Lanphear v. Tognelli

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NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
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                                No. 90-210

Patricia Lanphear                            Supreme Court

                                             On Appeal from
     v.                                      Chittenden Superior Court

Carmen and Carlo Tognelli                    October Term, 1991

Frank G. Mahady, J.

William R. Marks, Burlington, for plaintiff-appellant

James J. Dunn of Mickenberg, Dunn, Sirotkin & Dorsch, Burlington, for

PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.

     MORSE, J.   Plaintiff brought suit against defendants, the owners and
operators of a small 12-unit motel in Burlington, alleging violation of 21
V.S.A. { 384(a), Vermont's minimum wage law.  After a court trial, plaintiff
recovered a $50 judgment.  She appeals, claiming the court erred in not
applying a Vermont Department of Labor and Industry regulation and in making
no award of attorney's fees.  Defendants cross appeal, claiming the court
erred in doubling actual damages under 21 V.S.A. { 347.  We reverse and
remand for recomputation of damages.
     The facts are not in dispute.  On September 8, 1984, plaintiff,
Patricia Lanphear, began working at the motel.  Her duties included acting
as desk clerk at the motel office, assisting with chambermaid and laundry
duties on an as-needed basis, and being available for nighttime
emergencies.  Plaintiff worked an average of 50 hours per week, for which
she was paid $80.  In addition to cash wages, plaintiff and her husband were
allowed to live rent-free in a three-room apartment adjoining the motel
office.  All utilities, including telephone, cable T.V., linen, and cleaning
materials were provided free of charge, as was off-street parking and use of
a washer and dryer.  The value of the non-cash compensation was $375 a
month, which, together with her weekly pay, translated into an hourly wage
of $3.33.  Plaintiff terminated employment at the motel on February 27,
     Plaintiff contended at trial that a Vermont Department of Labor and
Industry regulation, Wage Order No. 2, effective October 22, 1978, applied
to this case.  This Wage Order, ostensibly covering the motel industry,
permitted deductions from minimum wage of up to $18.00 per week for lodging
furnished an employee.  The court ruled, however, that Wage Order No. 2 was
not applicable to the small motel industry, based on testimony of Department
of Labor and Industry employees that it was customary and acceptable to
allow lodging on the premises as part of a compensation package.  According
to these witnesses, the Department allowed credit for the fair value of
lodging rather than the much lower rate allowed under the Wage Order in
determining minimum wage paid.
     Because $3.35 was the minimum wage at the time of plaintiff's
employment, the court determined actual damages to be $.02 an hour for
twenty-five 50-hour weeks, or $25.00.  It added another $25.00 under 21
V.S.A. { 347 (requiring forfeiture of twice the value of "unpaid wages" as
defined), for a total judgment of $50.00.
     The court erred in its disregard of the plain meaning of Wage Order No.
2, and substitution of the opinion of Department officials that full fair
market value of lodging should be applied to wages in the small motel
     Unless the regulation was invalid for some reason, it was the law.  An
employer is permitted to deduct from minimum wage an amount for lodging,
utilities, and other items which are usual in a particular industry "as
determined by the wage order made under this subchapter."  21 V.S.A. {
384(c).  Wage orders are initiated by a wage board appointed by the
Commissioner of Labor and Industry with approval of the governor.  21 V.S.A.
{ 385(4)(A).  Defendants advanced no reason for the invalidity of Wage Order
No. 2.
     Apparently, the Department officials did not enforce Wage Order No. 2
because they found it was unsuitable for the small motel industry.  There
may be good reason to doubt the wisdom of a fixed, artificially low
allowance for lodging, but the remedy is modification of the regulation, not
an ad hoc disregard of it.  See In re Peel Gallery, 149 Vt. 348, 351, 543 A.2d 695, 697 (1988) ("An administrative agency must abide by its
regulations as written until it rescinds or amends them" so that people
will know how to conduct their affairs.) (citations omitted).
     Wage Order No. 2 could not be clearer.  It contains no ambiguities
which may be interpreted by the agency to harmonize it with legislative
policy.  See Vermont State Employees' Ass'n v. State, 151 Vt. 492, 493, 562 A.2d 1054, 1055 (1989) (although Court generally defers to statutory
interpretation of administrative body, construction cannot withstand appeal
if it conflicts with unambiguous statutory language).
     Defendants argue that it was proper for the Department to deem Wage
Order No. 2 inapplicable because it involves a "deduction" from minimum
wage, while in the small motel industry it is usual to provide lodging as
part of a compensation package.  This is a senseless difference in
semantics.  It makes no difference whether the hourly wage is determined by
adding or deducting the value of lodging.  A predetermined wage is the wage
either way.
     We agree with defendants that the double recovery provision of 21
V.S.A. { 347 does not apply to this case.  Subchapter 2 ("Wages and Medium
of Payment") of chapter 5 ("Employment Practices") makes it unlawful to
delay payment of weekly wages beyond six days from the end of the week the
wages were earned.  21 V.S.A. { 342(a).  Subchapter 2 also provides other
measures to ensure prompt payment, the form of payment, investigative
procedures, and criminal and civil penalties.  In short, the penalty
provision applies only to violations of the timeliness and form of wage
requirements, not the under-payment of wages.  The minimum wage requirement
is found in subchapter 3 ("Minimum Wages"), a self-contained regulatory
scheme distinct from the preceding subchapter.  Criminal penalties and civil
remedies are unique to violations of the requirements in subchapter 3.  21
V.S.A. {{ 394(b), 395.
     If violations of requirements to pay no less than minimum wage under
subchapter 3 were automatically violations subject to subchapter 2
penalties, different remedies and penalties would apply to the same conduct,
rendering the less stringent sanctions of subchapter 3 meaningless.  See
Lomberg v. Crowley, 138 Vt. 420, 423, 415 A.2d 1324, 1326 (1980) (if two
statutory provisions seem to conflict, they should be interpreted and
harmonized so as to give effect to both) (emphasis added).
     Plaintiff also contends that the court erred in denying attorney's
fees because such an award is mandatory according to her reading of { 347.
Because we hold { 347 does not apply to this case, we remand for review
under { 395 in light of this opinion.  21 V.S.A. { 395 ("reasonable
attorney's fees . . . may be allowed by the court")
     Reversed and remanded for recomputation of damages in accordance with
the views of this opinion.

                                        FOR THE COURT:

                                        Associate Justice