Gatewood v. S.C. Dep't of Corr.

• Decision Date: 09 March 2016
• Docket Number: No. 5389.,Appellate Case No. 2014–001199.,5389.
• Parties: Fred GATEWOOD, Appellant, v. SOUTH CAROLINA DEPARTMENT OF CORRECTIONS, Respondent.
• Court: South Carolina Court of Appeals

416 S.C. 304

785 S.E.2d 600

Fred GATEWOOD, Appellant,

v.SOUTH CAROLINA DEPARTMENT OF CORRECTIONS, Respondent.

Appellate Case No. 2014–001199.

No. 5389.

Court of Appeals of South Carolina.

Heard Nov. 2, 2015.

Decided March 9, 2016.

Rehearing Denied June 2, 2016.

Douglas H. Westbrook, of Charleston, for appellant.

Lake Eric Summers, of Malone Thompson Summers & Ott, LLC, of Columbia, for respondent.

GEATHERS

, J.

Appellant (Inmate), an inmate participating in a Prison Industries service project operated by Respondent South Carolina Department of Corrections (SCDC), challenges an order of the South Carolina Administrative Law Court (ALC) upholding SCDC's denial of Inmate's wage-related grievance.¹ Inmate argues the ALC erred in denying his motion to supplement the record. Inmate also argues the ALC erred in applying section 24–1–295 of the South Carolina Code

(Supp.2015) to determine the deductions from his gross wages. We affirm in part, reverse in part, and remand.

FACTS/PROCEDURAL HISTORY

In 1995, our legislature enacted section 24–3–430 of the South Carolina Code

(2007) to authorize the expansion of the Prison Industries program into the private sector. This expansion allowed qualified private entities to use inmate labor but required the wages for participating inmates to be no less than “the prevailing wage for work of [a] similar nature in the private sector.” Act No. 7, 1995 S.C. Acts 78. Section 24–3–430 became effective on July 1, 1995. Id. at 102. Subsequently, on September 30, 1998, SCDC entered into a contract with Williams Technologies, Inc. (WTI) for the employment of SCDC inmates on the premises of Lieber Correctional Institution (Lieber) in WTI's business of “disassembly and/or remanufacturing of its product lines at [Lieber].” The cover page for the contract document is entitled “Williams Technology Transmissions Service Contract.”

The contract's “Scope of Work” provision states, in pertinent part, “Prison Industry inmates under the general oversight of SCDC will disassemble and/or remanufacture [WTI's] product lines according to engineering design and manufacturing specifications developed and provided by [WTI]....” The contract also provides, “For all purposes, inmates shall be considered to be employees of SCDC.” With regard to payment for services, the contract requires WTI to pay SCDC “$4.00 per hour per inmate for work performed[,] including training hours and hours in excess of the inmate's normal shift.”

The payment provision further states,

SCDC shall be responsible to pay inmate workers, cover security costs and [Prison Industries] overhead, including any costs for health, safety and welfare of the inmates, taxes or other payroll deduction....

Thirty (30) days prior to each anniversary date of this agreement, SCDC and [WTI] may negotiate an increase in the per hour rate paid by [WTI] to SCDC. If such an increase is requested, it shall be limited to a maximum of five percent (5%) annually or the annual percentage increase in the Consumer Price Index, whichever is lower. It is the intent of the parties that such increase shall only reflect SCDC's increased costs of prison overhead.

[WTI] and SCDC may mutually agree upon a bonus plan for inmates based on productivity and quality control. Such bonus will be paid in its entirety by [WTI] to SCDC for distribution to inmates.

(emphases added). The contract's cover page highlights the contract's “Requirements/Specifications,” which include “Wage Rate: $4.00 per hour/per inmate; $.35/[hour] base for inmates.” Also, the contract's terms concerning “Bonus Pay/Programs” indicate that the “starting base pay” for participating inmates is $0.35 per hour.

On July 20, 2001, the legislature enacted the first of a series of yearly budget provisos, effective for the fiscal year beginning July 1, permitting SCDC to pay participating inmates less than the prevailing wage for “service work”:²

The Director of [SCDC] may enter into contracts with private sector entities that would allow for inmate labor to be provided for prison industry service work. The use of such inmate labor may not result in the displacement of employed workers within the local region in which work is being performed. Service work is defined as any work such as repair, replacement of original manufactured items, packaging, sorting, labeling, or similar work that is not original equipment manufacturing. The department may negotiate the wage to be paid for inmate labor provided under prison industry service work contracts, and such wages may be less than the prevailing wage for work of a similar nature in the private sector.

