DocketNumber: No. X03-CV98-485223S
Citation Numbers: 2001 Conn. Super. Ct. 3349, 29 Conn. L. Rptr. 110
Judges: AURIGEMMA, JUDGE.
Filed Date: 3/2/2001
Status: Non-Precedential
Modified Date: 4/18/2021
Statement of Facts
The following facts are not disputed. The plaintiffs are or were sales employees selling shoes at various retail stores owned by May Department Stores. In Connecticut, May operates department stores under the trade names of Lord Taylor and Filene's.
In October 1995, Mytych accepted Lord Taylor's offer of employment as a part-time commissioned salesperson in the women's shoe department at its West Farms store. At the time she accepted the offer, Lord Taylor told her that she would receive an 8% commission on her net sales, provided her with a copy of Lord Taylor's Women's Shoes Associate Commission Agreement, and asked her to sign an acknowledgment that she had read and understood the agreement. Under the Women's Shoes Associate Commission Agreement, Mytych agreed that Lord Taylor would pay her "a straight commission on net sales." "Net sales" was defined, in pertinent part, as her gross sales
• less any applicable customer/employee discount,
• less any identified returns ("assigned credits") — the retail price of merchandise which a customer has returned with a sales receipt — and,
• less any unidentified returns ("unassigned credits") — her pro rata share of the retail price of merchandise which a customer has returned without a sales receipt and hence without any means of identifying the salesperson who initially made the sale.
She further agreed that Lord Taylor would calculate her pro rata share of the "unidentified returns" as a percent of each commissioned salesperson's sales in her department:
FOR EXAMPLE: If you sell 10% of all merchandise in a given week, then 10% of the unassigned credits ([unidentified] returns) will be charged against your sales for that week.
Lord Taylor paid Mytych her all of her earned commissions as agreed and that Lord Taylor regularly provided her with a Sales/Returns CT Page 3351 Commission Report with her paychecks. The Reports set forth Lord Taylor's calculation of her earned commissions so that she could verify the accuracy of the calculation.
In February 2000. Mytych voluntarily left Lord Taylor and accepted Filene's offer of part-time employment as a commissioned salesperson in the women's shoe department at its West Farms store. She applied for a commissioned salesperson's position because she could "make more money' than an hourly salesperson and wanted to work at the Filene's women's shoe department because it was busier than Lord Taylor's women's shoe department. At the time she accepted Filene's offer, she had a basic understanding of how her commissions would be calculated and understood that she would be paid a 9% commission on her "net sales," as defined above.
With each paycheck, Filene's provided Mytych with a Commission Payment Summary and a Sales/Returns Commission Report which set forth Filene's calculation of her commission earnings for that pay period. As at Lord Taylor, Mytych received a commission based on her gross sales less identified returns, unidentified returns, and customer/employee discounts.
Between 1992 and 1995, Michaud worked as an hourly salesperson in various departments at Lord Taylor's Trumbull store. In May 1995, Michaud applied for and obtained a full-time commissioned sales position in the women's shoe department. She applied for the position because she could make more money as a commissioned, rather than an hourly, salesperson.
At the time she accepted Lord Taylor's offer to work in the women's shoe department, Michaud agreed that Lord Taylor would pay her a 9 1/2% commission on her net sales. Lord Taylor provided her with a copy of the Lord Taylor Women's Shoes Commission Agreement — the same agreement provided to Mytych — which, in Michaud's words, was "self-explanatory" and set forth, in "black and white," her agreement on how Lord Taylor would pay her. Like Mytych, Michaud signed an acknowledgment indicating that she had read and understood the agreement.
In successive years of her employment in the women's shoe department, she signed similar commission agreements.
Lord Taylor regularly provided Michaud with a Sales/Returns Commission Report with her paychecks which set forth her gross sales less identified returns, unidentified returns, and customer/employee discounts. The Reports explained Lord Taylor's calculation of her earned commissions. Lord Taylor paid Michaud all of her earned commissions as agreed. CT Page 3352
Lord Taylor and Filene's formulated their commission policies in response to the prevailing industry practice. Virtually all of Lord Taylor's and Filene's competitors have similar policies.
Position of the Parties
Although the plaintiffs allege at various times that the defendant illegally deducted from the "commissions," they are actually challenging the manner in which the defendant deducted from the plaintiffs' gross sales to calculate those commissions. The plaintiffs do not challenge the defendant's deduction of identified returns from an employee's gross sales. They acknowledge that when a salesperson sells a pair of shoes and the buyer returns those shoes, the salesperson is not entitled to a commission on that sale. See Plaintiffs' Memorandum in Opposition to Defendant's Motion for Summary Judgment, p. 11.
