Erdman v. Jovoco, Inc., 92-0980

• Decision Date: 01 November 1993
• Docket Number: No. 92-0980,92-0980
• Parties: , 1 Wage & Hour Cas.2d (BNA) 1510 Robert D. ERDMAN, Plaintiff-Appellant-Cross Respondent-Petitioner, v. JOVOCO, INC., A Foreign Corporation, Defendant-Respondent, Crown Coco, Inc., A Foreign Corporation, Defendant-Respondent-Cross Appellant-Respondent. . Oral Argument
• Court: Wisconsin Supreme Court

Page 487

512 N.W.2d 487

181 Wis.2d 736, 1 Wage & Hour Cas.2d (BNA) 1510

Robert D. ERDMAN, Plaintiff-Appellant-Cross Respondent-Petitioner, v. JOVOCO, INC., A Foreign Corporation, Defendant-Respondent Crown Coco, Inc., A Foreign Corporation Defendant-Respondent-Cross Appellant-Respondent.

No. 92-0980.

Supreme Court of Wisconsin.

Oral Argument Nov. 1, 1993.

Decided March 3, 1994.

For the defendant-respondent there was a brief by William G. Thiel and Weld, Riley, Prenn & Ricci, S.C., Eau Claire and oral argument by William G. Thiel.

For the defendant-respondent-cross appellant there was a brief by James T. Remington and Remington Law Offices, New Richmond and oral argument by James T. Remington.

SHIRLEY S. ABRAHAMSON, Justice.

This is a review of a published decision of the court of appeals, Erdman v. Jovoco, Inc., 173 Wis.2d 273, 496 N.W.2d 183 (1992), affirming the judgments of the circuit court of Rusk County, Frederick A. Henderson, circuit judge, dismissing the actions.

The plaintiff, Robert Erdman, commenced an action against Jovoco, Inc., in May 1990 and against Crown Coco, Inc., in February 1991, claiming that these companies, his former employers, made deductions from his commission earnings in violation of sec. 103.455, Stats.1991-92. Section 103.455 provides in part that "no employer shall make any deduction from the wages due or earned by any employe ... for defective or faulty workmanship, lost or stolen property or damage to property, unless the employe authorizes the employer in writing to make such deduction...." (emphasis added). ¹ After the plaintiff presented his case the circuit court granted the defendants' motion to dismiss the cause on the grounds that sec. 103.455 is limited to compensation received in the form of wages and is not applicable to compensation received in the form of commissions. The court of appeals affirmed the dismissal.

The primary question presented to the circuit court, the court of appeals, and this court is whether compensation to an employe in the form of commissions constitutes "wages" within the meaning of sec. 103.455, which prohibits an employer from making certain deductions from an employe's wages. The meaning of "wages" in sec. 103.455 is a question of law of first impression. We conclude that sec. 103.455 applies to compensation in the form of commissions because the legislature intended the word "wages" to be given its ordinary meaning in everyday parlance, which encompasses a variety of forms of employe remuneration.

Because we conclude that sec. 103.455 applies to compensation in the form of commissions, we must address three additional issues: 1) whether the plaintiff's claim is barred by the statute of limitations; ² 2) whether sec. 103.455 requires the plaintiff to exhaust administrative remedies by bringing his claim before the Department of Industry, Labor and Human Relations prior to initiating these court actions against his employers; and 3) whether the employers complied with the requirements in sec. 103.455 in making the deductions.

We conclude 1) that the applicable statute of limitations is sec. 893.43, Stats.1991-92, which provides a six-year limitation on contract claims; 2) that the plaintiff was not required to exhaust administrative remedies; and 3) that the employers did not comply with the requirements of sec. 103.455. Accordingly, we reverse the decision of the court of appeals and the judgment of the circuit court and remand the case.

I.

The plaintiff was the manager of a 24-hour gas station and convenience store in Ladysmith, Wisconsin. He was initially hired by defendant Crown Coco, Inc. in the fall of 1983 and worked until July 1986, when the store was sold to defendant Jovoco, Inc. He continued working for Jovoco until December 1989.

The change of ownership did not affect the plaintiff's position as the store manager nor did it alter the terms of his employment. As store manager he was responsible for the daily operation of the store, hiring and firing employes, bookkeeping, tending to inventory, and operating the cash register during the hours he was on duty. He worked approximately 49 hours per week.

