The opinion of the court was delivered by: SIFTON
This is an action brought pursuant to 29 U.S.C. § 217 to restrain violations of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §§ 201 et seq. (the "Act"), specifically, failure to pay overtime compensation said to be due certain employees of defendant pursuant to 29 U.S.C. § 207 and failure to keep related records pursuant to 29 U.S.C. § 211(c) in violation of 29 U.S.C. § 215(a)(2) and (a)(5), respectively. Trial of the case was conducted before the undersigned, sitting without a jury, during the week of April 7, 1980. What follows sets forth this Court's decision and contains its findings of fact and conclusions of law as required by Rule 52(a) of the Federal Rules of Civil Procedure.
The Court has subject matter jurisdiction over this controversy pursuant to 29 U.S.C. § 217. Plaintiff is the Secretary of Labor of the United States Department of Labor. Defendant is a corporation, engaged in the retail, fast-food restaurant business, which owned and operated five such restaurants in this District in the period May 1, 1974, when the Act's provisions with respect to overtime pay first became applicable to retail service establishments, Fair Labor Standards Amendments of 1974, Pub.L. No. 93-259, § 15, 88 Stat. 65 (1974), to date. Four of these restaurants, at 2800 Hylan Boulevard, 1565 Hylan Boulevard, 2901 Richmond Avenue, and 20 Willowbrook Road all on Staten Island were sold by defendant on October 20, 1978. The other, located at 39-60 Sunrise Highway in Seaford, New York, was still owned and operated by defendant at the time of trial.
The parties are agreed for purposes of this litigation that defendant is an "employer" within the meaning of 29 U.S.C. § 203(d), is an "enterprise engaged in commerce or in the production of goods for commerce" within the meaning of 29 U.S.C. § 203(b), (j), (r), and (s)(1), and is otherwise "covered" by the applicable provisions of the Act with respect to the Assistant Managers I and II employed by defendant at the five restaurants referred to above.
At trial, plaintiff established that defendant employed as Assistant Managers I or II in its business at least eighteen persons twelve of whom appeared as witnesses for the plaintiff at one or more of the five stores referred to above, during the time subsequent to May 1, 1974, when each store was owned by defendant, for work weeks in excess of forty hours, without compensating those employees for their overtime hours at the time-and-one-half rate or better required by law. See 29 U.S.C. § 207(a)(1). The parties have agreed that for purposes of this action the eighteen employees may be deemed to have worked a fifty-hour week during each week of the period of their employment listed on a stipulation received in evidence at the trial as Court's Exhibit 1.
Since overtime compensation was not paid, it goes without saying that payroll and other records containing information with regard to the excess compensation required to be maintained pursuant to 29 U.S.C. § 211(c) and 29 C.F.R. § 516.2(a)(9) were not kept by defendant.
Defendant has pleaded, as an affirmative defense to both the claimed overtime and record-keeping violations, that recovery with respect to part of the period covered by the complaint namely, May 1, 1974, to August 27, 1974 is barred by the two-year statute of limitations set forth in 29 U.S.C. § 255(a). Plaintiff responds with respect to this last defense that defendant's violations were willful; and, accordingly, the entire period since the time the Act became applicable to defendant's establishment is within the three-year statute of limitations for causes of action "arising out of a willful violation" set forth in the same statute.
In addition, defendant has pleaded as an affirmative defense that its Assistant Managers are exempt from the provisions of sections 207 and 211 of the Act. The exemption relied on by defendant is that applicable to employees "employed in a bona fide executive ... capacity ... (as such term ... (is) defined and delimited from time to time by regulations of the Secretary ...)" set forth in 29 U.S.C. § 213(a)(1). The applicable regulations of the Secretary, 29 C.F.R. § 541.1, provide in relevant part:
"The term "employee employed in a bona fide executive ... capacity' in section 13(a)(1) (29 U.S.C. § 213(a)(1)) of the act shall mean any employee:
"(a) Whose primary duty consists of the management of the enterprise in which he is employed or of a customarily recognized department or subdivision thereof; and
"(b) Who customarily and regularly directs the work of two or more other employees therein; and
"(c) Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring and firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight; and
"(d) Who customarily and regularly exercises discretionary powers; and
"(e) Who does not devote more than 20 percent, or, in the case of an employee of a retail or service establishment who does not devote as much as 40 percent, of his hours of work in the workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (a) through (d) of this section: Provided, That this paragraph shall not apply in the case of an employee who is in sole charge of an independent establishment or a physically separated branch establishment, or who owns at least a 20-percent interest in the enterprise in which he is employed; and
"(f) Who is compensated for his services on a salary basis at a rate of not less than $ 155 per week (or $ 130 per week, if employed by other than the Federal Government in Puerto Rico, the Virgin Islands, or American Samoa), exclusive of board, lodging, or other facilities: Provided, That an employee who is compensated on a salary basis at a rate of not less than $ 250 per week (or $ 200 per week, if employed by other than the Federal Government in Puerto Rico, the Virgin Islands, or American Samoa), exclusive of board, lodging, or other facilities, and whose primary duty consists of the management of the enterprise in which the employee is employed or of a customarily recognized department or ...