LABOR ‑- OFFSET AGAINST EMPLOYEE'S WAGES

LABOR ‑- OFFSET AGAINST EMPLOYEE'S WAGES

Rem. Supp. 1947, § 7594, would not prohibit an employer from withholding a sufficient sum from the wages of an employee to offset his claim against the employee for credit advanced the employee during his employment.

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                                                               November 26, 1951

Honorable Dale McMullen
Washington State Senate
Seventeenth District
211 Central Building
Vancouver, Washington                                                                                                              Cite as:  AGO 51-53 No. 175

Dear Sir:

            This is in answer to your letter of October 22, 1951 in which you requested our opinion relative to section 1, chapter 181, Laws of 1947 (Rem. Supp. 1947, § 7594).

            Specifically, your question is whether the above statute would prohibit an employer, when an employee terminates his employment, from withholding from the employee's wages due, a sum owing the employer for credit advanced to the employee during the course of his employment.

            Our conclusion is that Rem. Supp. 1947, § 7594, would not prohibit an employer from withholding a sufficient sum from the wages of an employee to offset his claim against the employee for credit advanced the employee during his employment.

                                                                     ANALYSIS

            Rem. Supp. 1947, § 7594, provides in part as follows:

            "It shall not be lawful for any corporation, person or firm engaged in manufacturing of any kind in this State, mining, railroading, constructing railroads,  [[Orig. Op. Page 2]] or any business or enterprise of whatsoever kind in this State, to issue, pay out or circulate for payment of wages of any labor, any order, check, memorandum, token or evidence of indebtedness, payable in whole or in part otherwise than in lawful money of the United States, unless the same is negotiable and redeemable at its face value, without discount, in cash or on demand, at the store or other place of business of such firm, person, or corporation when the same is issued, and the person who, or company which may issue any such order, check, memorandum, token or other evidence of indebtedness, shall upon presentation and demand redeem the same in lawful money of the United States.  And when any laborer performing work or labor as above shall cease to work, whether by discharge or by voluntary withdrawal, the wages due shall be forthwith paid either in cash or by order redeemable in cash at its face value on presentation at bank, store, commissary, or other place in the county where the labor was performed:  Provided, Such order may be given payable in another county when the place of employment is more convenient of access to the employee."  (Emphasis supplied)

            This statute in its original form was enacted in 1888.  The second portion of the statute, underlined above, was added by the Laws of 1905.

            The purpose of the statute was to prohibit an employer from paying employees in checks which were only redeemable in goods which were furnished by the employer, and further, to protect the employee from the necessity of having to wait a long time before securing his wages.  State vs. Chehalis Furniture Co., 47 Wash. 378, 92 Pac. 277.

            This two-fold object of the statute does not appear to us to embrace and cover the situation presented herein.  First of all, the statute specifically provides "the wages due shall be forthwith paid * * *."  In other words, all the employer is compelled to pay is the wages that are due.  Thus, where an employee is indebted to his employer by the latter's advance of credit to the employee, the employee's "wages due" is only that amount that the employer actually owes the employee at that time.

             [[Orig. Op. Page 3]]

            The case ofPillatos v. Hyde, 11 Wn. (2d) 403, 119 P. (2d) 323, might appear to compel us to reach a contrary conclusion.  It is our view, however, that this case is not controlling of the instant situation, and is distinguishable on the facts from the situation herein concerned.  In thePillatos case, the court found that a contract between the employer and employee which provided that one‑half of the employee's wages were to be redeemed by the employer to pay for stock in a corporation to be formed by the employer, and if not formed, the money retained was to be forfeited by the employee to be within the prohibitions of Rem. Supp. 1947, § 7594.  The decision in the above case was five to four.

            The facts of thePillatos case clearly indicate that the employee therein was to be paid some of his wages in something other than "lawful money" or "in cash or by order redeemable in cash at its face value."  However, in the instant situation, there is no showing that the employee will receive as wages anything other than lawful money or cash.

            We feel that if thePillatos case was extended to cover the situation herein, employees would very likely lose the benefit if a credit relationship with their employer.  This result would follow because employers would be very reluctant to extend any credit to an employee if the employer could not offset an amount owing him from the wages due the employee upon the latter's termination of employment.

            Though not mentioned in the majority opinion, the dissent in thePillatos case pointed out on page 413 that the court allowed an offset for gas, coal, and tires, which indicates to us that the principle of the majority opinion was not in effect intended to preclude an offset as herein presented.

            Accordingly, we feel that the purpose and objects of Rem. Supp. 1947, § 7594, were not intended to cover the situation presented herein, and that remedial legislation might be advisable to make the application of Rem. Supp. 1947, § 7594 more definite and specific in its coverage.

            You are, therefore, advised that in our view, Rem. Supp. 1947, § 7594, would not bar an employer from withholding a sufficient sum from the wages of an employee to offset his claim against the employee for credit advanced the employee during his employment.

Very truly yours,

SMITH TROY
Attorney General

ROBERT L. SIMPSON
Assistant Attorney General