Gray v. Empire Gas, Inc.

METZGER, Judge.

In this action for compensation withheld, penalties, and attorney’s fees, plaintiffs, *611Dolan Gray, Lorinda Wilvers, John R. Smith, Dale Carpenter, Elwyn Green, and Leonard Imes (employees), appeal a partial summary judgment entered in favor of defendants, Empire Gas, Inc., a Missouri corporation, and its subsidiary, Empire Gas, Inc. of Denver (Empire Gas). We reverse and remand for further hearing.

In 1970 Empire Gas implemented a “Growth Bonus Program.” Employees each participated in this program during the period beginning November 1, 1978, and ending February 28, 1979. Empire Gas, however, did not pay the amount the employees calculated was due them under the plan, and they made written demand for full payment of the bonuses earned. Thereafter, Empire Gas discharged each of the employees.

Employees brought this action to recover the amounts withheld, claiming they constituted wages. Prior to trial, however, the trial court held the unpaid bonuses were not “wages” as defined by § 8-4-101(9), C.R.S. It ruled that the bonuses were earnings from an employee profit-sharing plan, and, therefore, were a form of deferred compensation as defined by § 8-4-105(3), C.R.S. Thus, the court concluded employees were entitled to neither penalties nor attorney fees under §§ 8-4-104 and 8-4-114, C.R.S.

The “Growth Bonus Program” initially became effective on July 1, 1975, and was revised in some respects on July 1, 1978; both versions provided that all other existing commission programs were discontinued. It provided for the establishment of a fund, and for contributions to the fund based on the company’s appliance sales, labor charges, retail bulk gasoline sales, tank rentals, and cylinder gas sales during the period of the program. The fund was to be divided every four months among employees participating for the full term of accumulation. Distribution to the individual employee was calculated on the basis of his or her total gross earnings.

Section 8-4-101(9), C.R.S., defines wages or compensation as:

“[A]ll amounts for labor or service performed by employees, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculating the same ... if the labor or service to be paid for is performed personally by the person demanding payment.” (emphasis added)

In construing the agreement we must consider the plan in its totality. Gandy v. Park National Bank, 200 Colo. 298, 615 P.2d 20 (1980). Our review of the pertinent documents indicates that the language used in the plan envisions that the payments to be made to employees were wages. The plan replaced all existing commission programs. It provided for payments in cash to supplement employees’ regular earnings based on their efforts in the areas of sales and company growth. None of the components of the fund were based on net profit; only one was based on “gross profit,” and the remaining components were based on the prior year’s gross sales figures.

This plan is substantially different from that discussed in Lampley v. Celebrity Homes, Inc., 42 Colo.App. 359, 594 P.2d 605 (1979); that plan was titled “Profit Sharing Plan” and all employee distributions pursuant to the plan were keyed to “profits.”

Thus, we conclude that the trial court was incorrect when it concluded that the Growth Bonus Program was “nothing more than a profit-sharing plan.”

Employees seek an award of the 50 percent penalty on all unpaid wages pursuant to § 8-4-104(1) and (3), C.R.S. According to that statute, employees are entitled to a 50 percent penalty if: (1) employment is terminated; (2) “wages” are not timely paid; and (3) the employer fails to establish a good-faith legal justification for its refusal to pay wages upon the employee’s request.

Here, all elements of § 8-4-104(1) and (3), C.R.S., have been met except the rationale for the failure to pay wages. *612While there was a determination that plaintiffs were entitled to the full amount provided by the plan, the issue of the employer’s justification, if any, was not presented because of the trial court’s determination that the amounts at issue were not wages.

Therefore, we remand this matter for hearing to determine whether Empire Gas had any legal justification for its refusal to pay the wages due and owing to employees pursuant to § 8-4-104(1) and (3), C.R.S., and for entry of judgment accordingly.

Since employees have also requested attorney fees pursuant to § 8-4-114, C.R.S., we remand that issue to the trial court for entry of judgment in favor of employees for all reasonable attorney fees and for costs in connection with this action, including those incurred on appeal.

The judgment denying the statutory penalty and attorney fees is reversed and the cause is remanded for further proceedings in accordance with this opinion.

BERMAN, J., concurs. PIERCE, J., dissents.