North Marion School District 15 Ex Rel. Trejo v. Acstar Insurance

WALTERS, J.,

dissenting.

A contractor that violates the prevailing wage statute must pay a penalty equal to the unpaid wages. ORS 279.356(1).1 I conclude that a contractor violates the prevailing wage statute, and wages are unpaid, when a contractor fails to pay its workers the prevailing wage on the date that wage is due, viz.: the statutorily required payday. ORS 652.120.2

The majority acknowledges that a contractor is required to pay its workers on payday, and that the contractor must pay its workers the prevailing wage on that date. But the majority decides that the contractor does not violate the prevailing wage statute, and wages are not unpaid, if the contractor fails to perform as required. The majority holds that no penalty can be imposed unless and until the contractor, at some unknown, unpredictable, moving target date, “tenders wages at less than the prevailing wage rate.” 343 Or at 320. By that reasoning, a contractor that tenders payment *331of a penny less than the amount due, five years after the job is completed, violates the prevailing wage statute and the wage becomes unpaid. A contractor that never tenders even a penny does not violate the statute and the wage never becomes unpaid.

Because the express terms of Oregon law and the purposes served by that law dictate a contrary result, I must dissent.

Three Oregon statutes compel the result that I reach. First, the Oregon prevailing wage rate statute, ORS 279.350(1), requires that a public contractor employer pay its employees “not less than the prevailing rate of wage”:

“The hourly rate of wage to be paid by any contractor or subcontractor to workers upon all public works shall be not less than the prevailing rate of wage for an hour’s work in the same trade or occupation in the locality where such labor is performed.* * *”

Second, ORS 652.120(1) requires that all employers pay employees the “wages due and owing to them” on a payday established by the employer:

“Every employer shall establish and maintain a regular payday, at which date all employees shall be paid the wages due and owing to them.”

Third, ORS 279.356(1) makes a contractor who violates the prevailing wage law liable and provides remedies:

“Any contractor or subcontractor or contractor’s or subcontractor’s surety who violates the provisions of ORS 279.350 shall be liable to the workers affected in the amount of their unpaid minimum wages, including all fringe benefits under ORS 279.348(4), and in an additional amount equal to said unpaid wages as liquidated damages.”

(Emphases added.)

The majority acknowledges the obligations imposed by all three of the foregoing statutes, but asserts, as the sole stated basis for its disagreement with this dissent, that each *332obligation is independent of the others and that the legislature has provided “different remedies and liabilities” for violation of each. 343 Or at 323. The majority grounds its ruling on what it says is a legislative “policy choice” to treat the obligations differently. In fact, the payrate and paydate obligations are interdependent and the legislature has provided but one penalty for their violation. As demonstrated by the text, context, and history of enactment of those statutes, the legislature intended that they work hand in glove.

The text of the prevailing wage statute, ORS 279.350, requires that contractors pay their workers “not less than the prevailing rate of wage.” ORS 279.350(1). If contractors do not pay their workers on payday, the day the wage is due, they pay them zero, a sum that is certainly “less than the prevailing rate of wage.” The contractor therefore violates the prevailing wage statute and must pay the penalty set forth in ORS 279.356.

ORS 279.356 provides the sole remedy for violation of the intertwined obligations to pay the wage due on the date due. There is no separate remedy for a contractor’s failure to make payment on payday and the majority does not point to any. The payday statute is ORS 652.120. Chapter 652 contains no remedy for violation of that statute.3 That does not mean that there is none. The remedy for employees who are entitled to the prevailing wage is found in chapter 279 *333because the remedy is calculated based on the rate of pay set forth in that statute.4

My conclusion that the prevailing wage statute works in tandem with the payday statute is also based on the context in which the prevailing wage statute is found. Chapter 279 is replete with provisions that are built on the assumption that contractors are required to pay the prevailing wage on payday. For instance, ORS 279.528 requires workers to give notice of claims for unpaid wages within 120 days from the date they “last provided labor.”5 If the majority’s reasoning were correct, the legislature would have given the workers 120 days from the date that a contractor tenders inadequate payment to give notice. That date could, of course, be years after the date workers “last provided labor.” The statute, as written, assumes that a violation occurs on a date certain before, or sometime shortly after, the date on which the worker last provides labor. The statute certainly does not anticipate that a violation will occur at some undetermined time long after payment was due when the contractor happens to tender payment to its workers.

