Ballaris v. Wacker Siltronic Corp.

• Decision Date: 03 June 2004
• Docket Number: No. 02-35956.,02-35956.
• Citation: 370 F.3d 901
• Parties: Michael BALLARIS, Plaintiff-Appellant, v. WACKER SILTRONIC CORPORATION, a foreign corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

370 F.3d 901

Michael BALLARIS, Plaintiff-Appellant, v. WACKER SILTRONIC CORPORATION, a foreign corporation, Defendant-Appellee.

No. 02-35956.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 3, 2004.

Filed June 3, 2004.

Apppeal from the United States District Court for the District of Oregon, Barr M. King, J.

Jacqueline L. Koch, Koch & Deering, Portland, Oregon, and J. Dana Pinney Bailey, Pinney & Associates, Tualatin, OR, for the plaintiff.

Bruce L. Campbell and John F. Neupert, Miller Nash LLP, Portland, OR, for the defendant.

Appeal from the United States District Court for the District of Oregon Garr M. King, District Judge, Presiding.

Before: REINHARDT, SILVERMAN, and CLIFTON, Circuit Judges.

REINHARDT, Circuit Judge.

Michael Ballaris, on behalf of himself and others similarly situated, sued Wacker Siltronic Corporation to recover: (1) unpaid overtime wages under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq.; (2) unpaid overtime wages under the Oregon wage and hour laws, Or.Rev.Stat. §§ 652.140 and 652.150; and (3) equitable remedies and unpaid benefits on account of the company's failure to keep accurate records and to make contributions to employee benefit plans, as required by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. The district court granted Wacker summary judgment on all claims.

Plaintiffs assert three principal errors on appeal. They contend that the district court erred in concluding that: (1) paidlunchtime compensation did not constitute remuneration regularly received for employment and is therefore excludable from the regular rate of pay used to calculate overtime compensation; (2) time spent by employees changing into and out of plant uniforms at the work-site was not "work-time" under the FLSA, and therefore is not compensable; and (3) the employer could lawfully credit the "paid lunch" time payments against overtime compensation due the employees.¹ We affirm in part, reverse in part, and remand.

I.

Wacker manufactures silicon wafers for the computer industry.² Its facility in Portland, Oregon has two fabrication plants: "Fab 1" and "Fab 2." Plaintiffs are employees of Wacker who work or who have worked in Fab 1 or Fab 2.

a. Cleanrooms

Part of the silicon wafer manufacturing process takes place in "cleanrooms" — environments that have few of the air-borne impurities that exist in the ambient air. Cleanrooms are classified by the number of particles of contamination permitted per cubic foot. Therefore, a Class 10,000 cleanroom has more impurities than a Class 10 cleanroom.

All employees who work in cleanrooms must wear gowns to help maintain the environment. The gowns worn in the cleanrooms are referred to as "bunny suits." The process of preparing oneself to enter the cleanroom is called "gowning." More gowning is required in a Class 10 cleanroom than in a Class 10,000 cleanroom. For example, employees who work in a Class 10,000 cleanroom complete eight steps before entering, five of which involve "donning gowns," whereas employees who work in a Class 10 cleanroom must complete ten to twelve steps. Some, but not all, of the cleanrooms have an air shower that employees must proceed through prior to entering the cleanroom. During the relevant times, Wacker required Fab 1 and 2 employees who worked in cleanrooms to complete the gowning process prior to beginning their shifts or prior to clocking in.

b. Fab 1

Fab 1 has 18 cleanrooms: seven Class 10,000, four Class 1,000, four Class 100, and three Class 10. Fab 1 employees enter the building and proceed to the gowning area directly outside of the cleanroom manufacturing area. Fab 1 employees are not required to wear plant uniforms under their bunny suits.

c. Fab 2

Fab 2 has seven cleanrooms. The employees in Fab 2 are divided into three teams. Each team has a different gowning area. Unlike Fab 1 employees, Fab 2 employees are required to wear plant uniforms, consisting of a polo shirt, pants, and shoes under their bunny suits. During the relevant time period, Fab 2 employees were required to wear their street clothes to work and to change into and out of their plant uniforms in a locker room located between the Fab 2 entrance and the gowning areas. The time for employees to walk from the locker rooms to the gowning areas varies from approximately 15 seconds to four minutes.

Upon accepting employment with Wacker, Fab 2 employees are given an introductory manual, which contains instructions and warnings regarding the plant uniforms. The manual states that: "Everyone in the building is required to wear the plant uniform." It provides five reasons why plant uniforms must be worn at all times while employees are on-site:

(1) The uniform supports [Wacker's] objective to be the cleanest Silicon manufacturer world-wide.

