2006-586, The Demers Agency v. Tami Childs Widney

The petitioner, the Demers Agency (agency), appeals

orally), for the respondent. Krans Law Firm, of Dover (Hamilton R. Krans, Jr. on the brief and

Murphy on the brief and orally), for the petitioner. to press. Errors may be reported by E-mail at the following address: Coughlin, Rainboth, Murphy & Lown, P.A., of Portsmouth (Kenneth D.

editorial errors in order that corrections may be made before the opinion goes No. 2006-586 Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Rockingham Readers are requested to notify the Reporter, Supreme Court of New ___________________________

THE SUPREME COURT OF NEW HAMPSHIRE

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00

well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as which he communicated his refusal to pay her a year-end bonus for 2004. p. 2 record includes an e-mail from Demers to Widney, dated March 4, 2005, in were still working for the agency on the date bonuses were distributed. The

$2,813 and interest. This appeal followed.

bonus. He refused, explaining that bonuses were only paid to employees who year-end bonuses. After Widney left, she asked Demers for her 2004 year-end approximately six weeks before the date on which Demers typically distributed affirmed the DOL decision and also awarded attorney’s fees in the amount of

following month, Widney took a job with another insurance agency, was willful in his actions.” Demers appealed to the superior court, which bonus from Nationwide, generally on or about March 31. finding that “the employer did not have good cause to withhold the [bonus] and entitled to liquidated damages in the amount of $7,106.25, based upon a wages . . . in the amount of $7,106.25.” He further ruled that Widney was

the agency had missed its goal, her bonus would be only $7,106.25. The asked Demers what her 2004 bonus would be, Demers told her that because employees received their year-end bonuses shortly after Demers received his end, she would receive a bonus of $9,475. In January 2005, when Widney appraisal of their particular contributions to the agency’s success. The he routinely paid a part of it to the agency’s employees, based upon his that she had “proved by a preponderance of the evidence that she was due was actually distributed to him. After Demers received his Nationwide bonus, “wages” for purposes of RSA 275:43, I. Accordingly, the hearing officer ruled bonus due [for 2004] was part of her salary package,” thus qualifying it as officer found that Widney “carried her burden to show that the [year-end] (1999) and liquidated damages under RSA 275:44, IV (1999). The DOL hearing filed two claims with the DOL, seeking unpaid wages under RSA 275:43, I When Demers refused to pay Widney her year-end bonus for 2004, she Nationwide agent, a bonus based upon the agency’s loss ratio, years, Nationwide Insurance Company (Nationwide) paid Demers, who is a

(Demers), told Widney that if the agency met a specific sales goal before year

knew the loss ratio which was used to determine his bonus before the bonus Demers received his bonus from Nationwide on or about March 31, but he each calendar year to calculate an agency’s loss ratio for that year. Generally, amount paid out in claims. It took Nationwide up to six weeks after the end of relationship between the amount of money collected in premiums and the

the evidence before the hearing officer demonstrates the following. For several Regarding the mechanics for payment of the agency’s year-end bonuses,

March of that year. In December 2004, the agency’s owner, Chris Demers during 2003, pro-rated due to the fact that she started with the agency in end of the first quarter of 2004, Widney received a year-end bonus for her work

and a year-end bonus based upon the agency’s profitability for the year. At the package included an annual base salary, quarterly bonuses based upon sales p. 3 RSA 275:43, I.

court erred by determining that the disputed bonus qualified as wages under

nothing of any such policy. That is evidentiary support for the DOL’s finding

by working until December 31, 2004. The agency also argues that the trial 3 affirming the DOL’s finding that Widney had earned the disputed bonus simply working for the agency on or about March 31 of the following year; and (3)

testified that Widney was his “right hand,” and Widney testified that she knew months after the end of the year for which year-end bonuses are paid, Demers agency policy requiring an employee to remain employed for an additional three officer’s finding lacked evidentiary support. Regarding the existence of an

the agency’s policy that year-end bonuses were paid only to employees still law. the DOL unless they were lacking in evidentiary support or tainted by error of

Demers presented conflicting testimony does not mean that the hearing consisting of a base salary, quarterly bonuses, and a year-end bonus. That that at the time she was hired, Demers described her compensation as disputed bonus were not lacking in evidentiary support. First, Widney testified The DOL’s factual findings related to Widney’s entitlement to the

Id. disputed bonus was a part of Widney’s agreed-upon compensation; (2) ignoring arguing that the trial court erred by: (1) affirming the DOL’s finding that the 455 (2006). The trial court was entitled to uphold the findings and rulings of bonus. The agency asserts three challenges to the sufficiency of the evidence, factual findings was a question of law. See Miller v. Blackden, 154 N.H. 448, In the trial court, the sufficiency of the evidence supporting the DOL’s

review by the superior court shall be limited to questions of law.” of the trial court’s decision concerning Widney’s entitlement to the disputed decision is claimed to be in error.” RSA 275:51, V (Supp. 2006). “The scope of The agency’s first four arguments on appeal focus upon various aspects erroneous, in whole or in part, and specifying the grounds upon which the

