Opinion ID: 521941
Heading Depth: 3
Heading Rank: 1

Heading: Salary Per Annum

Text: O.C.G.A. Sec. 34-7-1 provides as follows: 26 If a contract of employment provides that wages are payable at a stipulated period, the presumption shall arise that the hiring is for such period, provided that, if anything else in the contract indicates that the hiring was for a longer term, the mere reservation of wages for a lesser time will not control. An indefinite hiring may be terminated at will by either party. 27 O.C.G.A. Sec. 34-7-1 (1988). Tipton relies on a 1981 Georgia Court of Appeals case which held that under section 34-7-1, an 'offer of employment at so much per month will, in the absence of anything further indicating the period of employment intended, be treated as meaning employment for a term of one month.'  Floyd v. Lamar Ferrell Chevrolet, Inc., 159 Ga.App. 756, 757-58, 285 S.E.2d 218, 219 (1981), quoting Odom v. Bush, 125 Ga. 184, 184, 53 S.E. 1013, 1013, (1906). Tipton contends that since she was offered a salary for a specific amount per year, the offer must be treated as meaning employment for a term of one year. 28 Other and later cases of the Georgia Court of Appeals, however, do not support Tipton's argument. In Taliaferro v. S & A Restaurant Corp., 172 Ga.App. 399, 323 S.E.2d 271 (1984), the appellant attempted to argue that the salary stipulation of $12,000 per year in the letters gives rise to the presumption that the hiring was for a period of one year under O.C.G.A. Sec. 34-7-1. Id. at 400, 323 S.E.2d at 272. The Court of Appeals disagreed with this argument. The court noted that the salary provision in the letters did not give rise to the presumption set forth in section 34-7-1, but instead, the letters established an atwill relationship between the parties that was subject to termination by either party at any time. Id. 29 In Fortenberry v. Haverty Furniture Co., Inc., 176 Ga.App. 360, 335 S.E.2d 460 (1985), the appellant also attempted to argue that the stipulation of annual pay in a written agreement raised a presumption that the agreement established a one-year contract. The Court of Appeals rejected this argument holding that the reference to appellant's annual salary in the written agreement merely established the total amount of his salary during a 12-month period and did not establish a pay period requiring application of the presumption under O.C.G.A. Sec. 34-7-1. Id. at 360, 335 S.E.2d at 460. 30 And finally, in Gatins v. NCR Corp., 180 Ga.App. 595, 349 S.E.2d 818 (1986), the Court of Appeals again held that an annual salary provision in an employment contract does not give rise to the presumption of a one-year contract under O.C.G.A. Sec. 34-7-1. Id. at 597, 349 S.E.2d at 820. Specifically, the court stated that [t]he computation of the salaries on an annualized basis does not turn this compensation term into a duration term. Id. The Gatins court also noted that the statement of an annual salary provision in a contract does not create an ambiguity as to the duration term of the contract. Id. 31 We agree with the district court below that in Taliaferro, Fortenberry, and Gatins, the Georgia Court of Appeals gave a literal interpretation to O.C.G.A. Sec. 34-7-1. Under this interpretation, if the presumption under section 34-7-1 is to arise, the employment contract must provide that the wages are payable at a stipulated period. Therefore, an annual salary provision in an employment contract will not establish the presumption under section 34-7-1 unless the employee is also paid on an annual basis. If the employee is paid on a weekly, bi-monthly or monthly basis, the statement of an annual salary will not create a binding one-year contract. The district court also correctly noted that this literal interpretation does not conflict with Floyd since it appears that the employee in Floyd was paid at the stipulated period, monthly. 32 In the instant case, the evidence shows that Tipton was paid on a monthly or bi-monthly basis. Since she was not paid on an annual basis, the annual salary provision in her employment agreement does not establish a binding one-year contract. Consequently, O.C.G.A. Sec. 34-7-1 does not support Tipton's argument that CIBC breached the durational term of her employment agreement.