John C. Gress v. Fabcon Incorporated, et al.

FOR PUBLICATION

ATTORNEYS FOR APPELLANT:    ATTORNEYS FOR APPELLEE:
 
JOHN F. ITTENBACH    HAROLD R. BICKHAM
RICHARD TRETTIN     MARK W. CLARK
Indianapolis, Indiana    Indianapolis, Indiana
                    
 
IN THE COURT OF APPEALS OF INDIANA JOHN GRESS, ) )
Appellant-Plaintiff,    )
)
vs.    )    No. 49A02-0409-CV-751
)
FABCON, INC.,    )
)
Appellee-Defendant.    )

 
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable S.K. Reid, Judge
Cause No. 49D13-0109-CP-1399
 
 

 
February 1, 2005

OPINION - FOR PUBLICATION

 
BAKER, Judge
 

 
Appellant-plaintiff John Gress appeals the trial court's grant of summary judgment in favor of appellee-defendant Fabcon, Inc. Specifically, Gress raises two issues, which we consolidate and restate as whether the trial court correctly granted partial summary judgment in favor of Fabcon upon his complaint seeking unpaid commissions from his employment with Fabcon.
FACTS
    Gress was employed by Fabcon as a Sales Engineer, Regional Sales Manager, and National Accounts Manager on an at-will basis from March 1995 until February 9, 2001. Fabcon was engaged in the manufacture and sale of precast wall panels and hollow core decks. Gress's general job responsibilities included soliciting and developing new business for Fabcon, bidding/negotiating contracts, and participating in each of his projects through the final project billing, collection, and closure.
    Gress was paid on both a salary and commission basis. At the time of his separation from Fabcon, Gress received a base salary of approximately $46,000 per year. Gress was also eligible to receive commission payments, which represented either unearned advance payment for jobs shipped but not completed or final earned commissions on jobs for which all costs were paid and actual profitability had been determined. The payments were made on approximately the fifteenth of every month. The monthly commission payments fluctuated from month to month depending on the degree of activity on the salesman's jobs in the prior month, whether the projects were closed out, and whether the projects were profitable. Once a project was shipped, Fabcon tendered an estimated advance payment to the salesperson based on the anticipated profitability.
When the project was "closed out," the final commission was calculated and those sums due to the salesperson, if any, were paid. A job was closed out when the accounting department determined that all job costs had been paid, the final payment had been received, and the actual profitability of the project could be determined. This process could take anywhere from several months to a couple of years after shipment. Meanwhile, the salesperson received a monthly commission report registering the status of his various projects. After the project was closed out, if it was less profitable than anticipated, the salesperson might receive no additional commission. And if Fabcon lost money or earned no profit on the project, the salesperson had to reimburse Fabcon for some or all of the advance payment that had been tendered to him at the time the job was shipped.
    After Gress left the company, Fabcon tendered him a check in the amount of $18,309.47, representing its calculation of commission payments that were owed to him at the time. In the accompanying letter, Fabcon indicated that an additional payment would be forthcoming. Fabcon later sought to close out any commission payments owed on Gress's outstanding jobs, but Gress rejected Fabcon's offer, contending that it was not the full amount that he was owed.
    Gress filed suit against Fabcon on May 30, 2001, alleging that Fabcon had violated the Wage Payment Statute See footnote by failing to pay his commission within the statutory period. Fabcon moved for partial summary judgment on September 26, 2003, arguing that the payments that Gress sought were not "wages" under the Wage Payment Statute. The trial court conducted a hearing on January 23, 2004, and granted partial summary judgment to Fabcon, concluding that Gress's commissions were not wages within the meaning of the statute. On April 26, 2004, the trial court certified its ruling for interlocutory appeal, and we accepted jurisdiction on March 24, 2004. However, Gress did not pursue the matter with us at that time. On July 22, 2004, Fabcon filed a request to make the trial court's ruling final. The trial court granted Fabcon's request and entered a final appealable judgment in favor of Fabcon. Gress now appeals.
DISCUSSION AND DECISION
Gress argues that the trial court erred in granting Fabcon's motion for partial summary judgment. Specifically, Gress alleges that the trial court erred when it concluded that his commissions were not "wages" under the Indiana Wage Payment Statute as a matter of law.
We note that when reviewing the grant or denial of a summary judgment motion, we apply the same legal standard as the trial court. Mattingly v. Warrick County Drainage Bd., 743 N.E.2d 1245, 1247 (Ind. Ct. App. 2001). As we stated in Little Beverage Co., Inc. v. DePrez, 777 N.E.2d 74, 77-78 (Ind. Ct. App. 2002):
[S]ummary judgment is appropriate when no designated genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Our standard of review is not altered by cross motions for summary judgment on the same issues. A party appealing the denial of summary judgment carries the burden of persuading this court that the trial court's decision was erroneous. The movant must demonstrate the absence of any genuine issue of fact as to a determinative issue and only then is the non-movant required to come forward with contrary evidence. This court may not search the entire record but may only consider the evidence that has been specifically designated. All pleadings, affidavits, and testimony are construed liberally and in a light most favorable to the nonmoving party.     
 
