Donovan v. I-20 Motels, Inc.
| Decision Date | 28 December 1981 |
| Docket Number | No. 80-3985,I-20,80-3985 |
| Parties | 25 Wage & Hour Cas. (BN 259, 92 Lab.Cas. P 34,099 Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Plaintiff-Appellant, v.MOTELS, INC. and James S. Noel, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Donald S. Shire, Assoc. Sol., Claire Brady White, U. S. Dept. of Labor, Washington, D. C., for plaintiff-appellant.
Gamm, Greenberg & Kaplan, Jack H. Kaplan, Shreveport, La., for defendants-appellees.
Appeal from the United States District Court for the Western District of Louisiana.
Before BROWN, COLEMAN and RUBIN, Circuit Judges.
The Secretary of Labor appeals from the District Court's refusal to apply the "rolling quarter" method to compute the annual dollar volume of I-20 Motels' sales in order to determine coverage under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq. The controversy arose out of Motels' alleged violation of the FLSA's minimum wage, overtime, and recordkeeping provisions for the years 1976 and 1977. 1 Motels argued that it was not covered by the Act because its proceeds for the year 1977 were less than the $250,000 threshold for application of the Act. 29 U.S.C. § 203(s)(2). The government argued that Motels was covered by the Act until September 30, 1977, when its annual dollar volume as computed under the "rolling quarter" method dipped below $250,000. The district court granted summary judgment in Motels' favor, explaining only that the "rolling quarter method of computation should not be utilized in this case." (Emphasis in original.)
In an interpretative bulletin, 29 C.F.R. § 779.266, the Secretary of Labor has described the operation of the rolling quarter method; if an employer's business exceeds the dollar volume requirement in any calendar year, the business will be presumed to be covered in the next year unless the employer establishes through use of the rolling quarter method that its dollar volume for the previous twelve months has fallen below the $250,000 mark. Id. § 779.266(a). Thus, the rolling quarter method is a way of determining currently whether a business once covered by the Act continues to be subject to it. Under this formula, an employer determines if it is covered by the Act at the beginning of each quarter, by calculating its annual dollar volume based on the sum of the four preceding quarters. Id. § 779.266(b). In other words, on April 1, 1981, the employer totals his gross volume of sales for the year ended March 31, 1981. If the total exceeds $250,000, he is covered by the Act for the next quarter; if not, he is exempt from the Act.
Although interpretative bulletins relating to the FLSA issued by the Secretary are "not controlling upon the courts ..., (they) do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance." Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 164, 89 L.Ed. 124, 129 (1944). The Secretary's interpretations are "entitled to careful consideration and in proper circumstances to considerable weight." Wirtz v. Keystone Readers Serv., Inc., 418 F.2d 249, 257 (5th Cir. 1969). If the interpretative bulletin is "consistent with prior court decisions and with the purposes and aims of the Fair Labor Standards Act ... it is entitled to recognition and application in the case before us." Id.
In considering proposed amendments to the FLSA in 1961, Congress apparently approved the rolling quarter method not only by failing to change the method as described in an existing interpretative bulletin, but by express sanction in the Senate Report. That report states that the rolling quarter method, as described in the Secretary's interpretative bulletin, allows the employer to "know whether or not to comply with the requirements of the act in the workweeks ending in the current quarter-year." S.Rep. No. 145, 87th Cong., 1st Sess. 38, reprinted in (1961) U.S.Code Cong. & Ad.News, 1620, 1657.
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