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Aaron v. Bay Ridge Operating Co.

June 3, 1947


Author: Frank

Before SWAN, AUGUSTUS N. HAND, and FRANK, Circuit Judges.

FRANK, Circuit Judge.

Section 7(a) of the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq., provides: "No employer shall * * * employ any of his employees * * * for a workweek longer than forty hours * * * unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed." The fundamental question before us here turns on the interpretation of "regular rates." Since ours is but an intermediate court, of course, in construing those words we are bound by the pertinent decisions of the Supreme Court.

These appeals are from judgments to the extent that they are adverse to plaintiffs, longshoremen working in the Port of New York, who maintain that defendants violated the Act by not paying plaintiffs one and one-half times the "regular rate" for hours, in certain workweeks, in which plaintiffs worked for defendants in excess of forty hours. It is urged by the defendants that the "regular rate" is controlled by provisions of collective bargaining agreements between the defendants and the union, International Longshoremen's Association, to which plaintiffs belonged in the years in question. The annual collective agreements made with this union since 1921 have provided for a "basic working day" of eight hours and a "basic working week" of forty-four hours. Beginning in 1918, these agreements fixed two sets of hourly rates: (1) Specified hourly rates were set for "work performed from 8 A.M. to 12 Noon and from 1 P.M. to 5 P.M., Monday to Friday inclusive, and from 8 A.M. to 12 Noon Saturday." (2) With a few exceptions, one and one-half times these rates were fixed for what the agreements called "all other time." In the Fall of 1938, after the enactment of the Fair Labor Standards Act, the agreement changed the labels for these respective periods: The first was now called "straight time"; the second was now called "overtime," the rates for that period being newly described as "overtime rates." This nomenclature was thereafter used in the agreements and is contained in the agreements for the years involved in these suits. No other significant changes were made in the agreements after the Act went into effect.*fn1

During the years 1943-1945, here involved, in most instances the defendants applied the terms of these agreements in paying the plaintiffs. As a result, if one of the plaintiffs in a given week worked, say, fifty hours during the so-called "overtime" period, he received for the excess ten hours precisely the same rate per hour as he was paid for the forty hours; that is, he received merely the contract rate - called the "overtime rate" in the contract - for all the fifty hours. If, in a given workweek, he worked thirty hours during the so-called "straight time" period and twenty hours in the so-called "overtime" period, again he received merely the contract rates; that is, for the excess ten hours, he received merely the contractually-labelled "overtime rate."*fn2

The trial judge held this method of payment correct, on the ground that the rates fixed in the agreements for the "straight time" period constituted the "regular rate" referred to in § 7(a) of the Act.*fn3 In so deciding, he relied on Walling v. A. H. Belo Corp., 316 U.S. 624, 62 S. Ct. 1223, 86 L. Ed. 1716. We think he erred. As recently as May of this year, the Supreme Court, in a unanimous opinion by Chief Justice Vinson - confirming what had been said previously by this court and by several other inferior courts*fn4 - decided that the Belo case doctrine must be limited to agreements which contain a "provision for a guaranteed weekly wage with a stipulation of an hourly rate," and that other types of agreement, whether or not the result of collective bargaining, cannot, by their terms, determine what is the "regular rate" named in the Act. That "regular rate," said the Court, is an "actual fact." See 149 Madison Avenue Company v. Asselta, 67 S. Ct. 1178, 1184, citing Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424, 65 S. Ct. 1242, 89 L. Ed. 1705. See also Walling v. Helmerich & Payne, 323 U.S. 37, 65 S. Ct. 11, 89 L. Ed. 29.

In the instant case, the "actual fact" concerning the "regular rate" appears in the findings of the trial judge which are supported by the evidence and which we understand the defendants do not dispute. In an Appendix to this opinion, we have set forth pertinent portions of those findings.

Because government counsel, appearing for the defendants,*fn5 have earnestly asserted the grave precedential importance of these appeals, and because of our respect for the able trial judge, we have considered his opinion with unusual care. None of us, however, is able to agree with that opinion. We conclude that the judgments, in so far as they are adverse to the plaintiffs, must be reversed.

