a "grievance/arbitration" proceeding pursuant to the collective bargaining agreement. The arbitrator found that the implementation of a lag payroll system was an item governed by the collective bargaining agreement. See Rogers Aff., Exhibit K at 11. As such, and on the basis of considerable precedential weight, it was concluded that the weekly system could not be changed unilaterally. Id. Rather, a change "must be the result of negotiation and mutual agreement of the parties." Id. at 12. The arbitrator, inter alia, ordered the City to reinstate the weekly pay system, on the basis that the implementation of the one week lag violated the collective bargaining agreement. Id. at 20. In essence, the arbitrator held that the City had breached its contract with the plaintiffs.
The PBA then commenced a proceeding in New York State Supreme Court, pursuant to CPLR Article 75, to confirm the arbitration award. The City asserted an affirmative defense seeking to vacate the award. By a Decision and Judgment of the Supreme Court, Rennselaer County, filed on September 11, 1995, the award was confirmed. See Walsh Aff., Exhibit B at 3. The City then appealed. The Appellate Division, by Memorandum and Order dated January 25, 1996, affirmed the lower court, and stated that the City's appeal was frivolous. See Walsh Aff., Exhibit C at 2. Therefore, the state courts have decided that the City violated the collective bargaining agreement when it changed from a weekly to bi-weekly pay schedule. It was that sole issue that was before the state courts, and it is that sole issue that will be precluded: (1) if it is an issue necessary for the determination of the FLSA claim raised in the instant action, such that a different judgment in this case would destroy or impair rights or interests established by the state courts, and, if so, (2) if the defendants had a full and fair opportunity to litigate the issue before the state courts.
2. Necessity of Decided Issue in the Instant Case
As the Court has already determined that the sole issue decided by the state courts is that the City breached its collective bargaining agreement with the PBA, the Court must next determine if that issue necessarily must be decided in the present action. If not, the doctrine of collateral estoppel is inapplicable. If so, the Court will then examine whether the defendants had a full and fair opportunity to litigate the issue in state court. See Ryan, 62 N.Y.2d at 502, 478 N.Y.S.2d at 826.
The claim asserted in the Complaint is pursuant to the FLSA. The FLSA requires that an employer pay each employee no less than a statutorily prescribed minimum wage. See 29 U.S.C. § 206. Section 206(b) mandates that "every employer shall pay" employees the minimum wage if "in any workweek [the employee] is engaged in commerce." There is no dispute that the plaintiffs fall within the scope of the Act.
Although not specifically addressed in the statute, there is general acceptance of the proposition that payment must be prompt or "on time." See Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 707 n. 20, 89 L. Ed. 1296, 65 S. Ct. 895 (1945); Biggs v. Wilson, 1 F.3d 1537, 1539-40 (9th Cir. 1993), cert. denied 510 U.S. 1081, 114 S. Ct. 902, 127 L. Ed. 2d 94 (1994). Courts have construed the term prompt to mean the regular payday. See Brooklyn Sav., 324 U.S. at 711; Biggs, 1 F.3d at 1541. Thus, the central issue relating to an alleged violation of the FLSA, 29 U.S.C. § 206(b), is whether a plaintiff was or was not paid at least a minimum wage on his/her regular payday, regardless of whether a failure to promptly pay was the result of delayed payment or no payment at all. Nowhere in the statute is there language to the effect that it must be shown that such failure to promptly pay was in violation of collective bargaining agreement, contract, or other arrangement. Such agreements, as suggested by the plaintiffs, may be evidence of what the regular pay period was, in relation to the parties to the dispute. However, the fact that an agreement has terms that sets forth a pay period does not bear on the ability of the employer, under the FLSA, to change that pay period. In other words, where the alleged breach of the collective bargaining agreement bears on rights that do not arise from the FLSA the arbitral decision is not a bar to a federal claim, and thus, is not dispositive. See Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 745, 67 L. Ed. 2d 641, 101 S. Ct. 1437 (1981). Accordingly, and as will be further explained below, there is no identity of issues between the state action, essentially a breach of contract action, and the instant action, brought under the FLSA.
