Donovan v. Williams Chemical Co., Inc., 81-1999

• Decision Date: 02 July 1982
• Docket Number: No. 81-1999,81-1999
• Citation: 682 F.2d 185
• Parties: 25 Wage & Hour Cas. (BN 757, 95 Lab.Cas. P 34,235 Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Appellant, v. WILLIAMS CHEMICAL CO., INC., a corporation and doing business as Dooley Oil Company, and Edwin G. Dooley, an Individual, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 185

682 F.2d 185

25 Wage & Hour Cas. (BN 757, 95 Lab.Cas. P 34,235

Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Appellant, v. WILLIAMS CHEMICAL CO., INC., a corporation and doing business as Dooley Oil Company, and Edwin G Dooley, an Individual, Appellees.

No. 81-1999.

United States Court of Appeals Eighth Circuit.

Submitted March 9, 1982.

Decided July 2, 1982.

T. Timothy Ryan, Jr., Sol. of Labor, Beate Bloch, Associate Sol., Mary-Helen Mautner, Eleanor R. Jenkins, Attys., U. S. Dept. of Labor, Washington, D. C., for appellant.

J. Michael Shaw and James A. Arnold, II, Fort Smith, Ark., for appellees.

Before LAY, Chief Judge, ROSS and McMILLIAN, Circuit Judges.

McMILLIAN, Circuit Judge.

The Secretary of Labor (Secretary) appeals from portions of a final judgment entered in the District Court for the Western District of Arkansas after a bench trial, finding that Williams Chemical Co. d/b/a Dooley Oil Co. (the company) had violated the minimum wage, overtime compensation and recordkeeping provisions of the Fair Labor Standards Act (the Act), 29 U.S.C. § 201 et seq. The court enjoined the company from future violations and awarded back pay to twenty-three employees for the years 1975 and 1976.

For partial reversal the Secretary argues that the district court erred in (1) computing the back pay awards of husband-wife team employees; (2) allowing a credit for living quarters and utilities provided to six husband-wife team employees; (3) failing to enjoin Edwin G. Dooley individually; and (4) finding that two of the company's stations were exempt under the retail establishment exemption to the Act, 29 U.S.C. § 213(a)(2). ¹ We affirm the district court on all issues except the court's allowance of a credit for living quarters and exemption of the two stations under § 213(a)(2). On these issues we reverse and remand for further proceedings.

The company operates approximately thirty self-service gasoline stations located in Arkansas, Missouri and Oklahoma. Two of the stations, Summit and Vinita, sell diesel fuel in addition to gasoline. During 1975 and 1976, more than twenty-five percent of the annual dollar volume of sales at these stations consisted of diesel fuel.

The company hired either one married couple or two unrelated individuals to manage each station. The managers' primary duty was to collect money from customers who pump their own gas. Six married couples were hired to manage stations where living quarters were located on the premises. Five of the living quarters were trailers which differed in size, condition and location, and one was a house. Utilities were included with the facilities.

All employees were instructed to keep the stations open for approximately eighty hours per week. The company had no written policy regarding the number of hours that each employee was supposed to work. In addition, the instructions to the married couples as to whether they were to work together or alone were vague and imprecise.

Before a Wage and Hour Division investigation in 1976, the company kept no records as to the hours its employees worked. At that time the Department of Labor's compliance officer informed the company of its recordkeeping responsibilities under § 11(c) of the Act and thereafter the company instituted a time card system.

The Secretary initiated the present action to enjoin the company and its president, Edwin Dooley, from violating the Act's minimum wage, overtime compensation and recordkeeping provisions. The Secretary also sought to recover back wages owing the employees as a result of the violations.

After a bench trial the district court found that the company had failed to keep accurate records ² and that, as a result, numerous employees had received less than the required minimum wage and overtime compensation. The court entered an injunction restraining the company from committing future violations and ordering the payment of back wages to twenty-three employees. The employees included both unrelated individuals and husband-wife teams.

In computing the amount of back wages due the individual employees the district court relied primarily on the employees' recollections as to the actual number of hours worked. The individual employees testified that one person was on duty during a shift and that, due to the arrangement of the shifts, the employees often worked in excess of forty hours per week. This award to the individual employees is not challenged on appeal.

