Drought v. Marsh ( 2020 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
03/27/2020 09:07 AM CDT
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Nebraska Supreme Court Advance Sheets
304 Nebraska Reports
DROUGHT v. MARSH
Cite as 304 Neb. 860
Kevin Drought and Kyle Fessler, appellants, v.
Eric Marsh and The Bar at the Yard, LLC,
doing business as Longwells
Restaurant, appellees.
___ N.W.2d ___
Filed January 17, 2020. No. S-19-018.
1. Summary Judgment: Appeal and Error. An appellate court affirms a
lower court’s grant of summary judgment if the pleadings and admitted
evidence show that there is no genuine issue as to any material facts or
as to the ultimate inferences that may be drawn from the facts and that
the moving party is entitled to judgment as a matter of law.
2. Statutes: Judgments: Appeal and Error. The meaning and interpreta-
tion of a statute are questions of law. An appellate court independently
reviews questions of law decided by a lower court.
3. Statutes: Judicial Construction: Legislature: Intent: Presumptions.
Where a statute has been judicially construed and that construction has
not evoked an amendment, it will be presumed that the Legislature has
acquiesced in the court’s determination of the Legislature’s intent.
4. Employer and Employee: Employment Contracts: Wages: Appeal
and Error. Under Neb. Rev. Stat. § 48-1229 (Cum. Supp. 2018), an
appellate court will consider a payment a wage subject to the Nebraska
Wage Payment and Collection Act if (1) it is compensation for labor
or services, (2) it was previously agreed to, and (3) all the conditions
stipulated have been met.
Appeal from the District Court for Lancaster County:
Andrew R. Jacobsen, Judge. Affirmed.
Jennifer M. Tomka, of Amen Law, for appellants.
Brian S. Koerwitz, of Endacott, Peetz & Timmer, P.C.,
L.L.O., for appellees.
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Nebraska Supreme Court Advance Sheets
304 Nebraska Reports
DROUGHT v. MARSH
Cite as 304 Neb. 860
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Cassel, J.
INTRODUCTION
After two employees separated from their employment with
a restaurant, they sued for “paid time off” (PTO) compensa-
tion under the Nebraska Wage Payment and Collection Act
(Wage Act).1 Upon cross-motions for summary judgment,
the district court sustained the employer’s motion. Because
the employees did not meet the written employment agree-
ment’s stated conditions to earn PTO, we affirm the sum-
mary judgment.
BACKGROUND
Parties
The Bar at the Yard, LLC, doing business as Longwells
Restaurant, is a restaurant and bar in Lincoln, Nebraska. Eric
Marsh is the owner of Longwells Restaurant. We will refer to
The Bar at the Yard, LLC; Longwells Restaurant; and Marsh
collectively as “Longwells.”
Kevin Drought worked as the general manager of Longwells
from October 2013 to October 22, 2015. He was paid a yearly
salary of $80,000. Kyle Fessler worked as Longwells’ head
chef from October 2013 to December 8, 2015. His annual sal-
ary was $49,999.99.
Employment Agreement
Drought and Fessler were required to sign a “Longwells
Employee Agreement” in order to obtain employment. Under
“Work Hours,” the agreement stated in part that “you will be
expected to work a minimum of 40 hours per week other than
paid time off which is addressed below.” The “Termination”
provision of the agreement stated that “if, at any point, 60 days
1
See Neb. Rev. Stat. § 48-1228 et seq. (Reissue 2010, Cum. Supp. 2018 &
Supp. 2019).
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Nebraska Supreme Court Advance Sheets
304 Nebraska Reports
DROUGHT v. MARSH
Cite as 304 Neb. 860
pass with you billing no hours to a client, this agreement will
be considered terminated.”
The “Compensation” section of the agreement included the
following provisions:
1. You will be paid weekly
2. Your earnings will be based on your billable hours
3. You will be paid <>
. . . for every hour billed to and approved by the client
4. Billable hours are determined based on the
Company’s understanding with its clients
5. You will be required to provide the Engagement
Manager with a timesheet signed off by the client desig-
nee in order to be paid
6. The Company will provide the timesheet template to
you separately
7. If you do not produce an approved time sheet then
you will not be considered to have earned billable hours
8. Approved timesheets are to be submitted per the
“Time and Expense Reimbursement Policy and Procedure”
which will be provided to you separately
The PTO section specified that PTO included vacation, sick
days, and holidays. A table showed that when the “Employment
Anniversary” is “[l]ess than 2 years,” an employee would earn
4 hours of PTO “per 40 hour + week billed.” Once the employ-
ment anniversary reached 2 years, the amount of PTO earned
increased to 5 hours.
