Paolini v. Albertson's Inc.

EISMANN, Justice.

We have accepted questions of law certified by the Ninth Circuit Court of Appeals asking us whether stock options constitute wages under Chapter 6 of Title 45, Idaho Code, and whether terminating an employee for trying to exercise his right to receive wages violates Idaho’s public policy exception to at-will employment. We answer the first question in the negative, which renders the second question moot.

I. FACTS AND PROCEDURAL HISTORY

Brace Paolini was an employee of Albert-son’s, Inc. (Albertson’s) for seventeen years. During that time he received several thousand stock options issued pursuant to the Albertson’s Amended and Restated 1995 Stock-Based Incentive Plan (Plan). According to the Plan, a change in control of the company accelerated vesting of the stock options. In the summer of 2001, Paolini believed that a change in control had occurred, and he attempted to exercise his stock options based on accelerated vesting. The Administrator of Albertson’s, Inc.’s Stock-Based Incentive Plan (Plan Administrator) denied his request. For reasons that are disputed, Paolini later left his employment with Albertson’s. He subsequently filed an action in the Federal District Court for the District of Idaho seeking to recover damages against Albertson’s and the Plan Administrator. One of the claims he asserted was that Albertson’s discharged him for acting to exercise his stock options. He argued that this was a retaliatory discharge in violation of Idaho’s wage laws, public policy, and the covenant of good faith and fair dealing.

Both parties moved for summary judgment. The federal district court granted summary judgment to Albertson’s and the Plan Administrator and denied Paolini’s motions for summary judgment. He then appealed to the Ninth Circuit, which certified *549questions of law in writing to us in order to resolve issues of law raised by Paolini on appeal. We accepted certification of those questions.

II. CERTIFIED QUESTIONS OF LAW

1. Can stock options be wages under Idaho Code §§ 45-601(7) and 45-613? If so, is it a factual issue as to whether the stock options were issued as wages, to be resolved by a factfinder?

2. If an employer fires an employee for trying to exercise his right to the receipt of wages, has the employer violated the public policy exception to at-will employment?

III. ANALYSIS

A. Can Stock Options Be Wages under Idaho Code §§ 45-601(7) and 45-613?

Claims for wages are governed by Chapter 6 of Title 45, Idaho Code. Section 45-601(7) defines wages as “compensation for labor or services rendered by an employee, whether the amount is determined on a time, task, piece or commission basis.” The statute does not define wages as including all forms of compensation. Latham v. Haney Seed Co., 119 Idaho 412, 807 P.2d 630 (1991) (approving Whitlock v. Haney Seed Co., 114 Idaho 628, 759 P.2d 919 (Ct.App.1988), which held that the term wages as it is defined in I.C. § 45-601(7) does not include a life insurance policy issued as part of the employment contract because it was not compensation that was earned in increments as services were performed). The issue we address now is whether compensation in the form of stock options constitutes wages under Chapter 6 of Title 45.

“The interpretation of a statute is a question of law over which we exercise free review.” McLean v. Mavenk Country Stores, Inc., 142 Idaho 810, 813, 135 P.3d 756, 759 (2006). “This Court must construe a statute to give effect to the intent of the legislature.” Carrier v. Lake Pend Oreille School Dist. # 84, 142 Idaho 804, 807, 134 P.3d 655, 658 (2006). “It must begin with the literal words of the statute; those words must be given their plain, usual, and ordinary meaning; and the statute must be construed as a whole.” McLean v. Mavenk Country Stores, Inc., 142 Idaho 810, 813, 135 P.3d 756, 759 (2006) (citations omitted). “Statutes that are in pari materia must be construed together to effect legislative intent. Statutes are in pari materia if they relate to the same subject.” City of Sandpoint v. Sandpoint Indep. Highway Dist., 139 Idaho 65, 69, 72 P.3d 905, 909 (2003) (citations omitted).

