Walling v. Hardwood Co Same v. Harnischfeger Corporation
| Citation | 89 L.Ed. 1711,325 U.S. 419,89 L.Ed. 1705,65 S.Ct. 1250,325 U.S. 427 |
| Decision Date | 04 June 1945 |
| Docket Number | Nos. 955,956,YOUNGERMAN-REYNOLDS,s. 955 |
| Parties | WALLING, Administrator of Wage and Hour Division, U.S. Department of Labor, v. HARDWOOD CO., Inc. SAME v. HARNISCHFEGER CORPORATION |
| Court | United States Supreme Court |
See 66 S.Ct. 12.
Mr. Douglas B. Maggs, of Washington, D.C., for petitioner.
Mr. Fred S. Ball, Jr., of Montgomery, Ala., for respondent.
The respondent corporation manufactures lumber for shipment in interstate commerce, employing various men to pick up and stack boards. Prior to the trial in this case these stackers were compensated at agreed piece rates per thousand board feet ricked or stacked. The Administrator of the Wage and Hour Division of the Department of Labor brought suit to enjoin alleged violations of the overtime and record-keeping provisions of the Fair Labor Standards Act of 19381 in connection with these stackers. On the day before the commencement of the trial in the District Court the respondent ceased to use the allegedly illegal mode of piece rate compensation and entered into new and more elaborate wage agreements with the stackers. Following the trial the District Court dismissed the complaint and the Fifth Circuit Court of Appeals affirmed the judgment. 145 F.2d 349. We granted certiorari because of important questions as to whether the new wage agreements comply with the requirements of Section 7(a) of the Act.
First. The District Court found that even though the former piece rate agreements be considered unlawful the respondent had no apparent intention of resuming their use. It also found no willful intention on the part of the respondent to violate the Act and no evidence of any intention of future violations. It therefore felt that there was no necessity for an injunction. While 'voluntary discontinuance of an alleged illegal activity does not operate to remove a case from the ambit of judicial power,' Walling v. Helmerich & Payne, Inc., 323 U.S. 37, 43, 65 S.Ct. 11, 14, it may justify a court's refusal to enjoin future activity of this nature when it is combined with a bona fide intention to comply with the law and not to resume the wrongful acts. Cf. United States v. United States Steel Corp., 251 U.S. 417, 445, 40 S.Ct. 293, 297, 64 L.Ed. 343, 8 A.L.R. 1121. We cannot say, therefore, that the District Court abused its discretion in refusing to enjoin the abandoned method of wage payments.
At the same time, however, the validity of the new wage agreements was also at stake. These agreements on their face contemplated future hourly payments at regular and overtime rates as well as additional piece rate payments. Since the Administrator's complaint alleged generally that the respondent was violating Sections 7 and 15(a)(2) by employing its stackers on a piece work basis for more than 40 hours a week without compensating them for overtime at one and one-half times the regular rate, the ques ion as to whether the new contracts satisfied Section 7(a) was properly in issue. Upon proof that these new provisions did not comply with Section 7(a) the Administrator was therefore entitled to an injunction absent any recognized mitigating factor. Evidence on this matter was introduced at the trial and the two courts below considered the contracts thoroughly, predicating their judgments in part upon the belief that the agreements did comply with Section 7(a). We accordingly turn to a consideration of that question.
Second. For approximately six months immediately preceding the trial the stackers were paid piece rates of 60 cents per thousand board feet ricked and 70 cents per thousand board feet stacked. During this period they earned at these rates an average of 51 cents an hour. Under the new contracts made on the day before the trial, however, they were compensated according to the following provisions:
'The basic or regular rate of pay is 35 cents per hour for the first forty hours each week and for time over forty hours each week the pay shall not be less than one and one-half times such basic or regular rate above mentioned with a guaranty that the employee shall receive weekly for regular time and for such overtime as the employee may work a sum arrived at as follows:
'The amount of stacking done by said employee shall be figured on
the basis of 80 cents per thousand board feet of lumber for flat stacking and 70 cents per thousand board feet of lumber ricked.'
Using by way of illustration the labor performed and the hours worked during the six-month period preceding the trial, the Administrator points out that under the new guaranteed piece rates of 70 and 80 cents per thousand the stackers would earn an average of about 59 cents an hour for all hours actually worked, including those in excess of the statutory maximum. On the basis of the contract 'regular rate' of 35 cents an hour2 on the other hand, the excess hours would yield the stackers only 52 1/2 cents hourly. It is thus apparent that the guaranteed piece rates would yield greater returns on an hourly basis for both regular and overtime work and that they would actually be the rates paid.
The respondent argues that these contract provisions satisfy Section 7(a) since they provide for a 'regular rate' of 35 cents an hour and for payment of one and one-half times that rate, or 52 1/2 cents, for all overtime hours. Inasmuch as the Act does not forbid incentive pay or compensation above and beyond the statutory requirements it is urged that the additional payments resulting from the operation of the guaranteed piece rates are unaffected in any way by Section 7(a). We cannot agree, however, that this scheme of compensation is obedient to this statutory mandate.
Under Section 7(a) an employer is required to compensate his employees for all hours in excess of 40 at not less than one and one-half times the regular rate at which they are employed. Thus by increasing the employer's labor costs by 50% at the end of the 40-hour week and by giving the employees a 50% premium for all excess hours, Section 7(a) achieves its dual purpose of inducing the employer to reduce the hours of work and to employ more men and of compensating the employees for the burden of a long workweek. Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 577, 578, 62 S.Ct. 1216, 1219, 1220, 86 L.Ed. 1682; Walling v. Helmerich & Payne, supra, 323 U.S. 40, 65 S.Ct. 13; Jewell Ridge Coal Corp. v. Local No. 6167, 325 U.S. 161, 65 S.Ct. 1063, at page 1067.
The keystone of Section 7(a) is the regular rate of compensation. On that depends the amount of overtime payments which are necessary to effectuate the statutory purposes. The proper determination of that rate is therefore of prime importance.
As we have previously noted, the egular rate refers to the hourly rate actually paid the employee for the...
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