The gravamen of the plaintiffs' claim is that in deducting an employee's pro rata share of unidentified returns from their gross sales 1) the defendant is unfairly diminishing the plaintiffs' commissions, 2) that the deduction of unidentified returns bears no reasonable relationship to the plaintiffs' job performance and 3) that the deduction constitutes the defendant's improper attempt to force the plaintiffs to bear its cost of doing business. The plaintiffs have not presented any evidence to support the foregoing integral elements of their claim.
The defendant has presented evidence that it formulated its policy of allocating unidentified returns such that it would have a reasonable relationship to the job performance of the plaintiffs: Deducting from a salesperson's gross sales his or her pro rata share of unidentified returns based on that salesperson's quantum of sales in the previous week is statistically designed to increase the likelihood that an affected salesperson actually "sold that [returned] shoe and received that commission in the first place." Because the defendant's no receipt return policy is designed to create customer good will and generate repeat business, a commissioned salesperson can — as even Mytych admits — make more money by generating still more sales with their customers.
Discussion of Law and Ruling
Practice Book §
Summary judgment should only be granted if the pleadings, affidavits and other proof submitted demonstrate that there is no genuine issue as to any material fact. Scinto v. Stam,
Although Mytych and Michaud admit that Lord Taylor and Filene's paid their agreed upon wages in full, they contend that Lord Taylor's and Filene's practices with respect to unidentified returns constitute an illegal deduction from, or an illegal refund of, their wages in violation of §§
Construction of these statutes requires a "reasoned search for the intention of the legislature." Frillici v. Town of Westport,
Connecticut General Statutes §
No employer may withhold or divert any portion of an employee's wages unless (1) the employer is required or empowered to do so by state or federal law, or (2) the employer has written authorization from the employee for deductions on a form approved by the commissioner, or (3) the deductions are authorized by the employee, in writing, for medical, surgical or hospital care or service, without financial benefit to the employer and recorded in the employer's record book.
(emphasis supplied).
Under the plain meaning of the statute, once an agreed upon wage has fully vested, the employer cannot seek to take back any portion of the wage he has agreed to pay. "Wages," as used in §§
As the broad definition of "wages" suggests, the statute does not purport to prescribe how that wage is to be calculated or determined. The definition itself does not purport to prescribe what is or is not a proper wage but broadly includes any "wage" — no matter how calculated — which an employer has promised to pay an employee and for which that employee's previous performance of labor and services now entitles him or her to receive as a matter of right.
Moreover, as explained in Roto-Rooter Services Co. v. Department ofLabor,
. . . "Commissions" means any premium or incentive compensation for business transacted whether based on per centum of total valuation or specific rate per unit of accomplishment. "Incentive plan" means any method of compensation, including, without limitation thereto, commissions, piece rate, bonuses, etc. based upon the amount of the results produced, by which the employee becomes entitled to the compensation upon the CT Page 3355 fulfillment of the conditions established as part of the working agreement. . . .
Regs. Conn. State Agencies §
. . . "Commissions" means earnings based on sales. These earnings may be achieved through the payment of a fixed sum per sale or by the payment of a percentage on any or all sales made by an individual or group of individuals.
Regs. Conn. State Agencies §
Consistent with the definition of "wages," these definitions of "commissions" do not prescribe the gamut of permissible commission arrangements. They simply leave that determination to the employer and employee's "working agreement." Mytych's and Michaud's wage agreements are "working agreements"within the meaning of these regulations and their earnings, as reflected by these agreements, are based on a percent of "any or all" sales made by "an individual or group of individuals."
Given these definitions of "wages" and "commissions," it is clear that §
Under their "working agreements," Mytych and Michaud understood and agreed that their earnings — or vested wages — would be determined as a percent of their net sales. Accordingly, since their right to a particular wage did not vest until Lord Taylor and Filene's had applied the preapproved formula for the calculation of their earned commissions and had subtracted from their gross sales their pro rata share of unidentified returns, under the statute, Lord Taylor and Filene's did not attempt to deduct any sums from their wages.
Connecticut General Statutes §
No employer . . . shall, directly or indirectly, demand, request, receive or exact any refund of wages, fee, sum of money or contribution from any person, or deduct any part of wages agreed to be paid, upon the representation or understanding that such refund of wages, fee, sum of money, contribution or deduction is necessary to secure employment or continue in employment.
