The opinion of the court was delivered by: PORT
I. Nature Of The Proceeding
This action was brought by the Secretary of Labor to enjoin defendants from violating minimum wage and record-keeping requirements of the Fair Labor Standards Act, 29 U.S.C. §§ 201-19 (the Act), and to obtain back wages on behalf of numerous employees of defendants.
More specifically, the complaint, filed on June 21, 1976, charges that defendants violated sections 6 and 15(a)(2) of the Act (29 U.S.C. §§ 206, 215(a)(2)) by failing to pay car salespersons the applicable minimum wage for each week of work, and also violated sections 11(c) and 15(a)(5) of the Act (29 U.S.C. §§ 211(c), 215(a)(5)) by failing to keep adequate and accurate records of the hours worked by these salespeople. The case was tried to the court on November 17 and 18, 1977. After obtaining the transcript of the trial, the parties have briefed the matter and it is now before me for decision.
Jurisdiction over the parties and subject matter and all statutory requirements for coverage under the Act were stipulated. The issues framed by the pretrial order are:
A. Does a two or three year statute of limitations apply to this case?
B. How many hours did each employee whose wages are at issue work during each of the periods in question?
C. What were the amounts which each employee should have been paid in compliance with the minimum wage provisions of the Act?
D. To what relief, if any, is the plaintiff entitled?
The findings and conclusions with reference to each of the issues are as follows:
A. The three year statute of limitations applies.
B. With the three exceptions noted hereinafter, each employee worked 55 hours per week prior to January 1, 1976.
C. Each employee should have been paid, for each week, the applicable minimum wage times the number of hours hereinafter found to have been worked.
D. Plaintiff is entitled to the relief requested in its complaint.
Defendant Sam Dell's Dodge Corp. is an automobile dealership in Syracuse, New York. Defendant Sam Dell, Sr. and Sam Dell, Jr. have acted directly in the interest of defendant Sam Dell's Dodge Corp. in relation to its employees and, therefore, all three defendants are employers within the meaning of Section 3(d) of the Act, 29 U.S.C. § 203(d). Defendants' activities have been performed through a unified operation for a common business purpose, thus constituting an enterprise under section 3(r) of the Act, 29 U.S.C. § 203(r). They are an enterprise engaged in commerce or in the production of goods for commerce. 29 U.S.C. § 203(s). (Tr. 5).
The hours and wages of 117 salespersons who were employed at Sam Dell's Dodge at some time between June 21, 1973 and the date of trial are at issue. (Tr. 5).
Aside from their major responsibility for selling vehicles (Tr. 15, 16), they would obtain license plates from the Department of Motor Vehicles, occasionally pick up insurance cards for their customers, and touch up the cars prior to delivery to the customers. (Tr. 57). Additional duties included starting up cars on the lot in the morning, moving these cars around when necessary during the day, and removing the keys at night. (Tr. 85). The salespeople worked in any or all of defendants' new car, used car and truck departments.
The defendants paid their salespeople under a series of rather complex plans. Total compensation included combinations of base pay, commissions, and bonuses. These plans were all introduced into evidence as defendants' Exhibits C-K. The plans varied from time to time but can be summarized as follows. Each salesperson received base pay of $56.00 per week for most of the period covered by this action. The base pay was received free and clear without regard to sales made. Commissions were paid on the sales of just about everything, new cars, used cars, trucks, accessories and finance agreements. At times the commissions were fixed amounts paid for the sale of each new car. (See Defendants' Exhibit H). For used cars and, more recently, for new cars the commissions were a percentage of either the sales price or the dealer's profits. On top of commissions, salespersons were paid bonuses as an incentive for increased sales. For selling four or more cars during one week, a salesperson would receive a weekly bonus in the next pay check. If he or she sold over 20 cars during one month, a monthly bonus would be received at the end of that month. Similarly, annual bonuses were paid for the sale of over a given number of cars during a calendar year. For a good salesperson, these bonuses could be substantial compared to the base pay. (Tr. 249).
Some salesmen testified, however, that they would stagger receipt of their commissions so as to spread out or average their income during the year. (Tr. 123). In this way, they would not get a disproportionately large pay check after a highly successful selling week. Nevertheless, there were some weeks during each year when each salesperson received only the base salary -- $56.00 prior to 1976 (see plaintiff's Exhibit 11(a)) -- and failed to earn any commissions or bonuses.
Many of the salespeople were furnished by defendants with demonstrator cars or "demos." Primarily, these cars were used in connection with the salespersons' duties at Sam Dell's Dodge Corp. The cars were parked on the lot during the day. (Tr. 80-81). Salespeople used them for demonstration rides for their customers. Occasionally, the "demos" would be lent to other salespeople for the same use. (Tr. 157). Salespersons were permitted to drive the cars for personal use when not working; however, they were specifically told that the cars were not for their families. (Tr. 80, 156). For each week that a "demo" was provided to an employee, defendants deducted $2.50 from the employee's earnings for insurance. The value of the use of the "demos" was never included on the employee's W-2 tax statements or the employer's pay records. (Tr. 81). After April, 1976, defendants' pay plans indicated that a Form 1099 would be given to each employee listing the value of the "demo" car at $20.00 each month. (See Defendants' Exhibits D,J,K). However, defendants failed to introduce any evidence that the 1099 Forms were ever provided.
The bulk of the testimony received at trial concerned the number of hours worked each week by the sales staff. Defendants' showroom and car lots, referred to throughout the trial as the "store" were open six days a week. On Mondays, Tuesdays and Thursdays, the store was open from 9:00 A.M. to 9:30 P.M. Wednesdays, Fridays and Saturdays the store was open from 9:00 A.M. to 6:30 P.M. (Tr. 16, 58, 85, 222). Thus, defendants' posted operating time for the store totaled 66 hours per week. The operating hours did not change during any of the time which is the subject of this suit. The hours were the same year-round, during the slow season as well as the busy season. (Tr. 22, 164).
Some of the witnesses testified that on occasion, some salespeople arrived to work late (Tr. 75). However, sales meetings were held four days a week--Mondays, Wednesdays and Fridays at 9:00 A.M. and on Saturdays at 8:50 A.M. Considering that all salespersons were required to attend these meetings, (Tr. 89), which occurred on two-thirds of the working days, and also considering that the entire sales staff reported to work early on Saturday, the tardiness averaged over the entire staff for the entire year would be negligible.
Similar testimony was introduced to show that either the store closed early on occasion or that salespersons left a few minutes before closing. Russell Will testified that on long days, if business was slow, he would leave thirty minutes early. (Tr. 16). Gary Demperio stated that he left about one-half hour early approximately half the time, (Tr. 58), and that other salespersons might go home fifteen to thirty minutes early. On rare occasions, the store would close in the evening due to a snow storm. However, Victor Samora testified that when he worked on the used car lot, he never left before 9:30 P.M. (Tr. 104). James Cannady, who became defendants' new car manager in 1974, testified that the store closed early anywhere between fifteen and sixty minutes, about 50% of the ...