Opinion ID: 1176472
Heading Depth: 3
Heading Rank: 1

Heading: Did Diethrich Fail to Pay Wages?

Text: A.R.S. § 23-355 provides that when an employer fails to pay wages due any employee the employee is entitled to recover an amount which is treble the amount of the unpaid wages. The term wages is defined in A.R.S. § 23-350(5) as follows: Wages means nondiscretionary compensation due an employee in return for labor or services rendered by an employee for which the employee has a reasonable expectation to be paid whether determined by a time, task, piece, commission or other method of calculation. Wages include sick pay, vacation pay, severance pay, commissions, bonuses and other amounts promised when the employer has a policy or a practice of making such payments. (Emphasis added.) Noting the ambiguous nature of the statute, slip op. at 33, the court of appeals resorted to the doctrine of the last antecedent, holding that the qualifying words  when the employer has a policy or a practice of making such payments  applied not only to other amounts promised but to severance pay. The severance pay which Diethrich had expressly promised to pay Schade was not wages because Diethrich had neither a policy [n]or a practice of making such payments. We disagree with this conclusion for several reasons. The statute is ambiguous: the qualifying phrase at the end of the second sentence may modify only the employer's liability for other amounts promised or the entire enumeration of benefits included in the second sentence, including severance pay. Under the doctrine of last antecedent, however, the modifying phrase would ordinarily apply only to the phrase which directly precedes it and not to words further removed. Tanner Companies v. Arizona State Land Department, 142 Ariz. 183, 189, 688 P.2d 1075, 1081 (App. 1984). Thus, the limiting condition of policy or practice should apply only to amounts promised and not to sick pay, vacation pay, severance pay, commissions and bonuses. Tanner Companies indicated, however, that where, as in the statute before us, the limiting phrase is connected to prior words by a term such as other, the limiting phrase may be connected to the prior words. But this is an exception to the rule and need not be applied. Id.; see also Federal Trade Commission v. Mandel Brothers, Inc., 359 U.S. 385, 79 S.Ct. 818, 3 L.Ed.2d 893 (1959); Town of Florence v. Webb, 40 Ariz. 60, 9 P.2d 413 (1932). The cardinal rule of statutory interpretation is to determine and give effect to the legislative objectives. Calvert v. Farmers Insurance Co., 144 Ariz. 291, 697 P.2d 684 (1985); Mandel; Tanner Companies; Webb. By applying the exception to the rule of the last antecedent, the court of appeals did just the opposite. If the limitation requiring a policy or a practice is applied to each type of payment enumerated in the second sentence of A.R.S. § 23-355, then employers of only one employee or those with a unique employee will be exempted from the application of the statute merely because they have no other employees in the same category as the one to whom the promise was made. The purpose of A.R.S. § 23-350 is to define the terms used in the sections that follow. Listing various forms of compensation  sick pay, vacation pay, severance pay, etc.  furthers this goal. In order to make the definition complete, the legislature added the phrase and other amounts promised when the employer has a policy or a practice of making such payments. We believe that a restrictive interpretation of the statute would frustrate important legislative objectives. The treble damage statute deters employers from withholding or delaying payment of sums which employees have earned, Apache East, Inc. v. Wiegand, 119 Ariz. 308, 312, 580 P.2d 769, 773 (App. 1978), and protects employees from an employer's groundless refusal to pay compensation which was promised and which was due in return for work performed. Nieto-Santos v. Fletcher Farms, 743 F.2d 638, 642 (9th Cir.1984) (statute is inapplicable, therefore, to damages for breach of a contract to employ). The legislature surely did not intend to permit an employer to procure labor or services by a specific promise of compensation and then evade financial responsibility merely because he only had a single employee, made the promise to a unique employee, or made a unique promise to one of many employees. In this case, Diethrich made the promise of a separation package in part for Schade's services. More important to the present inquiry, the promise was made to induce Schade to perform services for the upcoming Congress. Schade provided those services and testified that he would not have done so without Diethrich's promise. While the amount was subject to computation, the obligation to pay was absolute, not discretionary. By its terms, the statute subjects an employer to treble damages for failing to pay nondiscretionary compensation for labor or services actually performed and for which the employee had a reasonable expectation, no matter how the compensation is calculated or whether labeled as wages, sick pay, vacation pay, severance pay, commissions or bonuses. See Abrams v. Horizon Corp., 137 Ariz. 73, 77, 669 P.2d 51, 55 (1983). The requirement of a policy or practice of making such payments is applicable only to the nonenumerated types of benefits  other amounts promised  which might not ordinarily qualify as compensation for services rendered. [10] In the case before us, Diethrich's commitment made the severance compensation nondiscretionary. It was for services rendered before the promise and for services actually rendered after the promise. Schade had a reasonable expectation that he would be so compensated because Diethrich had made a specific promise and had allowed Schade to perform on that expectation. The trial court properly applied A.R.S. § 23-355.