Faced with substantially similar collective bargaining agreements and with facts in many respects the same, the Seventh Circuit in 1944 reached a conclusion like ours, as to longshoremen in the Great Lakes area; see Cabunac v. National Terminals Corp., 139 F.2d 853, affirming the able opinion of Judge Duffy, sub nom. International Longshoremen's Association v. National Terminals Corp., D.C., 50 F.Supp. 26. Judge Cooper, a few months ago, also reached this conclusion as to longshoremen working in Puerto Rico, in a case in which, as here, government counsel represented the employer and apparently advanced the very arguments advanced here. See Ferren v. Waterman S.S. Corp., D.C., 70 F.Supp. 1.

We cannot agree with the argument that our conclusion is unsound because it may require separate computations for each week at rates which may vary from week to week. In Overnight Motor Transport Co. v. Missel, 316 U.S. 572, 580, 62 S. Ct. 1216, 1221, 86 L. Ed. 1682, the Court said that compensation capable of reduction to an hourly basis by application of a uniform principle is "regular in the statutory sense inasmuch as the rate per hour does not vary for the entire week though week by week the regular rate varies with the number of hours worked." We take this statement as meaning that the statutory element of regularity is met where a single principle or rule is uniformly applied in order to obtain the rate.*fn6

We think that the administrative interpretations suggest no conclusion different from ours.*fn7 The one conceivable exception has to do with Sunday and holiday work. In a letter of May 14, 1943, discussing the Cleveland Stevedore Co., the Administrator said that "overtime compensation for Sunday or holiday work * * * may be credited toward overtime due under the Act," because "it can be regarded as time outside the employee's normal working hours"; but we must also consider the following: (1) The day after that letter of May 14, 1943 was written, Judge Duffy held the contrary; see International Longshoremen's Association v. National Terminal Corp., D.C., 50 F.Supp. 26, affirmed in Cabunac v. National Terminals Corp., 7 Cir., 139 F.2d 853. (2) In an opinion published in the Wage & Hour Manual, 1944-1945 Cum.Ed. page 227, the Assistant Solicitor referred to a previous ruling, in the Administrator's Interpretative Bulletin No. 4, that an employer might consider "as overtime compensation" extra amounts of compensation paid "for hours worked outside the normal or regular working hours"; the opinion said that such extra compensation might be considered overtime compensation only if the "hours compensated for" were "hours not normally worked by the employees", giving as an example "work on Sundays, holidays, or at a time of day when the employee does not normally work"; the opinion, however, went on to explain that "hours worked on Sundays and holidays are generally outside the 'normal or regular working hours.'" In the instant cases, on the facts disclosed in the findings,*fn8 the hours worked on Saturday afternoons, Sundays and holidays were surely not "outside the normal or regular working hours."

It is suggested that, if the contractual "straight time" rate is not the "regular rate," then that rate for any employee in any week must be ascertained by averaging the rates paid for the first forty hours of work in that week. But in Wallimg v. Halliburton Oil Well Cementing Co., 67 S. Ct. 1056, 1059, the Court stated that "in Overnight Motor Co. v. Missel, 316 U.S. 572, 62 S. Ct. 1216, 86 L. Ed. 1682, we held that the regular rate was to be determined by dividing the wages actually paid by the hours actually worked." See also Ferren v. Waterman S.S. Co., supra; cf. Walling v. Wm. Schollhorn Co., 54 F.Supp. 1022.

The Administrator's Press Release 1913 stated that theretofore, where an employee received more than one rate during a workweek, the Administrator had ruled that the employer must pay the employee an "overtime rate of one and one-half his average hourly earnings for the entire week, computed by dividing the weekly earnings at both rates by the total number of hours worked in the week," but that thereafter an employer would have an option, in the alternative, to compute the overtime rate at one and one-half times the rate at which the employee worked during the hours in excess of forty. However, this Release was later qualified by Press Release 1913A, which stated, "In order to take advantage of this [revised] rule, the records ...

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