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### STATE OF MICHIGAN

COURT OF APPEALS

ROBERT E. HEINE,

Petitioner-Appellee/CrossAppellant, UNPUBLISHED April 25, 2017

v No. 328964 Wayne Circuit Court MACH 1 GLOBAL SERVICES, INC., also known as MACH 1 AIR SERVICES, INC., LC No. 15-003562-AA

Respondent-Appellant/CrossAppellee.

Before: S AWYER , P.J., and S AAD and R IORDAN , JJ.

P ER C URIAM

.

This suit arises from a disput e between petitioner and respond ent about the payment of wages under the Payment of Wages and Fringe Benefits Act (PWFBA ), MCL 408.471 et seq. Respondent appeals the circuit court order that affirmed the de cision of an administrative law judge (ALJ), which required the payment of disputed earnings to petitioner. Petitioner crossappeals the same order, which denied his request for an award o f exemplary damages under the PWFBA. We affirm in part, reverse in part.

On appeal, respondent challenges the decision of the ALJ, as a ffirmed by the circuit court on appeal, which found that petitioner is entitled to the payme nt of certain earnings, despite petitioner’s resignation of emplo yment before the monies were t o be distributed. Respondent maintains that the earnings, which are characterized as commiss ions under the contract, are fringe benefits, not wages, under the PWFBA. As a related matt er, respondent argues that both
the ALJ and circuit court erred in finding that relevant provis ions of petitioner’s employment contract were ambiguous.

“This Court has limited review of a circuit court’s review of an agency determination. This Court must determine ‘whether the lower court applied corr ect legal principles and whether it misapprehended or grossly misapplied the substantial evidenc e test to the agency’s factual findings.’ This standard of revi ew is indistinguishable from t he ‘clearly erroneous’ standard of
review.” Dana v American Youth Foundation , 257 Mich App 208, 211; 668 NW2d 174 (2003) (citations omitted). “[A] finding is clearly erroneous when, o n review of the whole record, this
Court is left with the definite and firm conviction that a mist ake has been made.” Boyd v Civil-2- Serv Comm , 220 Mich App 226, 235; 559 NW2d 342 (1996). “The circuit cou rt’s legal conclusions are reviewed de novo and its findings of fact are r eviewed for clear error. Great deference is accorded to the circuit court’s review of the [adm inistrative] agency’s factual findings; however, substantially less deference, if any, is acc orded to the circuit court’s
determinations on matters of law.” Mericka v Dep’t of Community Health , 283 Mich App 29, 36; 770 NW2d 24 (2009) (quotation marks and citations omitted). “[Q]uestions of statutory interpretation are reviewed de novo by this Court.” Dana , 257 Mich App at 211. Specifically, “[i]f an administrative agency or circuit court interprets a st atute, such a determination is a question of law subject to review de novo.” Mericka , 283 Mich App at 36.

MCL 408.471 of the PWFBA defines th e terms “fringe benefits” a nd “wages” as follows:

(e) “Fringe benefits” means compensation due an employee pursua nt to a written contract or written policy for holiday, time off for sickness o r injury, time off for personal reasons or vacation, bonuse s, authorized expenses incu rred during the course of employment, and contri butions made on behalf of an em ployee.

(f) “Wages” means all earnings of an employee whether determine d on the basis of time, task, piece, commission, or other method of calculatio n for labor or services except those defined a s fringe benefits under subdivis ion (e) above.

“Fringe benefits” are to be paid by an employer “to or on behal f of an employee in accordance with the terms set forth in the written contract or written pol icy.” MCL 408.473. An employer is not permitted to “withhold a payment of compensation due an employee as a fringe benefit to be paid at a termination date unless the withholding is agreed upon by written contract or a signed statement obtained with the full and free consent of the employee without intimidation or fear of discharge for refusing t o agree to the withholding of t he benefit.” MCL 408.474.

In accordance with the relevant provisions of MCL 408.475(1): “An employer shall pay to an employee voluntarily leavi ng employment all wages earned and due, as soon as the amount can with due diligence be determined.” Penalties for violation of specific sections of the Act, including sections MCL 408.472 through MCL 408.478, include “ex emplary damages of not more than twice the amount of wage s and fringe benefits which w ere due, if the violation is flagrant or repeated.” MCL 408.488(2).

