Brennan v. PADRE DRILLING COMPANY, INC., Civ. A. No. 71-C-111.

• Decision Date: 02 May 1973
• Docket Number: Civ. A. No. 71-C-111.
• Citation: 359 F. Supp. 462
• Parties: Peter J. BRENNAN, Secretary of Labor (Successor to James D. Hodgson), United States Department of Labor v. PADRE DRILLING COMPANY, INC., and Billings Oil Service, Inc.
• Court: U.S. District Court — Southern District of Texas

359 F. Supp. 462

Peter J. BRENNAN, Secretary of Labor (Successor to James D. Hodgson), United States Department of Labor v. PADRE DRILLING COMPANY, INC., and Billings Oil Service, Inc.

Civ. A. No. 71-C-111.

United States District Court, S. D. Texas, Corpus Christi Division.

May 2, 1973.

Robert A. Fitz, Asst. Regional Sol., Department of Labor, Dallas, Tex., for plaintiff.

Lev Hunt, Corpus Christi, Tex., for defendants.

MEMORANDUM AND ORDER

OWEN D. COX, District Judge.

This action was instituted by the Secretary of Labor, seeking to enjoin the Defendants from withholding payments of overtime compensation, under Section 17 of the Fair Labor Standards Act, 29 U.S.C. § 217. Plaintiffs charge that the Defendants are violating and have violated 29 U.S.C. §§ 207 and 215(a)(2). Jurisdiction is conferred upon the Court by 29 U.S.C. § 217.

At all relevant times, Defendants Padre Drilling Company, Inc., and Billings Oil Service, Inc., employed and are now employing a number of employees engaged in drilling activities related to the production of petroleum products, substantial portions of which products have been and are being shipped and transported in commerce to destinations outside the state in which such production of goods has occurred. The Defendants are Texas corporations, maintaining their principal offices in the City of Corpus Christi, Nueces County, Texas.

The Defendants are engaged in the business of drilling oil and gas wells. Each company owns two drilling rigs. These rigs are portable and moved from drilling location to drilling location in the South Texas area, from Fort Bend County, Texas, on the north, to Cameron County, Texas, on the south, and Wharton County on the east. The rigs are moved from and to various drilling sites, as directed by the oil companies. The nature of Defendants' drilling business is such that each drilling rig must be moved many times during the course of a year. The rigs remain at particular locations from three days to two weeks. Consequently, the locations where Defendants' employees work constantly change.

While drilling, each of the Defendants' four drilling rigs operates on a 24-hour basis, seven days a week. The three crews work the morning, day, and evening "tours," eight hours each. A crew normally works 56 hours during a seven-day week. A regular crew consists of one toolpusher, one driller, one derrickman, and one or two roughnecks.

Since it would be most unusual for a drilling location to be within walking distance of any employee's residence, it is necessary that the employees of Defendants drive to and from the location of the particular rig on which they are working at the time. In so traveling and sometimes remaining at the job site overnight, the employees incur travel and other expenses. Such expenses are incurred by each employee in the furtherance of his employer's interest.

In 1967, the Defendants reduced the wages paid to their drillers, derrickmen, floorhands and roughnecks, by a dollar per hour, and started paying such employees one dollar per hour for travel expenses. Such expenses are gasoline, oil, and general depreciation on their automobiles, as well as lodging and food. The Defendants refer to this dollar per hour as a "per diem." The Defendants do not consider this dollar per hour as part of their employees' regular rate of compensation, and, therefore, do not pay overtime on the "per diem." In other words, no employee gets one and one-half times this dollar per hour for all the hours worked by him in excess of forty hours per week. The drillers, derrickmen and floorhands are not required to submit expense statements, but the toolpushers are.

The members of each crew normally commute to the drilling site in the automobile of a crew member. The crew members normally rotate driving the "car pool" so that one of the crew members drives his own car every fourth or fifth day to the job site. Occasionally, the Defendants' employees stay overnight or for several days at a time near the drilling site. On such occasion, they usually camp out or obtain lodging in the general vicinity. These employees receive a dollar per hour for traveling expenses, regardless of what the actual expense may be. It should be noted that all of the crew members who work on a particular rig are not necessarily residents of the same town or city; so, it is not always possible for the employees working on a particular rig to travel together.

It should be further noted that if computed on an annual basis at the rate of twelve cents per mile, for the first 15,000 miles traveled, and nine cents per mile thereafter, the Defendants' employees' car expenses would slightly exceed the dollar per hour "per diem." However, the computation ignores the fact that upon occasion four or five crew members will ride together and that, therefore, the actual miles driven are proportionately reduced. But, the sometimes cost of lodging and meals must also be taken into account as travel expense. It seems reasonably clear to the Court that, generally speaking, the traveling expenses are about the same, or perhaps a little more, than the "per diem" dollar per hour.

There are factors in the oil well drilling business which prevent any exact computation of the actual traveling expenses or other expenses incurred by an employee in the furtherance of his employer's interest. Among these factors are the constantly changing locations of the drilling rigs, varying residences of the employees, and a very high rate of employee turnover. So, to require an employee to submit a detailed expense account, in addition to the added bookkeeping chores, is impractical. Consequently, there is and has been a custom among oil well drilling contractors in the South Texas area to pay a flat sum to their employees as reimbursement for traveling expenses incurred in the furtherance of the employer's interest. The amount of such flat sum varies from drilling contractor to drilling contractor, as does the name given the payment, such as "travel expenses," "travel allowance," "living expense," "per diem," and similar names. Regardless of the name given, the purpose of such payment is for the reimbursement of expenses incurred by the employee.

The sole issue presented here is whether the one dollar per hour "per diem" paid by the Defendants to their employees should be included in the regular rate for the purpose of computing overtime compensation under 29 U.S.C. § 207. Subdivision (e) of said Section 207 provides:

"As used in this section, the `regular rate' at which an employee is employed shall be deemed to include all remuneration for employment paid to, or on behalf of, the employee, but shall not be deemed to include . . .

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"(2) . . . reasonable payments for traveling expenses, or other expenses incurred by an employee

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