Section
(1) The return by an employee to his employer . . . any sum of money actually paid or owed to an employee in return for services performed, or
(2) payment by the employer . . . to an employee of wages at a rate less than that agreed to by the employee.
Emphasis added.
The purpose of §
Mytych and Michaud have admitted that the defendant has paid them all "wages" which Lord Taylor and Filene's "agreed [would] be paid." Lord Taylor and Filene's did not pay them "wages at a rate less than agreed to" and did not ask them to return "any sum of money actually paid or owed."
The statutory scheme embodied in these wage payment statutes reflects an intent to protect the sanctity of the wage agreement and to provide an employee an enhanced remedy if an employer reneges on his promise to pay an agreed upon wage. It does not embody substantive provisions on how to determine those wages.
In Shortt v. New Medford Police Dept.,
Our statute, by contrast with [the Fair Labor Standards Act], merely provides an enhanced remedy for the collection of wages. It does not embody substantive standards to determine the amount of wages that are payable but provides penalties in order to deter employers from deferring wage payments once they have accrued. Section
31-72 [which provides litigants a private cause of action under §31-71 ] is, therefore, a remedial statute rather than one creating independent substantive rights.
The other courts which have addressed the purpose behind the statutory scheme have concurred in the Shortt Court's conclusion. See, e.g., Butlerv. Hartford Technical Inst.,
The legislative history to these statutes, albeit scant, is consistent with such a conclusion. In her successful support of an amendment to the wage statutes, providing employees with enhanced remedies in the event an employer fails to pay their vested and accrued wages, Nancy Johnson, the amendment's sponsor, noted:
The payment of earned wages is a gut-level right that should be assured by clear, strong state statutes. . . . The weaknesses of these statutes came to my attention through the experience of a constituent whose wage checked bounced. . . . A person must be able to count on his or her paycheck — that it will be forthcoming . . . and that[,] if paid by check, that the check will not bounce. . . .
Conn. Joint Standing Committee Hearings, Labor 1978 Sess. Sections
The Attorneys General who have been called upon to construe these statutes have not found them to contain provisions dictating the manner in which wages or commissions should be calculated. Attny. Gen. Opin., 1976 WL 29975 (April 28, 1976) (§
The courts which have applied these statutes have consistently found that they are limited in scope to the collection of vested and accrued wages and have refused to find that these statutes create any substantive rights as to a particular amount of wages or to a particular formula for the calculation of those wages. As one court put it, "the court will not create a contract not agreed to or contemplated by the parties"; to recover, an employee must "prove his entitlement to the amount claimed under the employment contract relied upon." Turecek v. A-Lined HandlingSystems, Inc., 1990 WL 272174 at 2, 3 (Super.Ct. 1990).
In Christensen v. BIC Corp.,
"Courts should not lightly intervene to impair the exercise of managerial discretion or to foment unwarranted litigation." Burnham v.Karl Gelb, P. C.,
The plaintiffs seek to evade the effect of the foregoing statutes, regulations and case law which establish that commissions are determined based on an agreement between the employer and the employee by arguing that an agreement to do something illegal is void and against public policy. The bases of the plaintiffs' claims of illegality are 1) the defendants have forced the plaintiffs to refund a portion of their commissions in violation of §
The plaintiffs' first claim of illegality is based on a misreading of the commission agreements between the plaintiffs and the defendant. Those agreements do not provide that unidentified returns will be deducted from the plaintiffs' already earned commissions. Rather, they provide that the commissions are calculated based on a percentage of net sales, which include the employee's gross sales minus identified and unidentified returns.
The plaintiffs have attempted to underscore this first claim of illegality by proffering the opinion of the assistant director of the Connecticut Department of Labor. However, that opinion is based on the assumption that the defendant deducts from previously earned commissions. As stated above, there is no evidence to support that assumption.
The plaintiffs have provided no evidence that any plaintiff has been harmed by the defendant's deduction for unidentified returns in the calculation of net sales. The plaintiffs have simply assumed that such a deduction is harmful. In support of that assumption they have cited the following language from Hudgins v. Neiman Marcus Group,
[T]o the extent the employer deducts for unidentified returns resulting from other employees . . . the conscientious sales associate is required to return a portion of commissions he or she has legitimately earned from completed sales in order to compensate Neiman Marcus for commissions paid on sales other employees did not complete — amounts that would CT Page 3360 otherwise be a business loss the conscientious sales associate has done nothing to cause. This policy of punishing all employees for the sins of a few cannot survive scrutiny under California law.
