Request By:
Mr. Charles B. Wells
Assistant Director
Kentucky Association of State Employees
115 E. Second Street, #2
Frankfort, Kentucky 40601
Opinion
Opinion By: Frederic J. Cowan, Attorney General; Anne E. Keating, Assistant Attorney General
Earlier this year you requested an interpretation of KRS 337.010(1)(c), which states, "wages include any compensation due to an employee by reason of his employment, such compensation to include salaries, commissions, vested vacation pay, overtime pay, severance or dismissal pay, earned bonuses and any other similar advantages agreed upon by the employer and the employee or provided to employees as an established policy; such wages to be payable in legal tender of the United States or checks on banks convertible into cash on demand at full face value, subject to such allowances made in this chapter."
KRS 337.055 states, in addition,
Any employee who leaves or is discharged from his employment shall be paid in full all wages or salary earned by him; not later than the next normal pay period following the date of dismissal or voluntary leaving or fourteen (14) days following such date of dismissal or voluntary leaving whichever last occurs. Any employee who is absent at the time fixed for payment by an employer, or who, for any other reason, is not paid at that time, shall be paid thereafter at any time or upon fourteen (14) days' demand. No employer shall, by any means, secure exemption from this section.
In particular, you ask whether these statutes would apply to state employees who are covered by KRS Chapter 18A and accompanying regulations. 101 KAR 2:100(1)(11) states that, "an employee dismissed for cause or who has failed to give proper notice of resignation may, at the discretion of the appointing authority, be paid in a lump sum for accumulated annual leave not to exceed the maximum amounts set forth in Section 2(2) of this regulation. " This regulation has been interpreted to authorize appointing authorities to grant or withhold annual leave to individuals who have been dismissed for cause or who have failed to give proper notice of resignation at the discretion of the appointing authority.
In your earlier letter you asked whether the withholding of payment for accrued annual leave by an appointing authority would be a violation of KRS Chapter 337. This office forwarded copies of your request to the Department of Personnel and to the Labor Cabinet as those agencies administer the personnel laws effecting state employees and the labor laws. An agency's interpretation of a statute that it is charged with enforcing is entitled to more than mere deference or weight.
Walker v. Adams, 741 Fed.2d 116 (6th Cir. 1984), 578 F.Supp. 50 (Ky. 1983).
It is the position of the Labor Cabinet that KRS Chapter 337 does not apply to state employees. Compensation of state employees is covered by specific statutes in other chapters. See, for example, KRS 45.340 Checks for salaries - when to be issued. Where a labor statute conflicts with a more specific statute on payment of state employees and state officers, clearly, the more specific statute prevails. For another example, see KRS 337.060, Unlawful for employer to withhold wages - exception - specified deduction from wages prohibited. This statute, according to the Labor Cabinet, would not apply to state employees due to a conflict with KRS 44.030, Money not to be paid to state debtor. State employees who have incurred debts to the state would be subject to the provisions of KRS 44.030.
The Department of Personnel considers that personnel regulation 101 KAR 2:100 Section 1(11) makes it clear that annual leave does not vest, or if it does, than annual leave is subject to divestiture in the event that the employee is dismissed for cause or fails to give fourteen days notice of resignation.
101 KAR 2:100 Section 1(11) is promulgated pursuant to KRS 18A.110(1)(h) on annual leave. It is the position of the Department of Personnel that this regulation does not contravene KRS 337.010(1)(c) or KRS 337.055 because those statutes contemplate property interests which have vested, absolutely. In contrast, the personnel regulation puts employees on notice of the consequences for failure to give adequate notice of resignation. In the same manner, failure satisfactorily to perform assigned duties and responsibilities may cause the employee to fail to qualify for annual leave upon dismissal for cause.
The Department of Personnel relies on
Sweet v. Stormont Vail Regional Medical Center, Kansas, 647 P. 2d 1274 (1982). In that case an employee contested being denied paid vacation by an employer after she terminated her employment without giving prior notice. The Supreme Court of Kansas held that the hospital employee was not entitled to such compensation based on a hospital policy set forth in the employee handbook that such compensation would be paid only if two weeks advance notice of intent to terminate had been given. Therefore, giving notice was deemed to be a condition precedent and the employee's failure to comply with that condition resulted in her not being eligible to receive payment for unused vacation time.
The positions of the Labor Cabinet and the Department of Personnel basically are not in conflict. While the Labor Cabinet's position is that KRS Chapter 337 does not apply to state employees, the Department of Personnel does not reach that question. Yet even if KRS Chapter 377, in pertinent part, were deemed to apply to state employees, KRS Chapter 18A covers the rights and responsibilities of merit employees with greater specificity.
Clearly, under KRS 18A.110, the Department of Personnel has authority to regulate various forms of employee benefits, including annual leave and sick leave. Moreover, the regulations that the Department of Personnel may promulgate are subject to a legislative review. The standard in question has long been a part of the regulation.
In Kentucky, employers are not required to provide annual leave and sick leave, although most employers do so. While, essentially, this question is one for the courts to resolve, since the state is not legally obligated to grant unconditional annual leave as a benefit, it follows that the Department of Personnel may define the terms under which benefits may vest. Accordingly, it is the opinion of this office that it is legally permissible for the Commonwealth to determine by regulation that annual leave may not be converted to terminal wages and salary until fourteen days notice of resignation is given. It is also permissible for the Commonwealth to determine that in order to qualify the employee must not have been terminated for misconduct or for poor work performance.