Erdman v. Jovoco, Inc., 92-0980

• Decision Date: 15 December 1992
• Docket Number: No. 92-0980,92-0980
• Citation: 496 N.W.2d 183,173 Wis.2d 273
• Parties: , 1 Wage & Hour Cas.2d (BNA) 283 Robert D. ERDMAN, Plaintiff-Appellant-Cross Respondent, d v. JOVOCO, INC., a foreign corporation, Defendant-Respondent, Crown Coco, Inc., a foreign corporation, Defendant-Respondent-Cross Appellant.
• Court: Wisconsin Court of Appeals

Page 183

496 N.W.2d 183

173 Wis.2d 273, 1 Wage & Hour Cas.2d (BNA) 283

Robert D. ERDMAN, Plaintiff-Appellant-Cross Respondent,^d v. JOVOCO, INC., a foreign corporation, Defendant-Respondent Crown Coco, Inc., a foreign corporation Defendant-Respondent-Cross Appellant.

No. 92-0980.

Court of Appeals of Wisconsin.

Submitted on Briefs Nov. 9, 1992.

Opinion Released Dec. 15, 1992.

Opinion Filed Dec. 15, 1992.

For the plaintiff-appellant-cross-respondent, Robert D. Erdman, the cause was submitted on the briefs of Stuart J. Krueger of Bye, Krueger & Goff, S.C., River Falls.

For the defendant-respondent-cross-appellant, Crown Coco, Inc., the cause was submitted on the brief of James T. Remington of Remington Law Offices, New Richmond.

For the defendant-respondent, Jovoco, Inc., the cause was submitted on the brief of William G. Thiel of Weld, Riley, Prenn & Ricci, S.C., Eau Claire.

Before CANE, P.J., and LaROCQUE and MYSE, JJ.

CANE, Presiding Judge.

Robert D. Erdman appeals a judgment dismissing his action under sec. 103.455, Stats., and holding that the compensation he received in the form of a commission was not wages. The central issue in this case is whether the term "wages" as used in sec. 103.455 includes the additional compensation of commissions. Erdman's former employers, Jovoco, Inc., and Crown Coco, Inc., contend that Erdman's commissions, which were computed independently of his salary, were not wages as that term is used in sec. 103.455. ¹ We agree and therefore affirm the judgment of the circuit court.

Erdman started as a store manager for Crown Coco in the fall of 1983. The store is a gas station/convenience store. He continued to work for Crown Coco through July 1986. In August 1986, ownership of the store changed to Jovoco. Erdman remained in essentially the same capacity for Jovoco from August 1986 through December 1989.

Erdman's compensation was a combination of a set salary, plus a commission. The commission was computed according to the Crown Coco Manager's Manual, ² which provides in part:

b. All commissions are based on petroleum gallonage plus merchandise sales.

c. All cash and merchandise shortages during each month will be deducted from these gross earnings.

d. Excess hours over budget (other than managers) will be deducted from your commission at the current minimum hourly rate.

e. Deductions will be made for all out of policy checks as well as all out of policy credit cards returned.

f. Other deductions for commissions could include missing supplies, equipment, etc., uncontrollable budgets including store utilities, etc.

g. Any shortages in excess of commission earnings will be carried forward to the following month.

h. Commissions, if earned, are presented to each manager on a monthly basis.

The commission deductions never affected Erdman's salary. If the deductions exceeded commissions for a given period, Erdman would still receive a full salary, although he would receive no commission and the deficit would carry over to the next period's commission tabulation. If a deficit existed upon termination of employment, the employe was not held responsible for the deficit.

Erdman brought an action against Crown Coco and Jovoco contending that the commission deductions were in violation of sec. 103.455, Stats. This section reads in part:

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, unless the employe authorizes the employer in writing to make such deduction or unless the employer and a representative designated by the employe shall determine that such defective or faulty work, loss or theft, or damage is due to worker's negligence, carelessness, or wilful and intentional conduct on the part of such employe, or unless the employe is found guilty or held liable in a court of competent jurisdiction by reason thereof. If any such deduction is made or credit taken by any employer, that is not in accordance with this section, the employer shall be liable for twice the amount of the deduction or credit taken in a civil action brought by said employe.

Both Jovoco and Crown Coco argued that the requirements of sec. 103.455 do not apply to the commission deductions because these commissions are not "wages" as contemplated by sec. 103.455. The trial court agreed and dismissed Erdman's complaint. Erdman appealed.

