Dunlop v. State of N.J., No. 74-1289

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Writing for the CourtBefore BIGGS, ADAMS and GARTH; BIGGS; Douglas; ADAMS; As an indicium of legislative intent with respect to the imposition of liability upon the states
Citation522 F.2d 504
Parties22 Wage & Hour Cas. (BN 415, 22 Wage & Hour Cas. (BN 478, 77 Lab.Cas. P 33,277 John T. DUNLOP, Secretary of Labor, United States Department of Labor v. The STATE OF NEW JERSEY et al., Appellants.
Docket NumberNo. 74-1289
Decision Date03 September 1975

Page 504

522 F.2d 504
22 Wage & Hour Cas. (BN 415, 22 Wage & Hour
Cas. (BN 478,
77 Lab.Cas. P 33,277
John T. DUNLOP, Secretary of Labor, United States Department of Labor
v.
The STATE OF NEW JERSEY et al., Appellants.
No. 74-1289.
United States Court of Appeals,
Third Circuit.
Argued Oct. 8, 1974.
Final Submission May 5, 1975.
Decided Aug. 4, 1975.
As amended Sept. 3, 1975.

Page 506

William F. Hyland, Atty. Gen. of N. J., Theodore A. Winard, Asst. Atty. Gen., Mary Ann Burgess, Deputy Atty. Gen., Trenton, N.J., for appellants.

William J. Kilberg, Solicitor of Labor, Carin Ann Clauss, Assoc. Sol., Donald S. Shire, Jacob I. Karro, Darryl J. Anderson, U.S. Dept. of Labor, Washington, D.C., for appellee.

Before BIGGS, ADAMS and GARTH, Circuit Judges.

OPINION OF THE COURT

BIGGS, Circuit Judge.

The basic issue presented on this appeal is whether the practice of certain New Jersey state institutions in implementing a New Jersey statute 1 authorizing

Page 507

overtime compensation to state service employees in the form of compensatory time off comports with the requirements of § 7 of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 207. The district court entertained this question on partial cross-motions for summary judgment 2 and ruled that the compensatory time off program was invalid as violative of the FLSA. Subsequently, it permanently enjoined appellants from violation of § 15(a)(2) of the FLSA 3 by continuation of the compensatory time off program as previously practiced by these institutions, ordered retroactive payments for compensation owed state employees, and entered final judgment on this issue pursuant to Rule 54(b), F.R.Civ.P. 4 We affirm the district court's decision that the FLSA was violated and its award of restitution damages. We are, however, required to vacate that portion of the district court's order specifying the time from which retroactive payments are to be computed and to remand this portion of the order to the district court for a consideration of the applicable statute of limitations.

I.

The Fair Labor Standards Act, enacted in 1938, required employees "engaged in commerce or in the production of goods for commerce" to be paid a minimum hourly wage, 29 U.S.C. §§ 206(a) and 207(a) (§§ 6(a) and 7(a), 52 Stat. 1062, 1063). 5 It likewise prescribed that such employment be regulated by premium payrates for work in excess of a certain number of hours per workweek. 29 U.S.C. § 207(a). The Congressional purpose in imposing these standards was, and remains, two-fold: (1) to effect greater employment by providing a financial disincentive to employers who require overtime hours; and (2) to compensate employees for the burden of a lengthier work week. Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, 460, 68 S.Ct. 1186, 92 L.Ed. 1502 (1948); Walling v. Helmerich & Payne, 323 U.S. 37, 40, 65 S.Ct. 11, 89 L.Ed. 29 (1944). See also 29 U.S.C. § 202. In order to ensure that these statutory goals would not be subverted by construing the FLSA either to allow employers to evade more stringent state standards or to permit the freezing of wage rates at the minimum hourly wage, Congress specified, § 18, 52 Stat. 1069; now, 29 U.S.C. § 218(a):

"No provision of this chapter or of any order thereunder shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter or a maximum workweek lower than the maximum workweek established under this chapter, and no provision of this chapter relating to the employment of child labor shall justify noncompliance with any Federal or State law or municipal ordinance establishing a higher standard than

Page 508

the standard established under this chapter. No provision of this chapter shall justify any employer in reducing a wage paid by him which is in excess of the applicable minimum wage under this chapter, or justify any employer in increasing hours of employment maintained by him which are shorter than the maximum hours applicable under this chapter."

Originally, the FLSA exempted the federal and state governments and their political subdivisions from compliance with its provisions. § 3(d), 52 Stat. 1060. In 1966, however, Congress amended the FLSA to encompass certain activities of the states and their political subdivisions, including operations of hospitals, schools, and institutions. At that time, the following pertinent changes were engrafted upon 29 U.S.C. § 203:

"(d) 'Employer' includes any person acting directly or indirectly in the interest of an employer in relation to an employee but shall not include the United States or any State or political subdivision of a State (except with respect to employees of a State, or a political subdivision thereof, employed (1) in a hospital, institution, or school referred to in the last sentence of subsection (r) of this section, or (2) in the operation of a railway or carrier referred to in such sentence), or any labor organization (other than when acting as an employer), or anyone acting in the capacity of officer or agent of such labor organization." (now cited as Act of Sept. 23, 1966, Pub.L.No. 89-601, § 102(b), 80 Stat. 831).

"(s) 'Enterprise engaged in commerce or in the production of goods for commerce' means an enterprise which has employees engaged in commerce or in the production of goods for commerce, including employees handling, selling, or otherwise working on goods that have been moved in or produced for commerce by any person, and which . . .

