Opinion
No. 2-490 / 01-1468
Filed October 30, 2002
Appeal from the Iowa District Court for Polk County, Artis Reis, Judge.
Plaintiff appeals from a district court ruling granting summary judgment in favor of defendant. AFFIRMED.
Todd A. Elverson of Elverson, Vasey, Peterson, L.L.P., Des Moines, for appellant.
Dennis P. Ogden of Belin Lamson McCormick Zumbach Flynn, P.C., Des Moines, for appellee.
Heard by Huitink, P.J., and Mahan and Vaitheswaran, JJ.
Plaintiff Sally Blanton appeals a district court ruling granting summary judgment in favor of defendant Robert Half International, Inc. (RHI). Blanton contends (1) the wages owed to her were not a discretionary "bonus" but constituted commission on sales generated by her labor, (2) wages for labor and services rendered by an employee are not subject to forfeiture, (3) wages are earned by an employee when the labor or services are rendered, (4) other cases dealing with true "bonus" type payments under the Iowa Wage Payment Collection Law are distinguishable, (5) the portion of the compensation plan that is illegal or against public policy may be excised from the plan by the court and the remaining portions enforced, and (6) RHI's reason for termination and her past illegal actions are irrelevant to the issue at hand. We affirm.
Background Facts and Proceedings. Sally Blanton was employed at Robert Half International, Inc., an employment search company, as an account executive in the permanent placement division. For her compensation, she received a base salary of $32,000, and her employment contract indicated that at the sole discretion of her employer, bonuses may be instituted. She received a quarterly bonus for which she was paid thirty percent of the first $100,000 of revenue generated for RHI, forty percent of revenue above $100,000 but less than $250,000, and fifty percent of revenue greater than $250,000. The low base salary was established by agreement between the employer and employee to be used as a draw against the bonus payments. Paragraph six of the employment agreement provides:
As compensation for all his or her services to employer or any of the other RHI companies through his or her employment, employee shall initially receive a monthly salary as set forth in section 1. In employer's sole discretion, such salary may be changed from time to time, without amendment to this agreement.
In the employer's sole discretion, bonuses . . . and other benefit plans may be instituted from time to time. Employee can have no expectations regarding such plans or their continuation. All of such plans may be instituted, amended, and discontinued at any time at employer's sole discretion, without employee's consent.
Blanton understood these provisions to be a part of her employment agreement when she was employed. In order to be eligible for the bonus, Blanton was required to be employed on the last day of the quarter. On September 1, 1999, two months into the third quarter, RHI terminated Blanton's employment because they discovered she falsified her employment application. Blanton failed to reveal she had been convicted of the offense of theft by check, a felony under Minnesota law. Since Blanton was not employed at RHI on the last day of the quarter, RHI refused to pay Blanton a bonus.
On July 6, 2001, both parties filed motions for summary judgment, which were heard by the court on August 3, 2001. On August 22, 2001, the district court granted RHI's motion for summary judgment. Blanton appeals.
Standard of Review. The standards for reviewing a grant of a motion for summary judgment are well established:
We will uphold a grant of summary judgment when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. An issue of fact is "material" only when the dispute is over facts that might affect the outcome of the litigation, given the applicable governing law.
When we review the propriety of a grant of summary judgment, the moving party is required to show that no genuine issue of material fact exists and that he or she is entitled to judgment as a matter of law. In determining whether the movant has met this burden, we review the record in a light most favorable to the party opposing summary judgment, in this case the plaintiff.
In this sense, we review the record as we would on a motion for directed verdict, with the nonmoving party entitled to every legitimate inference that reasonably can be deduced from the evidence and summary judgment is inappropriate if reasonable minds can differ on how the issue should be resolved.Dickerson v. Mertz, 547 N.W.2d 208, 212 (Iowa 1996) (citations omitted). In this case, the facts are undisputed; thus, this court must determine whether the district court correctly applied the law to the facts.
The Merits. This case involves statutory interpretation under the Iowa Wage Payment Collection Law. The purpose of the Iowa Wage Payment Collection Law is to facilitate the collection of wages owed to employees. Phipps v. IASD Health Servs. Corp., 558 N.W.2d 198, 201 (Iowa 1997). Under the Act, an employer must pay all "wages due" its employees. Iowa Code § 91A.3(1) (2001). "Wages" means compensation owed by an employer for:
a. Labor or services rendered by an employee, whether determined on a time, task, piece, commission, or other basis of calculation.
b. Vacation, holiday, sick leave, and severance payments which are due an employee under an agreement with the employer or under a policy of the employer.
c. Any payments to the employee or to a fund for the benefit of the employee, including but not limited to payments for medical, health, hospital, welfare, pension, or profit-sharing, which are due an employee under an agreement with the employer or under a policy of the employer. . . .
Iowa Code § 91A.2(7)(a), (b), (c) (2001).
Blanton claims that due to the wording of Iowa Code section 91A.2(7) (1999), her bonus payments constitute wages and are not subject to employment agreements that put conditions on the payment of those amounts. She contends RHI deceptively labeled her commissions earned as a "bonus." By labeling it a bonus, rather than a commission it can be classified under section 91A.2(7)(b) or (c), not wages for labor or services under section (a). Because sections 91A.2(7)(b) and (c) refer to compensation paid under agreements and subsection (a) does not, compensation referred to under subsection (a) should not be subject to agreements such as RHI's requirement that she be employed on the last day of the quarter to receive her bonus.
The district court relied upon Phipps v. IASD Health Services Corp., 558 N.W.2d at 202; Matzke v. Mary Greeley Medical Center, 2001 WL 355838, at *1 (Iowa Ct.App. Apr. 11, 2001); and Lane v. Amoco Corp., 133 F.3d 676, 678 (8th Cir. 1998), in finding that an employer can put "conditions" on a bonus or commission by an employment agreement. We agree. Blanton, however, distinguishes those cases by pointing out the type of payment at issue was not a commission, rather it was a "bonus," "gainshare" or "variable incentive pay" which is really some sort of profit sharing under section 91A.2(7)(c). She argues that under subsection 91A.2(7)(c) those sorts of payments may be governed by an agreement between the employer and the employee. Under such an agreement, an employer could condition payment of the bonus on many different factors, including the requirement of the employee being employed on the date the bonus was paid. Because section 91A.2(7)(a) does not mention an agreement, it is clear that an employer cannot condition payment of wages under (a) on any factors.
On the other hand, RHI contends it is irrelevant whether the payments made to Blanton are labeled "commissions" or "bonuses" because it would not be "compensation owed" since the terms of RHI's contract with Blanton govern this dispute. The contract was clear when Blanton signed it, and it stated she had to be employed on the final day of the quarter to receive her bonus payment. The contract also made it clear that the bonuses were discretionary.
It is clear that Blanton understood the terms of the contract. That is undisputed. The contract was clear and unambiguous and that also is undisputed. Blanton understood that the bonuses were discretionary and she did not fulfill the terms of the contract because she was not employed on the final day of the quarter. This was due to wrongdoing on her part and not culpable behavior on the part of RHI.
We agree with RHI that it is irrelevant whether the payments are labeled "commissions" or "bonuses" and that it is not "compensation owed" because the contract between the parties governs this dispute and Blanton clearly did not fulfill the terms of the contract.
We conclude Blanton's other arguments are without merit.