Baker v. Barnard Const. Co., Inc.

• Decision Date: 18 June 1998
• Docket Number: No. 96-2223,96-2223
• Citation: 146 F.3d 1214
• Parties: 135 Lab.Cas. P 33,689, 4 Wage & Hour Cas.2d (BNA) 1249, 98 CJ C.A.R. 3418 Rex BAKER; Joseph N. Bordelon; Charlie E. Bradshaw, Jr.; Larry Cunningham; Denny Hensley; Steven D. Hensley; Leonard L. Mahan; Mack D. Mantle; Ray E. Fowler, Plaintiffs, and Alan Boyd; William R. Clarence; Gary Coon; Robert Cornett, Jr.; Tracy R. Mcmanus; Eddie Miller; Gerald Miller; David L. Robinson; James D. Spears, Jr.; Dennis Stiles; Gary Miller, Sr., Plaintiffs--Appellants, v. BARNARD CONSTRUCTION CO., INC.; Davy McKee Corporation; Flint Engineering & Construction Company; Mountain West Fabrication Plants & Stations, Inc.; Pioneer Contracting Company, Inc., Defendants, and Four-Way Company, Inc.; Foutz & Bursum Construction Company, Inc., Defendants--Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1214

146 F.3d 1214

135 Lab.Cas. P 33,689, 4 Wage & Hour Cas.2d

(BNA) 1249,

98 CJ C.A.R. 3418

Rex BAKER; Joseph N. Bordelon; Charlie E. Bradshaw, Jr. Larry Cunningham; Denny Hensley; Steven D Hensley; Leonard L. Mahan; Mack D Mantle; Ray E. Fowler, Plaintiffs and Alan Boyd; William R. Clarence; Gary Coon; Robert Cornett, Jr.; Tracy R. Mcmanus; Eddie Miller; Gerald Miller; David L. Robinson; James D. Spears, Jr.; Dennis Stiles; Gary Miller, Sr., Plaintiffs--Appellants, v. BARNARD CONSTRUCTION CO., INC.; Davy McKee Corporation; Flint Engineering & Construction Company; Mountain West Fabrication Plants & Stations, Inc.; Pioneer Contracting Company, Inc., Defendants, and Four-Way Company, Inc.; Foutz & Bursum Construction Company, Inc., Defendants--Appellees.

No. 96-2223.

United States Court of Appeals, Tenth Circuit.

June 18, 1998.

David N. Mark, Seattle, Washington (K. Lee Peifer, Albuquerque, New Mexico, with him on the briefs), for Plaintiffs-Appellants.

Thomas J. Hynes of Hynes, Hale & Gurley, Farmington, New Mexico, for Defendants-Appellees.

Before BRISCOE, McKAY, and LUCERO, Circuit Judges.

McKAY, Circuit Judge.

At issue in this case is whether return travel time associated with refueling and maintaining construction equipment qualifies as work under the Fair Labor Standards Act [FLSA], 29 U.S.C. §§ 201-219, and is therefore compensable under the FLSA. Plaintiffs, employees of Defendants Four-Way Company and Foutz & Bursum Construction Company, were hired to perform welding work on oil and gas pipelines. They brought this action against their employers, alleging violations of the FLSA's overtime provisions.

As part of the terms of Plaintiffs' employment, Defendants required Plaintiffs to provide their own fueled and stocked welding rigs each work day. Plaintiffs were compensated by a "split-check system" which divided their hourly rate into labor compensation and rental compensation for the welding rigs. Defendants then equated Plaintiffs' labor compensation rate with the "regular rate" used to determine overtime rates under the FLSA. 29 U.S.C. § 207(a). Defendants did not pay Plaintiffs for their return travel time associated with refueling and restocking the welding rigs in the evenings.

At trial, the jury returned a verdict in favor of Defendants on each of Plaintiffs' claims. After the trial court denied Plaintiffs' motion for a new trial pursuant to Federal Rule of Civil Procedure 59(a), Plaintiffs' appealed. We assume jurisdiction pursuant to 28 U.S.C. § 1291, and, for the reasons set forth below, we reverse and remand.

Plaintiffs assert on appeal that the district court erroneously instructed the jury that Plaintiffs could waive their overtime rights by agreeing with Defendants that the rig rental fee would compensate them for travel time associated with refueling and restocking the welding rigs. See Appellants' App. at 59, Instr. No. 9. Because Plaintiffs objected to Instruction Nine at trial, we review the instruction de novo. See United States v. Pappert, 112 F.3d 1073, 1076 (10th Cir.1997). Instruction Nine reads, in pertinent part:

[T]o award damages to Plaintiffs as a result of travel time Plaintiffs [sic] claim was necessary to refuel and restock their welding rigs, you must find both that:

(1) travel back from the job site was integral and indispensable to the principle [sic] activity or activities for which Plaintiffs were hired, and

(2) the parties made no mutual agreement that the rig rental fee would compensate Plainiffs [sic] for travel time associated with refueling and restocking their welding rigs.

Appellants' App. at 59. We agree with Plaintiffs that if their travel time was integral and indispensable to the principal activities for which they were hired, no mutual agreement could waive the application of the FLSA minimum wage and overtime provisions to that work.

