LABOR - OFFSET AGAINST EMPLOYEES' WAGES - ASSIGNMENTS OF FUTURE WAGES.
(1) A written agreement between an employer and employee under which the employer is entitled to deduct sums of money from the employee's wages due or to become due for the purpose of obtaining payment of amounts owed by the employee in connection with credit previously advanced by the employer to the employee, does not violate the provisions of RCW 49.52.050, relating to unlawful wage rebates.
(2) RCW 49.48.090 relating to the filing of wage assignments or orders with the county auditor does not apply to such a written agreement.
(3) RCW 49.48.100 requiring a wife's written consent for wage assignments or orders is applicable to such an agreement where the employee is a married man.
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May 16, 1968
Honorable James A. Andersen
State Senator, 48th District
3008 98th N.E.
Bellevue, Washington 98004
Cite as: AGO 1968 No. 20
By letter previously acknowledged you have requested an opinion of this office on questions pertaining to the applicability of certain statutes to an agreement entered into between an employer and an employee whereby the employer is authorized to make certain deductions from the employee's wages. We paraphrase your questions as follows:
(1) Do the provisions of RCW 49.52.050 and 49.52.060 make it unlawful for an employer, pursuant to a written agreement with his employee, to deduct sums of money from the employee's wages due or to become due for the purpose of obtaining payment of amounts owed by the employee in connection with credit previously advanced by the employer to the employee?
(2) Does RCW 49.48.090, relating to the filing of wage assignments or orders with the county auditor, apply to such an agreement as is described in question (1)?
[[Orig. Op. Page 2]]
(3) Does RCW 49.48.100, requiring a wife's written consent for wage assignments or orders, apply to such an agreement as is described in question (1) where the employee is a married man?
We answer questions (1) and (2) in the negative, and question (3) in the affirmative for the reasons set forth in our analysis.
In your letter you have described the factual situation giving rise to your questions as follows:
"A retail store permits its employees to make purchases and charge the same to their personal account, thus putting the employee in that respect in the same position as any other customer. The store asks the employee to sign the following agreement:
"'In consideration of your opening or continuing a charge account for me in your store, I hereby authorize you, at any time, to deduct from any wages due or to become due to me, such sums as in your discretion you deem necessary or desirable to apply on or to satisfy such account.'"
Your first question has to do with the applicability of RCW 49.52.050 and 49.52.060 to such an agreement as this. The first of these statutes reads, in material part, as follows:
"Any employer or officer, vice principal or agent of any employer, whether said employer be in private business or an elected public official, who
". . .
"(2) Wilfully and with intent to deprive the employee of any part of his wages, shall pay any employee a lower wage than the wage such employer is obligated to pay such employee by any statute, ordinance, or contract; . . .
[[Orig. Op. Page 3]]
". . .
"Shall be guilty of a misdemeanor."
The second statute, RCW 49.52.060, then provides that:
"The provisions of RCW 49.52.050 shall not make it unlawful for an employer to withhold or divert any portion of an employee's wages when required or empowered so to do by state or federal law or when a deduction has been expressly authorized in writing in advance by the employee for a lawful purpose accruing to the benefit of such employee nor shall the provisions of RCW 49.52.050 make it unlawful for an employer to withhold deductions for medical, surgical, or hospital care or service, pursuant to any rule or regulation:Provided, That the employer derives no financial benefit from such deduction and the same is openly, clearly and in due course recorded in the employer's books."
Clearly, this latter statute is not an independent enactment; rather, it simply limits the application of the first statute RCW 49.52.050, supra under certain conditions.1/ Therefore, unless this first statute must be deemed to apply to the employer's performance under an agreement of the type in question, it will not be necessary for us to comment on the scope of the exceptions contained in RCW 49.52.060.
We do not believe that RCW 49.52.050 renders it unlawful for an employer, pursuant to a written agreement with his employee, to deduct sums of money from the employee's wages due or to become due for the purpose of obtaining payment of amounts owed by the employee in connection with credit previously advanced by the employer to the employee. We base this conclusion on the same reasoning as was used in AGO 51-53-175 [[AGO 51-53 No. 175]], copy enclosed, in which we said that an employer may, without violating a different statute (RRS § 7594, now codified as RCW 49.48.010), withhold a sufficient sum from the wages of an employee to offset the employer's claim against the employee for credit advanced the employee during his employment.
[[Orig. Op. Page 4]]
The statute there construed prohibits employers from paying wages due to their employees in checks which are redeemable only in goods. Our conclusion was based on the reasoning that "wages due" refers to the amount of money that is actually owed by the employer to the employee, computed by deducting credit advances from earned wages.
Here, in the case of RCW 49.52.050 (2), supra, the requirement is simply that the employer not pay his employee ". . . a lower wage than the wage such employeris obligated to pay such employee by any statute, ordinance, or contract:. . ." (Emphasis supplied.) Because of the similarity in import of this language to the key phrase "wages due" in RCW 49.48.010 (construed in AGO 51-53-175 [[AGO 51-53 No. 175]]), application of the same reasoning as was used in that earlier opinion likewise supports the conclusion that the phrase reading "wage such employer is obligated to pay such employee" in RCW 49.52.050, supra, refers to earned wages less any amount that may be owing to the employer from the employee because of credit advanced by the employer.
In addition, we should note that the purpose of this statute, which our court has said to be the prohibition of secret wage rebates (McDonald v. Wockner, 44 Wn.2d 261, 267 P.2d 97 (1954)), would not be violated by the conduct of an employer who, pursuant to a written agreement entered into with his employee, deducted from the employee's earned wages sums of money for credit advanced. The employee in this case would still be receiving his agreed wage, although offset by the deduction for credit advanced.
