Labor Ready Northeast, Inc. v. McConaghy

• Decision Date: 04 June 2004
• Docket Number: No. 2002-698-M.P.,2002-698-M.P.
• Parties: LABOR READY NORTHEAST, INC. v. Marilyn Shannon McCONAGHY, in Her Capacity as Director of the Department of Business Regulation.
• Court: Rhode Island Supreme Court

849 A.2d 340

LABOR READY NORTHEAST, INC. v. Marilyn Shannon McCONAGHY, in Her Capacity as Director of the Department of Business Regulation.

No. 2002-698-M.P.

Supreme Court of Rhode Island.

June 4, 2004.

William M. Dolan, III, Esq., Providence, for Plaintiff.

Brian P. Stern, Esq., for Defendant.

Present: WILLIAMS, C.J., FLANDERS, GOLDBERG, FLAHERTY, and SUTTELL, JJ.

OPINION

FLANDERS, Justice.

As our parents used to tell us, "money doesn't grow on trees." But nowadays, for a fee, it sometimes comes out of machines.

In this case, an employer of temporary workers hired them out each day to perform various manual-labor jobs for the employer's customers. Pursuant to its "work today, cash today" policy, the employer equipped its branch offices with so-called cash-dispensing machines (CDMs) for these laborers to use, thereby affording them an optional means to convert their earned wages for each day's work into cash. In doing so, however, the employer charged these employees a fee. Indeed, Labor Ready, Inc., the employer's parent company, grossed over eight million dollars nationwide just for the year 2000 by providing this profit-making CDM service to its employees on a daily basis.¹

Was the employer required to obtain a license to engage in this profitable activity because it was operating a check-cashing business in this jurisdiction? The Department of Business Regulation (DBR or the department) thought so, but the Superior Court disagreed, deeming a contrary DBR ruling on this issue to be clearly erroneous and unauthorized.

Because the Superior Court, we conclude, failed to accord the requisite deference to the DBR's administrative decision on this question, we respectfully disagree with the court's unduly narrow definition of the word "instrument," as the General Assembly used that term of art in the operative check-cashing statute. Consequently, because the employer in question improperly provided currency for checks without first obtaining a DBR license to do so, we reverse, quash the judgment of the Superior Court, and remand the papers in this case for the entry of a new judgment consistent with this opinion.

Facts and Travel

The employer, Labor Ready Northeast, Inc. (Labor Ready), provided the above-described temporary day-labor services to its customers from its three branch offices in Rhode Island. Each morning, its employees would report to one of Labor Ready's branch offices. At the end of each work day, after finishing their assigned day-labor job for Labor Ready's customers, the employees would return to one of these branch offices to obtain payment for their services.

Labor Ready offered its workers two payment options for each day's work. Under one method, employees could choose to receive their daily wages via a traditional paycheck. If an employee opted for this payment method, Labor Ready arranged with a local national bank to permit these workers to cash their daily paychecks there without paying a fee. Alternatively, employees could elect to receive a cash payment for their daily wages at Labor Ready's branch offices via a voucher system that Labor Ready used to disburse these payments. Under this method, the employees could obtain cash equal to their earned wages (net of any tax deductions and other withholdings) at the end of each working day directly from Labor Ready, less a fee it charged them for using a CDM to dispense the cash.

An employee could take advantage of this second payment method by obtaining a written voucher from Labor Ready. Among other data, the voucher contained an access code comprising a series of numbers. Labor Ready had these access codes printed on the vouchers that it provided to its employees. Besides the access codes, these vouchers also contained other information, including the employee's name and address and certain tax-withholding information:

To obtain a cash payment for the wages due to them, the employees manually would punch the access-code numbers into one of Labor Ready's CDMs inside its branch offices.² Labor Ready also charged a fee to those workers who chose to receive cash for their wages via this voucher system. This fee was equal to one dollar, plus the so-called "breakage," which was the amount of change included in the employee's net earned wages. For example, if an employee wished to use the voucher system to convert $51.25 in net wages that he or she had earned for that particular day's work into cash, the employee could punch in the access code to the CDM and the CDM would disburse $50 to the employee ($51.25, less the fee — $1 plus $0.25 — that Labor Ready charged the employee to use this method of obtaining payment).