H. 3687, Appropriation Bill 2001–2002, Part IB § 37.31 (Act No. 66, 2001 S.C. Acts 738) (emphasis added). The legislature enacted identical, or nearly identical, provisos for each following fiscal year until the 2007–2008 fiscal year, and on August 1, 2007, section 24–1–295 of the South Carolina Code

, which codified the language in the provisos, became effective.³

See S.C.Code Ann. § 24–1–295 (Supp.2015) (“[SCDC] may negotiate the wage to be paid for inmate labor provided under prison industry service work contracts and export work contracts, and these wages may be less than the prevailing wage for work of a similar nature in the private sector.”). This legislation also established mandatory deductions from the “gross earnings of the inmates engaged in prison industry service work in addition to any other required deductions.” Id.

Inmate began working under the WTI contract in 2004—he received his first paycheck on October 18, 2004, and he filed his “Step 1” Inmate Grievance Form with SCDC on this same date. In his grievance, Inmate requested the negotiated wage of $4.00 per hour. SCDC's Inmate Grievance System Policy, designated as Policy GA–01.12, provides for formal review of inmate complaints in two steps. A Step 1 grievance is evaluated by the prison's Warden, and any appeal from the Warden's decision to the “responsible official,” is designated as “Step 2.” The responsible official must render a decision on the appeal within sixty days, and this decision constitutes SCDC's final response in the matter.

On October 28, 2004, Lieber's Warden denied Inmate's Step 1 grievance. On November 8, 2004, Inmate filed his Step 2 Inmate Grievance Form, challenging SCDC's denial of the requested relief. On May 14, 2007, SCDC issued a final decision on Inmate's Step 2 grievance, basing its denial of relief on both the merits and the fifteen-day filing deadline set forth in paragraph 13.1 of Policy GA–01.12.⁴ Inmate then appealed SCDC's decision to the ALC.

According to SCDC, Inmate received his last paycheck on April 13, 2009, during the pendency of his appeal to the ALC. On April 29, 2014, the ALC upheld SCDC's denial of Inmate's grievance on the ground that the deductions taken by SCDC from Inmate's gross wages were proper. This appeal followed.

ISSUES ON APPEAL

1. Did the ALC err in denying Inmate's motion to supplement the record?

2. Did the ALC err in applying section 24–1–295 of the South Carolina Code

(Supp.2015) rather than section 24–3–40 of the South Carolina Code (2007) to determine the deductions from Inmate's gross wages?⁵

3. Did the ALC err in holding that security and overhead constituted “other required deductions” for purposes of section 24–1–295 ?

4. Does section 24–1–295 apply retroactively to Inmate's pre-August 1, 2007 work?⁶

5. Did the ALC err in holding that the issue of overtime was not preserved for review?

6. Did the ALC err in denying Inmate's request for pre-judgment interest, post-judgment interest, costs, and attorney's fees?

7. Did the ALC err in declining to consider whether SCDC should process grievances for all inmates participating “in the program”?

8. Did the ALC err in declining to enjoin SCDC from further wage violations?

STANDARD OF REVIEW

Section 1–23–610(B) of the South Carolina Code

(Supp.2015) sets forth the standard of review when this court is sitting in review of a decision by the ALC on an appeal from an administrative agency. Here, there are no factual disputes. Rather, the issues on review involve questions of law. Therefore, our review of the ALC's decision is governed by item (d) of section 1–23–610(B), which allows this court to reverse the ALC's decision if it is affected by an error of law.

LAW/ANALYSIS

I. Motion to Supplement

Inmate argues the ALC erred in denying his motion to supplement the record of the grievance proceedings before SCDC. We hold any error in denying the motion was harmless because Inmate's sole issue before the ALC was whether he was entitled to a wage of $4.00 per hour, a question of law not requiring review of Inmate's pay stubs and time cards, and Inmate's issues on appeal to this court are likewise issues of law. See Judy v. Judy, 384 S.C. 634, 646, 682 S.E.2d 836, 842 (Ct.App.2009)

(“Error is harmless where it could not reasonably have affected the result of the trial.”); id. (“Generally, appellate courts will not set aside judgments due to insubstantial errors not affecting the result.”).

II. Deductions

Inmate asserts the ALC erred in applying section 24–1–295 of the South Carolina Code

(Supp.2015) to determine the deductions from his gross wages earned prior to August 1, 2007 because (1) the parties did not raise this issue in their briefs and (2) section 24–3–40

rather than section 24–1–295 applies to determine deductions from his gross wages earned prior to August 1, 2007. We agree with Inmate that section 24–3–40 governs deductions from his gross wages earned prior to August 1, 2007, but only as to the month of July 2007.

As to Inmate's assertion that the parties did not raise the issue of deductions before the ALC, we note that in his “Level Three Brief,” Inmate requested the ALC to calculate his back wages at “$4.00 per hour, less any deductions under [section] 24–3–40(A)

applicable to [Inmate].... No deduction should be made from [Inmate's] gross wages unless expressly authorized by [section] 24–3–40. Any...