On January 4, 2013, Judge Irene M. Keeley of the United States District Court for the Northern District of West Virginia issued a Memorandum Opinion and Order that partially granted the Defendant’s Motion for Summary Judgment in the case of Eddy v. Biddle, Barr and Dolgencorp, LLC, Civil Action No. 1:11CV137. Judge Keeley subsequently entered a Final Judgment on January 11, 2013, and the case was dismissed with prejudice. The Final Judgment has now been appealed to the Fourth Circuit by both parties. Even though this case is on appeal, Judge Keeley’s discussion of the various claims Eddy asserted is instructive for attorneys coping with the shotgun-style litigation approach increasingly employed by those representing terminated employees (and helping employers perhaps avoid the suits in the first place). Judge Keeley’s ruling on the Wage Payment claim is of particular interest in that it turned on an interpretation of when a “discharge” effectively occurs under the Act and, thus, triggering the 72-hour clock for paying all wages due.

Eddy was terminated from her employment as a Store Manager of a Dollar General store for allegedly removing merchandise from the store without first paying for it in violation of company policy. Eddy subsequently filed suit in the Circuit Court of Monongalia County alleging (1) common law wrongful discharge; (2) age discrimination under the West Virginia Human Rights Act; (3) defamation; (4) conspiracy; (5) the tort of outrage; (6) state and federal wage and hour violations; and (7) violations of the West Virginia Wage Payment and Collection Act (WPCA). The defendants removed the case to federal court based on “federal question” jurisdiction.

Judge Keeley granted summary judgment to the defendants on all but the WPCA claim. On that claim, despite the absence of an actual motion having been made by Eddy, the Court exercised its authority to sua sponte grant judgment to Eddy. A summary of selected portions of Judge Keeley’s decision and rationale follows, with the claim most likely to force employers to reconsider their procedures.

Wage Payment and Collection Act. Eddy alleged that Dollar General violated the WPCA by failing to pay her wages in full within 72 hours of her discharge. Employers that violate the WPCA 72-hour rule are not only liable for the unpaid amount, but are also liable to the employee for three times that amount as liquidated damages.

Eddy argued her termination was effective on May 27, 2011, the day she was told she was fired. The WPCA was violated, she claimed, because she was not paid in full until June 8, 2011, some twelve days later. Dollar General argued that Eddy had informed it on May 27 that she intended to contest her termination under Dollar General’s employee discrimination hotline and, as a result, the termination decision was administratively ineffective until its internal investigation concluded on June 8, 2011, the same day that she was paid. The issue considered by Judge Keeley was quite simply whether Eddy was discharged on May 27 or June 8.

Dollar General also pointed out that (1) it advised Eddy when she called to file her internal complaint that she was still considered to be an active employee and (2) her continued active status through June 8 made her eligible for a quarterly bonus that was subsequently paid. Eddy countered, without contradiction, that she was not allowed to work past May 27, her payment on June 8 included compensation for work completed only to May 27, and that her insurance was cancelled as of May 27.

Judge Keeley reached her decision by interpreting the word “discharge” as used in the WPCA. The court pointed out that applicable regulations defined “discharge” as an “involuntary termination or the cessation of performance of work by an employee due to employer action.” W.Va. C.S.R. § 42-5-2.8 (emphasis added). The regulations further provide that the payment of all wages must be made “within seventy-two (72) hours of the employee’s final hour of employment.” W.Va. C.S.R. § 42-5-13.1 (emphasis added). Judge Keeley ruled that Dollar General’s “administratively active” theory found no support in the plain language of the statute or the regulations, noting that the statute focused exclusively on the end of “work” not the cessation of any active status. Judge Keeley ruled that since the plaintiff was neither working nor earning a salary after May 27, 2011, it was plain that she had “ce[ased] . . . performance of work,” and consequently, had been “discharged” with the meaning of WPCA. Although the plaintiff had not moved for summary judgment on the WPCA count, the Court sua sponte granted summary judgment to plaintiff. {NOTE: The West Virginia Legislature has taken up a bill that would require employers to make final payment to employees who are discharged no later than their next regular pay day – and not within 72 hours. If passed, this act would change the timing of when final payment would be required, but not the analysis of what is meant by “discharge” under the WPCA.}

Wrongful Discharge. Eddy contended that her termination violated a company policy of providing “a positive work environment” based on “respect and opportunity.” Judge Keeley acknowledged the long-established law that West Virginia is an “at-will” employment state and considered whether plaintiff’s claim satisfied the “substantial public policy” exception recognized by the West Virginia Supreme Court of Appeals decision in its 1978 Harless decision. Judge Keeley rejected plaintiff’s argument, holding that a private company’s internal employment policy does not qualify as the sort of “substantial public policy” defined in Harless which is only found in West Virginia’s “constitution, legislative enactments, legislatively approved regulations, and judicial opinions.”

Wage and Hour Claims. Eddy alleged that federal and state wage and hour laws were violated by Dollar General’s alleged failure to pay her overtime wages, making her work alone, and paying her less than her male peers. Eddy failed to respond to defendants’ arguments that she was exempt from overtime under the Fair Labor Standards Act (FLSA) as a managerial employee and that there was no evidence that she was paid less than male store managers. Consequently, Judge Keeley ruled she had waived those arguments. Judge Keeley further ruled since it was undisputed that over 80% of Dollar General’s employees were covered by the federal FLSA; Dollar General was not a covered “employer” under the West Virginia Act and Eddy’s state law wage and hour claims must fail.

Intentional Infliction of Emotional Distress – Tort of Outrage. Eddy’s claims of intentional infliction of emotional distress were based on her being discharged without progressive discipline; that Dollar General failed to pay many hours of forced overtime; and that there had allegedly been an attempt to fire her four years earlier in violation of the FMLA. Judge Keeley included a thoughtful summary of West Virginia law on the tort of outrage in her decision, including that such claims are generally not viable where the employee’s distress results from the discharge itself rather than from any improper conduct on the part of the employer in carrying out the discharge. Judge Keeley ruled as a matter of law, in part, that the employer’s otherwise legitimate exercise of its discretion to terminate an at-will employee without graduated discipline cannot reasonably be considered outrageous conduct.

Judge Keeley’s decision presents an accurate, cogent summary of the general law applicable to many of the employment-related claims typically brought by terminated employees and is an excellent resource for those who would benefit from a quick refresher on these subjects. More importantly, the decision raises significant questions as to whether an employer’s internal procedures, many of which involve internal appeal rights that may delay a final decision on discharge, affect the timing of the obligation to pay all wages in full. We recommend those procedures be closely examined and appropriate revisions be implemented.