(citations omitted).
    Gress can prevail on his claim under the Wage Payment Statute only if the payments he seeks are "wages," as defined by the statute. The Wage Payment Statute requires that every employer pay its employees "at least semi-monthly or biweekly, if requested, the amount due such employee" and that "[p]ayment shall be made for all wages earned to a date not more than ten (10) days prior to the date of payment." Ind. Code § 22-2-5-1. The failure to do so subjects the employer to liquidated damages of ten percent of the amount due for each day that the amount due remains unpaid. I.C. § 22-2-5-2. The Indiana Code defines "wages" for purposes of the Wage Payment Statute as, "all amounts at which the labor or service rendered is recompensed, whether the amount is fixed or ascertained on a time, task, piece, or commission basis, or in any other method of calculating such amount." I.C. § 22-2-9-1(b).
The name given to the method of compensation is not controlling. Gurnik v. Lee, 587 N.E.2d 706, 709 (Ind. Ct. App. 1992). Rather, we will consider the substance of the compensation to determine whether it is a wage, and therefore subject to the Wage Payment Statute. Id. We have recognized that wages are "something akin to the wages paid on a regular periodic basis for regular work done by the employee. . . ." Wank v. St. Francis College, 740 N.E.2d 908, 912 (Ind. Ct. App. 2000). In other words, if compensation is not linked to the amount of work done by the employee or if the compensation is based on the financial success of the employer, it is not a "wage." Pyle v. Nat'l Wine & Spirits Corp., 637 N.E.2d 1298, 1300 (Ind. Ct. App. 1994).
A recent decision by our supreme court is instructive. In Highhouse v. Midwest Orthopedic Institute, P.C., 807 N.E.2d 737 (Ind. 2004), a former employee physician sued in order to collect an unpaid bonus calculated on the basis of the employer's collections for services rendered by the former employee, less an allocation of expenses of the employer's operations. Our supreme court concluded that compensation constitutes "wages" only if it is compensation for time worked and is not linked to a contingency such as the financial success of the company. Id. at 740. Compensation that is contingent upon determining the employer's financial success long after the work is performed is different from and inconsistent with the routine type of pay due ten days after it is earned. Id. Therefore, our supreme court ruled in favor of the employer and concluded that Highhouse's bonus did not constitute "wages." Id.
Here, Fabcon's commission program is based upon the profitability of the salesperson's individual projects. The salesperson earns no commission if the project does not result in a profit for Fabcon. The payment of commissions was not directly linked to the amount of work performed by Gress. To be sure, a salesperson could work for an entire year without earning any commissions if none of the projects were profitable. Appellee's App. p. 17-18. Moreover, although the commissions were paid once each month, the payments were based on the previous month's accounting events for the projectwhether all job costs had been paid, whether the job had "closed out," and whether any determination had been made with respect to profitabilityrather than on work performed by Gress in the previous month. Id. at 12, 23-24. In short, because of the length of time involved in determining the final commission, it was simply impossible for Fabcon to know what Gress was owed within ten days. In light of all this, we agree with the trial court that Gress's commissions were not "wages" within the purview of the Indiana Wage Payment Statute.
The judgment of the trial court is affirmed.
SHARPNACK, J., and FRIEDLANDER, concur.

Footnote: Ind. Code § 22-2-5-1, et seq.