Defendant Crown Coco compensated its store managers using two components. This method of compensation was later adopted by defendant Jovoco when it purchased the store. Store managers were paid a fixed sum and were also eligible to receive a commission based on a percentage of the store's monthly gross sales of merchandise and gasoline. When the plaintiff began his employment with Crown Coco, he signed a Statement of Policy agreeing to the company's policy regarding commissions. The company policy allowed the employer to make deductions from an employe's commissions for such items as merchandise and cash shortages, returned checks, credit card charges which were accepted in violation of company policies, and damaged or returned videos. ³ The company policy expressly stated that no deductions would be made from the "manager's salary." ⁴

The company determined the amount to be deducted from the plaintiff's commissions through a monthly or bimonthly audit performed by another company employe. The auditor would compare her findings with the sales records kept by the plaintiff; any shortages of merchandise or cash, or damaged goods would be deducted from the plaintiff's commission. The plaintiff was given an opportunity to correct the accuracy of the auditor's findings (e.g. he could alert the auditor to inventory which she had overlooked during the audit), but he was not given the opportunity to contest his liability for shortages or damaged goods.

Deductions from the plaintiff's commission were made for certain incidents whether or not he was present in the store. As the store manager he was held financially responsible for any returned checks or credit card charges which were accepted in violation of company policies, regardless of whether he was present in the store to approve the transactions. He was also required to compensate the company for any stolen gas or merchandise, regardless of whether he was on duty or whether he was capable of preventing the theft. He was held responsible for shoplifted merchandise as well as large scale thefts. In one instance, deductions were made from the plaintiff's commissions for the theft of inventory which his employer had instructed him to store outside the store. The plaintiff testified that he repeatedly complained to his employer that the inventory was not secure if it was displayed outside 24 hours a day, but the store refused to expend the money for additional security or storage space.

While the plaintiff worked for Crown Coco, he received his compensation in two separate checks, one in a fixed amount and one for his commissions. Jovoco combined his salary and commissions and paid him his full compensation in one check. Both employers accompanied his payment with a reconciliation sheet noting the amounts deducted and the reasons for the deductions. Deductions were made from the plaintiff's commissions nearly every month of his tenure as the store manager.

The deductions made from the plaintiff's commissions never affected the fixed amount of compensation. If the deductions exceeded the commissions for a given period, he would not receive any commissions but would still be paid the fixed amount of compensation. Any deficit would carry over to the next period's calculation of the commissions. The plaintiff was not held responsible for any deficit at termination of employment.

The plaintiff initiated his actions pursuant to sec. 103.455, Stats.1991-92, seeking to recover double the deductions which were made from February 1985 through December 1989, plus the 5% statutory interest rate. He calculated that $7,906.68 was deducted by Crown Coco from February 1985 to August 1986, and $19,581.33 was deducted by Jovoco from August 1986 until December 1989.

II.

The primary issue presented in this case is one of statutory interpretation. We must determine whether commissions constitute "wages" within the meaning of sec. 103.455. The statute provides, as we have stated, that "no employer shall make any deduction from the wages due or earned by any employe, who is not an independent contractor, for defective or faulty workmanship, lost or stolen property or damage to property...." Section 103.455. The interpretation of this statute is a question of law which this court determines independently of the other courts.

The principal objective of statutory interpretation is to ascertain and give effect to the intent of the legislature. Green Bay Development Authority v. Bee Frank, Inc., 120 Wis.2d 402, 409, 355 N.W.2d 240 (1984).

The first step is to examine the statutory language. There is no definition of "wages" as used in sec. 103.455 either in the section itself, in ch. 103, or in the cases. The plaintiff argues that "wages" is a general term encompassing various forms of employe compensation, including commissions. This broad definition comports with some dictionary definitions ⁵ and with some statutory definitions of wages. ⁶ The defendants, also referring to a dictionary definition, argue that the word "wages" is limited to payment made on a contractual, hourly, daily, or piecework basis. ⁷

The court of appeals concluded, and we agree, that reasonable persons could unearth a plethora of different definitions for the word "wages." As the court of appeals suggested, "wages" could be an employe's base salary, compensation given only for manual labor, compensation to employes in nonmanagement positions, or compensation paid for human labor itself but not compensation paid as commission for the end product. Erdman v. Jovoco, 173 Wis.2d 273, 279, 496 N.W.2d 183 (1992). We must therefore look to the history of the statute and the objective to be accomplished to determine the meaning of "wages." Green Bay Redevelopment Authority v. Bee Frank, Inc., 120 Wis.2d 402, 409, ...