Lawsuit
After separating from employment, Drought and Fessler
requested compensation for PTO that they claimed had
been earned but not paid. Longwells refused the requests.
Drought and Fessler then sued Longwells, alleging a viola-
tion of the Wage Act. They asserted that the employment
agreement governed PTO to be paid. The complaint alleged
that Longwells owed PTO of $16,430.86 to Drought and
$10,027.61 to Fessler.
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Nebraska Supreme Court Advance Sheets
304 Nebraska Reports
DROUGHT v. MARSH
Cite as 304 Neb. 860
As an affirmative defense, Longwells asserted mutual mis-
take. But Longwells also asserted that if the court found that
the employment agreement should not be rescinded or reformed
based upon mutual mistake, Drought and Fessler’s claims were
barred by the terms of the agreement. Specifically, Longwells
contended that no PTO accrued under the agreement, because
Drought and Fessler did not have billable hours and did not bill
hours to a client.
Summary Judgment
The parties filed cross-motions for summary judgment. The
evidence was undisputed that as salaried employees, Drought
and Fessler were not required to keep track of their hours
worked. It was also undisputed that Drought and Fessler did
not have clients or billable hours.
Drought and Fessler claimed to have “easily worked at
least 40 hours per week,” but Marsh stated that Drought
worked less than 30 hours in a week on multiple occasions.
Drought testified in a deposition that he was paid a salary
every week regardless of the number of hours he worked.
Drought took 1 week of vacation in 2014, and Longwells paid
him for that vacation time. Fessler took 1 week of vacation in
2014 and in 2015, and he similarly stated that Longwells paid
him for that vacation time. Marsh testified that Drought and
Fessler took time off, but that there was never a PTO offer or
policy. Marsh testified that he “never docked anyone’s salary
when they were off for sick time or vacation time.” According
to Marsh, PTO was not discussed at the time of hiring, was
not a term of employment, and neither he nor Drought or
Fessler knew the PTO clause was in the agreement when it
was signed.
Marsh stated that he asked Drought and Fessler to sign the
employment agreement for the sole purpose of the noncom-
pete provision. The employment agreement was based off a
document used by an information technology company that
employed independent contractors who serviced clients of the
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Nebraska Supreme Court Advance Sheets
304 Nebraska Reports
DROUGHT v. MARSH
Cite as 304 Neb. 860
information technology company. According to Marsh, the
agreement contained a number of provisions that were never
intended to apply to employees of Longwells.
The court found that there was no dispute payment for
accrued PTO is compensation for labor or services and that
Drought and Fessler each signed the employment agreement
containing a provision for PTO. The court framed the dispute
as whether Drought and Fessler satisfied the terms of the
employment agreement in order to be entitled to PTO. The
court found that Drought and Fessler could not have earned
any PTO because they did not have timesheets signed by cli-
ents nor did they have billable hours. The court determined
that hours worked did not equate to hours billed and that there
was no agreement to provide PTO based on hours “worked.”
The court reasoned that because Drought and Fessler did not
bill any hours to clients, they could not have earned any PTO
under the plain language of the employment agreement. Thus,
the court sustained Longwells’ motion for summary judg-
ment, overruled Drought and Fessler’s motion, and dismissed
the complaint.
Drought and Fessler filed a timely appeal.
ASSIGNMENTS OF ERROR
Drought and Fessler assign that the court erred in (1) fail-
ing to find that they were entitled to their earned but unused
PTO; (2) failing to find that there were terms in the employ-
ment agreement that were inapplicable to their employment
situation, in finding that they did not earn PTO because they
could not prove billable hours, and in failing to address that
there could be no mutual mistake in a unilateral employment
agreement; (3) failing to find that the parties’ understanding
and agreement of how PTO was earned was demonstrated by
the fact that both Drought and Fessler had been paid for PTO
before their terminations; and (4) sustaining Longwells’ motion
for summary judgment and overruling Drought and Fessler’s
motion for summary judgment.
