McHugh

CHARLESTON -- The West Virginia Supreme Court of Appeals has ruled that a lower court did not err in categorizing the termination of two bank employees' jobs as layoffs.

The two cases, consolidated by the Berkeley Circuit Court for appeal purposes, concern the application of the state's Wage Payment and Collection Act, or WPCA.

The plaintiffs, Mary Catherine Lehman and Patricia Ann Powell, appeal the court's virtually identical July 7, 2010 orders granting summary judgment to the defendant, United Bank Inc.

Both were employees of Premier Community Bankshares Inc. prior to a 2007 merger with United.

At Premier, Lehman was vice president of operations, while Powell was chief financial officer.

Both positions were eliminated as a result of the merger, although the two women stayed for a short period after for transition purposes. Their last day of work was Aug. 3, 2007.

On what would have been their next regular pay day, Aug. 10, 2007, they were each paid for their final days of work, unused vacation pay and their severance pay. Lehman's payment also included a bonus.

In response, the women claimed their final paychecks were untimely paid because under the terms of the WPCA, as discharged employees, they were entitled to receive their final payments within 72 hours of Aug. 3, 2007 rather than by the next regular pay day.

Based on the act's provision regarding liquidated damages for untimely payment of final wages, both demanded that United pay them three times the total of their last paychecks.

United, in an effort to avoid litigation, issued additional checks to each woman equaling three times the amount of regular earnings, applicable vacation pay and the bonus pay for Lehman.

However, it refused to pay liquidated damages on the severance payments, asserting that severance pay did not amount to wages subject to the WPCA's 72-hour rule. Unlike wages, the severance pay was not earned until after termination occurred.

The women each filed lawsuits a year later seeking to recover liquidated damages for their severance pay.

On appeal, Lehman and Powell asserted that the Berkeley Circuit Court incorrectly found that their terminations fall within the definition of a layoff rather than a discharge under the WPCA.

They also argued that the lower court wrongly concluded that severance pay does not constitute wages that are required under the act to be paid within 72 hours of a discharge.

The state Supreme Court, in its Nov. 10 opinion, affirmed the Berkeley court's ruling. Justice Thomas McHugh wrote the Court's 12-page decision.

"Discharge," the justice noted, means "any involuntary termination of the cessation of performance of work by employee due to employer action."

Meanwhile, "layoff" means "any involuntary cessation of an employee for a reason not relating to the quality of the employee's performance or other employee-related reason."

The women did not dispute that they performed their job duties in a satisfactory manner at the time their positions were eliminated. Also, there was no dispute that their terminations were involuntary, McHugh points out.

However, Lehman and Powell continued to assert that the WPCA provides that layoffs are always temporary rather than permanent.

In particular, they pointed to the use of the word "suspended" in state code.

The state's high court refused to buy into their reasoning.

"Appellants' argument is not born out by the plain language and construction of West Virginia Code § 21-5-4(d), which we are bound to follow," McHugh wrote.

The statute states in relevant part that "(w)hen work of any employee is suspended as a result of a labor dispute, or when an employee for any reason whatsoever is laid off, the person, firm or corporation shall pay (the employee) in full... not later than the next regular payday."

"As such, this portion of the statute plainly sets forth two discreet instances when it is applicable: (1) when an employee is suspended as a result of a labor dispute, OR (2) when an employee for any reason whatsoever is laid off. In the context of the statute, the word suspended is used only to denote an interruption in work due to a labor dispute," McHugh explained.

"Contrary to appellants' suggestion, the word 'suspended' is not used to define, clarify or otherwise modify the second statutory alternative involving layoffs, and we decline to read into the statute that which is not there."

The Court also pointed to the definition of "layoff" in Black's Law Dictionary, which is defined as the "termination of employment at the employer's instigation esp., the termination -- either temporary or permanent -- of many employees in a short time."

"If the reason for the termination does not relate to the quality of the employee's performance or other employee-related reason, the termination is a layoff and not a discharge," McHugh wrote.

As for the issue of the women's severance pay, the Court said it is "not relevant" to the disposition of the appeal.

Both women were properly and fully compensated otherwise, it determined.

Justice Menis Ketchum disqualified himself from the case.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

More News