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June 28, 1954

James P. MITCHELL, Secretary of Labor, Plaintiff,
Meyer FEINBERG, Defendant

The opinion of the court was delivered by: GALSTON

This is an action by the Secretary of Labor for an injunction under Section 17 of the Fair Labor Standards Act of 1938, as amended, restraining the defendant from violating Sections 15(a)(2) and 15(a)(5) of the Act, relating to the overtime and record keeping requirements of the Act respectively. 29 U.S.C.A. §§ 215(a)(2), 215(a)(5), and 217.

The defendant is the owner and operator of a number of trucks engaged in the delivery of goods and the pick-up of garments in the completed state between various points in the City of New York. He employs a number of chauffeurs and chauffers' helpers to do this work. It has been stipulated that substantially all of the goods handled and transported by these employees have been and are shipped and sold in interstate commerce, and that the defendant's employees have been and are engaged in the production of goods for interstate commerce within the meaning of the Act. The defendant denies that he has violated or is violating the provisions of Sections 7 and 15(a)(2) of the Act, relating to overtime hours and pay, or the provisions of Sections 11(c) and 15(a)(5) of the Act with respect to keeping adequate and accurate records of his employees' wages and hours.

 Section 7(a) of the Act provides:

'Except as otherwise provided in this section, no employer shall employ any of his employees who is engaged in commerce or in the production of goods for commerce 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.' 29 U.S.C.A. § 207(a).

 Section 11(c) of the Act provides as follows:

'Every employer subject to any provision of sections 201-219 of this title or of any order issued under said sections shall make, keep, and preserve such records of the persons employed by him and of the wages, hours, and other conditions and practices of employment maintained by him, and shall preserve such records * * *.' 29 U.S.C.A. § 211(c).

 Plaintiff alleges that defendant has failed to pay his employees time and one-half overtime compensation which is based on the employees' regular rates of pay, as required by the Act, and that the contract hourly rate of pay does not determine the weekly compensation paid to the employees. The defendant contends that his method of overtime payments is based on certain collective bargaining agreements with the union of which his employees are members, and that these agreements come within Section 7(e) of the Act providing:

'No employer shall be deemed to have violated subsection (a) by employing any employee for a workweek in excess of forty hours if such employee is employed pursuant to a bona fide individual contract, or pursuant to an agreement made as a result of collective bargaining * * * if the duties of such employee necessitate irregular hours of work, and the contract or agreement (1) specifies a regular rate of pay of not less than the minimum hourly rate provided in section 206(a) of this title and compensation at not less than one and one-half times such rate for all hours worked in excess of forty in any workweek, and (2) provides a weekly guaranty of pay for not more than sixty hours based on the rates so specified.' 29 U.S.C.A. § 207(e).

 The determination of whether the wage arrangement of the defendant violated the overtime provisions of the Act requires an examination of such arrangements to see if they are based on 'the regular rate at which he [the employee] is employed', within the meaning of section 7 of the Act. It is not disputed by the plaintiff that if the case of Walling v. A. H. Belo Corp., 316 U.S. 624, 62 S. Ct. 1223, 86 L. Ed. 1716, is applicable, the contract rate here must be regarded as the 'regular rate' and valid within the meaning of the Act.

 The plaintiff contends that the Belo doctrine is 'a 'narrow precedent' of very limited application,' in view of later Supreme Court cases construing it. Following Walling v. Halliburton Oil Well Cementing Co., 331 U.S. 17, 67 S. Ct. 1056, 91 L. Ed. 1312, our circuit, in McComb v. Utica Knitting Co., 2 Cir., 164 F.2d 670, 673, said:

'We must, therefore, now take the Belo doctrine as an established gloss on the Act, one which constitutes an exception to the usual rule -- as to the actual 'regular rate' -- announced in the Missel [Overnight Transp. Co. v. Missel, 316 U.S. 572], Helmerich & Payne [Walling v. Helmerich & Payne, 323 U.S. 37, 65 S. Ct. 11, 89 L. Ed. 29], Youngerman-Reynolds [Walling v. Youngerman-Reynolds, 325 U.S. 419, 65 S. Ct. 1242, 89 L. Ed. 1705] and Harnischfeger cases [mWalling v. Harnischfeger, 325 U.S. 427, 65 S. Ct. 1246, 89 L. Ed. 1711]. In other words, a contract rate which, in line with those cases, would otherwise be deemed an artificial regular rate, is not so when the contract provides for a guarantee a la Belo.'

 There is, in the instant case, as in the Belo case, a provision in the collective bargaining contracts involved which sets forth a basic rate of pay per hour, for the maximum hours fixed by the Act, and not less than one and one-half times that rate per hour for overtime, with a guaranty that the employee should receive each week, for regular time and overtime, not less than a specified wage. In addition the contract provides that the employees shall be guaranteed no less than eight hours overtime per week for work actually performed during the weeks worked. Overtime work is defined in the contracts as 'work performed in excess of forty hours in any one week.' Thus, each employee is guaranteed a workweek of 48 hours, with eight hours of the 48 to be considered overtime, entitling him to one and one-half times the stated hourly rate of pay.

 In the Utica Knitting case, supra, the Court of Appeals for this Circuit pointed out that the mere fact of a guaranteed wage does not suffice to bring a wage arrangement within the Belo doctrine. In addition to such guarantee, there must be 'a condition of irregularity or instability of work, so that the guaranty yields the employees a stability of employment and income otherwise absent.' McComb v. Utica Knitting Co., supra, 164 F.2d at page 673.

 In the case at bar, the defendant's employees who were called to testify stated that they averaged 40 to 42 hours and 42 to 44 hours of work weekly. Their testimony did not give a breakdown of the work according to the hours worked each week. The plaintiff, however, put in evidence copies of 'Wage Computation and Transcription Sheet' records of the employees, showing the hours worked each week, beginning in January, 1952. Limiting the examination of these payroll transcriptions to the period from January 1952 through August, 1953, since the plaintiff contends that the defendant has failed to keep accurate and proper records subsequent thereto, we find that the weeks in which the employees worked the minimum of 40 hours or more comes to about 82.5% of the total number of weeks worked, and the weeks in which they ...

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