Viafield, F/K/A Progressive Ag Cooperative and Farmers Cooperative v. Robert Engels ( 2016 )

IN THE COURT OF APPEALS OF IOWA
No. 15-1663
Filed July 27, 2016
VIAFIELD, f/k/a PROGRESSIVE AG COOPERATIVE
AND FARMERS COOPERATIVE,
Plaintiff-Appellee,
vs.
ROBERT ENGELS,
Defendant-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Floyd County, Rustin T. Davenport,
Judge.
An employee appeals the dismissal of his claim for unpaid wages against
his former employer. AFFIRMED.
David A. Morse of Law Offices of David A. Morse, Des Moines, for
appellant.
Roger L. Sutton of Sutton Law Office, Charles City, for appellee.
Considered by Vogel, P.J., and Doyle and Bower, JJ.
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DOYLE, Judge.
Robert Engels appeals the dismissal of his claim for unpaid wages against
his former employer, Viafield. Engels argues Viafield failed to pay him wages in
the form of unused “paid time off” that he had accrued prior to his termination.
Because Engels failed to prove the paid time off was due to him at the time of
termination by agreement of the parties or pursuant to an employment policy, we
affirm.
I. Background Facts and Proceedings.
Robert Engels worked at an agricultural cooperative in Marble Rock from
1986 until 2010. On September 1, 2010, the cooperative became Viafield after
merging with two other cooperatives, and Engels continued his employment as
the grain manager of the western portion of Viafield’s territory.
Viafield developed employment policies that it published in “Team Member
Handbooks” and distributed to its employees. Section HR.410 of the handbook
sets forth Viafield’s policy regarding “Paid Time Off (PTO),” detailing the rate at
which it is accrued and how it may be used by employees. The policy provides
that employees “shall be paid regular pay for all unused accrued leave, providing
that they give a proper two weeks[’] notice of resignation.” It further provides that
if an employee is “terminated for ‘just cause,’ the Chief Executive Officer shall
decide if unused accrued leave shall be paid.”1 Viafield fired Engels in
1
The 2008 Marble Rock Farmers Cooperative Personnel Policies handbook contains a
similar provision: “Upon termination, the employee shall be paid for all unused accrued
annual leave providing the employee has given proper two weeks[’] notice of resignation
or has not been terminated for ‘just cause’ of which the Association shall be the sole
judge.”
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November 2010 after Engels had amassed 589.74 hours of unused accrued
PTO—worth $19,002.25 in regular wages—which Viafield never paid.
Eventually, Viafield initiated an action against Engels for breach of
contract and fraudulent conversion, and Engels counterclaimed for payment of
his unpaid PTO wages. The matter proceeded to trial, and at the close of
Viafield’s evidence, the district court directed a verdict in favor of Engels on
Viafield’s breach-of-contract claim. The trial court submitted Viafield’s conversion
claim to a jury, which found in favor of Engels. On Engels’s cross-claim for
unpaid wages, the jury found Viafield terminated Engels for “just cause.” In light
of this finding, the trial court determined that Engels was not entitled to payment
of his PTO under Viafield’s employment policy as a matter of law, and it
dismissed the claim. Engels appeals.
II. Scope and Standard of Review.
This matter was tried at law, and therefore, our scope of review is for
errors at law. See Iowa R. App. P. 6.907. Fact-findings are binding upon this
court if supported by substantial evidence. See NevadaCare, Inc. v. Dep’t of
Human Servs., 783 N.W.2d 459, 465 (Iowa 2010). However, we will reverse the
trial court’s judgment if the court has erroneously applied the law in a way that
materially affects its decision. See id.
III. Analysis.
On appeal, Engels does not challenge the jury’s finding that Viafield had
just cause to terminate his employment. He instead challenges the trial court’s
application of the law to the facts. Specifically, Engels argues the court erred in
determining the policy contained in Viafield’s handbook was a valid and
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enforceable employment policy because (1) the handbook did not create a
binding contract and (2) there was insufficient evidence that Engels received the
handbook.
