Brennan v. General Motors Acceptance Corporation

• Citation: 482 F.2d 825
• Decision Date: 03 August 1973
• Docket Number: No. 72-2943.,72-2943.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Parties: Peter J. BRENNAN, Secretary of Labor, United States Department of Labor, Plaintiff-Appellee, v. GENERAL MOTORS ACCEPTANCE CORPORATION, Defendant-Appellant.

482 F.2d 825 (1973)

Peter J. BRENNAN, Secretary of Labor, United States Department of Labor, Plaintiff-Appellee, v. GENERAL MOTORS ACCEPTANCE CORPORATION, Defendant-Appellant.

No. 72-2943.

United States Court of Appeals, Fifth Circuit.

August 3, 1973.

Wm. P. Simmons, Jr., Eric B. Meyers, Muller & Mintz, Ray C. Muller, Miami, Fla., Ross L. Malone, Gen. Counsel, General Motors Acceptance Corp., Eugene L. Hartwig, Detroit, Mich., for defendant-appellant.

John K. Light, William J. Kilberg, Solicitor, Carin Ann Clauss and Donald S. Shire, Department of Labor, Washington, D. C., for plaintiff-appellee.

Before GEWIN, THORNBERRY and RONEY, Circuit Judges.

THORNBERRY, Circuit Judge:

This is an action brought by the Secretary of Labor to enjoin the General Motors Acceptance Corporation from violating the overtime and record keeping provisions of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., and from withholding more than $92,000 in unpaid overtime compensation from twenty-six employees. The employees in question were district representatives, field representatives, and telephone collection men; their basic task was collecting overdue accounts and repossessing automobiles. Their jobs naturally demand long and irregular hours in the field. Because the men work on their own and without direct supervision, GMAC computes their hours worked (and thus wages) by relying on time sheets completed by the employees in the field. The court below found that despite efforts of upper echelon management to encourage accurate overtime reporting, the employees nevertheless understated their overtime because of pressure brought to bear by their immedidate superiors. The trial court found that these supervisors insisted that reported overtime hours be kept to a stated minimum level, thus forcing the employees to work unreported and thus uncompensated hours of overtime. The trial court, 347 F.Supp. 9, concluded that GMAC had willfully violated the FLSA and therefore awarded back pay for three years' unreported overtime to twenty-six employees, including eleven who did not testify at trial. GMAC appeals from the trial court's decision, and we affirm.

On appeal GMAC raises three points of error. It maintains it did not violate the FLSA because the company had no actual or constructive knowledge that these employees were working unreported, uncompensated hours of overtime. GMAC further claims that even if it did violate the FLSA, the violation was not willful and therefore a two-year statute of limitations should apply, instead of the three-year statute applied by the trial court. GMAC's last point is that there was no competent evidence in the record to justify an award to the eleven employees who did not testify at trial.

GMAC's principal argument is that it cannot have violated the FLSA because it had no knowledge of the unreported overtime. The company relied on its employees to report fully all the hours worked. In fact the record contains a series of memoranda and instructions promulgated by upper management to encourage full reporting of all hours worked by employees. If the employees are not paid for all overtime hours worked it is because they have voluntarily failed to report those hours to the company. While it may be true that the company has had no actual knowledge of the unreported overtime hours, we believe the company had constructive knowledge.

This court's latest pronouncement on the issue of employer knowledge in FLSA cases came in Gulf King Shrimp Co. v. Wirtz, 5th Cir. 1969, 407 F.2d 508. In that case the employer maintained he did not have actual knowledge that minors were illegally working in his factory. In response to that position we said:

With these principles in mind we need only to inquire whether the circumstances of the present case were such that the employer either had knowledge that minors were illegally in his employ, or else had the "opportunity through reasonable diligence to acquire knowledge." 407 F.2d 508, 512.

In the instant case the trial court found that during the three years preceding this lawsuit twenty-six employees had been working an average of thirteen hours of overtime each week. It would seem that an employer exercising reasonable diligence would acquire knowledge of this fact. Indeed, GMAC's upper management regularly encouraged the full reporting of overtime and sought to learn of all overtime worked, but the trial court found that the employees' immediate supervisors insisted that all work be completed within certain defined time limits and that "the pervasive effect of such instructions from defendant's supervisors to its employees was that an employee was limited in the number of hours he could turn in for payroll purposes irrespective of the number of hours actually worked. The defendant's district representatives, field representatives and certain of the side telephone collection men regularly worked in excess of forty hours per week but with rare exception, were only allowed to turn in, record, and be paid for forty to forty-two hours." Because the immediate supervisors were primarily responsible for the employees' failing to report all overtime, we believe they may have had actual knowledge of the unreported overtime. At the very least they had constructive knowledge, for they had the opportunity to get truthful overtime reports but opted to encourage artificially low reporting instead. The company cannot disclaim knowledge when certain segments of its management squelched truthful responses.

GMAC appeals also from the trial court's finding that its violation of the FLSA was...