In contrast, the husband-wife teams testified, for the most part, that their shifts overlapped and that both spouses were on duty for the total number of hours that the station was open. The district court, with one exception, ³ did not compute the back pay awards based on this testimony but rather found that each spouse should only have worked forty hours per week. Therefore, their back pay awards were computed by dividing the total number of hours worked in half and compensating each spouse for hours worked in excess of forty per week.

The district court also found that the reasonable value of the trailers and utilities was $200 per month and of the house and utilities, $240 per month. It allowed those amounts as a credit against unpaid minimum wages and overtime compensation. In addition, the court found that the sale of diesel fuel at the Vinita and Summit stations were retail sales and that the employees at these stations were therefore exempt under § 13(a)(2) of the Act because the stipulated annual dollar volume of sales at each of those stations was less than the statutory minimum during 1975 and 1976. Finally, the court dismissed Edwin G. Dooley individually from the action based on its finding that he was not an employer within the meaning of the Act.

Husband-Wife Teams

The Secretary argues that the husband-wife teams were entitled to back wages for all the hours they testified they were at the stations under the principles established in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946), and Mumbower v. Callicott, 526 F.2d 1183 (8th Cir. 1975). The Secretary stresses that the company did not prove an express agreement with its employees concerning their wages and hours and reasons that the employees were therefore entitled to be compensated for all the hours they spent at the station. We disagree and conclude that the district court's calculation of back wages was not clearly erroneous.

The term "work" is not defined in the Act. Therefore, the concept of "hours worked" or "compensable working time" has necessarily evolved through case law to delineate which employee activities are covered under the Act for purposes of minimum wage and maximum hours requirements. The definition of compensable working time includes "duties performed by an employee before and after scheduled hours, even if not requested ... if the employer 'knows or has reason to believe' the employee is continuing to work, 29 C.F.R. § 785.11, and the duties are an 'integral and indispensable part' of the employee's principal work activity." Mumbower v. Callicott, 526 F.2d at 1188, citing Steiner v. Mitchell, 350 U.S. 247, 256, 76 S.Ct. 330, 335, 100 L.Ed. 267 (1956); 29 C.F.R. § 785.24, .25 (1974).

In determining whether hours are compensable it is the duty of the court to look to the employment agreement to determine what the parties intended, and where that is impossible, to look to the circumstances to determine what was intended. See Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944); Rural Fire Protection Co. v. Hepp, 366 F.2d 355 (9th Cir. 1966). "The law does not impose an arrangement upon the parties. It imposes upon the courts the task of finding what the arrangement was." Skidmore v. Swift & Co., 323 U.S. at 137, 65 S.Ct. at 163.

In the present case the district court found that the company's instructions to its employees concerning shifts and number of hours to be worked were vague and imprecise. ⁴ However, the court also examined the surrounding circumstances and found that the employment arrangement between the company and the husband-wife teams was that each spouse was to work a forty-hour shift alone. The court reasoned that the employer's policy was evidenced by the facts that the paychecks were split evenly between the spouses and each check reflected forty hours of work and that the time cards, while not accurate, indicated that each spouse had worked forty hours. In addition, the court stressed the fact that only one person was required to manage the station per shift.

The district court further found that the overlapped time did not constitute compensable working time for both spouses within the meaning of the Act. The court reasoned that because of the close proximity of the lodgings and the station it was more likely that the off-duty spouse would be at the station to visit the on-duty spouse than to work. The court concluded that such time was not compensable working time and that even the occasional performance of the on-duty attendant's job was a matter of the employee's own personal convenience and companionship and not a product of any policy or requirement of the company. ⁵

The Secretary argues that the fact the district court awarded back pay for the number of hours testified to by Robert and Inez Grady is evidence that the district court erred in not awarding full compensation to the other couples.

We disagree. The court considered the circumstances surrounding each station and the testimony of each station manager. The court made detailed factual findings distinguishing the Gradys' situation from those of the other husband-wife teams and concluded that they had been permitted to work all the hours they testified to, see note 3. In addition, we note that the court resolved issues of credibility in favor of the Gradys and against the other couples. We have carefully reviewed the record and conclude that the...