The Michigan Court of Appeals in Detroit Pub. Schools v. Conn. No. 317007
held that the Wage and Hour Division of LARA has subject matter jurisdiction over claims made under the Payment of Wages and Fringe Benefits Act (“PWFBA”). Further, the Court held that payroll deductions negotiated through collective bargaining agreements are exempted from the individualized written consent requirements of the PWFBA.
The Detroit Federation of Teachers, on behalf of Detroit Public School teachers, entered into a collective bargaining agreement with Detroit Public Schools. A provision, known as a Termination Incentive Plan, provided that all salaried teachers would have $250 per pay period deducted and deposited into the Termination Incentive Plan account.
The teachers challenged the plan citing to § 7(2) of the PWFBA (MCL 408.471(2)), which requires that any deduction for the benefit of the employer must have the written consent from the employee for each wage payment subject to the deduction. An administrative hearing officer sided with the teachers and held that the deductions were in violation of the PWFBA.
The Detroit public schools appealed arguing that 1) LARA’s Wage and Hour Division did not have jurisdiction to hear claims under the PWFBA and 2) that under §7(1) of the PWFBA (MCL 408.477(1)), the Termination Incentive Plan deductions were lawful as they fit squarely within the collective bargaining exception to the written consent requirements.
The Court first determined that based on the statutory language it was clear that the Wage and Hour Division was the proper administrative agency to initially challenge the deductions; it held that disputes under the PWFBA are properly brought at the Division.
The Court then considered whether the deduction required individualized written consent by each teacher. Again, citing to legislative intent, the Court concluded that, “A reasonable reading of [both § 1 and § 2], is that where a wage deduction is expressly permitted by a collective bargaining agreement, the deduction is exempted from the written consent requirements of [the PWFBA].
Thus, the Court reversed the administrative decision, and permitted the deductions without the individualized written consent of the teachers.