Under Instruction Nine, Plaintiffs must first prove that their return travel from a job site is compensable under the Portal-to-Portal Act, codified at 29 U.S.C. §§ 251-262. Under the Portal-to-Portal Act, employers need not pay minimum wage or overtime to an employee engaged in "activities which are preliminary to or postliminary to said principal activity or activities, which occur either prior to the time on any particular workday at which such employee commences, or subsequent to the time on any particular workday at which he ceases, such principal activity or activities." 29 U.S.C. § 254(a)(2). In Steiner v. Mitchell, 350 U.S. 247, 256, 76 S.Ct. 330, 100 L.Ed. 267 (1956), the Supreme Court interpreted section 254(a)(2) of the Act, holding that if an activity is "an integral and indispensable part of the principal activities for which covered workmen are employed," it constitutes a compensable principal activity rather than a non-compensable preliminary or postliminary task. Whether an activity is preliminary or postliminary to principal activities for purposes of § 254(a)(2) of the Portal-to-Portal Act is a mixed question of law and fact because the precise nature of the employee's duties is a question of fact, while application of the FLSA to those duties is a question of law. See Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 743, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981); Baker v. GTE North, Inc., 927 F.Supp. 1104, 1111-12 (N.D.Ind.1996), rev'd on other grounds, 110 F.3d 28 (7th Cir.1997). The first part of Instruction Nine appropriately asks the jury whether Plaintiffs have proved that their return travel is compensable under the Supreme Court's "integral and indispensable" standard.

The second part of Instruction Nine requires Plaintiffs to prove that "the parties made no mutual agreement that the rig rental fee would compensate Plainiffs [sic] for travel time associated with refueling and restocking their welding rigs." Appellants' App. at 59. We hold that this instruction incorrectly stated the law because travel time meeting the "integral and indispensable" test must be compensated pursuant to the FLSA regardless of any employer-employee agreement. If Plaintiffs' travel time associated with refueling and restocking the rigs is integral and indispensable, the disputed agreement in this case would violate the FLSA.

If the jury found that Plaintiffs' return travel time is integral and indispensable to the principal activities for which Plaintiffs were hired, Plaintiffs' travel time would be compensable unless another section of the FLSA provided an exception to the Portal-to-Portal payment requirements or approved of an alternative pay arrangement. ¹ See D A & S Oil Well Servicing, Inc. v. Mitchell, 262 F.2d 552, 554-55 (10th Cir.1958). In other words, regardless of whether employer-employee agreements classified the return travel associated with maintaining the rigs as noncompensable or compensated through rig rental, if payment for that return travel is required by the FLSA, Defendants must apply the minimum wage and overtime provisions of the FLSA to that return travel. See Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 740, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981) (The Supreme Court has "frequently emphasized the nonwaivable nature of an individual employee's right to a minimum wage and to overtime pay under the Act. Thus, [the Court has] held that FLSA rights cannot be abridged by contract or otherwise waived because this would 'nullify the purposes' of the statute and thwart the legislative policies it was designed to effectuate.") (citations omitted); Dunlop v. Gray-Goto, Inc., 528 F.2d 792, 794-95 (10th Cir.1976) (stating that "private agreement or understanding between the parties cannot circumvent the overtime pay requirements of the Act").

Defendants assert that compensation for Plaintiffs' travel time associated with maintaining the rented rigs is properly allocated to a rental fee rather than employee wages. They contend that even if Plaintiffs' travel time is an integral and indispensable activity under the Portal-to-Portal Act, 29 U.S.C. § 207(e)(2) allows them to exclude such time from the hours of Plaintiffs' work which require minimum wage or overtime payments because section 207(e)(2) excludes equipment rental rates from an employee's regular rate of pay.

Section 207(e)(2) lists one of "seven categories of employer payments [that] are not to be taken into consideration in determining what an employee's 'regular rate' of pay is." Dunlop, 528 F.2d at 794; see 29 U.S.C. § 207(e). Section 207(e)(2) authorizes exclusion from the regular rate of "other similar payments to an employee which are not made as compensation for his hours of employment." In the applicable regulation, "[s]ums paid to an employee for the rental of his truck or car" is an example of the type of payment intended to be excluded from the regular rate as "other similar payments." 29 C.F.R. § 778.224(b) (1997). Thus, a rental payment for a vehicle is not included in the calculation of an employee's regular rate of pay because it is not "compensation for [the employee's] hours of employment." 29 U.S.C. § 207(e)(2).

Because 29 C.F.R. § 778.224(b)(1) excludes payments for rig rental from the calculation of Plaintiffs' regular rate of pay, Defendants assert that Plaintiffs' maintenance and transport of the rented rigs ought to be excluded from minimum wage and overtime compensation if such services are compensated by the rig rental fee. Their argument follows the reasoning of the district court's decision earlier in this case; they argue that we would read section 778.224(b)(1) too narrowly if we prohibited payment by a rental fee for services such as maintenance of rented equipment. See Baker v. Barnard Constr. Co., 863 F.Supp. 1498, 1502 (D.N.M.1993).

We do read section 778.224(b)(1) narrowly because we have consistently followed the Supreme Court's instruction that such FLSA exemptions are to be construed narrowly. See Sanders v. Elephant Butte Irrigation Dist., 112 F.3d...