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WELLS v. RCA

May 20, 1948

WELLS et al.
v.
RADIO CORPORATION OF AMERICA



The opinion of the court was delivered by: MEDINA

This is an action to recover overtime compensation, liquidated damages, and attorney's fees alleged to be due by reason of the provisions of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 216(b). Pursuant to pre-trial order the issues now before the Court concern only the question of whether or not plaintiffs were properly classified as exempt, and whether defendant had relied on any administrative regulation, order, ruling, approval or interpretation of any agency of the United States, as provided in Section 9, or acted in good faith and with reasonable grounds as provided in Section 11 of the Portal-to-Portal Act of 1947, 29 U.S.C.A. §§ 258, 260.

The controversy has its focus in the Camden, New Jersey, plant of defendant; and covers the period from January 15, 1940 to January 15, 1946. As a manufacturer of practically every type of electronic device, defendant was engaged in an exacting and intricate business. Its precision products were of the most diverse character and the increased demands of war production made it necessary not only to develop a highly efficient organization but also to train the most experienced and capable of its technical employees for a large number of specialized functions, all of which required the exercise of judgment and discretion, as will appear more fully in connection with the discussion of the particular work done by the various plaintiffs.

It would serve no useful purpose to set forth in detail the elaborate organization developed by the Company for the purpose of personnel classification. It was essential that accurate occupational definitions be made, that the classification of groups of employees as exempt or nonexempt be determined, and that all this be done with complete fairness to the employees. The morale and efficiency of the plant depended in no small measure upon the skill and fair-mindedness of the men to whom this task was entrusted. Several of these men testified to the manner in which the occupational definitions were developed and the procedure of classification for exemption status; some of the Job Analysis Schedules, prepared for purposes of checking, were 'reviewed' by some of the plaintiffs in this action.

 In 1944 and 1945 an investigator of the Wage and Hour Division of the Department of Labor, accompanied by various assistants, visited the Camden plant and made an extensive study to determine whether the employees were being and had been properly paid and to check the classification of employees as exempt or not exempt. Several of plaintiffs were individually interviewed. The result of this investigation was that certain recommendations were made relative to amounts found for one reason or another to be due to various employees. The Company made these payments. No such recommendation was made concerning any of these plaintiffs.

 As a practical matter the Company executives may well have regarded this investigation and its result as more or less giving the plant a clean bill of health. There is, however, no proof of any 'regulation, order, ruling, approval or interpretation' within the meaning of Section 9 of the Portal-to-Portal Act of 1947. The 'approvals' by the Salary Stabilization Unit of the Treasury Department fall into a different category. The first of these which related to any of these plaintiffs was approved on February 18, 1943. The job definitions had previously been filed with the Salary Stabilization Unit. This approval included increases in rates of pay to Armstrong, Deichert, Waddell and Wells as Cost Estimators. The approval on March 18, 1944 included all the plaintiffs, although they were not specifically mentioned by name. In each of these approvals it was necessarily found and decided that these men were properly placed in the exempt class. That the Company relied upon these approvals is self-evident; and the testimony is to the effect that it did so.

 The jurisdiction of the Salary Stabilization Unit at the time of the approvals above referred to was defined by Section 1002.10 of the Regulations of the Commissioner of Internal Revenue (1A C.C.H.Lab.Law Serv.p. 14008) as confined to cases where the rate at which the salary, exclusive of bonuses and additional compensation and without regard to the contemplated adjustment, computed on an annual basis, is: (1) In excess of $ 5,000 or less per annum, in the case of individuals (i) who are employed in bona fide executive, administrative or professional capacities, and (ii) who in their relations with their employer are not represented by duly recognized or certified labor organizations, and (iii) whose services are not within the meaning of agricultural labor as defined in Section 4001.1(1) of the General Regulations. Accordingly, in approving the applications of the Company for the above described increases in rates of pay, the Salary Stabilization Unit necessarily decided that each and every one of these individuals, each of whom was in the '$ 5,000 or less per annum' class, was employed in a bona fide executive or administrative capacity, and that each was properly classified as an exempt employee. Such a 'ruling,' thus relied on, constitutes, with respect to the period of time subsequent to the respective 'approvals,' a defense within the meaning of Section 9 of the Portal-to-Portal Act of 1947, as it will be found that the act of classifying each of the plaintiffs as exempt was done in good faith.