Therefore, we answer your first question in the negative, and turn to your remaining two questions, which we shall consider and answer together.
Questions (2) and (3):
You have asked whether either RCW 49.48.090 or 49.48.100 applies to a written agreement such as that described above, whereby the employer is authorized to deduct sums of money from the employee's wages, due or to become due, to apply to credit advanced by the employer to the employee.
The first of these statutes, RCW 49.48.090, provides that:
"No assignment of, or order for, wages to be earned in the future to secure a loan of less [[Orig. Op. Page 5]] than three hundred dollars, shall be valid against an employer of the person making said assignment or order unless said assignment or order is accepted in writing by the employer, and said assignment or order, and the acceptance of the same, have been filed and recorded with the county auditor of the county where the party making said assignment or order resides, if a resident of the state, or in which he is employed, if not a resident of the state." (Emphasis supplied.)
From the portion of this statute which we have underscored, it must be concluded that the protection of RCW 49.48.090 runs solely to the benefit of the employer of the person making an assignment or order. This statute requires such employer to recognize only such assignments or orders as the employer has accepted and as have been recorded with the county auditor. This statute, then, has no application to the employer-employee agreement in question because here the employer and the person seeking to enforce the assignment or order are one and the same. For this reason, we answer your second question, as paraphrased, in the negative.
The second statute in chapter 49.48 RCW with respect to which you have inquired is RCW 49.48.100, which provides:
"No assignment of, or order for, wages to be earned in the future shall be valid, when made by a married man, unless the written consent of his wife to the making of such assignment or order is attached thereto."
Here, the issue to be determined is as to the scope of the phrase "assignment of, or order for, wages to be earned in the future" as used in this statute. Before stating our conclusion on this question, we believe it would be helpful to note the general attitude which courts have taken regarding the purposes of laws like this and the consequent rule of construction to be applied.
InCleveland, C. C. & St. L. Ry. Co. v. Marshall, 182 Ind. 280, 105 N.E. 570, 572 (1914), the Indiana supreme court, in construing the Indiana law prohibiting wage assignments without a spouse's consent, said:
". . . Improvident debts of the head of the family constitute an important factor, not [[Orig. Op. Page 6]] only in the destitution and illiteracy of the state's youth, but hinders the normal development of their physical, mental, and moral powers. By restricting the power of the householder to pledge his future earnings and those which he has not yet received, the tendency to heedless extravagance is measurably curtailed, . . ."
InLande v. Jurisich, 59 Cal. App.2d 613, 139 P.2d 657, 659 (1943), the California Appellate Court, in ruling on the application of the California wage assignment restriction law to a transaction which (like the one now before us) was not technically an assignment, said:
". . . Taking the statute as a whole, it manifests a legislative intent to protect wage earners and salaried workers against the possibility that, either from improvidence or under the stress of immediate necessity, they may go too far in sacrificing the future to the needs or desires of the present and leave themselves and their families without future means of support. . . ."
The court then concluded that such statutes are to be liberally construed and that the intent therein is to prevent wage earners from being deprived of the use of future wages, however accomplished. The court continued, at page 660:
". . . While the agreement is not technically an assignment, it does, if valid, pass to defendant an interest in plaintiff's future wages which defendant did not have before and in a sense may be regarded as having transferred or 'assigned' that interest to him. . . .
". . . In Trottier v. Foley, 1920, 42 R.I. 422, 108 A. 498 [[108 Atl. 498]], it was held that a workman's agreement acknowledging receipt of a loan from his employer, 'against which I pledge my wages until paid back,' was an assignment of future wages within the terms of a statute making such assignments invalid against attacking creditors unless recorded and defining 'assignment' to include 'every [[Orig. Op. Page 7]] instrument purporting to transfer an interest in or an authority to collect the future earnings of any person.' The latter part of this definition is similar to the word 'order' used in our statute."
We are constrained by the reasoning used in the above cases to conclude that the Washington wage assignment law must also be liberally construed. Therefore, we are of the opinion that the language, ". . . assignment of, or order for, wages to be earned in the future . . ." found in RCW 49.48.100,supra, is broad enough in scope to include the type of agreement between an employer and an employee which we are here discussing.2/ Unlike a mere payroll deduction authorization for the payment of insurance premiums, "united fund" contributions, or the like which we concluded in AGO 63-64 No. 64, copy enclosed, do not constitute such an "assignment of, or order for, wages to be earned in the future . . ." The present agreement does create an enforceable right, upon execution, to the payment of such future wages to the extent that the employer chooses to withhold funds from the employee's wages in payment of the employee's credit obligation.
Thus, in summary as to your second and third questions, we conclude first that RCW 49.48.090,supra, does not require that a written agreement entered between an employer and an employee whereby the employer is authorized to deduct sums of money from the employee's wages due or to become due, to apply to credit advanced by the employer to the employee, be recorded with the county auditor.3/ We also conclude that [[Orig. Op. Page 8]] RCW 49.48.100 does require the written consent of a wife to such an agreement when entered into by a married employee.
We trust the foregoing will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
HENRY E. STILES, II
Assistant Attorney General
*** FOOTNOTES ***
1/These two code sections were originally enacted as §§ 1 and 2, chapter 195, Laws of 1939.
2/Of course, this same language also appears in RCW 49.48.090; however, for the reason discussed above, this statute does not apply where it is the employer himself to whom the wage "assignment" is made.
3/We should point out that in consequence of this present state of the law, inequities may arise as far as an employee's creditors or prospective creditors, other than the employee's employer, are concerned. There would be nothing in the county auditor's records to indicate that the employee had already contracted away to his employer the right to receive part of his future earnings. Remedial legislation might be advisable to remove the inequities and make the application of the wage assignment law more specific.