The “Compensation” portion of petitioner’s employment contract with respondent provides, in relevant part:

4. Compensation.

a) During Employee’s employment h ereunder, the Employer shall p ay Employee an annual salary of ONE HUNDRED TWENTY THOUSAND DOLLARS ($120,000.00) per year (the “ Salary”), which Salary sha ll be payable to Employee in accordance with t he standard salary policies of the Corporation as they may exist from time to time. Salary payments shall be sub ject to withholding and other applicati on taxes. The salary is subject to adjustment at the discretion of the Corporation.-3- b) Commissions:

(i) Year 1: A lump sum payment of $10,000.00 on each account t hat exceeds $300,000.00 of revenue per year (in a twelve month time frame) provided the gross margin of the account is 27.5%. A quarterly payment of 1% of gross revenue for e very $100,000.00 increment over $30 0,000.00 in gross revenues provided the gross margin of the account exce eds 30%.

* * *

Successive Years: A lump sum payment of $5,000.00 on each acco unt that exceeds $300,000.00 of revenue per year (in a 12 month tim e frame) provided the gross margin of the account exceeds 27.5%. A quar terly payment of 1% of gross revenue for every $100,000.00 increment over $300,000.00 in gross revenues provided the gross margin of the account exceeds 30%.

(ii) All business over $1,000,000.00 pe r calendar year secured by other
national account executives ini tially recruited by Employee wil l be commissioned at one-half of one percent to the Employee subject to Notes 1 through 7 below.

(iii) The Employee shall be eligible for any other incentive pr ograms or bonuses generally made available to positions of Vice President -National

Accounts.

* * *

Note 7: All commission items contained in 4.b) are considered incentive plan items. Employee must be an employee on the date of the distribution of an incentive check/commission check to be a pla n participant and to be e ntitled to payment.

* * *

11. Termination by Employee. Employee, upon at least 14 days p rior written notice, may terminate his employment under Section 1 of this Ag reement for no cause whatsoever. In the event of such termination, Employee s hall receive compensation he is entitled to receive pursuant to Sections 4 and 5 of this Agreement, calculated to the date of termination.

Respondent argues that the empl oyment contract clearly identif ies the earnings as an “incentive,” and therefore, a fringe benefit, not wages. Also, respondent says that the contract is clear that entitlement to payment is contingent upon employment at the time of distribution. Because petitioner resigned from his employment with respondent before the distribution of the commission check, respondent say s plaintiff is not entitled to payment.-4- The ALJ found a contractual ambiguity and held that the earnin gs were payable as wages rather than as an incentive plan or bonus. The ALJ noted that the employment contract included
commissions under the broader he ading of compensation, despite labeling them within the same section as an “incentive plan.” Supporting her finding of ambi guity, the ALJ referenced a provision in the personnel policy handbook, which, despite refe rencing commissions as an incentive plan, indicated that i ncentive plans “are annual plan s with quarterly prepayments.” Because commissions were paid quarterly, but not until the comp letion of an accounting, “typically 45 to 90 days after the end of a quarter,” the ALJ d etermined that “finding
commissions to be incentives is inconsistent with the handbook. ” As a result, the administrative law judge found that respondent violated MCL 408.475(1) of the Act because the disputed earnings comprised wages and not a fringe benefit and, therefor e, necessitated payment. On appeal, the circuit court afforded deference to the ALJ’s decis ion and, despite some concerns with the analysis undertaken, affirmed the ruling of the ALJ, f inding it not to be arbitrary or contrary to the law.

In support of their argument that the disputed earnings compri sed a fringe benefit as an incentive plan or bonus and not wages, respondent relies on thi s Court’s decision in Gravely v Pfizer, Inc , 170 Mich App 262, 268; 427 NW2d 613 (1988). In similar circu mstances, this Court
in Gravely affirmed an administrative hearing referee’s ruling that the d isputed earnings were a fringe benefit because they comprised incentive pay, which cons tituted a “bonus” and not wages.
In both Gravely and this case, “[t]he disputed earnings were not based on a st raight commission. Rather, the bonus incentive plan p rovided that the percentage r ate would be increased as total sales met or exceeded a set quota.” Id. at 267. As such, the “program constituted a ‘bonus’ plan.” Id . The definition of the term “bonus” is found in Mich Admin Co de, R 408.9002(2)(d), which states that the word “ ‘[b]onus’ means a premium or extra or irregular remuneration in addition to wages that is awarded to an employee under a writte n contract or written policy.”
The Gravely Court further opined that the par ties’ respective characteriza tion of the disputed earnings “is not determinative since it is the legal status of those earnings which has been at
issue.” Gravely , 170 Mich App at 268.

