Alaska Intern. Industries, Inc. v. Musarra

• Citation: 602 P.2d 1240
• Decision Date: 16 November 1979
• Docket Number: Nos. 3652,3676,s. 3652
• Parties: 24 Wage & Hour Cas. (BNA) 630, 89 Lab.Cas. P 55,270 ALASKA INTERNATIONAL INDUSTRIES, INC., an Alaska Corporation, and Weaver Brothers, Inc., a Foreign Corporation, Appellants/Cross-Appellees, v. Charles A. MUSARRA, Appellee/Cross-Appellant.
• Court: Supreme Court of Alaska (US)

Page 1240

602 P.2d 1240

24 Wage & Hour Cas. (BNA) 630, 89 Lab.Cas. P 55,270

ALASKA INTERNATIONAL INDUSTRIES, INC., an Alaska Corporation, and Weaver Brothers, Inc., a Foreign Corporation, Appellants/Cross-Appellees, v. Charles A. MUSARRA, Appellee/Cross-Appellant.

Nos. 3652, 3676.

Supreme Court of Alaska.

Nov. 16, 1979.

Ronald D. Flansburg, Olympia, Charles E. Tulin, Anchorage, for appellants/cross-appellees.

J. L. McCarrey, III, McCarrey & McCarrey, Anchorage, for appellee/cross-appellant.

Before RABINOWITZ, C. J., and CONNOR, BOOCHEVER, BURKE and MATTHEWS, JJ.

OPINION

RABINOWITZ, Chief Justice.

This matter involves an appeal from a jury verdict in an action brought pursuant to Alaska's Wage and Hour Act, AS 23.10.050-150. The jury found in favor of the employee, Charles Musarra, in the amount of $37,498.03 as overtime compensation due from Alaska International Industries (AII) and Weaver Brothers, Inc. and rejected AII and Weaver Brothers' claims of exemption from the overtime provisions of the Wage and Hour Act under established categories for bona fide executive, administrative, professional and supervisory employees.

Charles Musarra was hired as a systems analyst by AII on January 29, 1975. A systems analyst is "a person that takes something that's usually being done manually, a function, be it accounting function, an inventory function, a payroll function, anything of this nature, and develops the methods, procedures, and general outlines or programs along with the necessary forms to convert that particular manual system into a computerized system." During the course of his employment, Musarra was responsible for the implementation of systems programs for the IBM computers at both AII and at appellant Weaver Brothers, a wholly owned subsidiary of AII which employed Musarra as its credit manager and subsequently also as its supervisor of accounts receivable until termination of Musarra's employment on February 13, 1976. There was apparently no discussion at the time Musarra was hired concerning the number of hours he would be required to work, and he was paid a monthly salary thereafter. No provision for overtime pay was made by AII in regard to Musarra's employment. Though he never requested overtime pay in writing during his employment, Musarra testified that on more than one occasion he made an oral demand for overtime compensation.

After Musarra's employment with AII and Weaver Brothers was terminated, he instituted an action in superior court under the Alaska Wage and Hour Act for compensation for approximately 1920 hours of overtime for which he had not been paid by appellants. AII and Weaver Brothers defended on the ground that Musarra was excepted from the provisions of the Wage and Hour Act by AS 23.10.055(9), as an individual employed in a bona fide executive, administrative or professional capacity or alternatively, as a supervisory employee under AS 23.10.060. In its instructions to the jury, the superior court gave the following two instructions which are focal points of this appeal.

Instruction No. 15

'Supervisory' means a person who directs the activities of other employees and who does not perform duties which are regularly performed by the employees supervised, except for brief periods of time not to exceed more than 8 hours in the supervisor's workweek.

Instruction No. 19

Although plaintiff might not have been employed in a supervisory, administrative, executive or professional capacity a sufficient fraction of his working time to be exempt from the overtime pay requirement under one of these capacities alone, he may still be exempt if:

(1) He performed work in more than one of the exempt capacities; and

(2) He spent as large a part of his work time in two or more of the exempt capacities as would be necessary to be exempt under the more restrictive applicable exempt category alone.

As mentioned at the outset, the jury returned a special verdict in Musarra's favor, awarding him $37,498.03 in additional compensation for overtime work. AII and Weaver Brothers subsequently moved for a new trial, and Musarra moved for additur or, alternatively, for judgment notwithstanding the verdict. The motions were denied, and this appeal and cross-appeal followed.

