Black v. Roland Electrical Co.

• Decision Date: 04 October 1946
• Docket Number: Civ. No. 2506.
• Citation: 68 F. Supp. 117
• Parties: BLACK et al. v. ROLAND ELECTRICAL CO.
• Court: U.S. District Court — District of Maryland

68 F. Supp. 117

BLACK et al. v. ROLAND ELECTRICAL CO.

Civ. No. 2506.

District Court, D. Maryland.

October 4, 1946.

Paul Berman and Theodore B. Berman, both of Baltimore, Md., for plaintiffs.

Nyburg, Goldman & Walter and David S. Sykes, all of Baltimore, Md., and O. R. McGuire, of Washington, D. C., for defendant.

COLEMAN, District Judge.

This is a suit for unpaid overtime compensation alleged to be due the plaintiffs by the defendant, and also for an additional equal amount as liquidated damages and for counsel fee, brought under Section 16(b) of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 216(b).

This litigation originated in this Court by a suit to enjoin alleged violations of the Fair Labor Standards Act brought by the Administrator of the Wage and Hour Division, United States Department of Labor, against the present defendant, the Roland Electrical Company, which is a corporation engaged in Baltimore in the business of buying and selling new and used electrical motors of various types; repairing, reconditioning and rebuilding used motors, and installing and repairing private, commercial and industrial wiring systems. After due hearing, at which extensive testimony was heard, this Court held that the defendant was not engaged in commerce within the meaning of the Fair Labor Standards Act, and also that defendant was exempt from the operation of that Act because engaged in "a retail or service establishment". See Walling v. Roland Electrical Co., 54 F.Supp. 733. On appeal to the Court of Appeals for this Circuit, the aforementioned holdings of this Court were reversed. See 146 F.2d 745. Thereupon, the defendant petitioned the Supreme Court for and was granted a writ of certiorari. See 325 U.S. 849, 65 S.Ct. 1566, 89 L.Ed. 1970. On January 28, 1946, the Supreme Court affirmed the Circuit Court of Appeals. See 326 U.S. 657, 66 S.Ct. 413. Meanwhile, that is, on March 13, 1945, while the mandate of the Circuit Court of Appeals was stayed pending defendant's application to the Supreme Court for a writ of certiorari and before that writ had been granted, the plaintiffs filed a suit in this Court against the defendant to recover unpaid overtime compensation and for additional liquidated damages and counsel fees alleged to be due them pursuant to Section 16(b) of the Act, as a result of the decision of the Circuit Court of Appeals. Disposition of this suit was postponed pending the ultimate action of the Supreme Court, which, as above stated, in due course affirmed the Circuit Court of Appeals.

The defendant has answered the plaintiffs' complaint, denying that any of the plaintiffs have been underpaid by it under the provisions of the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq. There is no dispute over the hourly rates at which the plaintiffs were entitled to be paid by the defendant, or that the plaintiffs worked overtime as defined by the statute. Issue was joined by the parties on the two following points, and a determination of the exact amount, if any, to which each plaintiff might be entitled, has been deferred, pending a decision of these two points: (1) Did the defendant violate the provisions of Section 7 of the Fair Labor Standards Act, 29 U.S.C.A. § 207, in applying the amounts actually paid the plaintiffs in excess of the requirements of that section in some weeks, as a credit against payments in other weeks when compensation for overtime did not, in fact, equal the amounts prescribed by that section; and (2) was the defendant justified, in determining the amount of overtime compensation due the plaintiffs under the Act, in deducting from such amounts regular year-end bonuses paid to the plaintiffs?

The present suit covers the period from October 24, 1940 to January 10, 1945, during some part of which all of the present plaintiffs were employed by the defendant. The following is an accurate, brief description of defendant's employment practices as they affected the plaintiffs during the overall period in question, which give rise to the two questions, above stated, here in issue: Irrespective of the total hours worked in any work-week, defendant paid time and a half for all time worked in excess of eight hours in any one week-day and in excess of four hours worked on Saturday, and also time and a half for all time worked before or after the regular working hours of any given work-day. In other words, at times it was customary for the employee to work after 5 o'clock on regular week-days; after 12 o'clock, noon, on Saturdays and before or after regular working hours. For all work during such periods, plaintiffs were paid one and one half times their regular wage. As a result, the wages that a given individual received in some weeks was actually in excess of those prescribed by the Act, and in other weeks, it was less.

