June 2015 Bar Bulletin
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June 2015 Bar Bulletin

Do Contest Prizes Count as Wages?

By Karen Sutherland

 

Have you ever dropped your card into a fishbowl when attending a work-related event? If you won, did you keep the prize? What if winning required purchasing something that was paid for by your employer? Questions like these were addressed in Byrne v. Courtesy Ford,1 one of Washington's most interesting wage law cases.

Kenneth Byrne was a manager at Courtesy Ford. He periodically attended auto auctions where he would purchase cars for his employer and the auction house would then bill his employer for the cars. The parties disagreed as to whether the company required him to purchase cars at auction or if he did so to exercise more control over the dealership's inventory.2

On November 18, 1993, Byrne purchased about a dozen cars at an auction that included a drawing where a ticket with the buyer's name on it went into a basket for each car purchased. That night, the prize was a 31-inch television (which was considered big back in 1993). Byrne won the drawing and took the television home to his fiancée.3

The next day, Byrne told the general manager of the dealership that he had won. According to Byrne, the general manager "gave him a bad time" about not bringing the set to the dealership, but the tone was "banter." According to Byrne, the general manager told him he could keep the television. The general manager said they discussed the television, but that they did not agree on its ultimate disposition.4

Six days later, the owner of the company asked Byrne, "[W]here is my TV?" Byrne responded, "Your general manager gave it away." The general manager subsequently told Byrne that the owner was serious and really wanted the television. Two days later, the general manager told Byrne to bring in the television or be terminated, and then terminated his employment "on the spot" when the owner walked by during the meeting and apparently muttered, "Get rid of him."5

Byrne sued Courtesy Ford for wrongful termination, alleging breach of contract, violation of public policy and retaliation.6 The jury found that Byrne's termination "was in retaliation for his lawful refusal to return wages to his employer."7

On appeal, the first issue addressed by the Court of Appeals was: "Can a television be a wage?" The Court of Appeals provided two answers to this question, depending on which wage statute was under consideration:

Byrne's argument is persuasive to a point. As he notes in his brief, it makes sense that the definition of "wages" under the Minimum Wage Act is limited to monetary compensation, as it would be impossible to tell if the minimum wage is being paid if wages were paid in anything other than money. Conversely, to apply the chapter that prohibits the rebate or kickback of wages (chapter 49.52 RCW), the term should be defined more broadly, because any compensation that actually is a wage should be protected from rebate demands by employers. We agree that "wages" should be defined broadly in the context of employers' demands for wage rebate. The anti-kickback statute is to be liberally construed to advance the legislature's intent to protect employee wages and assure payment....8

Applying this analysis, the Court held: "A television certainly could be a wage in this context if an employee were regularly paid in televisions as part of his employment agreement.... In this context, however, where the employee is paid a salary and receives commissions and bonuses from sales, at most the television at issue could only be a ‘bonus.'"9

The Court of Appeals then addressed the issue of "Bonus as Compensation" and noted, "A discretionary bonus can be compensation under an implied contract, if given regularly so as to create an expectation that it will continue."10 However, the jury found no implied contract and the Court of Appeals found that the television did not meet the criteria for compensation as a discretionary bonus.11

The final issue addressed by the Court of Appeals was "Evidence of Television as Wage." The Court of Appeals held that it was not reasonable for the jury to infer that when the general manager allegedly said that Byrne could keep the television, it was compensation and then held as a matter of law that the television was not a wage. The Court of Appeals reversed the trial court's denial of Courtesy Ford's motions for judgment as a matter of law.12

One of the points made by Byrne that may have helped persuade the jury to find in his favor was the absence of a company policy regarding auction prizes. Employee handbooks do not normally address this issue, but if your clients are in an industry where raffles or drawings are common, it may make sense to specifically address them in a policy or to adopt a policy that clearly defines employee compensation and wages so as to leave no room for argument.

Karen Sutherland is the chair of the Employment and Labor Law Practice Group at Ogden Murphy Wallace, PLLC. She can be reached at www.omwlaw.com. This article only touches the surface of a complex area of the law and should not be relied on for any purpose.

1 32 P.3d 307 (Div. 2, 2001).

2 Id. at 309.

3 Id.

4 Id.

5 Id.

6 Id.

7 Id. at 309–10.

8 Id. at 310.

9 Id. at 311.

10 Id. (citations omitted).

11 Id. at 312.

12 Id.

 

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