere knowledge and acknowledgment of an admittedly non-contractual policy.
In a similar vein, Williams also argues that she was entitled to her hourly wages upon performing labor for Riverside, and so Riverside cannot require her, after the fact, to return a portion of those already-vested wages to them absent a contractual agreement. This is in contrast to deferred compensation, where an employee's right to receive such compensation often only vests upon the realization of variables besides or in addition to labor. Again, Williams' argument follows our discussion of the differences between present and deferred compensation. Hourly pay, as present compensation, indefeasibly vests in an employee immediately upon the performance of labor for the employer. Once Williams performed the labor necessary to earn her hourly wage, allowing Riverside to divest Williams of this indefeasibly vested interest absent a contractual agreement providing for divestiture would be allowing Riverside to take that to which Williams already has acquired an absolute right. We cannot condone such a practice. Williams' argument is correct on this issue. The trial court erred in granting summary judgment to Riverside with regard to the reduction in Williams' hourly pay rate, and we remand this matter to the trial court for entry of summary judgment on Williams' behalf.
B. Deferred Compensation
Having dealt with Williams' hourly wage claim under the present compensation umbrella, we now turn to the two
Williams generally argues that the trial court erred in granting Riverside's motion for summary judgment because she claims that she was entitled to receive her accrued vacation and sick pay upon termination. She argues that because vacation and sick pay constitute deferred compensation under Indiana law, her right to receive vacation and sick pay vested as she worked the hours under which these benefits accrued. Riverside counters, however, that their policy, as published in their employee handbook, clearly sets forth the conditions under which their employees' rights to vacation and sick pay benefits may vest; because Williams was not employed by Riverside for the length of time relevant to her receipt of vacation and sick pay, her rights to receive these benefits never vested, and she may not now claim these benefits. Riverside's position is correct, although for different reasons as between vacation and sick pay benefits.
1. Vacation Pay
Williams contends that she is entitled to any vacation pay she had accrued at the time of her termination by Riverside. The parties agree that vacation pay is a form of deferred compensation. See also Ind. Heart Assoc. P.C. v. Bahamonde, 714 N.E.2d 309, 311 (Ind.Ct.App. 1999) (recognizing this Court's precedent "that vacation pay constitutes deferred compensation . . ."). Our case law has directly addressed this issue in the past, and its application here is straightforward. The controlling precedent established in Die & Mold, Inc. v. Western, 448 N.E.2d 44 (Ind.Ct.App.1983), mandates that Williams' claim for vacation pay must fail.
Die & Mold, Inc. asserted that it had a policy requiring employees to reach their anniversary date each year before they became eligible for vacation benefits. Finding no evidence of any existing policy or any instrument giving employees notice of such a policy, the Die & Mold court, analyzing the issue under the Wage Claims Statute, held:
Id. at 46-47. However, the court went on to state: "Here, the evidence and the finding of the court disclose no specific terms or policy. Had such an agreement or published policy existed it would be enforceable." Id. at 47-48 (emphasis added).
This is precisely the fact scenario before us today: a published policy, the Handbook, exists, and its terms are enforceable to limit the availability of this deferred compensation. Both parties cite numerous other cases endorsing this analysis. See Damon Corp. v. Estes, 750 N.E.2d 891, 893 (Ind.Ct.App.2001) (employee unable to collect accrued vacation pay where employment was terminated prior to anniversary date and company policy provided "an employee does not earn vacation pay each year until his/her anniversary date."); Ind. Heart Assoc. P.C., 714 N.E.2d at 311-12 ("[A]n employee's right to vacation pay under the statute is not absolute. Rather, an employee is entitled to her accrued vacation pay to the time of termination `provided no agreement or published policy exist[s] to the contrary . . . .'") (citation omitted), trans. denied; Osler Inst., Inc. v. Inglert, 558 N.E.2d 901, 904 (Ind.Ct.App. 1990) ("Unless an agreement or published policy exists to the contrary, when there is an agreement to pay vacation an employee is entitled to a pro rata share of vacation pay to the time of termination."), aff'd by 569 N.E.2d 636 (Ind.1991); Baesler's Super-Valu v. Ind. Comm'r of Labor ex rel. Bender, 500 N.E.2d 243, 245 (Ind.Ct.App. 1986) ("employee [is] entitled to a pro rata share of vacation pay to the time of termination, provided no agreement or published policy existed to the contrary ...").