It was also the practice of the defendant, in the year 1941 and each succeeding year, to pay its employees a bonus amounting to 5% of his gross pay, determined as of the end of November of each year. On the pay-day preceding Christmas, each employee was given a company check for such bonus, less social-security and withholding tax. This was a voluntary payment on the part of the defendant, no previous arrangement having been entered into between the defendant and its employees with respect to the payment of any bonus.

We will consider the two questions at issue in the order in which they have been above stated and, therefore, first, the question whether the defendant violated the Act in applying, as compensation for overtime work, the amounts it paid the plaintiffs in some weeks in excess of the statutory requirement, as a credit against payments in other weeks which did not equal the statutory requirement.

While there appears to be no reported decision which interprets Section 7 of the Fair Labor Standards Act when applied to a state of facts precisely like those here involved, nevertheless, in view of the extensive interpretations which have been given to that section, in dealing with other and not unrelated situations, by the Supreme Court and the Circuit Court of Appeals for this Circuit, as well as by other Federal Courts, we believe from those interpretations we are required to rule that the defendant may not make the credits as proposed.

A basic principle held to underlie Section 7 is that the week is the inflexible work unit. See Overnight Motor Transportation Co. Inc. v. Missel, 316 U.S. 572, 62 S.Ct. 1216, 86 L.Ed. 1682; Walling v. Helmerich & Payne, 323 U.S. 37, 65 S.Ct. 11, 89 L.Ed. 26. As was said in the first of these cases (316 U.S. 572, at page 579, 62 S.Ct. 1216, at page 1221, 86 L.Ed. 1682): "Neither the wage, the hour nor the overtime provisions of sections 6 and 7 on their passage spoke specifically of any other method of paying wages except by hourly rate. But we have no doubt that pay by the week, to be reduced by some method of computation to hourly rates, was also covered by the act. It is likewise abundantly clear from the words of section 7 that the unit of time under that section within which to distinguish regular from overtime is the week." Also, in the same decision it was declared to be basic by the provisions of both sections 6 and 7 of the Act that they were designed to require payment for overtime at time and a half the regular pay where that pay is above the statutory minimum, as well as where equal to it. 316 U.S. 572, at page 578, 62 S.Ct. 1216, at page 1220, 86 L.Ed. 1682. See also Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 427, 65 S.Ct. 1242, 1250, 89 L.Ed. 1705; Walling v. Harnischfeger Corp., 325 U.S. 427, 65 S.Ct. 1246, 1250, 89 L.Ed. 1711. Likewise, it necessarily follows that the Act requires prompt payment at the end of each week to the employee of the amounts then due him, Rigopoulos v. Kervan, 2 Cir., 140 F.2d 506, 151 A.L.R. 1126, as a corollary of which it is now established law that the employee may not deprive himself of full compensation according to the express provisions of the Act, prior to a judicial determination of his rights thereunder, by any agreement of compromise and settlement, even though entered into in all good faith. Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296; D. A. Schulte, Inc. v. Gangi, 66 S.Ct. 925; Guess v. Montague, 4 Cir., 140 F.2d 500.

As a result of the aforegoing, we believe this Court is required to hold, inequitable as it may seem, that the present contention of the plaintiffs and not that of the defendant must prevail. Let us clarify the precise factual situation by the following illustration: According to its general pay policy, the defendant company works its employees eight hours a day for five days each week, from Monday through Friday, and for four hours on Saturday, or a total of forty-four hours per week. Also, in accordance with its general pay policy, the defendant company pays its employees time and one half for all hours worked before or after the normal working hours, regardless of the number of hours that the given employee may have worked in the given week. Suppose then, that one of the plaintiffs in a given week has worked forty hours, four hours of which were after the close of the regular work day, and his hourly rate of pay is 50¢. The defendant company has figured the plaintiff's wages under the above circumstances as amounting to $21 for the week, computed as follows: For 36 hours at 50¢ an hour, $18 and for four hours at 75¢ an hour, $3. Since, as is undisputed, according to the requirements of the Act the plaintiff would be entitled to only $20, that is to say, for forty hours work at 50¢ an hour, there being no statutory overtime, there can be no question that in so far as the strictly statutory obligation to pay is concerned, apart from the defendant's contractual obligation to the plaintiff, the defendant has actually made to the plaintiff an excess payment of $1. However, this is not the extent of defen...