3. Full and Fair Opportunity To Litigate
Given the court's determination that there is no identity of issues, it need not reach the issue of whether the defendants had a full and fair opportunity to litigate whether the instigation of a lag pay period was a breach of the collective bargaining agreement as that issue is not material to the FLSA claim, and thus, will be given no preclusive effect.
D. Alleged Violation of the FLSA
1. FLSA and a Change in the Payday
As set forth above, the failure of an employer to pay at least a minimum wage to an employee on the regular payday gives rise to a claim pursuant to the FLSA. See 29 U.S.C. § 206(b); see also Brooklyn Sav., supra at 711; Biggs, supra at 1541. The issue for the Court to determine is whether the defendants have violated the FLSA by unilaterally changing the payday, i.e., phasing-in a biweekly rather than weekly pay system. The Court actually is faced with two issues; one legal, the other factual. First, the Court must make the legal determination of if and under what circumstances an employer can change the date on which it pays its employees. Then, the Court must make the factual determination as to whether the defendants' alleged violation of the FLSA by implementing a biweekly payment system raises a material question of fact.
The Court first notes that the administrative regulations adopted pursuant to FLSA "are entitled to great weight and should not lightly be set aside." Mitchell v. Greinetz, 235 F.2d 621, 625 (10th Cir. 1956). FLSA regulations "constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance." Skidmore v. Swift & Co., 323 U.S. 134, 140, 89 L. Ed. 124, 65 S. Ct. 161 (1944); see Hill v. United States, 751 F.2d 810, 813 (6th Cir. 1984), cert. denied Cummings v. United States, 474 U.S. 817, 88 L. Ed. 2d 51, 106 S. Ct. 63 (1985).
As to whether an employer can change the designated payday, the parties agree that the FLSA does not directly address the issue. Certainly, the regulations to the Act recognize that employees will not be paid uniformly. Rather employees will be paid "on a daily, weekly, biweekly, monthly, or other basis." 29 C.F.R. § 778.104 (stated in context of defining a single workweek as the computational standard under the Act). However, the regulations to the FLSA suggest that the ability of an employer to change the pay period is contemplated by the Act. See 29 C.F.R. §§ 553.224 & 778.105. 29 C.F.R. § 553.224 applies to employees of state and local governments, including law enforcement personnel, in the context of exemptions to the overtime provisions of the FLSA. That section states "the beginning and the ending of the work period may be changed, provided that the change is intended to be permanent and is not designed to evade" certain requirements of the Act. In section 778.105, a provision of "Subpart B - the Overtime Requirements," the regulations state "the beginning of the workweek may be changed if the change is intended to be permanent and it is not designed to evade" certain requirements of the Act. Each section concerns the effect of a change in the pay period on the FLSA's overtime requirements or the exemptions therefrom. However, each section clearly states that a change in the pay period is permissible under the Act if two requirements are met. First, the change must be intended to be permanent. Second, the change must not be for purposes of evading the requirements of the Act.
Without reaching the issue of whether the defendants satisfied these requirements, the Court holds that the FLSA, as a general rule, does not prohibit an employer from changing a payday in all circumstances. The issue the Court must next turn to is the effect of collective bargaining agreement on the FLSA.
2. FLSA and the Collective Bargaining Agreement4
The plaintiffs argue that the fact that the defendants violated the collective bargaining agreement by unilaterally instituting a biweekly pay system, in effect, renders all payments made pursuant to the "lag" process and biweekly system delayed payments, such that the defendants were in violation of the FLSA.
The Court first notes the FLSA's purpose was to protect employees from detrimental labor conditions and provide for the general well-being of workers. See Lyon v. Whisman, 45 F.3d 758, 763 (3d Cir. 1995), citing 29 U.S.C. § 202. The FLSA is clearly structured to provide workers with specific minimum protections against excessive work hours and substandard wages. Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739, 67 L. Ed. 2d 641, 101 S. Ct. 1437 (1981). As noted by the Supreme Court in Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 86 L. Ed. 1682, 62 S. Ct. 1216 (1942):
"A fair day's pay for a fair day's work" was the objective stated in the Presidential message which initiated the legislation. That message referred to a "general maximum working week", "longer hours on the payment of time and a half for overtime" and the evil of "overwork" as well as "underpay."