Idaho Code § 45-608(1) gives clarity to the legislature’s intent regarding the meaning of the word wages in Chapter 6 of Title 45. It states:

Employers shall pay all wages due to their employees at least once during each calendar month, on regular paydays designated in advance by the employer, in lawful money of the United States or with checks on banks where suitable arrangements are made for the cashing of such checks without charge to the employee. Nothing contained herein shall prohibit an employer from depositing wages due or to become due or an advance of wages to be earned in an account in a bank, savings and loan association or credit union of the employee’s choice, provided that the employee has voluntarily authorized such deposit. If the employee revokes such authorization for deposit, it shall be deemed terminated and the provisions herein relating to the payment of wages shall apply.

This statute requires employers to “pay all wages due to their employees at least once during each calendar month, on regular paydays designated in advance by the employer.” By its terms, it is not limited to wages earned during a calendar month or to wages that are normally paid every calendar month. It applies to wages due during the month. Wages earned over a longer period of time, such as an annual bonus based upon net profits, will come due during a specific calendar month and are covered by the statute.

This statute also requires that employers “shall pay all wages due to their employees ... in lawful money of the United States or with checks on banks where suitable arrangements are made for the cashing of such checks without charge to the employee” or by deposit into the employee’s account with his or her consent. (Emphasis added.) “The word shall, when used in a statute, is mandatory.” Goff v. H.J.H. Co., 95 Idaho *550837, 839, 521 P.2d 661, 663 (1974). Thus, the employer does not have discretion to pay wages in a manner other than as directed by the statute. The manner of payment directed by the statute applies to “all wages due.” If all wages due must be paid in cash, with a check, or by deposit into the employee’s account, then the word wages can only refer to monetary compensation. Nonmonetary compensation such as stock options cannot be wages because that form of compensation is not payable in cash, with a check, or by deposit into the employee’s account. When Section 45-601(7) is construed with Section 45-608(1), stock options cannot constitute wages under Section 45-601(7). The term wages in Chapter 6 of Title 45 only refers to monetary compensation.

The dissent argues that Idaho Code § 45-608(1) only deals with wages that come due on a periodic basis. Of course, that is not what the statute says. For it to say that, the dissent would have to add the words shown in italics so that it would say, “Employers shall pay all wages that come due on a periodic basis to their employees at least once during each calendar month.” There is nothing in the wording of the statute as enacted by the legislature, however, that limits its application to wages that come due on a periodic basis. As drafted, the statute applies to “all wages due,” not just to those that come due on a periodic basis.

The dissent also argues that changes made in 1989 to Idaho Code § 45-606 demonstrate a legislative intent that wages due on termination from employment do not have to be paid in cash or its equivalent. In 1989 the legislature recodified and amended the statutes in Chapter 6 of Title 45. Prior to 1989, Section 45-606 required that upon termination an employer must pay wages then due “in cash, lawful money of the United States, or its equivalent.” After 1989, that wording was not in Section 45-606. According to the dissent, this indicates that the legislature intended to eliminate any requirement that wages due on termination be paid in cash or by check or deposited into the employee’s account. The dissent’s explanation of the change in Section 45-606 made in 1989, however, only tells part of the story.

As originally enacted in 1911, that statute provided:

Whenever any employer of labor shall hereafter discharge or lay off his or its employes without first paying them the amount of any wages or salary then due them, in cash, lawful money of the United States, or its equivalent, or shall fail or refuse on demand to pay them in like money, or its equivalent, the amount of any wages or salary at the time the same becomes due and owing to them under their contract of employment, whether employed by the hour, day, week or month, each of his or its employes may charge and collect wages in the sum agreed upon in the contract of employment for each day his employer is in default until he is paid in full, without rendering any service therefore; Provided, however, he shall cease to draw such wages or salary thirty (30) days after such default.

Ch. 170, § 1, 1911 Idaho Sess. Laws 565. As originally enacted, it was not limited to the failure to pay wages upon termination. It required immediate payment of wages upon termination “in cash, lawful money of the United States, or its equivalent” and payment of wages on demand “in like money, or its equivalent” whenever they had become due. It applied both to wages due on termination and to wages due weekly, semimonthly, monthly, annually, or at any other time.