On August 9, 2001, DBR caused Labor Ready to be served with an order to show cause and a notice of hearing, alleging that its voucher system constituted an unlicensed check-cashing business in violation of G.L.1956 § 19-14-2.³ After an administrative hearing on March 20, 2002, the hearing officer found that, by using CDMs to dispense cash to its employees, Labor Ready was engaged in the unlicensed business of check cashing in violation § 19-14-2. Thereafter, DBR, through its director, adopted the hearing officer's recommendation and issued a decision ordering Labor Ready to cease and desist from using this voucher CDM system to pay cash to its employees without first obtaining a license to do so.

Pursuant to G.L.1956 § 42-35-15, Labor Ready timely appealed this administrative decision to the Superior Court, where it sought a stay of the DBR's decision pending its appeal. Although the court initially denied Labor Ready's stay request, it ultimately agreed with Labor Ready's argument that DBR had exceeded its statutory authority by applying the check-cashing statute to its voucher system. Consequently, the Superior Court reversed the DBR's administrative decision on this question. The reviewing justice ruled that DBR failed to properly interpret the word "instrument" as that term is used in § 19-14-1. Seeking our review of this judgment, DBR petitioned this Court for a writ of certiorari, which we issued on May 29, 2003.

In its brief to this Court, DBR argues that the Superior Court erred in reversing its administrative decision applying the check-cashing laws to Labor Ready's voucher system. It contends that courts reviewing administrative decisions such as this one should accord great deference to the administrative agency charged with administering and interpreting the regulatory statute in question. The Superior Court failed to accord its decision such deference, DBR maintains, by interpreting the statute in such a narrow manner that it unduly restricted the definition of a "check" — as that term is used in § 19-14-1 — to just "negotiable instruments,"⁴ when the term "check," as used in the check-cashing statute, has a much broader application. Finally, the department suggests, even if we excluded Labor Ready's vouchers from the scope of § 19-14-1, its voucher system, under which workers must pay a small fee to obtain cash wages from the CDM, violated G.L.1956 § 28-14-2, which requires employers to pay wages in full to their employees. `

Labor Ready, on the other hand, argues that we should affirm the Superior Court judgment reversing DBR because its administrative decision on this point was clearly erroneous. According to Labor Ready, the administrative hearing officer disregarded the proper definition of the undefined statutory term "instrument" in determining that Labor Ready's vouchers fell within the definition of what constitutes a "check" under § 19-14-1. Instead, Labor Ready posits, the reviewing justice properly concluded that its vouchers did not constitute "checks" under § 19-14-1 because these vouchers were not negotiable instruments, did not show evidence of or define any right to payment, and were not delivered to or transferred in any way to Labor Ready in exchange for currency. Further, Labor Ready contends, even if we determined that its vouchers qualified as "checks" for the purposes of § 19-14-1, its voucher system still did not constitute a check-cashing business because the statutory word "for" contemplates a physical tender or delivery of the instrument in question in exchange for a cash payment, which, Labor Ready says, does not occur under this voucher system. Finally, Labor Ready suggests that DBR is not the proper authority to enforce alleged violations of § 28-14-2.

For the reasons negotiated below, we reverse, quash the judgment of the Superior Court, and remand this case to it for the entry of a new judgment affirming DBR's decision that Labor Ready's voucher system constituted an unlicensed check-cashing business under § 19-14-2.

Analysis

This Court reviews Superior Court judgments interpreting statutes on a de novo basis. Stebbins v. Wells, 818 A.2d 711, 715 (R.I.2003) (per curiam). In doing so, our "ultimate goal is to give effect to the purpose of the act as intended by the Legislature." Id. (quoting Mottola v. Cirello, 789 A.2d 421, 423 (R.I.2002)). Nevertheless, when an administrative agency interprets a regulatory statute that the General Assembly empowered the agency to enforce, a court reviewing the agency's interpretation of the statute as applied to a particular factual situation must accord that interpretation "weight and deference as long as that construction is not clearly erroneous or unauthorized." In re Lallo, 768 A.2d 921, 926 (R.I.2001) (quoting Gallison v. Bristol School Committee, 493 A.2d 164, 166 (R.I.1985)). To be sure, when the language of the statute is clear and unambiguous, the court must interpret it literally, giving the words of the statute their plain and ordinary meanings. Stebbins, 818 A.2d at 715. And lain agency cannot modify the statutory provisions under which it acquired power, unless such an intent is clearly expressed in the statute." Little v. Conflict of Interest Commission, 121 R.I." 232, 236, 397 A.2d 884, 886 (1979). But...