Riverside's published policy contains two distinct terms that preclude Williams' success on her claim here. First, the Handbook sets forth eligibility requirements for various employee benefits, and none of those requirements permit an employee to begin receiving benefits, including vacation pay, until they have worked for at least ninety days. Having worked only forty-five days before her termination, Williams never met these requirements. In other words, she never rendered the services necessary to have her interest in vacation pay vest. Second, the Handbook provisions regarding vacation pay state that no vacation pay accrued during employment would be paid to any employee upon involuntary termination. Under Indiana law as articulated in the Die & Mold line of cases, then, these policies prevent Williams from collecting vacation pay, and her claim must fail. The trial court properly denied Williams' motion for summary judgment and properly granted summary judgment to Riverside on this issue.
2. Sick Pay
We next address Williams' claim that she is entitled to any sick pay she had accrued by the time of her termination. Our case law has addressed this issue in two cases. First, in Shorter v. City of Sullivan, 701 N.E.2d 890 (Ind.Ct.App. 1998), reh'g denied, trans. denied, the appellants-employees argued that accumulated sick pay is deferred compensation to which an employee is entitled when that employee terminates employment. Arguing that sick pay is analogous to vacation pay, the appellants cited Die & Mold, 448 N.E.2d 44, and City of Hammond v. Conley, 498 N.E.2d 48 (Ind.Ct.App.1986), overruled on other grounds by Osler, 569 N.E.2d 636, both of which held that accumulated vacation benefits were a form of deferred compensation that, under certain circumstances, an employee must be compensated for upon termination. However,
Shorter, 701 N.E.2d at 892 (emphasis added).
However, another panel of this Court clarified that sick pay may qualify as "wages" under the Wage Claims Statute. In Schwartz v. Gary Community School Corp., 762 N.E.2d 192 (Ind.Ct.App.2002), trans. denied, the Court overturned the trial court's conclusion that sick pay is not a wage and therefore need not be paid to an employee upon termination. The Schwartz court focused its inquiry on the method by which sick pay accrued and on the specific policy of the employer in that case. Noting Die & Mold's reasoning with respect to the accrual and deferred payment of vacation pay as wages,
Id. at 199 n. 2.
In the context of the facts before us, then, we recognize the Shorter analysis to be applicable to our case. With regard to sick pay, the language of Riverside's Handbook sets forth several specific situations, besides personal illness, under which an employee may be approved to use sick leave. These situations include "bona fide medical appointments of the employee and the employee's dependents," "prior to or during a medical or personal leave of absence," or, upon exhaustion of accrued vacation time, to care for a dependent or elderly parent. Appellant's App. p. 206. The Handbook contained no other provision allowing for sick pay to be converted or otherwise made available to an employee. Because Riverside's sick pay policy limited its employees' use of the benefit in this manner, the Shorter court's analysis applies, and the policy before us cannot properly be characterized as a benefit that automatically vests when earned. Therefore, Williams was not entitled to any accrued sick pay upon termination of her employment, and the trial court properly entered summary judgment for Riverside.
Although we find here that the holding in Shorter precludes Williams' sick pay claim, we observe that had we agreed with her assertion that sick pay is analogous to vacation pay, our analysis in the previous section under Die & Mold would operate to defeat her sick pay claim as well. As in the case of vacation pay, Williams never worked the requisite number of days to entitle her to sick pay under Riverside's sick pay policy. Further, the Handbook's provisions regarding sick pay provide that no accrued sick pay will be paid to any terminated employee, whether voluntarily or involuntarily terminated. Even in cases where sick pay can be regarded as analogous to vacation pay, then, see Schwartz, 762 N.E.2d 192, an employer's policy provisions may act to prevent an employee from collecting sick pay under the reasoning of Die & Mold.
As an additional matter, we are compelled to address Williams' argument, persistent throughout her briefs, that remuneration in the form of vacation and sick pay is akin to a contractual agreement for hourly wages. Williams argues that our Supreme Court's decision in Orr v. Westminster Village North, Inc., 689 N.E.2d 712 (Ind.1997), supports this argument. Orr involved a suit by a group of at-will employees challenging their termination under the employer's policy handbook. The employees asserted a breach of contract claim and argued that their employer could not fire them without first following the disciplinary procedures outlined in the employer's policy manual, which included such measures as oral and written warnings before outright dismissal. The Court found that while employment-at-will is a contractual arrangement, the policy manual was not a part of the employment contract, and therefore the employer was not bound by the policies set forth in the handbook. Id. at 720-21; see also Workman v. United Parcel Serv., Inc., 234 F.3d 998 (7th. Cir.2000) (applying the same analysis under similar facts). Williams argues, then, that the inverse must also be true: that employees are not bound by the policies set forth in their employers' handbooks. Therefore, according to Williams, she is not bound by the Handbook's stated policies regarding a waiting period for benefits eligibility or the forfeiture of benefits upon involuntary termination.
