Opinion ID: 1213759
Heading Depth: 3
Heading Rank: 4

Heading: Liquidated damages under Ohio's Prompt Pay Act

Text: Count III of the Dellarussiani complaint sought liquidated damages available under Ohio Revised Code § 4113.15(B), also known as the Prompt Pay Act or the Prompt Payment Act, which states: Where wages remain unpaid for thirty days beyond the regularly scheduled payday or, in the case where no regularly scheduled payday is applicable, for sixty days beyond the filing by the employee of a claim or for sixty days beyond the date of the agreement, award, or other act making wages payable and no contest[,] court order or dispute of any wage claim including the assertion of a counterclaim exists accounting for nonpayment, the employer, in addition, as liquidated damages, is liable to the employee in an amount equal to six per cent of the amount of the claim still unpaid and not in contest or disputed or two hundred dollars, whichever is greater. (Emphasis added). [2] The district court found that disputes accounting for nonpayment of the wages claimed by plaintiffs did exist and that therefore as a matter of law, plaintiffs could not receive liquidated damages. See Dellarussiani J.A. 28. So the trial court granted the employer's motion for summary judgment on count III. We agree. The district court correctly reasoned that Ohio law requires that a dispute accounting for nonpayment precludes the award of liquidated damages to a wage claimant. See, e.g., Jones v. Select Indus. Corp., 2006 WL 1705201, at  (S.D.Ohio 2006) (where the employer disputes the wage claim, no liquidated damages are due). Plaintiffs contend that there was no dispute in this case, because the employer never informed its employees that the employer was disputing the employees' entitlement to certain wages. Dellarussiani Appellants' Br. at 36. But the statute does not require such interaction between an employer and an employee. And even though the cases cited by defendants involve situations where an employer had to decide whether wages were due as a matter of policy, nothing in the statute limits a dispute accounting for nonpayment to such situations. See Fridrich v. Seuffert Construction Co., Inc., 2006 WL 562156, at  (Ohio Ct.App.2006) (deciding that dispute existed as to whether Seuffert Construction's vacation policy required the payout for unused vacation days); Haines & Company, Inc. v. Stewart, 2001 WL 166465, at  (Ohio Ct.App. 2001) (holding that where parties disputed whether certain commissions were wages under Prompt Pay Act, a contest existed, meaning no liquidated damages were availible). We see no reason why a factual dispute over the hours worked could not suffice as a dispute accounting for nonpayment. Next, plaintiffs suggest that the district court's broad interpretation of what constitutes a dispute allows any recalcitrant employer to reflexively invoke the safe harbor that a dispute existed. Dellarussiani Reply Br. at 9. [3] That, according to plaintiffs, would render as surplus the statute's provision of liquidated damages. But there could be situations where, under the district court's interpretation of the statute, the liquidated-damages provision could come into play. Suppose an employer had promised to pay a certain sum, and the employees agreed that this sum was their due wage. However, a clerical glitch prevented the sum from being delivered to the employees. In such a situation, the employer could not reasonably maintain that a dispute accounted for nonpayment. Likewise, if an employer were short on incoming cash, and consequently had to delay paying its employees, but conceded the employees' entitlement to payment, the employer could not reasonably argue that a dispute accounted for nonpayment. Further, because application of the statute's safe harbor requires that there be a contest, court order, or dispute of a wage claim accounting for nonpayment, it is proper to focus on whether the asserted dispute accounts for the nonpayment. Thus, it is not the case that any recalcitrant employer can simply declare that there is a dispute and then retroactively insulate its actions. Concerning Dellarussiani, the defendants disputed that they owed anything more than what they paid their employees according to the employer's own payroll records. Contrary to plaintiffs' argument, the offer of judgment does not undermine the existence of a dispute accounting for nonpayment, because the Rule 68 offer did not concede liability; it was a procedural tool to encourage the quick resolution of litigation. Dellarussiani J.A. 281-82. Plaintiffs suggest that a jury decide whether a dispute existed. Dellarussiani Appellants' Br. at 36. However, plaintiffs have failed to raise a genuine issue of material fact, as required under Rule 56, as to whether defendants' disputes with the plaintiffs count as dispute[s] under the statute. The district court examined the facts surrounding each of the plaintiffs' claims and concluded that a dispute accounting for nonpayment did indeed exist. Dellarussiani J.A. 32-38. The district court framed its inquiry as one determining whether the evidence demonstrated a reasonable basis upon which Defendants disputed the plaintiffs' claims. Although asking whether the defendant has a reasonable basis for disputing the claims does not flow directly from O.R.C. § 4113.15(B), the district court's reasonable basis gloss aided its consideration of whether there was a genuine issue regarding whether there was a contest or dispute accounting for nonpayment. Plaintiffs have not shown that the district court erred in concluding as a matter of law that there was no genuine issue of material fact whether there was a contest or dispute accounting for nonpayment. Even if plaintiffs may have provided evidence creating an issue of fact as to whether the underlying FLSA and wage-payment violations occurred, that evidence, even when viewed most favorably towards plaintiffs, does not suggest that there was no dispute accounting for nonpayment. Rather, the evidence, even when viewed in the required light, establishes that a contest or dispute regarding defendant's liability for further wages accounted for its nonpayment. Alternatively, if plaintiffs had evidence that the wages were withheld even though defendants conceded or reasonably had to concede that the wages were due, such evidence  like evidence about clerical glitches or cash-flow problems  could create a triable issue of fact on the Prompt Pay Act claim. But in our case, the plaintiffs have no such evidence: the reason that the lawsuit has continued is that defendants do not concede that the wages claimed by plaintiffs are due. Therefore, the district correctly granted summary judgment in defendants' favor on count III.