Another statute in chapter 279 that indicates that the legislature intended that the payrate and paydate statutes work synchronously is ORS 279.314(1). That statute provides that every public works contract must contain a clause or condition stating that if the contractor fails, neglects, or refuses to make “prompt” payment, the public contracting agency may pay the wage claim and charge the amount paid against funds owed to the contractor. The contractual right of a public contracting agency to step in and pay wages when a public contractor has failed to pay them *334promptly anticipates that the public contractor is otherwise obliged to do so. In fact, subsection (4) of ORS 279.314 provides that payment by the public agency “shall not relieve the contractor or the contractor’s surety from obligation with respect to any unpaid claims.” Other examples of provisions that anticipate and supplement the requirement that contractors pay their workers on payday include the following: ORS 279.320 (contractors shall “promptly, as due, make payment” for worker’s compensation or employees’ medical care); ORS 279.354(1) (requiring contractors to send weekly certified statements of workers’ hours and the wages paid in the previous week); ORS 279.355(4) (BOLI may initiate actions against employers to enjoin future failures to pay wages due); ORS 279.350(1) (contractor may discharge its obligation to pay prevailing wages by making payment in cash or by providing benefits).

All of the foregoing add up to what is, in any event, inescapable as a matter of logic: For Oregon’s minimum wage laws to work, there must be a time at which a violation occurs. Oregon law provides that that time is the date wages are due: payday. To conclude that a violation of the prevailing wage statute does not occur on a date expressly selected by the Oregon legislature but, instead, occurs (if at all) on some unknown date when payment is tendered, and may never occur if payment is never tendered, requires a jump not found in the text of the statutes themselves. And, the place the majority lands is contradicted by the history of that statute’s enactment.

Both Oregon and federal law include two payrate statutes: the minimum wage statute applicable to all employees (ORS 653.025; 29 USC § 206 (a provision of the Fair Labor Standards Act)), and the prevailing wage statute applicable to employees working on public works projects (ORS 279.350; 40 USC § 3142 (a provision of the Davis-Bacon Act)). The prevailing wage statute “is a minimum wage law designed for the benefit of construction workers.” U.S. v. Binghamton Construction Co., 347 US 171, 178, 74 S Ct 438, 98 L Ed 594 (1954).

Each of those payrate statutes sets out the minimum rate at which employers must pay their employees. None of *335those payrate statutes imposes an obligation to make payment at a certain time. But where those statutes impose a penalty for violation of the obligation to pay the required pay rate, the penalty is triggered when an employer fails to pay the required wage rate on time. Federal law requires an employer that violates the federal minimum wage statute to pay liquidated damages as follows:

“Any employer who violates the provisions of section 206 or section 207 of this title [setting forth the minimum wage rate] shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. * * *”

29 USC § 216(b) (emphases added).

In Brooklyn Bank v. O’Neil, 324 US 697, 65 S Ct 895, 89 L Ed 1296 (1945), the United States Supreme Court considered whether an employer was liable for liquidated damages under that statute when it did not pay plaintiff wages owed when due, but tendered the wages, at the correct rate, two years after they were due. The Supreme Court held, that although the employer paid wages in the correct amount, it violated the minimum wage statute when it did not pay those wages on time. Id. at 707. The Supreme Court decided that the liquidated damages were intended to restore damage done by an employer’s failure to timely pay the required wage. The Supreme Court stated that the penalty:

“constitutes a Congressional recognition that failure to pay the statutory minimum on time may be so detrimental to maintenance of the minimum standard of living ‘necessary for health, efficiency, and general well-being of workers’ and to the free flow of commerce, that double payment must be made in the event of delay in order to insure restoration of the worker to that minimum standard of well-being.”

