Opinion
No. C8-02-496.
Filed September 10, 2002.
Appeal from the District Court, Hennepin County, File No. EM 01 10179.
Mark A. Greenman, Ruth Y. Ostrom, (for appellant)
Steven M. Bell, Vicom, Inc., (for respondent)
Considered and decided by Toussaint, Chief Judge, Randall, Judge, and Harten, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant challenges the district court's grant of summary judgment to respondent, holding that, because the parties' settlement agreement discharged their obligations to each other, appellant is not entitled to separate compensation for paid time off. Appellant claims that paid time off is considered wages under Minn. Stat. § 181.13 and therefore any settlement agreement purporting to discharge paid time off must provide sufficient independent consideration. We affirm.
FACTS
On April 1, 2000, respondent hired appellant as a vice-president under a one-year employment contract. Previously, appellant had worked in a sales-consulting position with respondent, accumulating $53,525 in back commissions and borrowing a total of $25,000 from respondent. When appellant began his position as vice-president, the terms of the employment contract forgave appellant's loan. On June 1, 2000, appellant received an advance of $18,000 at an interest rate of ten percent per annum. At the end of appellant's contractual period, respondent declined to renew the contract. On April 5, 2001, appellant and respondent, following negotiations, executed an "Employment Settlement Agreement" that contains specific terms governing the termination of appellant's employment. In pertinent part, the agreement stated:
Employee agrees that as a result of the aforementioned offset and payment of $1,629.51 that Employer has now fulfilled its financial obligations to Employee as stated in the Agreement and therefore Employee acknowledges that Employer has no further liability or obligations to Employee.
Neither party negotiated an issue called "appellant's accrued paid time off." It nowhere appears in the settlement agreement as a separate line item.
After leaving the company and negotiating the terms of the above settlement, appellant made a demand to respondent for a separate payment for an accumulated 240 hours of paid time off. It is clear that during appellant's term of employment, he had accumulated those hours. Respondent refused payment, stating that the settlement agreement was full and final, covered all terms of monies owed appellant, and monies appellant owed respondent. Respondent argued to the district court that it was discharged from all obligations relating to appellant's employment through the settlement agreement. The district court agreed, granting summary judgment for respondent, and holding that the employment settlement agreement discharged all claims arising out of appellant's employment relationship with respondent. This appeal followed.
DECISION
This employment-contract appeal is before the court from a Hennepin County order granting respondent summary judgment. The issues before this court are whether appellant's paid time off is considered wages under Minn. Stat. § 181.13 (2000), and whether an executed settlement agreement governing appellant's termination provided sufficient independent consideration to discharge respondent's obligation to pay "time off wages."
On an appeal from summary judgment, this court must determine: (1) whether genuine issues of material fact exist and (2) whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). Applications of law on summary judgment are reviewed de novo by the appellant court. Lefto v. Hoggbreath Enters., Inc, 581 N.W.2d 855, 856 (Minn. 1998).
Appellant first argues that paid time off is considered wages under Minn. Stat. § 181.13. We agree.
Minn. Stat. § 181.13 states in pertinent part:
When any employer employing labor within this state discharges an employee the wages or commissions actually earned and unpaid at the time of the discharge are immediately due and payable upon demand of the employee.
It is settled that paid time off is considered wages under Minn. Stat. § 181.13. Brown v. Tonka Corp., 519 N.W.2d 474, 477 (Minn.App. 1994); Kohout v. Shakopee Foundry Co., 162 N.W.2d 237 (Minn. 1968). Therefore, in this case, appellant's paid time off is considered wages due and payable upon the demand of the employee.
Appellant next argues that, as wages due, paid time off must be provided for with specific consideration, and since consideration specifically relating to paid time off was not included in the settlement agreement, he is still owed unpaid wages under Minn. Stat. § 181.13. We disagree.
"Consideration may consist of either a benefit accruing to a party or a detriment suffered by another party." C D Investments v. Beaudoin, 364 N.W.2d 850, 853 (Minn.App. 1985) (citation omitted), review denied (Minn. June 14, 1985). We agree with appellant that past consideration will generally not support a new promise to pay . Sheehy v. Bodin, 349 N.W.2d 353, 354 (Minn.App. 1984). We understand appellant's argument wherein he claims that when he quit, he simply got what was coming to him anyway, and, thus, getting monies owed him does not also form an independent consideration for the paid time off wages accumulated before he left respondent. However, if consideration is present, this court will generally refuse to examine the adequacy of such consideration when the parties have exchanged something of value. C D Investments, 364 N.W.2d at 853.
Here, the consideration given by both parties in the employment settlement agreement is present and sufficiently definite. The settlement agreement called for appellant to receive a total of $28,525. From that sum, respondent was entitled to deduct a previous advance to appellant, appellant's accrued payroll deductions, and one more negotiated offset. The agreement was specific and entitled appellant to a release of all obligations he owed respondent, leaving appellant with an amount due of $1,629.51, which he received.
In his affidavit, appellant conceded that at the time of the termination of his employment, March 31, 2001, he knew of his accrued paid time off. If appellant thought the paid time off was a separate issue, he had every right to include it as a separate line item in the settlement negotiations. He did not. The employment settlement agreement, signed shortly after March 31, 2001, encompasses, on its face, all existing financial obligations between appellant and respondent.
Appellant did not raise the issue of paid time off until after the settlement agreement was signed and after he had received the net amount of $1,629.51 the agreement called for. We agree with the district court that appellant's paid time off was a financial obligation of respondent's that was owed appellant and, thus, it was merged into the settlement agreement, which is full and final on its face.
The April 5, 2001 release and settlement agreement called for a total of $28,525 to go to appellant, from which respondent could deduct a previous advance, payroll deductions, and another offset. Appellant received a very specific net check of $1,629.51 after both sides negotiated all claims and all set offs. We conclude, as the district court did, that the consideration bargained for and received by both parties supports respondent's claim that all wages, including paid time off, were merged into the employment settlement agreement and that respondent fully performed its obligations under that agreement.