Parts Depot, Inc. v. Beiswenger, No. 2002-SC-0948-DG.

• Decision Date: 25 August 2005
• Docket Number: No. 2004-SC-0124-DG.,No. 2002-SC-0948-DG.
• Citation: 170 S.W.3d 354
• Parties: PARTS DEPOT, INC.; and CSD America, Inc., Appellants v. Lynn BEISWENGER, Appellee. Housing Authority of Middlesborough, Appellant v. Charles Smith; and Eddie Harrell, Appellees.
• Court: United States State Supreme Court — District of Kentucky

170 S.W.3d 354

PARTS DEPOT, INC.; and CSD America, Inc., Appellants v. Lynn BEISWENGER, Appellee.

Housing Authority of Middlesborough, Appellant v. Charles Smith; and Eddie Harrell, Appellees.

No. 2002-SC-0948-DG.

No. 2004-SC-0124-DG.

Supreme Court of Kentucky.

August 25, 2005.

Mitzi D. Wyrick, Angela C. McCorkle, Wyatt, Tarrant & Combs, Louisville, KY, Ellen E. Boshkoff, Kathy L. Osborn, Baker & Daniels, Indianapolis, IN, Counsel for Appellants (2002-SC-0948-DG).

Donald Duff, Frankfort, KY, Glenn L. Greene, Jr., Harlan, KY, Counsel for Appellant (2004-SC-0124-DG).

Philip C. Kimball, Louisville, KY, Counsel for Appellee (2002-SC-0948-DG).

Bradley C. Freeman, Corbin, KY, Counsel for Appellees (2004-SC-0124-DG).

Kembra Sexton Taylor, Labor Cabinet, Frankfort, KY, Counsel for Amicus Curiae Commissioner of the Department of Labor (2004-SC-0124-DG).

Opinion of the Court by Justice COOPER.

We have consolidated these two appeals because they present a common issue, viz: Does a circuit court have original subject matter jurisdiction over a wage and hour dispute between an employer and employee, or is original jurisdiction over all such disputes vested exclusively in the Department of Labor by KRS Chapters 336 and 337, subject to only appellate review by the Court of Justice after exhaustion of administrative remedies? Each of these appeals involves a claim that an employer did not pay an employee the agreed compensation for services rendered. In each case, a circuit court determined that it did not have jurisdiction to resolve the dispute. Those decisions were reversed by separate panels of the Court of Appeals; but even those panel members agreeing with the result did not fully agree in the reasoning. Further, the only two previous published opinions addressing the subject, Early v. Campbell County Fiscal Court, 690 S.W.2d 398 (Ky.App.1985), and Noel v. Season-Sash, Inc., 722 S.W.2d 901 (Ky.App.1986), reached opposite results on different reasoning. We now affirm the decisions of the panels of the Court of Appeals in the case sub judice, and overrule Noel in part and Early in its entirety.

On April 10, 2001, Lynn Beiswenger sued Parts Depot, Inc., and CSD America, Inc., in the Shelby Circuit Court alleging that the two corporations had jointly employed him in various capacities from October 26, 1998, through January 20, 2001, and that they refused to pay him $29,250.00 in compensation, which they had agreed to pay for his services. Beiswenger alleged a violation of KRS 337.055 ("Any employee who leaves or is discharged from his employment shall be paid in full all wages or salary earned by him...."), and brought his action pursuant to KRS 337.385(1) (action may be maintained in any court of competent jurisdiction to recover unpaid wages earned, an additional equal amount in liquidated damages, and for costs and reasonable attorney fees). The Shelby Circuit Court dismissed the action for lack of subject matter jurisdiction. The Court of Appeals reversed and remanded with directions to permit Beiswenger to proceed with his action. The only issue presented by this appeal is the jurisdictional one.

On June 10, 1997, a complaint was filed with the Kentucky Labor Cabinet (now Department of Labor) alleging that the Housing Authority of Middlesborough¹ ("HAM") was not paying its "on call" maintenance employees at the on-call rate established in HAM's personnel policy. Pursuant to KRS 337.345, the name of the complainant remains confidential. An investigator from the Labor Cabinet investigated the complaint and reported that the complainant was not an "on call" employee. The Cabinet took no further action.

On January 20, 1998, Charles Smith and Eddie Harrell, two of HAM's maintenance employees, sued HAM in the Bell Circuit Court alleging that HAM had breached its contractual obligation to compensate them for their services at the on-call rate. HAM's personnel policy, officially adopted by HAM's board of commissioners on September 17, 1991, provides in pertinent part:

c. "ON CALL" Employees. An "On Call" employee is an employee working for the Housing Authority on a regular shift and is then required to be available to meet work requirements which arise outside of the employee's normal duty hours.

