N.M. Dol v. Echostar Communications Corp.

• Decision Date: 28 February 2006
• Docket Number: No. 25,777.,25,777.
• Citation: 134 P.3d 780,2006 NMCA 047
• Parties: DIRECTOR, LABOR AND INDUSTRIAL DIVISION, NEW MEXICO DEPARTMENT OF LABOR, Plaintiff-Appellee, v. ECHOSTAR COMMUNICATIONS CORPORATION, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

134 P.3d 780

2006 NMCA 047

DIRECTOR, LABOR AND INDUSTRIAL DIVISION, NEW MEXICO DEPARTMENT OF LABOR, Plaintiff-Appellee, v. ECHOSTAR COMMUNICATIONS CORPORATION, Defendant-Appellant.

No. 25,777.

Court of Appeals of New Mexico.

February 28, 2006.

Certiorari Granted, No. 29,724, April 20, 2006.

Patricia A. Madrid, Attorney General, Andrea R. Buzzard, Assistant Attorney General, Santa Fe, NM, for Appellee.

Bannerman & Williams, P.A., James T. Reist, Katherine Gibson, Albuquerque, NM, for Appellant.

OPINION

PICKARD, Judge.

{1} The Minimum Wage Act, NMSA 1978, §§ 50-4-19 to -30 (1955, as amended through 2005) (the Act), establishes a floor below which employers cannot pay employees wages and also requires the payment of time and a half for work in excess of a forty-hour workweek. See especially § 50-4-22(A) (providing generally for a minimum wage of $5.15 per hour); § 50-4-22(C) (providing that employees "shall not be required to work more than forty hours in any week of seven days, unless the employee is paid one and one-half times the employee's regular hourly rate of pay for all hours worked in excess of forty hours"). The question we address in this case is whether an employer and employee may agree to a fluctuating rate of pay, pursuant to which the employee is paid a fixed weekly salary plus an overtime factor of one-half of the hourly rate, which hourly rate is calculated such that it decreases as the number of hours worked increases. We agree with both courts below and hold that the Act does not permit such agreements, which conflict with the Act's prohibition against overtime paid at less than time and a half.

I. FACTS AND PROCEEDINGS

{2} Echostar Communications Corporation is a national corporation. It employed Terri Wendt in its Albuquerque office. Wendt and Echostar executed an agreement setting forth Wendt's salary and how overtime would be calculated. Pursuant to the agreement, Wendt would be paid $509.62 per week regardless of whether she actually worked less than forty hours or forty hours, but she would be paid overtime calculated by dividing the number of hours worked into $509.62 and then multiplying one-half of that result by the number of hours worked in excess of forty and adding that figure to $509.62. Thus, for example, if Wendt worked forty-five hours, her regular hourly rate would be $509.62 divided by 45, or $11.32, one-half of which would be $5.66. This $5.66 would be multiplied by 5, the number of overtime hours worked, for a total of $28.30, which would be added to the $509.62, for a total of $537.92 remuneration for the week.

{3} Wendt initiated this case by filing a wage claim with the Director of the Labor and Industrial Division of the Department of Labor (DOL), which ruled in her favor. After Wendt assigned her wage claim to the DOL, it filed a complaint in metropolitan court, which Echostar duly answered. Echostar moved for summary judgment. In metropolitan court, the parties agreed that there were no genuine issues of material fact, and each party claimed to be entitled to judgment as a matter of law. The metropolitan court ruled in favor of the DOL. Echostar appealed to the district court, which affirmed the judgment of the metropolitan court. Echostar now appeals to this Court.

{4} The DOL's position is that instead of being paid $537.92 in the above example, Wendt should have been paid $605.17, calculated as follows: $509.62 divided by 40 equals $12.74, which is the regular hourly rate. One and one-half times this hourly rate is $19.11; $19.11 multiplied by 5 equals $95.55, which should be added to $509.62, for a total of $605.17. If Wendt worked sixty hours, instead of forty-five, the calculations would be:

                           Echostar method                         DOL method
                           $509.62 ÷ 60 = $8.49             $509.62 ÷ 40 = $12.74
                           ½ × $8.49 = $4.25          1½ × $12.74 = $19.11
                           $4.25 × 20 = $85.00               $19.11 × 20 = $382.20
                           $85 + $509.62 = $594.62                 $382.20 + $509.62 = $891.82
                

It can be readily seen that Echostar's method results in significantly less overtime pay. For a week of eighty hours of work, the results are even more dramatic: $637.22 for that week under Echostar's method versus $1274.02 under the DOL method.

II. DISCUSSION

A. STANDARD OF REVIEW

{5} The issue raised on appeal is whether the words "regular hourly rate of pay" contained in Section 50-4-22(C) permit employers and employees to negotiate a fluctuating workweek and resulting fluctuating rate of pay on which to calculate overtime. Construction of statutes is a question of law that we review de novo. Blackwood & Nichols Co. v. N.M. Taxation & Revenue Dep't, 1998-NMCA-113, ¶ 5, 125 N.M. 576, 964 P.2d 137. In addition, the parties agreed in the trial court that there were no genuine issues of material fact and that summary judgment was proper for one party or another. In these circumstances also, our review is de novo. See Wilger Enters., Inc. v. Broadway Vista Partners, 2005-NMCA-088, ¶ 5, 137 N.M. 806, 115 P.3d 822.

