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Schilling v. Radio Holdings Inc.9/3/1998
Oral Argument Date: 06/18/97
Source of Appeal: Appeal from Superior Court of King County Docket No: 93-12-23705-7 Judgement or order under review Date filed: 12/15/95
En Banc
Radio Holdings, Inc., and its president, Robert Bingham, failed to pay wages due Sarah Schilling. Bingham does not dispute Radio Holdings employed Schilling, Schilling is owed back wages, or she was not paid, but alleges Radio Holding's financial problems prevented payment of Schilling, precluding a finding he or the corporation willfully withheld the wages. The King County Superior Court granted summary Judgement to Schilling on her claim for double damages pursuant to RCW 49.52.070, which provides for such damages when an employer willfully withholds wages due an employee. As Bingham's refusal to pay wages is willful under a long line of Washington cases and we decline to engraft a "financial inability" defense onto RCW 49.52.070, in the absence of express legislative direction, we affirm the trial court's Judgement.
ISSUE
Does an employer who fails to pay an employee's back wages, because of alleged financial inability to do so, willfully withhold such wages within the meaning of RCW 49.52.070?
FACTS
Robert Bingham was president of Radio Holdings, Inc. (Radio Holdings); he and his spouse were sole shareholders of the corporation. Until March 1993, Radio Holdings owned KKFX radio station where Schilling worked as an office manager from January 1991 to March 1993.
In April 1992, Radio Holdings began experiencing financial difficulties and stopped issuing regular paychecks to KKFX employees. Instead, employees were issued "advances on payroll due," which were variable cash amounts representing a portion of each employee's wages due; the balance of the wages would be paid at a later date. These advances were issued so that Radio Holdings could pay other bills to stay in business. Schilling and the other KKFX employees were aware of Radio Holdings' financial problems.
At some point during 1992, Children's Media Network (CMN) agreed to purchase KKFX from Radio Holdings. Bingham asserted the sale was controlled by U.S. Bank, Radio Holdings' secured creditor, but he tried to negotiate payment of employee wages out of the sale proceeds. Bingham later stated, "After negotiating on behalf of the employees for their compensation out of the closing proceeds, I believed that I had come to a binding agreement that required the purchaser of the radio station KKFX to pay the employees' wages." Clerk's Papers at 243. The purchase agreement actually stated in pertinent part:
All wages and salaries of Seller's employees shall be paid and discharged by Seller to and including 11:59 P.M. on the Closing date, but to the extent, for reasons beyond Seller's control, Seller shall be unable to discharge its obligations in full as to any employee or employees, Buyer shall be allowed a credit therefor to permit payment thereof by Buyer.
Clerk's Papers at 196.
Bingham wrote to Schilling on August 28, 1992, expressly assuring her she would be paid in full:
I have made arrangements with the bank that all past due monies owed employees will be paid out of the closing proceeds upon completion of the sale.
Clerk's Papers at 195 (emphasis added). Bingham also assured Schilling orally she would be paid in full. Schilling received assurances as well from a person she believed was working for CMN. Schilling averred that she worked for a year without contemporaneous payment of wages because she believed she would be paid in full upon the sale of KKFX: "Because I thought I w
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