Interpretation of a statute is a question of law appellate courts review without deference to the trial court's reasoning. State v. Wittrock, 119 Wis.2d 664, 669, 350 N.W.2d 647, 650 (1984). The sole purpose of statutory review is to ascertain the intent of the legislature. In re J.A.L., 162 Wis.2d 940, 962, 471 N.W.2d 493, 502 (1991). In interpreting a statute, the first recourse is to its plain language. If the meaning of the statute is clear and unambiguous on its face, resort to extrinsic aids for purpose of statutory construction is improper. State v. Martin, 162 Wis.2d 883, 893-94, 470 N.W.2d 900, 904 (1991). If a statute is ambiguous, the court looks to its content, subject matter, scope, history and the object to be accomplished in order to arrive at its reasonable meaning. Boltz v. Boltz, 133 Wis.2d 278, 284, 395 N.W.2d 605, 607 (Ct.App.1986). A statute is ambiguous if reasonable persons could disagree as to its meaning, and whether a statute is ambiguous is a question of law. Id.

Section 103.455, Stats., does not define "wages" nor is the term defined elsewhere in ch. 103. Although Erdman contends that caselaw shows that his commissions are sec. 103.455 wages, see infra, Wisconsin courts are silent on whether commissions are "wages" within sec. 103.455 where the employe receives a base salary and commissions on top of that salary. Therefore, interpretation of sec. 103.455 in this regard presents a question of first impression.

Reasonable persons could conclude that "wages" within sec. 103.455, Stats., means any form of compensation whatsoever. Reasonable persons could also conclude that "wages" means only an employe's base salary, only compensation given for manual labor or only compensation given for nonmanagement positions. Reasonable persons might look to sec. 109.01(3), Stats., for the definition of wages or might look to a dictionary definition of wages that distinguishes it from salary. See In re Riebs, 8 Wis.2d 110, 113-14, 98 N.W.2d 453, 455 (1959). Reasonable persons might conclude that compensation paid for human labor itself is wages, but compensation paid as commissions for the end product or the fruit of one's labor is something other than wages. See Saunders v. DEC Int'l, Inc., 85 Wis.2d 70, 73, 270 N.W.2d 176, 177 (1978). Indeed, reasonable persons could find a plethora of different definitions for "wages" within sec. 103.455. We conclude that the sec. 103.455 term "wages" is ambiguous.

Erdman contends that two cases dealing with sec. 103.455, Stats., mandate a conclusion that these commissions are wages. We disagree. In Zarnott v. Timken-Detroit Axle Co., 244 Wis. 596, 600-01, 13 N.W.2d 53, 54-55 (1944), the supreme court held that the compensation paid to machine operators paid on a piecework basis with guaranteed minimum hourly rates was covered by sec. 103.455. Therefore, the employer could not deduct from the employe's wages for defective pieces if a foreman determined the defect was due to the carelessness of the employe. In Donovan v Schlesner, 72 Wis.2d 74, 80-82, 240 N.W.2d 135, 139 (1976), the court held that the statute applied to compensation earned by an attendant at a gas station, who made $1.85 an hour and had deductions taken from his weekly pay for shortages determined by comparing the property or items on hand with the amounts entered into the books representing sales.

However, we note that in neither Zarnott nor Donovan were the deductions taken only from a portion of the employe's compensation, be it referred to as commission, bonus or anything else. In both instances, the employer had the ability to deduct from an employe's entire earnings. Thus, the employe's compensation could be shrunk to oppressive levels. Here, the situation is quite different. The employe receives a salary that is paid regardless of performance. While the commission portion of the compensation is tied to performance, the employe's earnings will never fall below his or her salary level. They can only increase. Thus, the rationale of Zarnott and Donovan does not apply. We must look elsewhere to determine if the legislature intended Erdman's commissions to be covered by sec. 103.455, Stats.

Section 103.455, Stats., was originally enacted in 1931 at the request of the Wisconsin State Federation of Labor. Chapter 457, Laws of 1931. Both Jovoco and Crown Coco argue that sec. 103.455 is a penal statute and thus should be construed narrowly. However, we held that a statute is penal if it undertakes to redress a wrong to the public and remedial if it undertakes to remedy a wrong to the individual. In re I.V., 109 Wis.2d 407, 411, 326 N.W.2d 127, 129 (Ct.App.1982) (citing 3 J. Sutherland, STATUTES AND STATUTORY CONSTRUCTION, § 60.02 (C. Sands 4th ed. 1974)). Section 103.455 seeks to remedy a wrong to an individual, the employe, and thus is a remedial statute that should be construed broadly.

Nevertheless, even given a broad construction, we cannot conclude that the legislature intended to include commissions of the type available to Erdman as wages within sec. 103.455, Stats. An ambiguity within a statute should be resolved in a manner that will effectuate the legislative intent. Forest Home Dodge, Inc. v. Karns, 29 Wis.2d 78, 86, 138 N.W.2d 214, 218 (1965). If the legislature had intended wages under sec. 103.455 to include all commissions, it could have defined them accordingly, as it did in ch. 109, Stats. Chapter 109 uses the word "wages" often and specifically defines the term as...