S.P. Constr. Co., 153 N.H. 498, 500 (2006). of S.N.H. v. N.H. Ins. Guaranty Assoc., 154 N.H. 553, 561 (2006); Behrens v. novo the trial court’s decisions on questions of law. See, e.g., OB/GYN Assocs. matter to the commissioner for further findings.” Id. We, in turn, review de modify in whole or in part the decision of the commissioner, or may remand the hearing and upon consideration of the record, the court may affirm, vacate or

appeal to the superior court . . . by petition, setting forth that the decision is “Any party aggrieved by the decision [of the DOL in a wage claim] may

p. 4 benefits in RSA 275:43, III does not mean that a bonus cannot be wages; the III, when due.” RSA 275:43, III. Absence of the term “bonus” from the list of

concerning forms of compensation that employers have attempted to exclude

practice or policy, or both, shall be considered wages pursuant to RSA 275:42, payment of employee expenses, when such benefits are a matter of employment “[v]acation pay, severance pay, personal days, holiday pay, sick pay and does not appear in RSA 275:43, III (1999). That statute provides that

that the bonus qualified as wages is consistent with our previous decisions calculation other than time, task, piece or commission. Our determination compensation for Widney’s services to the agency, determined on a basis of under RSA 275:42, III. Stated in the terms of the statute, that bonus was

in 2004. for the DOL’s finding that Widney earned the disputed bonus through her work conversation with Demers about the 2004 bonus provides evidentiary support an employer calls a bonus can be classified as wages because the term “bonus” The agency suggested, at oral argument, that no form of compensation

for those sales until after termination date). termination date, notwithstanding that his employer did not receive payment a former employee was entitled to commissions on sales closed before his N.H. 752, 756-57 (1998) (holding, in case involving contract interpretation, that services, the trial court correctly ruled that Widney’s bonus qualified as wages year-end bonus was a part of the compensation the agency paid her for her date or certain time for payment of the share”); Galloway v. Chicago-Soft, 142 (1999). Based upon the hearing officer’s factual determination that Widney’s notwithstanding that the profit-sharing agreement “did not provide a stated time, task, piece, commission, or other basis of calculation.” RSA 275:42, III III’s] reference to compensation calculated on some ‘other basis’” 800 (1985) (holding that agreed-upon profit sharing “fall[s] within [RSA 275:42, her with a bonus of $9,475. Widney’s testimony concerning her January Cf. Ives v. Manchester Subaru, Inc., 126 N.H. 796,

services rendered by an employee, whether the amount is determined on a That statute defines “wages” to mean “compensation . . . for labor or based upon the agency’s failure to achieve the goal that would have provided 2005, Demers told her that her 2004 year-end bonus would be $7,106.25, 275. to that performance, during 2004. Finally, Widney testified that in January namely, whether the bonus qualified as wages for purposes of RSA chapter Accordingly, we turn to the remaining question of law before the trial court; had evidentiary support, the trial court did not err by affirming them. Because all of the DOL’s factual findings concerning the disputed bonus

upon factors other than the agency’s performance, and Widney’s contribution that Demers was without discretion to condition payment of Widney’s bonus smaller . . . . p. 5 required or in an amount equal to the unpaid wages, whichever is

despite the financial ability to pay it.

such failure continues after the day upon which payment is wages for each day except Sunday and legal holidays upon which for liquidated damages in the amount of 10 percent of the unpaid section, such employer shall be additionally liable to the employee

term “willfully” to mean voluntarily, with knowledge of the obligation and RSA 275:44, IV. In the context of the foregoing statute, we have construed the

before us in this case. legal status of a bonus that is entirely gratuitous because that issue is not circumstances of this case. the employer’s obligation to pay the bonus. We express no opinion as to the that the liquidated damages provision of RSA chapter 275 applies in the package and the employee has performed all of the duties necessary to trigger willfully and without good cause failed to pay Widney her bonus; and (2) ruling an employee wages as required under paragraphs I, II or III of this the trial court erred by: (1) affirming the DOL’s finding that the agency had If an employer willfully and without good cause fails to pay

regular payday.” RSA 275:44, II. It further provides: or resigns, the employer shall pay the employee’s wages no later than the next paydays. Specifically, the statute provides that “[w]henever an employee quits to the payment of wages to employees separated from employment before their We begin by describing the relevant statute. RSA 275:44 (1999) pertains

circumstances in which a bonus is part of an agreed-upon compensation system Demers said was in place at the agency. Our holding is limited to those the DOL’s award of liquidated damages. Specifically, the agency argues that for some stated term. In other words, we see no legal infirmity in the bonus The agency’s next two arguments concern the trial court’s affirmance of employer could not condition payment of a bonus upon continued employment qualifies as wages for purposes of RSA chapter 275, and we do not hold that an qualified as wages, we do not hold that every bonus paid by an employer IV