Williams' arguments on this point are untenable and without support. First, there is no reason to believe that Orr's holding that employees cannot enforce the terms of an employment policy against
Further, even if we were to extend Orr under Williams' reasoning, Williams' claim would still fail here. Williams adamantly and repeatedly points out — correctly — that Riverside's Handbook is not contractual in nature, yet she fails entirely to bridge the gap this exposes, i.e., that she has no contractual agreement that would entitle her to sick or vacation pay benefits in the first place. Williams presents absolutely no evidence that her employment contract with Riverside included any mention of sick or vacation pay. Under her own expansive reading of Orr, then, the facts before us still lead to the conclusion that Williams had no right to expect sick or vacation pay pursuant to the terms of her employment contract with Riverside.
Because Williams has no contract with Riverside regarding vacation and sick pay, she is confined to the terms of Riverside's employment policies in seeking these benefits. In that regard, Williams' proposed reading of Orr is troubling for yet another reason. It is well-established that "[i]n Indiana, a party may not accept benefits under an agreement or instrument and at the same time repudiate its obligations." In re Marriage of Arvin, 689 N.E.2d 1270, 1273 (Ind.Ct.App.1997) (citing In re Estate of Palamara, 513 N.E.2d 1223, 1229 (Ind. Ct.App.1987), reh'g denied), trans. denied; see also Raymundo v. Hammond Clinic Ass'n, 449 N.E.2d 276, 283 (Ind.1983). Williams argues that she is entitled to compensation for vacation and sick pay because the Handbook, which she points out limits her rights to receive these benefits, is unenforceable. However, the vacation and sick pay benefits Williams claims arise only by virtue of the Handbook; if, as Williams resolutely contends, the Handbook is unenforceable by either party here, then she had no legal claim to vacation and sick pay in the first place. Inasmuch as employees had a right to earn vacation and sick pay pursuant to the employer's policies as set forth in the Handbook, that right was limited in whatever manner likewise set forth therein.
II. Summary Judgment on Riverside's Counterclaim
Williams next challenges the grant of summary judgment on Riverside's counterclaim. Riverside's counterclaim alleged that Williams suit was "utterly frivolous and without merit" and that its maintenance following the parties' correspondence was "frivolous and in bad faith." Appellant's App. p. 255. As is clear from our opinion above, we disagree. Most notably, we found for Williams on
III. Williams' Motion to Strike
As Williams' motion to strike the testimony of her deposition concerned only those portions of her deposition that were used by Riverside to support its cross-motion for summary judgment, and as we have reversed the trial court's ruling in favor of Riverside and found in favor of summary judgment for Williams on that cross-motion, Williams' motion to strike is moot. We decline, then, to reach the merits of this issue.
We agree with the trial court's grant of summary judgment to Riverside on the issues of vacation and sick pay. However, we find Williams' argument regarding the nature of hourly wages to be persuasive, and we therefore reverse the trial court's grant of summary judgment on that issue and instruct the court to enter summary judgment for Williams. For that reason, we also reverse the trial court's decision granting summary judgment on Riverside's frivolous action claim and direct the court to enter summary judgment for Williams accordingly. Finally, because Williams is entitled to summary judgment on Riverside's frivolous action claim, we find her motion to strike to be moot.
Affirmed in part, reversed in part, and remanded.
ROBB, J., and MATHIAS, J., concur.
The statute, then, regulates the amount and the frequency with which employers must pay their employees. St. Vincent Hosp. & Health Care Ctr., Inc. v. Steele, 766 N.E.2d 699, 703 (Ind.2002). It is worth noting that the statute does not provide that employees only acquire a vested interest in their earned wages at the time that payment is due under the statute. Ordinarily, an employee's interest in her hourly wages vests upon rendering services in a given hour. See Highhouse v. Midwest Orthopedic Inst., P.C., 807 N.E.2d 737, 739 (Ind. 2004) (absent an agreement to the contrary, an employee's interest in wages vests upon rendering services). The Wage Payment Statute simply establishes the maximum time frame in which those vested wages may be transferred from the employer to the employee.