(2) The use of a uniform attracts industry attention and shows [Wacker's] commitment to a clean philosophy.

(3) To be the best of the breed to [Wacker's] customers based on the benchmarking of our Wasserburg facility and Toshiba.

(4) To limit potential cleanroom contamination from the clothing worn under the cleanroom suits. Guidelines for personal clothing become obsolete with a controlled plant uniform.

(5) To be the industry leader in working environments, providing [Wacker] customers with the highest quality products, and making Wacker the preferred choice among vendors.

In a separate document, the plant uniforms are listed as among the garments required for an employee to enter any of the cleanrooms or adjacent areas.

Wacker informed Fab 2 employees that: "Plant shoes and uniforms are NOT to be worn outside the building, except in an emergency. This includes going to the other buildings on site, while smoking or going home at the end of the day." The company further notified employees that: "Security will be monitoring the entrance and exit so that [employees] do not walk out with [their] plant shoes on. [It] will also monitor Wacker personnel for wearing the plant uniform."

d. Shifts and "Pass-Down" Time

Wacker operates 24 hours per day in what it calls "twelve-hour" shifts. The shifts officially change at 7 a.m. and 7 p.m. Despite the official start time, the company requires employees who work in cleanrooms to report to their work stations by 6:50 or 6:55 to receive a "pass down" briefing about any manufacturing problems that occurred during the prior shift. Before reporting to their work stations for the briefing, Fab 1 and Fab 2 cleanroom employees swipe in, put on a bunny suit (or a bunny suit and plant uniform, as the case may be), and pass through an air shower.

At the end of the shift, the company requires these employees to remain in the cleanroom until 7:00 to participate in the "pass down" briefing with the next shift.³ After leaving the manufacturing floor, the employees remove their bunny suits and "clock out" outside of the cleanroom gowning area. Fab 2 employees then walk from their stations to the locker rooms to change out of the plant uniform and back into street clothes.

Wacker employees alternate between working three shifts one week and four shifts the next. On the weeks that employees work four shifts, they work more than 40 hours per week.

e. Amount of Time for Changing Into and Out of Gowns and Uniforms

The exact amount of time required to change into and out of company — required attire and to complete the gowning process differs for Fab 1 and Fab 2 employees. The parties appear to agree that it takes approximately 30 minutes each day to perform the gowning activities that are required of both groups,⁴ but they disagree about how much additional time is required for Fab 2 employees to change into and out of their plant uniforms and to walk to and from their stations. Fab 2 employees estimate an additional 20 to 30 minutes per day for these activities. Prior to clocking in, they estimate, it takes 10 to 15 minutes to change into their plant uniforms in the locker room and walk to the assigned cleanroom gowning area. After clocking out, they assert, it takes 10 to 15 minutes to return to the locker room and change from their plant uniforms back to street clothes.⁵

f. Time Paid & Breaks

i. Prior to July 29, 2001

a. Paid Time

Prior to March of 1999, Wacker used manual time cards to account for employees' hours on-site. However, no matter what the actual time card showed, Wacker paid employees for only 11.5 hours per day, 10 hours at a regular rate of pay and 1.5 hours at the overtime rate. In March of 1999, Wacker installed time clocks outside the cleanroom gowning areas, but continued to pay employees for 11.5 hours of work per shift⁶ regardless of whether they worked more than 11.5 hours.⁷

b. Breaks/Lunches

During the relevant time period, Fab 1 and 2 employees received two 20-minute paid breaks (half of which were spent doffing and donning the bunny suits).

They also received two meal periods: a 30-minute unpaid meal period and a 30-minute paid meal period. According to Ballaris, employees were only allowed to go outside during the unpaid lunch.

ii. July 29, 2001-present

On July 29, 2001, after the lawsuit was filed, Wacker changed its policies; Ballaris asserts no claims for the period after July 29, 2001.

Wacker changed its time keeping system so as to base its pay directly on entry and exit swipe times and ended the rounding process. The scheduled breaks for employees were changed as follows: a 10-minute paid break; a 40-minute unpaid lunch; a 10-minute paid break; and a 20-minute paid break. Employees have been instructed to de-gown and clock out no later than 7, unless they are pre-approved to work overtime.

Wacker also changed its plant uniform policy. Fab 2 employees are now allowed to wear their plant uniforms to and from work and no longer have to change at the plant. Fab 2 employees' street shoes may now either be covered with shoe covers or the employees may change into...