Abbott v. Beatty Lumber Co.

• Decision Date: 05 June 1979
• Docket Number: Docket No. 78-1676
• Citation: 282 N.W.2d 369,90 Mich.App. 500
• Parties: Floyd A. ABBOTT, Plaintiff-Appellant, v. BEATTY LUMBER COMPANY, a Michigan Corporation, Defendant-Appellee. 90 Mich.App. 500, 282 N.W.2d 369, 24 Wage & Hour Cas. (BNA) 309, 86 Lab.Cas. P 33,828
• Court: Court of Appeal of Michigan — District of US

Page 369

282 N.W.2d 369

Floyd A. ABBOTT, Plaintiff-Appellant, v. BEATTY LUMBER COMPANY, a Michigan Corporation,

Defendant-Appellee.

Docket No. 78-1676.

90 Mich.App. 500, 282 N.W.2d 369, 24 Wage & Hour Cas. (BNA)

309,

86 Lab.Cas. P 33,828

Court of Appeals of Michigan.

June 5, 1979.

Released for Publication Aug. 22, 1979.

[90 MICHAPP 501] Peres, Carr, Jacques, Batchik & Schmidt by J. Rick Schmidt, Pontiac, for plaintiff-appellant.

Hartman, Beier, Howlett, McConnell & Googasian, by James L. Howlett, Bloomfield Hills, for defendant-appellee.

Before CYNAR, P. J., and D. E. HOLBROOK, Jr. and RILEY, JJ.

D. E. HOLBROOK, Jr., Judge.

On September 24, 1977, [90 MICHAPP 502] plaintiff filed an action in the Oakland County Circuit Court alleging that defendant had wilfully violated the Fair Labor Standards Act of 1938 as amended, 29 U.S.C. § 201 Et seq., by failing to pay overtime as required under Section 7 of that act, 29 U.S.C. § 207. During the time in which plaintiff was employed by defendant, his employment relationship was controlled by a collective bargaining agreement. Article XXI, § 2 of this collective bargaining agreement stated that:

"Time and one-half (11/2) the employee's regular hourly rate shall be paid for all hours worked in excess of eight (8) hours in any one day, or forty (40) hours any one week, but not both. Hours paid for at overtime on any day shall not be counted towards weekly overtime. Overtime pay shall not be pyramided."

Article VII, § 1, concerned grievances and stated:

"All disputes and disagreements involving the application or interpretation of this Agreement shall be resolved in accordance with the procedures hereinafter provided."

The final step of the grievance procedure was binding arbitration. Article IX, § 1 stated:

"Any grievance remaining unresolved at the conclusion of the grievance procedure provided in Article VIII or any dispute or disagreement between the Local Union and the Employer, or the Association involved in the application or interpretation of this Agreement may be submitted to arbitration by either the Local Union, the Employer or the Association."

Section 7 of this article further provided that:

"The arbitrator's decision shall be final and bending [90 MICHAPP 503] upon the Local Union, the Employer, the Association and the employee or employees involved."

Defendant brought a motion for summary judgment under GCR 1963, 117.2(1) contending that plaintiff's claim is cognizable under the grievance and arbitration provisions of the contract and that his failure to utilize these procedures served to bar the action as a matter of law. After receiving briefs and hearing oral arguments, the trial court granted summary judgment for defendant, and plaintiff appeals as of right.

The only issue raised in this appeal is whether an individual employee seeking to assert his statutory rights under the FLSA must exhaust his contractual grievance procedure before seeking judicial resolution. Section 7 of the FLSA, 29 U.S.C. § 207, provides in pertinent part that:

"Except as otherwise provided in this section, no employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed."

Enforcement of Sec. 7 is granted to the individual employee by Sec. 16(b) of the FLSA, 29 U.S.C. § 216(b), which states in pertinent part:

"Any employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. . . . An action to [90 MICHAPP 504] recover the liability prescribed in either of the preceding sentences may be maintained against any employer (including a public agency) in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated."