In 1989 the legislature amended and recodified the statutes in Chapter 6 of Title 45. The new version of Idaho Code § 45-606 provided:

1. Upon layoff, or upon termination of employment by either the employer or employee, the employer shall pay or make available at the usual place of payment all wages then due the employee by the earlier of the next regularly scheduled payday or within ten (10) days of such layoff or termination, weekdays and holidays excluded. However, if the employee makes written request upon the employer for earner payment of wages, all wages then due the employee shall be paid within forty-eight (48) hours of the receipt of such request, weekends and holidays excluded.

Ch. 280, § 7, 1989 Idaho Sess. Laws 677, 679-80. The amended statute only addresses the payment of wages upon termination. *551It does not also apply to the payment of wages on demand at any time they have become due, as did its predecessor. The amended statute also does not include the wording that the wages are to be paid “in cash, lawful money of the United States, or its equivalent.”

The dissent interprets this change to mean that the legislature did not intend any restriction upon the manner in which wages were paid upon termination. The dissent would have us believe that the legislature did not think that the protection in Section 45-608(1) regarding the manner of paying wages was necessary when the employee was terminated from employment. Apparently, workers who have just been terminated need less protection than those who still have a job. Thus, according to the dissent, upon termination an employer could pay wages by a warrant redeemable only by presenting it in person at a bank in Timbuktu, and that would comply with the statute. The dissent offers no explanation as to why the legislature would want to eliminate this protection for employees that are terminated from employment.

A more reasonable interpretation of the legislature’s intent is that Section 45-608(1) requires that “all wages due” be paid in cash or its equivalent, and amended Section 45-606(1) specifies when wages become due upon an employee being laid off or terminated. Former Section 45-606 imposed a penalty if the employer did not pay any wages due before the employee was laid off or terminated. Amended Section 45-606(1) allows the employer to pay the wages within a specified time after the employee is laid off or terminated without incurring any penalty. The language “in cash, lawful money of the United States, or its equivalent” that was in the predecessor of Section 45-606(1) is unnecessary because it would merely be duplicative of what is already required by Section 45-608(1), which applies to “all wages due.”

The Ninth Circuit also asks whether stock options can constitute wages under Idaho Code § 45-613. That statute provides:

No employer shall discharge or in any other manner retaliate against any employee because that employee has made a complaint to the employer, or to the department, or filed suit alleging that the employee has not been paid in accordance with the provisions of this chapter, or because the employee has testified or may be about to testify in an investigation or hearing undertaken by the department. The provisions of this section shall not be construed to otherwise restrict the discipline or termination of an employee.

Although the statute does not include the word wages, it prohibits retaliation against an employee for the reasons listed. Paolini alleged that he suffered a retaliatory discharge in violation of this statute. The Ninth Circuit’s question regarding this statute is premised upon stock options being held to be wages. It stated, “In this case, if stock options are not wages then no triable issue of fact exists for the wrongful discharge claims under Idaho’s wage law. The claims therefore would have to be dismissed.” Paolini v. Albertson’s, Inc., 418 F.3d 1023, 1026 (9th Cir.2005). Because stock options cannot be wages, the Ninth Circuit’s question about Section 45-613 is moot.

B. If an Employer Fires an Employee for Trying to Exercise His Right to the Receipt of Wages, Has the Employer Violated the Public Policy Exception to At-Will Employment?

This question is dependent upon stock options being determined to be wages under Chapter 6 of Title 45. As the Ninth Circuit stated:

The question of whether Paolini was fired in violation of public policy is dependent, in part, on the answer to the earlier question of whether stock options can be wages. If stock options are wages then a legal question exists over whether firing a person for acting to prevent the withholding of wages is a violation of public policy. A factual question also remains as to whether Paolini was terminated for taking such an action.

Paolini v. Albertson’s, Inc., 418 F.3d 1023, 1027 (9th Cir.2005). Because stock options cannot be wages, this question is also moot.

*552IV. CONCLUSION

Stock options cannot be wages as that term is used in Chapter 6 of Title 45, Idaho Code.

Justices TROUT and BURDICK concur.