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Nebraska Supreme Court Advance Sheets
304 Nebraska Reports
DROUGHT v. MARSH
Cite as 304 Neb. 860
STANDARD OF REVIEW
[1] An appellate court affirms a lower court’s grant of sum-
mary judgment if the pleadings and admitted evidence show
that there is no genuine issue as to any material facts or as
to the ultimate inferences that may be drawn from the facts
and that the moving party is entitled to judgment as a matter
of law.2
[2] The meaning and interpretation of a statute are questions
of law. An appellate court independently reviews questions of
law decided by a lower court.3
ANALYSIS
Wage Act
The Wage Act requires an employer to pay “unpaid wages”
to an employee who separates from the payroll.4 It defines
“[w]ages” to include “fringe benefits, when previously agreed
to and conditions stipulated have been met by the employee.”5
The Wage Act further provides that “[p]aid leave, other than
earned but unused vacation leave, provided as a fringe benefit
by the employer shall not be included in the wages due and
payable at the time of separation, unless the employer and the
employee or the employer and the collective-bargaining repre-
sentative have specifically agreed otherwise.”6
[3] In Fisher v. PayFlex Systems USA,7 a majority of this
court determined that because the employees in that case could
use PTO hours for any purpose, the unused PTO hours must
be treated the same as earned but unused vacation hours, i.e.,
a wage that must be paid upon separation of employment.
2
Williamson v. Bellevue Med. Ctr., ante p. 312, 934 N.W.2d 186 (2019).
3
Professional Firefighters Assn. v. City of Omaha, 290 Neb. 300, 860
N.W.2d 137 (2015).
4
§ 48-1230(4)(a).
5
§ 48-1229(6).
6
Id.
7
Fisher v. PayFlex Systems USA, 285 Neb. 808, 829 N.W.2d 703 (2013).
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304 Nebraska Reports
DROUGHT v. MARSH
Cite as 304 Neb. 860
The dissent identified two difficulties in applying the law to
the facts of the case: (1) The Legislature did not define the
term “‘vacation leave’” and (2) the employer’s PTO policy
allowed employees to use PTO for both vacation and other
purposes in the employee’s discretion.8 Although the dissent
invited clarification by further amendment of the statute and
the Legislature indeed amended § 48-1229 the following year,9
it did not provide any clarification regarding vacation leave or
fringe benefits payable upon separation. Where a statute has
been judicially construed and that construction has not evoked
an amendment, it will be presumed that the Legislature has
acquiesced in the court’s determination of the Legislature’s
intent.10 Thus, PTO which can be used as vacation leave should
be treated the same as earned but unused vacation leave under
the Wage Act.
Entitlement to PTO
Under Agreement
The crux of Drought and Fessler’s argument is that Longwells
owed them PTO because the employment agreement—which
they were required to sign—contained a section concerning
PTO. We disagree.
[4] The statute imposes three requirements. Under § 48-1229,
an appellate court will consider a payment a wage subject to
the Wage Act if (1) it is compensation for labor or services, (2)
it was previously agreed to, and (3) all the conditions stipu-
lated have been met.11 Here, the decision turns upon the third
requirement.
Drought and Fessler’s claim fails the third requirement,
because they did not satisfy the conditions set forth in the
8
Id. at 824, 829 N.W.2d at 716 (Stephan, J., dissenting; Heavican, C.J., and
Cassel, J., join).
9
2014 Neb. Laws, L.B. 765, § 1.
10
Heckman v. Marchio, 296 Neb. 458, 894 N.W.2d 296 (2017).
11
Fisher v. PayFlex Systems USA, supra note 7.
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Nebraska Supreme Court Advance Sheets
304 Nebraska Reports
DROUGHT v. MARSH
Cite as 304 Neb. 860
agreement. Under the agreement, an employee earned PTO
“per 40 hour + week billed.” The agreement specified that
earnings were based on billable hours and that an employee
will not be considered to have earned billable hours if the
employee did not produce an approved timesheet “signed off ”
by a client designee. But Drought and Fessler were paid a set
salary—they did not have clients, did not have billable hours,
and did not submit timesheets.
Drought and Fessler attribute significance to the past pay-
ment of vacation time. They argue that if billing clients and
proving a 40-hour workweek had been required to earn PTO,
Longwells would not have paid them for their PTO during their
employment. But it appears from the evidence that as salaried
employees, Drought and Fessler were paid the same amount
each week no matter how many, if any, hours they worked.
Drought and Fessler assign that the district court erred in
failing to address Longwells’ assertion of a mutual mistake,
which they argue does not apply to a unilateral employment
agreement. However, the court had no need to do so. Drought
and Fessler claimed they were entitled to PTO due to the
inclusion of a PTO section in the employment agreement. But
because they did not meet the conditions required under the
written employment agreement to earn PTO, it is not a wage
subject to the Wage Act.12
CONCLUSION
There is no dispute that Drought and Fessler did not bill
to clients more than 40 hours of work per week. Accordingly,
they did not earn PTO under the terms of the employment
agreement. We affirm the order of the district court which
granted summary judgment in favor of Longwells.
Affirmed.
12
See id.