Id. (emphasis added) (quoting 29 USC § 202(a)).

The Oregon legislature enacted its minimum wage statute for public laborers 14 years after the Supreme Court’s decision in O’Neil. As a remedy for violation of that statute, the legislature adopted a liquidated damages provision virtually identical to the one that Congress imposed for failure *336to pay the federal minimum wage. Or Laws 1959, ch 627, § 6. That statute, ORS 279.356(1), provides:

“Any contractor or subcontractor or contractor’s or subcontractor’s surety who violates the provisions of ORS 279.350 shall be liable to the workers affected in the amount of their unpaid minimum wages, including all fringe benefits under ORS 279.348(4), and in an additional amount equal to said unpaid wages as liquidated damages.”6

(Emphases added.)

By enacting an identical penalty for violation of its prevailing wage statute, we presume that the Oregon legislature intended that the penalty be interpreted as the Supreme Court interpreted the federal penalty, to impose liability for the failure to pay the wages due on time. See, e.g., State v. Cooper, 319 Or 162, 167-68, 874 P2d 822 (1994) (“When the Oregon legislature adopts a statute modeled after another jurisdiction, an interpretation of that statute by the highest court of that jurisdiction that was rendered in a case decided before adoption of the statute by Oregon is considered to be the interpretation of the adopted statute that the Oregon legislature intended.”).

The majority ignores the Supreme Court’s decision in O’Neil and contends that “[federal courts have implied a time-of-payment obligation under FLSA because Congress left that gap for them to fill.” 343 Or at 324-25. O’Neil holds that an employer is liable for a penalty when it does not pay the minimum wage on time. The lower federal courts have come to various conclusions about when the federal minimum wage is due. See 343 Or at 325 n 20 (citing cases). Some lower federal courts hold that employers must make payment within a reasonable time. The Ninth Circuit holds that *337employers must make payment on a contractually required payday. Biggs v. Wilson, 1 F3d 1537, 1539-41 (9th Cir 1993). The reason there is a “gap” in federal law, open to judicial interpretation, is that there is no federal statute that requires payment of wages on payday. The Oregon legislature filled the “gap” statutorily by adopting the payday statute. ORS 652.120.

Oregon employers are liable for violating the Oregon prevailing wage statute when they fail to pay the wages in the correct amount “on time.” ORS 279.356(1), as interpreted by the Supreme Court in O’Neil. “On time” in Oregon means on “payday.”7 ORS 652.120. The majority is just plain wrong when it states that the Oregon legislature filled the gap by creating liabilities for an employer’s failure to pay the minimum wage on payday in ORS chapter 652. 343 Or at 325. As I have explained, there is no remedy for violation of ORS 652.120 in chapter 652.

The majority points out that there are no cases in which courts discuss time-of-payment requirements imposed by the Davis-Bacon Act or state acts that mirror it. That is not surprising, because the Davis-Bacon Act, and those modeled precisely on it, do not even include provisions directly requiring employers to pay the prevailing wage, much less requiring that they pay liquidated damages in the event of untimely payment. See 40 USC §§ 3141-3148. In requiring public contractors to pay the prevailing wage (ORS 279.350(1)), imposing a penalty for failing to timely pay that wage (ORS 279.356(1)), and enacting its payday statute (ORS 652.120), Oregon created an enforcement mechanism for the prevailing wage statute that is not found in the Davis-Bacon Act. It is the case law relating to that enforcement mechanism that should enlighten us.

The legislature’s imposition of a penalty for violation of the prevailing wage statute evidences a true concern for *338the plight of employees for whom every dollar counts. A legislature concerned with underpayment surely would have as great a concern about nonpayment. Yet, the majority insists that it can discern a legislative “policy choice” to condemn payment that is a penny short, whether five days or five years late, but to turn its back on nonpayment and impose no penalty at all. I cannot comprehend why the majority works so hard to divorce two statutes that work in such harmony. A time-of-payment requirement is necessary to effectuate a rate-of-pay requirement. Although a legislature could theoretically enact one without the other, there would be no reason for it to do so. To be of use, a rate of payment requirement must be tethered to time, just as a date for payment waits in need of the sum it must pay.