These provisions create a statutory entitlement to recover unpaid overtime compensation that is wholly independent of the provisions of any collective bargaining agreement which purports to control the payment of wages to the employee. This statutory entitlement to overtime compensation may not be waived by the employee even by a collective bargaining agreement, since to do so would nullify the purposes of the FLSA. Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 707, 65 S.Ct. 895, 902, 89 L.Ed. 1296 (1945), Mumbowar v. Callicott, 526 F.2d 1183 (C.A. 8, 1975), Marshall v. R. & M. Erectors, Inc., 429 F.Supp. 771, 780 (D.Del.1977). This rule of nonwaiverability has only one exception. Section 16(c) of the FLSA, 29 U.S.C. § 216(c), provides that:

"The Secretary is authorized to supervise the payment of the unpaid minimum wages or the unpaid overtime compensation owing to any employee or employees under section 206 or 207 of this title, and the agreement of any employee to accept such payment shall upon payment in full constitute a waiver by such employee of any right he may have under subsection (b) of this section to such unpaid minimum wages or unpaid overtime compensation and an additional equal amount as liquidated damages."

Thus, where an employee accepts payment in full after investigation by the Wage and Hour Division of the Employment Standards Administration of the United States Department of Labor, that employee[90 MICHAPP 505] has waived his right to judicial enforcement of his claim for overtime compensation. See Sneed v. Sneed's Shipbuilding, Inc., 545 F.2d 537 (C.A. 5, 1977). In this instance, there had been no supervised settlement by the wage and hour division, and plaintiff is not deemed to have waived his right to overtime compensation.

Having determined plaintiff has not waived his right to seek a judicial determination of his entitlement to overtime pay, we must now determine whether plaintiff's statutory entitlement to sue to recover unpaid overtime has been terminated in any other way. An individual's right to bring an action under the FLSA may be terminated by the occurrence of two statutorily recognized occurrences. Section 16(b), 29 U.S.C. § 216(b), provides that:

"The right provided by this subsection to bring an action by or on behalf of any employee, and the right of any employee to become a party plaintiff to any such action, shall terminate upon the filing of a complaint by the Secretary of Labor in an action under section 217 of this title in which (1) restraint is sought of any further delay in the payment of unpaid minimum wages, or the amount of unpaid overtime compensation, as the case may be, owing to such employee under section 206 or section 207 of this title by an employer liable therefor under the provisions of this subsection or (2) legal or equitable relief is sought as a result of alleged violations of section 215(a)(3) of this title."

Additionally, Sec. 16(c), 29 U.S.C. § 216(c) states:

"The Secretary may bring an action in any court of competent jurisdiction to recover the amount of the unpaid minimum wages or overtime compensation and an equal amount of liquidated damages. The right provided by subsection (b) of this section to bring an action by or on behalf of any employee to recover the liability specified in the first sentence of such subsection [90 MICHAPP 506] and of any employee to become a party plaintiff to any such action shall terminate upon the filing of the complaint by the Secretary in an action under this subsection in which the recovery is sought of unpaid minimum wages or unpaid overtime compensation under sections 206 and 207 of this title or liquidated for other damages provided by this subsection owing to such employee by an employer liable under the provisions of subsection (b) of this section, unless such action is dismissed without prejudice on motion of the Secretary."

The record indicates that neither of these two specified circumstances have occurred, forcing us to conclude the plaintiff's right to bring an action under the FLSA is not precluded by the statutory exceptions to its application.

A judicial exception has been created which terminates the right of an individual employee to sue for overtime compensation under the FLSA. In Satterwhite v. United Parcel Service, Inc., 496 F.2d 448 (C.A. 10, 1974), Cert. den., 419 U.S. 1079, 95 S.Ct. 668, 42 L.Ed.2d 674 (1974), it was held that an employee's right to sue for overtime compensation under Sec. 7(a) and Sec. 16(b) of the Fair Labor Standards Act was foreclosed by prior submission of his claim to final arbitration under the grievance procedure of the collective bargaining agreement. This exception has been recognized by other circuits. Union de Tronquistas de Puerto Rico, Local 901 v. Flagship Hotel Corp., 554 F.2d 8, 11 (C.A. 1, 1977), Atterburg v. Anchor Motor Freight, Inc., 425 F.Supp. 841, 845 (D.N.J.1977). See also Suissa v. American Export Lines, Inc., 507 F.2d 1343, 1348 (C.A. 2, 1974). However, since plaintiff has not elected to settle this dispute by arbitration, this exception is inapplicable.

We are convinced none of the recognized exceptions that could limit plaintiff's ability to bring [90 MICHAPP 507] this...