The plaintiffs in this case have submitted no evidence that they are conscientious. Assuming that the plaintiffs and the class they purport to represent are all conscientious workers, they have also failed to present any evidence that such conscientiousness helps prevent their customers from returning shoes without a receipt.
The plaintiffs concede that they are not entitled to a commission if one of their customers returns shoes with a receipt because the sale they made is effectively unmade by the return. However, they assume without any evidence whatsoever that the returns made without a receipt are done by some other salesperson's customers and, thus, that they are necessarily harmed by the defendant's deduction of unidentified returns to determine their net sales for the purpose of calculating their commission. Based on the evidence submitted by the defendant it appears just as likely that the plaintiffs would be helped by the deduction of unidentified returns. For example, if Mytych sold ten pairs of shoes in a week, and those sales represented 20% of the shoe sales for the department, and all ten customers returned their shoes with receipts, then Mytych would have no net sales for the week and would receive no commission. However, if all of Mytych's customers returned their shoes without receipts, then she would only be charged for 20% of the returns because she made 20% of the sales. Therefore, she would receive commissions on 80% of the shoes she had sold for the week.
The defendant's commission calculation formula — by deducting from a salesperson's gross sales his or her pro rata share of unidentified returns based on that salesperson's quantum of sales in the previous week — is statistically designed to increase the likelihood that an affected salesperson actually "sold that [returned] shoe and received that commission in the first place." (Logan Depo., 15:11-16:1) In absence of any evidence to the contrary it is logical to assume, as the formula does, that all salespersons sell to customers who return goods without receipt at approximately the same rate.
The plaintiffs have also argued that the defendant's method of calculating commissions is an attempt to penalize the plaintiff employees for their employer's cost of doing business. However, again, the plaintiffs have argued as if this were a Motion to Strike. A party opposing summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact, together with theevidence disclosing the existence of such an issue. Practice Book §§ CT Page 3361 17-45, 17-46; Burns v. Hartford Hospital,
The plaintiffs have relied on the case of Hudgins v. Neiman MarcusGroup, Inc.,
Here, Oja has been promised a 9% commission on her net sales. For each commission period, net sales are determined by subtracting identified returns and unidentified returns from gross sales. Returns do not result in repayment of past commissions, but merely reduce net sales for the period in which they occur. Oja is thus paid a commission on her net sales for a particular period of time; she is not entitled to a commission on the gross sales price of each pair of shoes she sells as soon as she makes the sale. Because her commission or compensation is not "due or earned" until certain amounts for returned merchandise have been subtracted from her gross sales Dayton's policy does not violate Minn. Stat. §181.79 .
Oja,
Since Connecticut's wage payment statutes, like Minnesota's statute, prohibit deductions only from accrued and vested wages (that is, wages which are "due and earned"), the Minnesota Court of Appeals' decision supports the defendant's position here.
By contrast, in Hudgins, the California Court of Appeal held that Neiman Marcus' commission policy which "deduct[ed] the amounts previouslypaid for "unidentified returns' on a pro rata basis from the wages of their commissioned sales associates" violated California's own wage payment statute which prohibits an employer from "collect[ing] or CT Page 3362 receiv[ing] any part of wages theretofore paid." Hudgins,
Neither Connecticut wage payment statutes nor the Labor Commissioner's definition of "commissions" prescribe when a commission is earned but, instead, expressly leave that determination to the parties' agreement. See, e.g., Regs. Conn. State Agencies §
Apparently in light of the foregoing statutes and regulations which allow an employer and employee to agree on the manner in which their commission is calculated Mytych and Michaud contend that they are not "bound" by the commission agreements they signed because of the disclaimer language set forth in those agreements. Specifically, they contend that Lord Taylor's disclaimer language, which states that the agreement "does not create an employment contract . . . between Lord Taylor and its Associates," renders these agreements unenforceable.
In Connecticut, as in many other jurisdictions, a policy statement or employee manual may create "a contract of employment which limit[s] the employer's right to discharge an otherwise at-will employee." Finley v.Aetna Life Cas. Co.,
[W]e note that all employer-employee relationships not governed by express contracts involve some type of implied "contract" of employment. "There cannot be any serious dispute that there is a bargain of some kind; CT Page 3363 otherwise the employee would not be working."
Toroysan v. Boeringer Ingelheim Pharmaceuticals, Inc.,
The plaintiffs have failed to demonstrate the existence of any material fact or establish any principle of law which might preclude this Court from entering summary judgment favor of the defendant. Sections
For the reasons set forth above, summary judgment may enter in favor of the defendant.
By the court,
Aurigemma, J.