Utley v. Mill Man Steel, Inc.
357 P.3d 992
| Utah | 2015Background
- Mill Man Steel fired sales agent Kendall Utley after discovering ~700 tons of company steel missing; Mill Man alleged misappropriation and withheld Utley’s earned commissions (~$100,480) to offset losses.
- Utley sued for breach of contract and violations of the Utah Payment of Wages Act (UPWA); district court granted summary judgment to Utley, awarded wages plus penalties (~$205,262.37).
- Mill Man appealed, arguing UPWA § 34-28-3(5)(c) permits withholding when the employer “presents evidence that in the opinion of a hearing officer or an administrative law judge would warrant an offset.”
- The central dispute: whether the statute requires a pre-withholding opinion (or other prior authorization) and whether a district court judge qualifies as a “hearing officer.”
- The Utah Supreme Court reversed, holding an employer may present evidence to a court after withholding but risks statutory penalties if the offset is not later found warranted; it also construed “hearing officer” to encompass district judges.
Issues
| Issue | Plaintiff's Argument (Utley) | Defendant's Argument (Mill Man) | Held |
|---|---|---|---|
| Whether § 34-28-3(5)(c) requires an employer to obtain an opinion authorizing an offset before withholding wages | "Unless" imposes a temporal precondition: employer must secure an opinion before withholding | "Unless" is merely conditional; employer may withhold and later seek a hearing-officer or judge’s opinion validating the offset | Court: "unless" is a condition (not necessarily temporal); employer may withhold and later seek a judicial/ALJ opinion, but faces UPWA penalties if offset not warranted. |
| Whether a district court judge is a permissible "hearing officer" under § 34-28-3(5)(c) | A district judge is not an "administrative law judge" or typical "hearing officer"; statute contemplates administrative officers | "Hearing officer" can be read broadly to include district judges; otherwise subsection 5(c) would be a dead letter for >$10,000 claims heard only in district court | Court: "hearing officer" should be construed to encompass district court judges to avoid absurd results; concurrence would reach same result via the absurdity doctrine. |
| Whether requiring pre-withholding authorization better furthers UPWA’s purpose of prompt wage payment | Utley: pre-authorization protects prompt payment and prevents employers from using wages as a lien/settlement leverage | Mill Man: pre-authorization is impracticable within UPWA’s 24-hour pay window and would nullify § 5(c) | Court: balances purposes—permits post-withholding judicial/ALJ review to validate offsets but subjects employers to liability and penalties if not justified. |
| Effect of employer’s later failure to prove offset (civil/criminal exposure) | Employer should not be allowed to risk criminal liability by withholding absent prior approval | Employer must accept risk of penalties; statute’s remedial scheme and prosecutorial discretion limit overreach | Court: employer acts at peril—if judge/ALJ concludes evidence does not warrant an offset, employer liable under UPWA (civil penalties, possible misdemeanor exposure). |
Key Cases Cited
- Encon Utah, LLC v. Fluor Ames Kraemer, LLC, 210 P.3d 263 (Utah 2009) (prefer statutory reading that avoids absurd results)
- Gagnon v. Scarpelli, 411 U.S. 778 (U.S. 1973) (due-process standards for revocation hearings; use of "hearing officer" terminology in probation/revocation context)
- Morrissey v. Brewer, 408 U.S. 471 (U.S. 1972) (probation/parole revocation framework cited for "hearing officer" usage)
- Cox v. Laycock, 345 P.3d 689 (Utah 2015) (distinguishing the absurdity doctrine from ordinary canons; "strong medicine" for overriding plain text)
- VCS, Inc. v. Utah Community Bank, 293 P.3d 290 (Utah 2012) (courts should avoid interpretations that render statutory provisions meaningless)