Id. at 578, quoting 81 Cong. Rec. 4983, 75th Cong., 1st Sess. (1937). "The substantive sections of the FLSA, narrowly focusing on minimum wage rates and maximum working hours, bear out its limited purposes." Lyon, 45 F.3d at 764. Collective bargaining agreements, on the other hand, were encourage by the passage of the Labor Management Relations Act, 29 U.S.C. § 141 et seq., "which was designed to minimize industrial strife and improve working conditions by encouraging employees to promote their interests collectively." Barrentine, 450 U.S. at 739 (emphasis in original).
It was in recognition of these distinct congressional purposes that the Supreme Court has held "that FLSA rights cannot be abridged by contract or otherwise waived." Id. at 740, citing Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 707, 89 L. Ed. 1296, 65 S. Ct. 895 (1945) (additional citations omitted). In addition, the Supreme Court has held "that congressionally granted FLSA rights take precedence over conflicting provisions in a collectively bargained compensation arrangement." 450 U.S. at 740-741, citing Martino v. Michigan Window Cleaning Co., 327 U.S. 173, 177-178, 90 L. Ed. 603, 66 S. Ct. 379 (1946) (additional citations omitted). In Barrentine, the Court held that prior arbitral determination of rights created under the FLSA does not bar a subsequent action in a federal court pursuant to the FLSA. 450 U.S. at 745. None of these aforementioned holdings bears directly on the issue raised in this case. However, they are instructive in that they illustrate the primacy of FLSA rights in relation to rights negotiated in a collective bargaining agreement.
In this case, the plaintiffs would have the Court find a violation of the FLSA because the defendants have been found in an arbitral forum to have violated the collective bargaining agreement with the plaintiffs when it implemented a biweekly pay system. As stated in Barrentine, "courts should defer to an arbitral decision where the employee's claim is based on rights arising out of the collective-bargaining agreement, [however] different considerations apply where the employee's claim is based on rights arising out of a statute designed to provide minimum substantive guarantees to individual workers." 450 U.S. at 736. This general rule was iterated by the Third Circuit in Vadino v. A. Valey Engineers, when it stated that "the Supreme Court has consistently recognized ... the distinction between claims asserting a statutory right and those to enforce the terms of a collective bargaining agreement." 903 F.2d 253, 265 (3d Cir. 1990).
The right asserted by the plaintiffs herein is the right to being paid promptly at least a minimum wage. That general right to prompt payment is a right protected under the FLSA. See 29 U.S.C. § 206(b); see also Brooklyn Sav., supra at 711; Biggs, supra at 1541. Pursuant to the collective bargaining agreement between the defendants and the PBA, the plaintiffs' pay period was weekly. This is a right created under the collective bargaining agreement. Certainly, such a provision is some evidence of when payment should be made such that it is prompt and lawful under the Act. The plaintiffs would have this Court hold such a term dispositive of the issue of whether payment was prompt. In support of its attempt to have the Court hold as dispositive the decision of the state arbitrator as to the weekly payday, the plaintiffs quote a footnote in Barrentine that states, in part, "a court should defer to a prior arbitral decision construing the relevant provisions of the collective-bargaining agreement." 450 U.S. at 741 n.19
However, the plaintiffs have failed to set forth the entire sentence from which the quote is taken. When looked at in its entirety, the footnote clearly leads to a result directly contrary to that sought by the plaintiffs. In footnote nineteen, the Barrentine Court states
Where plaintiff's claim depends upon application of one of these exceptions, we assume without deciding that a court should defer to a prior arbitral decision construing the relevant provisions of the collective-bargaining agreement. In this case, however, petitioners' threshold claim does not depend upon application of any of those exceptions.