The South Carolina Court of Appeals recently upheld a wage payment jury verdict in the amount of $1.6 million in favor of the employee. I regularly handle cases for wage payment and wage theft in SC, so I’m always interested to see the details of a case that went all the way to a jury trial and then went up on appeal. [Read more: Recovering Unpaid Wages in South Carolina]
Company Engages in Wage Theft in SC Against Its Employee
The employee, Paul David Hess, began working for Morphis Pediatric Group of Lancaster, P.A. and Dr. Elizabeth Morphis in 2009 as a nurse practitioner. Pursuant to the written employment agreement of 2010, the company agreed to pay a base salary and an annual bonus of 50% of net profit. In 2015, the company asked Hess to agree to change his bonus structure to 5% of the gross revenues. Hess received bonuses from 2015-2017 under the new agreement.
However, the company became cagey about providing Hess with financial information that he would need to confirm the proper calculation of his bonus. Even with the spreadsheets that the company did provide, the company deliberately deleted key information so Hess could not see it. Hess later gained access to the true financial information of the company, where he learned that the company was not being truthful about its financial position. The owner also ran her personally expenses through the business and paid herself high salaries and bonuses. After Hess filed his lawsuit, he sought payment for $650,000 in unpaid bonuses that were owed to him under the employment agreement and that the company had wrongfully withheld from him for 2010 onward.
After a jury trial, the jury awarded Hess $548,000 in total unpaid wages. Hess asked the court to triple the damages (called trebled damages), which is a remedy available under the S.C. Payment of Wages Act. The court did triple the damages and also awarded Hess $156,000 in attorney’s fees and $400,000 in interest.
Key Legal Issues in this Wage Theft Case
The company argued that Hess was too late in filing his lawsuit to meet the statute of limitations. Under the Wage Payment Statute, an employee has three years from the date of the unpaid wages to bring a lawsuit. The company argued that Hess should have been aware of the unpaid bonuses under the 2010 agreement, and if he was aware at that time and didn’t file his lawsuit, then his claim is barred. The court disagreed, especially considering the facts that the company and its owner deliberately withheld crucial financial information from Hess that prevented him from understanding the extent of the fraud that the company was engaged in.
The company also argued that Hess could not bring a standalone claim for the company’s failure to provide seven days’ written notice of any changes to the terns of employment. Under the Wage Payment Statute, “[a]ny changes in these terms [of employment] must be made in writing at least seven calendar days before they become effective.” S.C. Code § 41-10-30(A). Defense lawyers often argue that the Act does not allow an employee to bring a lawsuit based on a failure to provide seven days’ written notice. However, the Court of Appeals clarified that the Wage Payment Act does allow an employee to bring a claim for any income loss resulting from the change, if the company did not provide the required written notice. This ruling will prove helpful to employees moving forward.
The company argued that the trial judge should not have trebled/tripled the unpaid wages amount because the company had a “good faith belief” that it did not have to pay Hess the amounts he was owed. An award of treble damages is discretionary to the court, meaning the judge has to decide whether the company had any good faith belief that it did not have to pay the amounts owed to the employee. [Read more: Treble Damages for SC Wage Payment Claims] Here, the jury found sufficient evidence that the company and its owner purposefully withheld financial information from Hess and knowingly refused to pay what was owed. These facts justified the court’s decision to grant triple damages.
Hess appealed the trial judge’s more modest award of attorney’s fees. The Wage Payment Act allows an employee who is successful at trial to recover attorney’s fees. Judges have to decide what the properly hourly rate will be. The Act is designed to encourage plaintiff’s attorneys to take wage payment cases by providing for attorney’s fees as an additional remedy. Here, Hess’s attorney requested an hourly rate of $450, but the trial judge decided that $300/hour was more appropriate. (In my own practice, my hourly rate is $400-$500/hour, while defense firms often charge far above that.) The judge did not provide any basis for the lower fee amount, and Court of Appeals decided instead that the $450/hour was reasonable and supported by the facts.
Takeaways for South Carolina Employees
This case marks a big victory for South Carolina employees. We’ll be able to use this decision to better support the claims of employees who have been victims of wage theft in SC by their employers. With the clarification on the seven days’ notice provision, employees can confidently claim damages resulting from a company failing to provide written notice. Under the attorney’s fee issue, we now have support from the Court of Appeals for the more reasonable hourly rates that a court can award to plaintiffs. And we have some good language on the award of treble damages, which is the big stick that can help increase the value of wage payment claims (and, hopefully, serve as a deterrent for future violations of the Act).
I regularly represent employees for unpaid wages and wage theft in SC. [Read more: Do I Need a South Carolina Unpaid Wages Lawyer?] When all else fails, you should pay a person what you promised them and what that person earned. Anything less is dishonest, unethical, and illegal under the laws of South Carolina. If you have been the victim of wage theft in SC and are owed unpaid wages, reach out to our office at (864) 233-4351 or via our Contact Us page for a discussion about your legal options.
