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  • Illinois Court Ruling Leaves Distributing Firm Crying in Its Beer

    Employers Group | 05/07/2019 | News
    Photo by mnm.all
    By Steven L. Brenneman

    The Illinois Wage Payment and Collection Act (IWPCA) requires among other things that employees must agree in writing to any wage deductions. A beer distributor argued its deductions from drivers’ commissions for removal of stale beer from retailers’ store shelves were authorized by its past practice under the union contract.

    Read on to learn which side is toasting a ruling from the Illinois Court of Appeals.

    If You’ve Got the Time, We’ve Got the Beer

    Hayes Beer Distributing Company supplies beer and other beverages to retail stores. It has a collective bargaining agreement (CBA) with the International Brotherhood of Teamsters Union No. 703, which represents delivery drivers.

    Article 12 of the CBA describes drivers’ commission pay structure. It provides that Hayes will compensate drivers for each case delivered to stops on their routes and also take deductions from commissions if a driver accepts a bad check or counterfeit currency or encounters a cash shortage.

    Article 13 of the CBA says a driver’s duties include checking all code dates and rotating stock to ensure product freshness. Further, Hayes’ own distribution agreements with brewers, and also the Illinois Liquor Control Board regulations, require rotating products because the distributor cannot sell outdated merchandise.

    Everything You Always Wanted in a Beer . . . and Less

    In an attempt to satisfy the product freshness requirements, when Hayes sales reps discover beer on a retail shelf that is beyond the expiration date, they remove it and send a report to the driver who services that location.

    The distributor considers the removal of stale beer to be a return of the product and deducts its cost from the driver’s commissions. Hayes does not deduct the cost, however, if a driver removes the beer from the shelf before the expiration date and returns it to the distribution center.

    Hayes claims its policy of deducting money from delivery drivers’ commissions for stale beer is a reasonable measure to comply with state regulations and brewers’ contractual requirements. According to the distributor, its drivers are aware of the amounts deducted. Should a driver disagree with a deduction, he can file a grievance under the CBA.

    For All You Do . . .

    James Byrne, a delivery driver, filed a complaint with the Illinois Department of Labor (IDOL) claiming Hayes’ deductions for stale beer violated the IWPCA, which requires employees to agree to any wage deductions in writing at the time they’re made.

    The IDOL found it did not have jurisdiction to determine whether Hayes’ practice violated the IWPCA because doing so would require interpreting the CBA, thereby intruding into an area preempted by federal law. In particular, Section 301 of the federal Labor Management Relations Act (LMRA) grants federal courts exclusive jurisdiction over a state law claim when resolution depends on interpreting a CBA’s terms.

    Byrne appealed the dismissal, and the Circuit Court of Cook County reversed, finding the issues raised in the driver’s complaint did not require interpretation of the CBA. Therefore, his claim wasn’t preempted by Section 301. Hayes then appealed to the Illinois appellate court.

    Spot the Difference

    On appeal, the court observed that Section 301 doesn’t automatically preempt state law claims just because a party is a union member and employed under a CBA. Rather, a claim is preempted only when it is directly founded on the rights created by a CBA. If a claim merely involves looking or referring to the agreement, preemption does not occur.

    Here, the CBA did not expressly address wage deductions for stale beer removed from shelves. Instead, Hayes followed its practice of deductions in an attempt to induce drivers to proactively remove older products from store shelves, thereby enabling the distributor to comply with state liquor regulations and its commitments to brewers.

    It Doesn’t Get Any Better Than This

    On the other hand, Byrne’s claim invoked a right conferred by the IWPCA, namely the requirement that employees agree in writing to any wage deductions at the time they’re made. The appellate court agreed with the circuit court that Byrne’s claim did not depend on or require interpretation of the CBA, but instead sought to vindicate his rights under the IWPCA.

    Further, the court rejected Hayes’ contention that the company and the union had contracted around the IWPCA’s no-deduction provision. The CBA did not expressly permit Hayes to make deductions for stale beer, while the language of the IWPCA is mandatory, not permissive, in prohibiting deductions unless done with the employee’s express written consent at the time the deduction was made. Therefore, Byrne will have a chance to prove his claim of improper deductions. Byrne v. Hayes Beer Distributing Co., 2018 IL App (1st) 172612 (Ill. App. 1st Dist., Dec. 4, 2018).

    Stay a Little Longer

    This case serves up three takeaways for Illinois employers:

    • Don’t make deductions from employees’ pay unless they have agreed in writing at the time the deductions are made;
    • Employers cannot “contract around” the wage payment requirements imposed by the IWPCA; and
    • Although federal law preempts all state claims that depend on interpreting a CBA, that doesn’t mean workers covered by such an agreement cannot assert state law claims—such as Byrne’s claim under the IWPCA—that arise from rights created by state wage payment laws.

    Good call.

    This article was written by Steven L. Brenneman of Fox, Swibel, Levin & Carroll, LLP, and an editor of the Illinois Employment Law Letter. He can be reached at sbrenneman@fslc.com.