                   IN THE COURT OF APPEALS OF IOWA

                                  No. 15-1663
                              Filed July 27, 2016


VIAFIELD, f/k/a PROGRESSIVE AG COOPERATIVE
AND FARMERS COOPERATIVE,
      Plaintiff-Appellee,

vs.

ROBERT ENGELS,
     Defendant-Appellant.
________________________________________________________________


      Appeal from the Iowa District Court for Floyd County, Rustin T. Davenport,

Judge.




      An employee appeals the dismissal of his claim for unpaid wages against

his former employer. AFFIRMED.




      David A. Morse of Law Offices of David A. Morse, Des Moines, for

appellant.

      Roger L. Sutton of Sutton Law Office, Charles City, for appellee.




      Considered by Vogel, P.J., and Doyle and Bower, JJ.
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DOYLE, Judge.

          Robert Engels appeals the dismissal of his claim for unpaid wages against

his former employer, Viafield. Engels argues Viafield failed to pay him wages in

the form of unused “paid time off” that he had accrued prior to his termination.

Because Engels failed to prove the paid time off was due to him at the time of

termination by agreement of the parties or pursuant to an employment policy, we

affirm.

          I. Background Facts and Proceedings.

          Robert Engels worked at an agricultural cooperative in Marble Rock from

1986 until 2010. On September 1, 2010, the cooperative became Viafield after

merging with two other cooperatives, and Engels continued his employment as

the grain manager of the western portion of Viafield’s territory.

          Viafield developed employment policies that it published in “Team Member

Handbooks” and distributed to its employees. Section HR.410 of the handbook

sets forth Viafield’s policy regarding “Paid Time Off (PTO),” detailing the rate at

which it is accrued and how it may be used by employees. The policy provides

that employees “shall be paid regular pay for all unused accrued leave, providing

that they give a proper two weeks[’] notice of resignation.” It further provides that

if an employee is “terminated for ‘just cause,’ the Chief Executive Officer shall

decide if unused accrued leave shall be paid.”1             Viafield fired Engels in




1
  The 2008 Marble Rock Farmers Cooperative Personnel Policies handbook contains a
similar provision: “Upon termination, the employee shall be paid for all unused accrued
annual leave providing the employee has given proper two weeks[’] notice of resignation
or has not been terminated for ‘just cause’ of which the Association shall be the sole
judge.”
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November 2010 after Engels had amassed 589.74 hours of unused accrued

PTO—worth $19,002.25 in regular wages—which Viafield never paid.

       Eventually, Viafield initiated an action against Engels for breach of

contract and fraudulent conversion, and Engels counterclaimed for payment of

his unpaid PTO wages.        The matter proceeded to trial, and at the close of

Viafield’s evidence, the district court directed a verdict in favor of Engels on

Viafield’s breach-of-contract claim. The trial court submitted Viafield’s conversion

claim to a jury, which found in favor of Engels.      On Engels’s cross-claim for

unpaid wages, the jury found Viafield terminated Engels for “just cause.” In light

of this finding, the trial court determined that Engels was not entitled to payment

of his PTO under Viafield’s employment policy as a matter of law, and it

dismissed the claim. Engels appeals.

       II. Scope and Standard of Review.

       This matter was tried at law, and therefore, our scope of review is for

errors at law. See Iowa R. App. P. 6.907. Fact-findings are binding upon this

court if supported by substantial evidence. See NevadaCare, Inc. v. Dep’t of

Human Servs., 783 N.W.2d 459, 465 (Iowa 2010). However, we will reverse the

trial court’s judgment if the court has erroneously applied the law in a way that

materially affects its decision. See id.

       III. Analysis.

       On appeal, Engels does not challenge the jury’s finding that Viafield had

just cause to terminate his employment. He instead challenges the trial court’s

application of the law to the facts. Specifically, Engels argues the court erred in

determining the policy contained in Viafield’s handbook was a valid and
                                           4


enforceable employment policy because (1) the handbook did not create a

binding contract and (2) there was insufficient evidence that Engels received the

handbook.

