Brennan v. Lauderdale Yacht Basin, Inc.

• Decision Date: 26 April 1974
• Docket Number: No. 73-1056.,73-1056.
• Citation: 493 F.2d 188
• Court: U.S. Court of Appeals — Fifth Circuit
• Parties: Peter J. BRENNAN, Secretary of Labor, UNITED STATES Department of Labor, Plaintiff-Appellant, v. LAUDERDALE YACHT BASIN, INC., and Glen H. Friedt, Individually, Defendants-Appellees.

493 F.2d 188 (1974)

Peter J. BRENNAN, Secretary of Labor, UNITED STATES Department of Labor, Plaintiff-Appellant, v. LAUDERDALE YACHT BASIN, INC., and Glen H. Friedt, Individually, Defendants-Appellees.

No. 73-1056.

United States Court of Appeals, Fifth Circuit.

April 26, 1974.

Carin Ann Clauss, U. S. Dept. of Labor, Richard F. Schubert, Sol. of Labor, Donald S. Shire, Atty., U. S. Dept. of Labor, Washington, D. C., Beverley R. Worrell, Regional Sol., U. S. Dept. of Labor, Atlanta, Ga., Edwin G. Salyers, Sandra P. Bloom, Attys., U. S. Dept. of Labor, Washington, D. C., for plaintiff-appellant.

John L. Britton, Miami, Fla., for defendants-appellees.

Before BELL, COLEMAN and RONEY, Circuit Judges.

RONEY, Circuit Judge:

This is a Fair Labor Standards Act case involving yacht salesmen at the defendants' marina and boat yard. The salesmen work irregular hours and are paid strictly on a commission basis. The District Court held there could be no violations of the minimum pay and overtime provisions of the Act because the total commissions paid to the salesmen annually were sufficient to include the $1.60 statutory minimum for all hours up to forty a week and time and a half or $2.40 for all overtime hours. Holding that the District Court erroneously equated the minimum wage with the regular rate of pay in deciding whether overtime might be due under the Act, we reverse and remand for further proceedings.

Section 7(a) of the Act requires that an employee must receive compensation for hours worked in excess of forty per week "at a rate not less than one and one-half times the regular rate at which he is employed." 29 U.S.C.A. § 207(a) (1). The District Court thought there could be no violation of the Act if the employee's actual compensation was more than what his annual earnings would be if computed at the statutory minimum wage and overtime compensation rates for the hours worked.

These people are not the people that the FLSA was designed to protect. . . . If Mr. Johnson had been paid the minimum wage, assuming he worked 50 hours a week, for 42 weeks out of the year, he was paid so far in excess of any standard hourly wage, at twice the minimum. His overtime was way over what the minimum overtime would be.

The Court thus focused on only one purpose of the Act: to raise substandard wages. Another fundamental purpose of the Act is to spread employment, induce worksharing, through the financial pressure applied when time and a half regular pay is required for overtime work. In Overnight Motor Co. v. Missel, 316 U.S. 572, 62 S.Ct. 1216, 86 L.Ed. 1682 (1942), the Supreme Court reviewed this Congressional purpose in interpreting Section 7(a) of the Act to require overtime compensation at time and a half regular pay, where that pay is above the minimum, as well as where the regular pay is at the minimum:

"One of the fundamental purposes of the Act was to induce worksharing and relieve unemployment by reducing hours of work." We agree that the purpose of the Act was not limited to a scheme to raise substandard wages first by a minimum wage and then by increased pay for overtime work. Of course, this was one effect of the time and a half provision, but another and an intended effect was to require extra pay for overtime work by those covered by the Act even though their hourly wages exceeded the statutory minimum. The provision of § 7(a) requiring this extra pay for overtime is clear and unambiguous. It calls for 150% of the regular, not the minimum, wage. By this requirement, although overtime was not flatly prohibited, financial pressure was applied to spread employment to avoid the extra wage and workers were assured additional pay to compensate them for the burden of a workweek beyond the hours fixed in the Act. . . . The existence of such a purpose is no less certain because Congress chose to use a less drastic form of limitation than outright prohibition of overtime. We conclude that the Act was designed to require payment for overtime at time and a half the regular pay, where that pay is above the minimum, as well as where the regular pay is at the minimum.

316 U.S. at 577-578. See Walling v. Helmerich & Payne, Inc., 323 U.S. 37, 40, 65 S.Ct. 11, 89 L.Ed. 29 (1944).

The concept that the overtime compensation requirements of the Act are not met when the employer merely pays compensation in excess of that computed at the minimum rates has been consistently upheld:

Petitioner urges that it complied with the overtime compensation requirements of the Act because respondents received wages in excess of the statutory minimum wage, including time and one-half of that minimum wage for all overtime hours, which wages respondents impliedly agreed included overtime compensation by accepting them. A similar argument was squarely rejected in Overnight Motor Co. v. Missel, 316 U.S. 572, 62 S.Ct. 1216, 86 L.Ed. 1682.

Warren-Bradshaw Drilling Co. v. Hall, 317 U.S. 88, 93, 63 S.Ct. 125, 87 L.Ed. 83 (1942). See Nunn's Battery & Electric Co. v. Goldberg, 298 F.2d 516 (5th Cir. 1962).

The District Court's misapplication of the law erroneously terminated the Government's case without a decision on the controlling issues. The Secretary of Labor filed this suit pursuant to 29 U.S.C. A. § 217 to enjoin the Lauderdale Yacht Basin, Inc. from violating the minimum wage, overtime, and recordkeeping requirements of 29 U.S.C.A. § 206(a) (1) a...