Date: 02-06-2001

Case Style: Salon Enterprises, Inc. v. Topaze Langford

Case Number: 84,135

Judge: Schiffner

Court: Kansas Court of Appeals

Plaintiff's Attorney: Allan E. Coon and Gregroy D. Kincaid of Norton, Hubbard, Ruzicka & Kreamer, L.C., Olathe, Kansas

Defendant's Attorney: Thomas Kelly Ryan of Gates, Biles, Sheilds & Ryan, P.A., Overland Park, Kansas

Description: Salon Enterprises, Inc., d/b/a Par Exsalonce Hair Salon (Par Exsalonce) appeals from the ruling of the trial court that Par Exsalonce violated the Kansas Wage Payment Act (KWPA), K.S.A. 44-312 et seq., and the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 (1994) et seq.

Joan and Ronald Sandstrom are the owners and directors of Par Exsalonce. In November 1992, Par Exsalonce hired Topaze Langford as a hairstylist. No written employment agreement was entered into although Langford signed a form prepared pro se by Par Exsalonce agreeing not to work within 5 miles of Par Exsalonce for a 2-year period in the event she terminated her employment.

Pursuant to the oral agreement of the parties, Par Exsalonce was to deduct a 6% overhead from the total amount of money generated by Langford and then pay her a 50% commission on the balance. The overhead amount was later reduced to 5%. Langford also received a 10% commission on her retail product sales.

In January 1994, Par Exsalonce modified its pay plan. Under the new plan, Langford's compensation was calculated weekly, and she received commissions on retail and service revenues pursuant to a graduated scale. The commissions ranged from 50% to 60% after 5% for overhead expenses was subtracted from the total dollars she generated. Her retail product sales commission ranged from 10% to 15%, depending on the dollar level of her retail sales. Langford signed a document on January 15, 1994, entitled "Compensation Schedule" that contained the terms of the new pay plan but provided for nothing else.

Because of the increasing costs for retail hair products, Par Exsalonce instituted a new pay plan in June 1997 for all of its stylists. The 1997 plan increased the overhead percentage from 5% to 10% if a stylist failed to sell retail products amounting to at least 15% of his or her gross amount of revenue generated from services for the entire month. The commission was calculated monthly. Par Exsalonce reverted to its previous pay plan in January 1998.

Par Exsalonce informed the affected stylists of the new pay plan prior to its implementation and prior to the earnings by the stylists of any commissions affected by the plan. The plan was not in writing, and although Langford continued to work for Par Exsalonce, she objected to the plan, claiming that it was unfair and that a 10% deduction from gross service revenues was excessive.

Langford left Par Exsalonce in February 1998 and began working at another salon within 5 miles of Par Exsalonce. Par Exsalonce filed suit against Langford for breach of contract and against her new employer for tortious interference with a business relationship. Langford asserted counterclaims alleging Par Exsalonce had wrongfully withheld wages in violation of the KWPA and had failed to pay her overtime in violation of the FLSA.

The trial court dismissed Par Exsalonce's claim against Langford's employer with prejudice. Following a bench trial, the trial court denied Par Exsalonce's breach of contract claim, finding the covenant not to compete to be unenforceable.

The trial court found Par Exsalonce had wrongfully withheld wages of $369.80. It found that the withholding was intentional and that Langford was entitled to $739.40 in damages under K.S.A. 44-315(b). The trial court also found Par Exsalonce had violated the FLSA. However, because Langford failed to prove the number of overtime hours she had worked, it awarded Langford nominal damages of $1 and an amount for attorney fees to be assessed after a separate hearing. Langford was subsequently awarded $1,000 in attorney fees for the FLSA violation. Par Exsalonce timely appealed.

Par Exsalonce first argues the trial court erred in concluding it violated the KWPA, citing Alkire v. Fissell, 23 Kan. App. 2d 487, 932 P.2d 1034 (1997), which held that the KWPA does not address wage or pay cuts for at-will employees. Langford asserted at trial that Par Exsalonce unilaterally modified the terms of her compensation structure and wrongfully withheld her wages in violation of the KWPA. This case involves the interpretation of statutes, and this court's review is unlimited. See Hamilton v. State Farm Fire & Cas. Co., 263 Kan. 875, 879, 953 P.2d 1027 (1998).

Langford relies upon K.S.A. 44-319(a), which states:

"No employer may withhold, deduct or divert any portion of an employee's wages unless: (1) The employer is required or empowered to do so by state or federal law; (2) the deductions are for medical, surgical or hospital care or service, without financial benefit to the employer, and are openly, clearly and in due course recorded in the employer's books; or (3) the employer has a signed authorization by the employee for deductions for a lawful purpose accruing to the benefit of the employee."

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Click the case caption above for the full text of the Court's opinion.

Outcome: The evidence showed Par Exsalonce was not required to pay Langford overtime for a particular week under the exemption, and it is likely that Par Exsalonce was not required to pay Langford overtime under 29 U.S.C. § 207(i) for the duration of her employment. As noted by the trial court, Langford failed to establish when she had worked overtime during her 5-year tenure at Par Exsalonce and the number of overtime hours she had worked. Because of this failure, it was not possible for Par Exsalonce to show Langford's regular rate of pay for a certain period exceeded 1 1/2 times the applicable minimum hourly rate.

The trial court's ruling that Par Exsalonce violated the FLSA should be reversed as should its order awarding Langford $1,000 in attorney fees based on the FLSA violation.

Reversed.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: E-mail comments, corrections and/or updates to Kent Morlan