       Iowa law provides that employers must pay all wages its employees earn

up until the time of termination. See Iowa Code § 91A.4 (2009). “Wages” are

defined by Iowa Code section 91A.2(7)(b) to include compensation for

“[v]acation, holiday, sick leave, and severance payments which are due an

employee under an agreement with the employer or under a policy of the

employer.” In dismissing Engels’s claim, the district court noted that section

91A.2(7)(b) does not require an employer pay their employee vacation, but

rather, Viafield was permitted to restrict the payment of PTO, and it did so.

Under Viafield’s policy, the decision to pay Engels for his unused accrued PTO

was within the CEO’s discretion.

       Engels argues the PTO policy contained in Viafield’s handbook does not

absolve Viafield of its obligation to pay PTO as wages under chapter 91A

because the handbook did not create a contract between the parties. He notes

that section HR.010, entitled “Nature of Employment,” explicitly states the

handbook “is not an employment contract and is not intended to create

contractual obligations of any kind.”      That section continues by stating that

“[n]either the [employee] nor Viafield is bound to continue the employment

relationship if either chooses, at its will, to end the relationship at any time.” We

agree with Engels that Viafield’s handbook did not create an employment

contract, as Viafield clearly states its intention to avoid creating one.
                                            5


       The absence of an employment contract is not dispositive of whether

Engels is entitled to payment of his unused accrued PTO, however. Section

91A.2(7)(b) provides an employee is entitled to payment of wages due to an

employee “under an agreement with the employer or under a policy of the

employer.”     (Emphasis added.)        Viafield intended its handbook to provide

employees “with a general understanding of [its] personnel policies.” Given the

at-will employment relationship, Viafield could modify those policies at any time2

as a condition of continued employment, and any employee who continued to

work for Viafield after receiving notice of the modification accepted it as a matter

of law. See Moody v. Bogue, 310 N.W.2d 655, 660-61 (Iowa Ct. App. 1981). A

preponderance of the evidence supports the finding that Engels was provided a

copy of the handbook; the handbook was distributed at a meeting attended by all

Viafield employees; and although Engels testified he did not recall seeing the

handbook, he did not deny ever receiving one.

       The burden was on Engels to prove his unused accrued PTO was due as

wages under chapter 91A at the time of his termination. Cf. Am. Family Mut. Ins.

Co. v. Hollander, 705 F.3d 339, 349 (8th Cir. 2013) (noting that employee

bringing claim for failure to pay extended earnings under the Iowa Wage

Payment Collection Law had the burden of proving extended earnings qualify as

“wages” under chapter 91A); Crookham v. Structural Contractors, Ltd., 466

N.W.2d 277, 278 (Iowa Ct. App. 1990) (noting discharged employee claiming


2
  Section HR.010 of Viafield’s handbook reflects as much, stating: “In order to retain
necessary flexibility in the administration of policies and procedures, Viafield reserves
the right to change, revise, or eliminate any of the policies and/or benefits described in
this handbook, except for its policy of employment-at-will.”
                                         6


employer failed to pay severance wages had the burden of proving by a

preponderance of the evidence the existence of an agreement to pay

severance). There is no evidence of an agreement or employment policy that

required Viafield to pay Engels his unused accrued PTO as wages upon

termination. Viafield’s policy only requires payment of unused accrued PTO to

employees who provide two weeks’ notice before resignation; when an employee

is fired for “just cause,” the payment of PTO is discretionary. Because the jury

determined Engels was fired for just cause, the wages in question were not “due”

to Engels at the time of his termination.       Cf. Willets v. City of Creston, 433

N.W.2d 58, 62 (Iowa Ct. App. 1988) (noting sick leave benefits that are payable

on certain conditions are not due to the employee until those conditions are

triggered). His claim for unpaid wages fails.

      The trial court properly applied the law in dismissing Engels’s counterclaim

for unpaid wages, and accordingly, we affirm.

      AFFIRMED.