For over 60 years it has been the law of this land that a requirement that a wage be paid at a certain rate is, and must be, accompanied by an obligation to pay that wage on time. In Oregon, on time means on payday. I cannot countenance a departure from those precepts, not because they originated with me, but because they have been cognizable by all until this day. I must, therefore, respectfully dissent.

As noted by the majority, the legislature repealed ORS chapter 279 in 2003. 343 Or at 308-09. However, the 1999 versions of the provisions of that chapter were in effect at the time of the relevant events in this action, so I refer to those versions throughout this dissent.

As the majority acknowledges, the prevailing wage statute imposes the same liability on sureties as it imposes on contractors. 343 Or at 318. ORS 279.356(1). I will, for simplicity’s sake, use the term contractor in this dissent, but my conclusions apply to contractors’ sureties as well.

Chapter 652 does contain a statute that requires employers to pay employees not later than the end of the first business day after discharge. ORS 652.140. ORS 652.150 provides a remedy for an employer’s failure to pay wages upon discharge. That obligation is separate from and in addition to the obligation to pay current employees on payday. Neither ORS 652.150, nor ORS 279.356 indicate that the duties they impose are mutually exclusive. Courts that have been faced with the argument that the termination penalty is an exclusive remedy for failure to pay wages owed have rejected that argument, although some courts have disallowed a double recovery. See Davis v. Maxima Integrated Products, 57 F Supp 2d 1056 (D Or 1999) (separate remedies for failure to pay overtime and failure to pay wages due on termination); Cornier v. Paul Tulacz, DVM PC, 176 Or App 245, 30 P3d 1210 (2001) (separate remedies for failure to pay overtime and failure to pay wages due on termination); Hurger v. Hyatt Lake Resort, Inc., 170 Or App 320, 13 P3d 123 (2000) (employee paid on payday so employer only liable for penalty for nonpayment on termination); Cooper v. Thomason, 2006 WL 2993376 (D Or 2006) (no separate penalties for same misconduct). No question of duplicate remedies is presented here because the majority holds that plaintiffs do not have a claim against their employer’s surety under ORS 652.140.

The remedy for violation of the payday statute for employees who are not entitled to the prevailing wage is set forth in the minimum wage statutes. ORS 653.025 prohibits an employer from employing an employee at wages lower than statutorily established minimum wages.

ORS 279.528(1) provides, in relevant part:

“The notice of claim required by ORS 279.526 shall he sent by registered or certified mail or hand delivered no later than 120 days after the day the person last provided labor or furnished materials or 120 days after the worker listed in the notice of claim by the Commissioner of the Bureau of Labor and Industries last provided labor.”

The penalty that both the state and federal laws impose for failure to make timely payment of the minimum wage is a sum equal to the amount of the unpaid wage. Congress imposed its penalty without regard to the length of time payment is delayed. When Oregon adopted that penalty for failure to make timely payment of the Oregon prevailing wage, it also imposed the penalty without regard to the length of time payment is delayed. Although the Oregon legislature could have a penalty that increases each day wages remain unpaid, its decision to impose a substantial penalty for failure to pay the wages owed on the date they are due does not indicate any less interest in ensuring prompt payment.

ORS 653.055 provides that any employer who pays an employee less than that minimum wage applicable to employees generally is hable to the employee for the amount of the wages and civil penalties. Courts that have considered the question have held that an employer that fails to pay an employee the minimum wage on payday violates minimum wage statutes and must pay penalties. Pascoe v. Mentor Graphics Corp., 199 F Supp 2d 1034 (D Or 2001); Scott v. American United Life Ins. Co., 2005 WL 2675185 (2005).