Iowa law provides that employers must pay all wages its employees earn
up until the time of termination. See Iowa Code § 91A.4 (2009). “Wages” are
defined by Iowa Code section 91A.2(7)(b) to include compensation for
“[v]acation, holiday, sick leave, and severance payments which are due an
employee under an agreement with the employer or under a policy of the
employer.” In dismissing Engels’s claim, the district court noted that section
91A.2(7)(b) does not require an employer pay their employee vacation, but
rather, Viafield was permitted to restrict the payment of PTO, and it did so.
Under Viafield’s policy, the decision to pay Engels for his unused accrued PTO
was within the CEO’s discretion.
Engels argues the PTO policy contained in Viafield’s handbook does not
absolve Viafield of its obligation to pay PTO as wages under chapter 91A
because the handbook did not create a contract between the parties. He notes
that section HR.010, entitled “Nature of Employment,” explicitly states the
handbook “is not an employment contract and is not intended to create
contractual obligations of any kind.” That section continues by stating that
“[n]either the [employee] nor Viafield is bound to continue the employment
relationship if either chooses, at its will, to end the relationship at any time.” We
agree with Engels that Viafield’s handbook did not create an employment
contract, as Viafield clearly states its intention to avoid creating one.
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The absence of an employment contract is not dispositive of whether
Engels is entitled to payment of his unused accrued PTO, however. Section
91A.2(7)(b) provides an employee is entitled to payment of wages due to an
employee “under an agreement with the employer or under a policy of the
employer.” (Emphasis added.) Viafield intended its handbook to provide
employees “with a general understanding of [its] personnel policies.” Given the
at-will employment relationship, Viafield could modify those policies at any time2
as a condition of continued employment, and any employee who continued to
work for Viafield after receiving notice of the modification accepted it as a matter
of law. See Moody v. Bogue, 310 N.W.2d 655, 660-61 (Iowa Ct. App. 1981). A
preponderance of the evidence supports the finding that Engels was provided a
copy of the handbook; the handbook was distributed at a meeting attended by all
Viafield employees; and although Engels testified he did not recall seeing the
handbook, he did not deny ever receiving one.
The burden was on Engels to prove his unused accrued PTO was due as
wages under chapter 91A at the time of his termination. Cf. Am. Family Mut. Ins.
Co. v. Hollander, 705 F.3d 339, 349 (8th Cir. 2013) (noting that employee
bringing claim for failure to pay extended earnings under the Iowa Wage
Payment Collection Law had the burden of proving extended earnings qualify as
“wages” under chapter 91A); Crookham v. Structural Contractors, Ltd., 466
N.W.2d 277, 278 (Iowa Ct. App. 1990) (noting discharged employee claiming
2
Section HR.010 of Viafield’s handbook reflects as much, stating: “In order to retain
necessary flexibility in the administration of policies and procedures, Viafield reserves
the right to change, revise, or eliminate any of the policies and/or benefits described in
this handbook, except for its policy of employment-at-will.”
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employer failed to pay severance wages had the burden of proving by a
preponderance of the evidence the existence of an agreement to pay
severance). There is no evidence of an agreement or employment policy that
required Viafield to pay Engels his unused accrued PTO as wages upon
termination. Viafield’s policy only requires payment of unused accrued PTO to
employees who provide two weeks’ notice before resignation; when an employee
is fired for “just cause,” the payment of PTO is discretionary. Because the jury
determined Engels was fired for just cause, the wages in question were not “due”
to Engels at the time of his termination. Cf. Willets v. City of Creston, 433
N.W.2d 58, 62 (Iowa Ct. App. 1988) (noting sick leave benefits that are payable
on certain conditions are not due to the employee until those conditions are
triggered). His claim for unpaid wages fails.
The trial court properly applied the law in dismissing Engels’s counterclaim
for unpaid wages, and accordingly, we affirm.
AFFIRMED.