Employment Law

Walczak v. Labor Works – Fort Wayne, LLC (Ind. March 13, 2013)

In this decision, the Supreme Court addressed some uncertainty that existed regarding the Wage Payment Act and the Wage Claims Act. The difference between these two statutory schemes, as succinctly summarized by the Supreme Court, is “that the Wage Payment Act applies to, among others, those who keep or quit their jobs, while the Wage Claims Act applies to those who are fired, laid off, or on strike.”

If a claim falls with the Wage Claims Act, an employee cannot file a suit in a state court before exhausting administrative remedies in the Department of Labor. If a claim falls within the Wage Payment Act, an employee may file a suit directly in court. The Supreme Court explained that this issue is jurisdictional and turns on the interpretation of the phrase “voluntarily leaves employment” as used in the Wage Payment Act, Ind. Code § 22-2-5-1(b), and “separates any employee from the payroll” as used in the Wage Claims Act, Ind. Code § 22-2-9-2(a).

The Court first held that the courts, not the Department of Labor, should decide whether an employee voluntarily left employment, explaining: “That is an issue of statutory construction dispositive on the question of jurisdiction, and it, therefore, lies squarely within the judicial bailiwick.” The Court elaborated that by leaving the determination to the Department of Labor, “we effectively would add an exhaustion requirement to the Wage Payment Act—an exhaustion requirement that as our Court of Appeals has noted, is wholly absent from the statutory text.” Rental Equip., Inc. v. Gifford, 744 N.E.2d 1007, 1010 (Ind. Ct. App. 2001) (“[A] plaintiff bringing a claim under I.C. § 22-2-5-2 is not required to first exhaust any available administrative remedies prior to filing suit.”).

The primary argument put forth by the employer in this case was that the Wage Payment could not apply to day laborers, who are, by the very nature of their work, separated from employment at the end of each day. The Supreme Court rejected this argument, primarily on policy grounds:
Ultimately, we believe the drafters of the Wage Payment Act intended the statute to benefit the entire Indiana workforce, including day labor employees. Day labor is not a newcomer to Indiana’s economy, and the drafters of the Wage Payment and Wage Claims Acts were likely aware of its role in the state’s employment landscape. Therefore, day labor employees are no less entitled to the statutory protections that the General Assembly has provided than any other Hoosier employees.
This case is, of course, important for employment law attorneys, as it clarifies the process for determining whether a claim falls within the Wage Payment Act or the Wage Claims Act. The opinion, written by Justice Massa, is also an interesting and enjoyable read. Justice Massa includes several literary references, a discussion of Indiana history as it relates to day laborers, and a pragmatic explanation of the ultimate legal conclusion:
Taken together, all of these circumstances lead us to conclude Walczak was not “separate[d] from the payroll” and need not comply with the requirements of the Wage Claims Act. Labor Works may say that all its employees are terminated after every shift and rehired the next day, like phoenixes rising daily from the ashes, but its employees, unlike those who have really been “separate[d] from the payroll,” have a realistic expectation that if they show up the next day, they may receive a job assignment. In other words, Walczak is more duck than phoenix.

This type of opinion and writing style helps both lawyers and non-lawyers understand a Court’s reasoning, and exemplifies the modern approach to legal writing.