 The proof of good faith by the Company is overwhelming. Not a scintilla of credible testimony was adduced to the contrary. The testimonial and documentary evidence on this somewhat lengthy trial revealed no single suspicious circumstance or any other proof of an attempt to deprive an employee of his just compensation by the use of an inaccurate and high-sounding title for a purely routine or manual job.

 There are forty-one plaintiffs. Each case must stand on its own footing, as if each individual plaintiff had brought a separate action. The classifications involved include Process Engineers, Manufacturing Development Engineers, Time Study Engineers, Cost Estimators, one Manufacturing Problem Analyst, Foremen and Assistant Foreman. Where the classifications had a junior and senior grade, as with the Process Engineers and others, the plaintiffs are all seniors. Many of them fall in various classifications for different parts of the period in suit. In many instances the plaintiffs testified in their own behalf but as to most of them it is necessary to rely exclusively on the testimony of others; and it is pleasing to record the circumstance that the testimony of both plaintiffs' and defendant's witnesses, with a few notable exceptions in the case of certain of the plaintiffs, was candid and satisfactory.

 Every possible effort has been made to give consideration to the proof relative to each individual plaintiff, including the special situations where it was claimed that for a certain period of long or short duration one or another of plaintiffs had done work of a character different from what was described generally in his occupational definition. Much time was consumed in argument and discussion during the trial simply for the purpose of bringing into sharp relief the proofs as they related to each of the forty-one men involved.

 The factual conclusions arrived at and briefly hereafter discussed are based upon a consideration of the evidence as a whole. In many instances the testimony of various plaintiffs has illuminated the general picture and, in the case of those plaintiffs who did not testify, it would be a mistake to infer that the findings are based solely upon the testimony of defendant's witnesses as to what was done generally by employees in certain job classifications.

 Process Engineers in General

 The Process Engineers form the largest group of plaintiffs. Upon receiving the blueprint and a request for a process it was the duty of these men to fill out a Process Manufacturing Form, which included a certain amount of data which an experienced process man could obtain by inspection, the use of available books and by consultation with others. Their chief function, however, was to determine the most economical method of manufacture consistent with the quantity and quality required and to specify in order the exact sequence of the operations to be performed, with a designation of the tools, machine equipment and labor classification to be used in each operation. It was their duty and responsibility to specify the material for ordering purposes and, if some tool not already available was needed to reduce the expense of manufacture to a minimum, to describe the tool and to suggest changes in design or tolerances where the specifications required a method of manufacture more expensive than the circumstances warranted. To do all this required a wealth of experience, a knowledge of cost, an ability to discriminate between the various machines capable of doing each operation so that the one which could do the work in the desired quantity at the least expense per unit should be selected, and a knowledge of the cost of setting up each machine in readiness for the operator. When the process reached the production floor, it was also the duty of the process engineers to see whether the work of operation was over or under the estimated average and make any changes in the process which the varying conditions of operation might make desirable. There was a small amount of supervision, the work was concededly non-manual, it was directly related to management policies or general business operations along specialized or technical lines requiring special training, experience or knowledge, and it plainly required the judgment. As the salary range was well above the required minimum, I find that the process engineers in general were properly classified as exempt within the meaning of Wage and Hours Division Regulations, Sec. 541.2 (B2), as administrative employees. Dolan v. Day & Zimmerman, D.C. Mass. 1946, 65 F.Supp. 923.

 It is of no significance that there was a certain amount of specialization among Process Engineers. Some worked almost exclusively in writing processes for the machine shop, others for gas welding, sheet metal, finishing, coils, capacitors, transformers and so on. In many instances there was a certain amount of repetition and process cards were duplicated, with one or two blanks to be filled in. Doubtless some of the Process Engineers were ...


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