Contrary to the circuit court’s ruling, the ALJ’s determinatio n that the disputed earnings comprised wages and not a fringe benefit is inconsistent with t he law. Although the employment contract references the disputed earnings as a “commission” in a section entitled “compensation,” this label is not dispositive. Id. Both the employment cont ract in § 4.b(iii) with the affiliated Note 7 and the personnel policy handbook indicat e that the disputed earnings comprise part of an incentive plan, not wages. The designation of the disputed earnings as a “bonus,” and therefore, a fringe benefit, is consistent with th e definition of a bonus in Rule 408.9002(2)(d) and case law. In Anusbigian v Trugreen/Chemlawn, Inc , 72 F3d 1253, 1254 (CA 6, 1996), citing Gravely as authority, the court stated, “[P]laintiff was not entitled t o commissions on sales made until t he sales in the specific area had met or exceeded a set quota. Such an arrangement constitutes a ‘bonus’ plan, not commissions .”

This Court is required to “uphold an agency decision if it is supported by such evidence as a reasonable mind would accep t as adequate to support the de cision.” Century Cellunet of Southern Mich, Inc v City of Ferrysburg , 993 F Supp 1072, 1078 (WD Mich, 1997). The Court is further required to “give def erence to the agency’s regulato ry expertise and not invade the province of the administrative fact finding agency.” Id. In this instance, the application of law-5- by the administrative law judge, as affirmed by the circuit cou rt, is based on the faulty premise that the employment contract is ambiguous.

An ambiguous contract has been defined “as one in which the wo rds may reasonably be understood in different ways.” Allstate Ins Co v Keillor , 450 Mich 412, 423-424; 537 NW2d 589 (1995). The employment contract in § 4.b(iii) and Note 7 i dentifies “commissions” as comprising “incentive programs or bonuses” or “incentive plan i tems,” thus distinguishing them from wages. As acknowledged by the ALJ, the personnel handbook also refers to “commissions” as “incentive plans.” The only alleged inconsist ency identified is within the personnel handbook where it suggests that the commissions are “ prepaid.” Initially, it is significant to note that the personnel handbook is subject to u nilateral revision by respondent, whereas petitioner’s employment contract with respondent requir es “a writing signed by all the parties” to amend the terms of the contract. The employment co ntract states, in conjunction with Note 2 of § 4, that “Commissions/i ncentives may be paid prior t o invoice collection by the company; however, commissions/incentives are not considered per manently earned until all freight invoices are paid by clients in full prior to 90 days f rom the date of the invoice.” “If no reasonable person could dispute the meaning of ordinary and pla in contract language, the Court must accept and enforce contractual language as written . . . . ” Laffin v Laffin , 280 Mich App 513, 517; 760 NW2d 738 (2008). Here, we hold that the contractlanguage belies the existence of any ambiguity. See Holmes v Holmes , 281 Mich App 575, 594; 760 NW2d 300 (2008) (“If the contract, although inartfully worded or clumsily arranged, fairly admits of but one interpretation, it is not am biguous.”) (citation omitted).

Similarly, petitioner’s contention that § 11 of the employment contract creates an ambiguity or governs the interpre tation of the contract is with out merit. Specifically, § 11 of the contract pertains to an employee’s voluntary termination of emp loyment and necessitates the “receipt [of] compensation [the employee] is entitled to receiv e pursuant to Sections 4 and 5 of this Agreement, calculated to t he date of termination.” Petiti oner suggests that calculation of the earnings “to the date of termina tion,” implies his entitlement to the earnings for the time period in dispute. Petitioner ignores, however, that the cited provis ion does not mandate payment in this circumstance because he was not entitled to compensation f or the disputed earnings under § 4 of the employment contract. Specifically, the disputed ear nings comprise an incentive that petitioner is ineligible to receive because he was not “an empl oyee on the date of the distribution,” which renders § 11 inapplicable. This is consis tent with MCL 480.474, which precludes an employer from “withhold[ing] a payment of compensa tion due an employee as a fringe benefit to be paid at a termination date unless the with holding is agreed upon by written contract or a signed statement obtained with the full and free consent of the employee without intimidation or fear of discharg e for refusing to agree to the withholding of the benefit.”

Accordingly, petitioner is not entitled to the benefits at iss ue because they are fringe benefits under the PWFBA and the employment contract conditione d their payment based on petitioner being employed at the time the payments were distrib uted. Further, because we have determined that respondent did not violate the PWFBA, petitione r’s issue on cross-appeal—that he is owed exemplary damages b ecause of the PWFBA violation—nec essarily fails.-6- We affirm the denial of exemplary damages and reverse the awar d of the disputed earnings as wages to petitioner. Respondent, as the prevailing party, may tax costs pursuant to
MCR 7.219.

/s/ David H. Sawyer /s/ Henry William Saad
/s/ Michael J. Riordan