Initially, we are presented with the question of whether appellants AII and Weaver Brothers sufficiently voiced their objections to the instructions to preserve the alleged errors on appeal. ¹ Under the standards we have previously articulated, we conclude that counsel for appellants adequately objected to jury instruction number 15. ² There was no objection by appellants to instruction number 19 in the superior court. Therefore, we are not presented with a question as to the sufficiency of the objection to this instruction in the superior court. However, as will be discussed subsequently, ³ this latter instruction is not critical to the resolution of this appeal.

We now turn to the substantive question of whether the jury was improperly instructed by jury instruction number 15 that a supervisory employee may not perform duties which are regularly performed by the employees supervised, "except for brief periods of time not to exceed more than 8 hours in the supervisor's workweek." ⁴ The jury instruction given was taken verbatim from the Alaska Administrative Code definition of "supervisory" as used in AS 23.10.060. ⁵ Appellants do not challenge the validity of the regulation directly but, rather, maintain that the error in the instruction was due to the superior court's improper definition of a supervisor's work week as being limited to forty hours as a matter of law. At trial, appellants argued that the intent of the regulation is to exempt employees who do not work over twenty percent (eight hours out of forty) in a non-exempt category rather than those who do not work eight hours in non-exempt categories regardless of the number of hours worked in a week. Based on their interpretation of federal cases construing the Federal Labor Standards Act, appellants argue that notwithstanding the fact that a "regular work week" is forty hours under both federal and Alaska law, ⁶ an employee's work week is actually "a fixed and regularly accruing period of 168 hours (7 consecutive 24 hour periods)." ⁷

We note that, in deciding this question, we are simultaneously engaged in determining the validity of the regulation which defines " supervisory" for purposes of AS 23.10.060, since the regulation and the instruction are worded identically. ⁸ Appellants' claim is that the eight-hour limitation on non-exempt work performed by employees otherwise classified as "supervisory" was erroneous in this case. Since the limitation was required by 8 AAC 15.070(h), the instruction can only be improper if the regulation is also invalid. Thus, it is appropriate to review the definition of "supervisory" based on the standards articulated in Kelly v. Zamarello, 486 P.2d 906, 911 (Alaska 1971), ⁹ namely, whether the agency acted within its "scope of authority" and in a "reasonable and not arbitrary" manner. ¹⁰

That the promulgating agency acted within the scope of its authority is clear from the terms of the authorizing statute, AS 23.10.085(b):

The regulations may, without limiting the generality of (a) of this section, define terms used in §§ 50-150 of this chapter . . . . ¹¹

The further question of whether the regulation is "reasonable and not arbitrary" must be resolved by examining the Wage and Hour Act and regulations promulgated thereunder and by drawing inferences as to the purposes of the particular regulation at issue in this case.

Preliminarily, it should be noted that supervisory employees are treated differently under the Wage and Hour Act from individuals employed in " bona fide executive, administrative, or professional" ¹² capacities. Executive, administrative and professional employees are exempted from all of the provisions of the Wage and Hour Act. ¹³ In contrast, supervisory employees are specifically exempted from payment for overtime, ¹⁴ but retain the protections of all of the other requirements of the Act, including the minimum wage provision, ¹⁵ the requirement that employers keep records of the hours worked, the rate of pay, etc. for each employee, ¹⁶ and the availability of certain civil remedies in case of violations of the Act by employers. ¹⁷ This separate, more limited exemption of supervisory employees is not paralleled in the federal Fair Labor Standards Act. ¹⁸ However, the federal regulations expressly recognized that local or state law on payment of overtime may differ from the standards set forth in the federal statute. The applicable regulation, 29 C.F.R. § 778.5, provides, in part:

Where such legislation is applicable and does not contravene the requirements of the Fair Labor Standards Act, nothing in the act, the regulations or the interpretations announced by the Administrator should be taken to override or nullify the provisions of these laws.

Nevertheless, it should be noted that "(c)ompliance with other applicable legislation does not excuse noncompliance with the Fair Labor Standards Act." ¹⁹ Thus, it is only where state law is more restrictive or more favorable to the employee that it governs in lieu of the federal act. ²⁰

Administrative regulations promulgated pursuant to the Alaska Wage and Hour Act distinguish between administrative, executive, and professional employees who uniformly are allowed to spend a percentage of the hours in the employee's total work week performing non-exempt activities, and supervisory employees, ²¹ whose limitation on non-exempt work is clearly stated in terms of "brief periods of time not to exceed more than 8 hours in the supervisor's work week." ²² This differential treatment of supervisory employees on the one hand and administrative, executive, and professional employees on the other hand follows the distinction drawn by the statute itself, in exempting the...