"On Call" maintenance employees who are provided a dwelling unit at reduced rent for restriction of time, shall be paid one and one-half times their basic hourly rate for all hours worked in excess of eight.

Maintenance employees who are not furnished a dwelling unit at reduced rates, and are required to be available after their normal duty hours, shall be paid for their restriction of time and the equivalent of one hour at one and one-half times the basic hourly rate for each day they are required to be "On Call." In addition, these employees shall be paid at the rate of one and one-half times their basic hourly rate for all hours worked in excess of eight.

d. "Subject to Call" Employees. "Subject to Call" employee is an employee who may be called by the Public Housing Authority (PHA). The employee is not required to be available to the PHA. All maintenance employees not "On Call" are considered "Subject to Call." These employees shall be paid at the rate of one and one-half times their basic hourly rate for hours actually worked in excess of 40 hours per week. (Part-time employees may, at the option of the PHA, be paid one and one-half times their basic hourly rate for hours actually worked excess [sic] of their normal work week.)

HAM added the "subject to call" status to its personnel policy in 1991 at the suggestion of the Federal Housing Authority. Smith and Harrell assert that they were "on call" maintenance employees and were neither provided a dwelling unit at reduced rent nor compensated at the on-call monetary rate. HAM asserts that Smith and Harrell were "subject to call" employees, not "on call" employees. Smith and Harrell neither asserted a violation of KRS 337.060 ("No employer shall withhold from any employee any part of the wage agreed upon.") nor purported to file their action under the authority of KRS 337.385(1). Their complaint can best be characterized as one for common law breach of contract.

The Bell Circuit Court initially granted summary judgment to the employees and, after a bench trial, awarded damages of $28,665.70 to Smith and $11,308.26 to Harrell, plus added contributions to Smith's and Harrell's retirement accounts commensurate with the unpaid wages. The Court of Appeals reversed in an unpublished opinion, No. 1999-CA-000765-MR (August 25, 2000), concluding that there existed a factual issue as to whether Smith and Harrell were "on call" or "subject to call" employees, thus precluding summary judgment. See Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476, 480 (Ky.1991). On remand, the Bell Circuit Court granted HAM's belated motion to dismiss the action for lack of subject matter jurisdiction. See Privett v. Clendenin, 52 S.W.3d 530, 532 (Ky.2001) ("Defects in subject-matter jurisdiction may be raised by the parties or the court at any time and cannot be waived."). The Court of Appeals reversed and remanded with directions to permit Smith and Harrell to proceed with their action.

In addition to the jurisdiction issue, we will also address HAM's assertion that its personnel policy does not confer contractual rights upon its employees such as would give rise to a cause of action for breach of contract.

I. JURISDICTION.

KRS 337.385, enacted as part of the 1974 General Assembly's major revision of Kentucky's Wages and Hours Act, 1974 Ky. Acts, ch. 391, § 9, provides:

(1) Any employer who pays any employee less than wages and overtime compensation to which such employee is entitled under or by virtue of KRS 337.020 to 337.285 shall be liable to such employee affected for the full amount of such wages and overtime compensation, less any amount actually paid to such employee by the employer, for an additional equal amount as liquidated damages, and for costs and such reasonable attorney's fees as may be allowed by the court. Provided, that if, in any action commenced to recover such unpaid wages or liquidated damages, the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of KRS 337.020 to 337.285, the court may, in its sound discretion, award no liquidated damages, or award any amount thereof not to exceed the amount specified in this section. Any agreement between such employee and the employer to work for less than the applicable wage rate shall be no defense to such action. Such action may be maintained in any court of competent jurisdiction by any one (1) or more employees for and in behalf of himself or themselves.

(2) At the written request of any employee paid less than the amount to which he is entitled under the provisions of KRS 337.020 to 337.285, the commissioner may take an assignment of such wage claim in trust for the assigning employee and may bring any legal action necessary to collect such claim, and the employer shall be required to pay the costs and such reasonable attorney's fees as may be allowed by the court. The commissioner in case of suit shall have power to join various claimants against the same employer in one (1) action.

(Emphasis added.)

Subsection (1) unambiguously authorizes an uncompensated or undercompensated employee to sue the employer in "any court of competent jurisdiction" for the amount due and unpaid, plus liquidated damages, costs and attorney fees. If the amount is $4,000.00 or less, the court of competent jurisdiction is the district court. KRS 24A.120(1). Otherwise, it is the circuit court. Ky. Const. § 112(5). KRS 337.385 is substantially similar to 29 U.S.C. § 216(b)² of the federal Fair Labor Standards Act, which also authorizes a private cause of action by...