By affirming the trial court’s determination that the bonus in this case

this case qualified as wages. definition, see RSA 275:42, III, the trial court correctly ruled that the bonus in to be treated as wages. Thus, as we have said, under the appropriate statutory specifies the circumstance, i.e., “when due,” under which certain benefits are statute does not purport to define the term “wages,” but, instead, simply receive in January 2005.

p. 6 agency also asserts that the trial court erred in awarding interest because the

the agency was able to pay Widney the $7,106.25 Demers told her she would

because it was based upon a flat fee rather than actual time expended. The her bonus; and (3) the amount of attorney’s fees awarded was unreasonable established and well-known company policy when he refused to pay Widney from Nationwide for 2004, thus providing evidentiary support for a finding that

law was unsettled and because Demers acted in good faith by following an officer heard testimony that Demers received a bonus of approximately $62,000 had invested so much time and effort in her training. Moreover, the hearing “only because he was upset with [her] moving on to other employment” after he 6

possible difficulty in determining the exact payday for this form of wages, RSA 275:53 (1999); (2) an award of attorney’s fees is inequitable because the 275:51 (Supp. 2006) rather than a direct action in the superior court under of attorney’s fees was unlawful because this case was an appeal under RSA finding that Demers knew the agency owed Widney her bonus and withheld it

Widney’s wages, then, necessarily, RSA 275:44 applies, notwithstanding any

Widney attorney’s fees and interest. Specifically, it argues that: (1) an award he provides his employees. That evidence is sufficient to support the DOL’s The agency’s final argument is that the trial court erred in awarding professional”; and (2) testimony from Demers describing the extensive training e-mail in which Demers called Widney’s departure from the agency “very un- V

N.H. at 756-57. bonus from Nationwide until after the date that Widney quit, see Galloway, 142 Ives, 126 N.H. at 800-01, or the fact that Demers was not due to receive his

circumstances of this case. Because the bonus in this case was a part of turn to the agency’s contention that RSA 275:44 does not apply to the cause, the trial court did not err by affirming that finding. Accordingly, we withheld Widney’s bonus knowingly, with the ability to pay it and without good Because there is evidence to support the DOL’s finding that the agency bonus that had already been earned. Moreover, the DOL had before it: (1) an requiring continuing employment as a qualification for being paid a year-end agency’s actual performance in 2004; and (3) the agency had no policy Widney, in January 2005, what her 2004 bonus would be, based upon the

exclusively through work she performed for the agency in 2004; (2) Demers told evidence to support findings that: (1) Widney earned her 2004 year-end bonus without cause. As we have already held, the hearing officer had before him DOL’s determination that Demers withheld Widney’s bonus willfully and The agency challenges the sufficiency of the evidence supporting the fee. p. 7 exercised its discretion by determining that $2,500 was a reasonable attorney’s

before the trial court, we cannot say that the trial court unsustainably

a one-hour hearing. Based upon the amount of work reflected by the record (2) attended a structuring conference; and (3) prepared for and participated in amended answer and an objection to the agency’s motion for reconsideration; 7

Widney’s counsel: (1) drafted and filed an answer to the agency’s appeal, an showed that in connection with the agency’s appeal from the DOL decision, DALIANIS, DUGGAN, GALWAY and HICKS, JJ., concurred. upon her attorney’s regular hourly rate. The record before the trial court that the flat fee she paid her counsel would be far exceeded by a fee based

standard. structuring conference and a one-hour hearing. Widney, in turn, contends case and that a $2,500 fee was unreasonable for a case involving a single counsel did not submit documentation of the time he actually spent on the Widney’s attorney charged her a flat rate of $2,500, but argues that Widney’s decision on attorney’s fees. Id. at 760. Here, the agency does not dispute that decision, and keep in mind the substantial deference accorded a trial court’s discretion standard, we look for some support in the record for the trial court’s amount of attorney’s fees it awarded. In applying the unsustainable exercise of Similarly, we find no fault with the trial court’s determination of the

[Widney for] moving on to other employment.’” end bonus] and seems to have done so only because [Demers] was upset with award of attorney’s fees under our unsustainable exercise of discretion the hearing officer’s finding that “Demers had ‘no reason to withhold the [yearfees inequitable. This is especially so in light of the trial court’s recitation of concluding that the agency advanced no facts rendering an award of attorney’s record before us, that the trial court unsustainably exercised its discretion by facts that would render such an award inequitable. Id. We cannot say, on the awarding reasonable counsel fees, unless the court further finds particular found a wage claim meritorious, it should exercise its statutory discretion by Galloway, 142 N.H. at 759. Moreover, we have held that when the court has particular, to effectuate the broad purpose of protecting employees. See We construe RSA chapter 275 in general, and the attorney’s fees provision in

In the Matter of Hampers & Hampers, 154 N.H. 275, 290 (2006).

Regarding the agency’s remaining arguments, we review the trial court’s

See Galloway, 142 N.H. 759-60, 761. fees and interest are available in superior court appeals under RSA 275:51. Notwithstanding the agency’s legal arguments to the contrary, attorney’s

We disagree. DOL did not do so, and such an award is not authorized by RSA chapter 275.