B. GENERAL RULES OF STATUTORY CONSTRUCTION

{6} The primary goal in interpreting a statute is to give effect to the legislature's intent. State v. Davis, 2003-NMSC-022, ¶ 6, 134 N.M. 172, 74 P.3d 1064. "Statutes are to be read in a way that facilitates their operation and the achievement of their goals." Miller v. N.M. Dep't of Transp., 106 N.M. 253, 255, 741 P.2d 1374, 1376 (1987), superceded by statute on other grounds as stated in Gallegos v. Sch. Dist. of W. Las Vegas, 115 N.M. 779, 858 P.2d 867 (Ct.App.1993). Statutes are not to be read in a manner that would make portions of them superfluous. State v. Rivera, 2004-NMSC-001, ¶ 18, 134 N.M. 768, 82 P.3d 939.

C. MEANING OF "REGULAR HOURLY RATE OF PAY"

{7} Our cases recognize that the Act is a statute with a remedial purpose and that it must be construed liberally to accomplish that purpose. See N.M. Dep't of Labor v. A.C. Elec., Inc., 1998-NMCA-141, ¶ 13, 125 N.M. 779, 965 P.2d 363. The Act itself declares that its policy is "to establish minimum wage and overtime compensation standards for all workers at levels consistent with their health, efficiency and general well-being" and to protect "workers against the unfair competition of wage and hours standards which do not provide adequate standards of living." Section 50-4-19. Construing a similar statute, one of our sister states has noted that these acts' "purposes are to compensate those who labored in excess of the statutory maximum number of hours for the wear and tear of extra work and to spread employment through inducing employers to shorten hours because of the pressure of extra cost." Janes v. Otis Eng'g Corp., 757 P.2d 50, 53 (Alaska 1988) (internal quotation marks and citation omitted). Another jurisdiction with a similar statute has noted that "[p]remium pay for overtime is the primary device for enforcing limitations on the maximum hours of work." Skyline Homes, Inc. v. Dep't of Indus. Relations, 165 Cal.App.3d 239, 211 Cal.Rptr. 792, 798 (Ct.App.1985), overruled on other grounds by Tidewater Marine W., Inc. v. Bradshaw, 14 Cal.4th 557, 59 Cal.Rptr.2d 186, 196, 927 P.2d 296 (1996). In light of these purposes, it makes little sense to construe the statute to lessen the financial impact on employers the more hours that employees are required to work.

{8} We also find support for our conclusion in a 1999 amendment to Section 50-4-22(C). Prior to the amendment, Section 50-4-22(C) provided that "[n]o employee covered by the provisions of Subsection A of this section shall be required to work more than forty hours in any week of seven days, unless he is paid one and one-half times his regular hourly rate of pay for all hours worked in excess of forty hours." In 1999, the legislature added the following language:

For an employee who is paid a fixed salary for fluctuating hours and who is employed by an employer a majority of whose business in New Mexico consists of providing investigative services to the federal government, the hourly rate may be calculated in accordance with the provisions of the federal Fair Labor Standards Act and the regulations pursuant to that act; provided that in no case shall the hourly rate be less than the federal minimum wage.

1999 N.M. Laws, ch. 164, § 1.

{9} This additional provision specifically allows what Echostar contends should be the general rule for all employers. See 29 C.F.R. § 778.114(a), (c) (2005). Yet it expressly applies only to certain employers. Had calculating overtime based on a fixed salary for fluctuating hours been permissible under the original version of Section 50-4-22(C), there would have been no reason for the legislative amendment in 1999. Similarly, the legislative amendment would be superfluous if Echostar is correct that "regular hourly rate of pay" contemplates fixed salaries for fluctuating hours generally. As stated above, we will not construe portions of a statute to be superfluous. Rivera, 2004-NMSC-001, ¶ 18, 134 N.M. 768, 82 P.3d 939.

D. ECHOSTAR'S ARGUMENTS

{10} Echostar's basic argument is that its agreement with Wendt is not clearly prohibited by the applicable statutes inasmuch as Section 50-4-22(C) does not define "regular rate of pay." Further, Echostar argues that because Section 50-4-26(A) provides criminal penalties for violations of the Act, the definition of "regular hourly rate" should encompass its agreement with Wendt unless such is clearly and unambiguously prohibited. Echostar also points out that the DOL has not enacted a specific regulation containing its definition, despite statutory authority to do so. See § 50-4-27. In light of New Mexico's strong public policy favoring freedom of contract, Echostar contends that the DOL's interpretation must be struck down because its contract with Wendt does not "clearly contravene some law or rule of public morals." See United Wholesale Liquor Co. v. Brown-Forman Distillers...