(4) is engaged in the operation of a hospital, an institution primarily engaged in the care of the sick, the aged, the mentally ill or defective who reside on the premises of such institution, a school for mentally or physically handicapped or gifted children, a preschool, elementary or secondary school, or an institution of higher education (regardless of whether or not such hospital, institution, or school is public or private or operated for profit or not for profit). " 6

These amendments had an undeniable impact on the financial responsibilities of those states involved in such operations. In response to this and other fiscal pressures exerted by its own laws relating to compensation of state employees, the state of New Jersey amended N.J.S.A. 52:14-17.13 to provide for overtime compensation in the form of either wages at a rate one and one-half times the hourly rate or compensatory time off at the

Page 509

rate of one and one-half hours for each overtime hour. 7

Pursuant to his authority under 29 U.S.C. §§ 211 and 217, the Secretary of Labor filed suit against the state of New Jersey and various state hospitals to enjoin violations of the overtime provisions of the FLSA. The Secretary contends that the compensatory time off provisions of the New Jersey statute, as applied to the employees of these state hospitals, violate § 7 of the FLSA, 29 U.S.C. § 207, because the time off is not afforded during the same pay period as earned. We are constrained to agree. 8

II.

The FLSA's overtime compensation provision is contained in 29 U.S.C. § 207(a) (1) which reads:

"Except as otherwise provided in this section, no employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, for a workweek longer than forty hours Unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed." (emphasis added).

Neither this section nor the statutory definitions contained in the FLSA, 29 U.S.C. § 203, define or mandate the form which overtime compensation is to take. Simply stated, the FLSA leaves unresolved the question of whether overtime compensation must take the form of monetary payments or whether it may assume the form of other types of remuneration, such as time off. This statutory reticence does not, however, render us guideless. Indeed, the FLSA is continually supplemented by the administrative interpretations and regulations of the Administrator of the Wage and Hour Division of the Department of Labor. See 29 U.S.C. § 204. While these administrative rulings do not have the binding effect of law, we may not only properly resort to them for guidance but should also accord them the weight, persuasiveness, and respect to which the expertise of their formulators entitles them. See e.g. Mabee v. White Plains Publishing Co., 327 U.S. 178, 182, 66 S.Ct. 511, 90 L.Ed. 607 (1946); Irwin v. Clark, 400 F.2d 882, 884 (9th Cir. 1968), cert. denied 393 U.S. 1062, 89 S.Ct. 715, 21 L.Ed.2d 706 (1969); Goldberg v. Sorvas, 294 F.2d 841, 847 (3d Cir. 1961).

The Wage-Hour Administrator has considered the question of compensatory time off as a form of overtime compensation. In Opinion Letter No. 913 (December 27, 1968), he explained:

"An employer may not credit an employee with compensatory time (even at a time and one-half rate) for overtime earned Which is to be taken at some mutually agreed upon later date subsequent to the end of the pay period in which the overtime was earned, rather than pay cash for the overtime as it is earned. However, it is permissible for the employer employing one at a fixed salary for a fixed workweek to lay off the employee a sufficient

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number of hours During some other week or weeks of the pay period to offset the amount of overtime worked (i.e. at the time and one-half rate) so that the desired wage or salary for the pay period covers the total amount of compensation, including overtime." (emphasis added). 9

We conceive this restrictive endorsement of compensatory time off to be perfectly consistent with the language and goals of the FLSA as well as the regulations surrounding it. The restriction that time off for overtime be granted within the...

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18 practice notes
  • Laffey v. Northwest Airlines, Inc., Nos. 74-1791 and 75-1334
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • September 8, 1977
    ...F.2d 335 (1974); Brennan v. Westinghouse Credit Corp., 21 Wage & Hour Cas. 871, 875-876 (E.D.Tenn.1973). See also Dunlop v. New Jersey, 522 F.2d 504, 518 (3d Cir. 1975); Hodgson v. Cactus Craft of Arizona, 481 F.2d 464, 467 (8th Cir. 1973); Hodgson v. Barge, Waggoner & Sumner, Inc., 377 F.S......
  • Hughes-Bechtol, Inc. v. W. Va. Bd. of Regents, No. C-3-81-038.
    • United States
    • United States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
    • December 4, 1981
    ...and remanded by the Supreme Court in light of the decision in National League of Cities v. Usery. See, Dunlop v. State of New Jersey, 522 F.2d 504 (3rd Cir. 1975) vacated and remanded sub. nom. New Jersey v. Usery, 427 U.S. 909, 96 S.Ct. 3196, 49 L.Ed.2d 1202 The preceding discussion has il......
  • Solis v. A-1 Mortg. Corp., Civil Action No. 09-1265
    • United States
    • U.S. District Court — Western District of Pennsylvania
    • March 21, 2013
    ...liability for liquidated damages may lie where employees do not receive their wages "at the time they were due"); Dunlop v. State of N.J., 522 F.2d 504, 512 (3d Cir. 1975) (recognizing FLSA's "immediacy of payment" requirement), vacated on other grounds sub nom. New Jersey v. Usery, 427 U.S......
  • Solis v. A-1 Mortg. Corp., Civil Action No. 09–1265.
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. Western District of Pennsylvania
    • March 21, 2013
    ...liability for liquidated damages may lie where employees do not receive their wages “at the time they were due”); Dunlop v. State of N.J., 522 F.2d 504, 512 (3d Cir.1975) (recognizing FLSA's “immediacy of payment” requirement), vacated on other grounds sub nom. New Jersey v. Usery, 427 U.S.......
  • Request a trial to view additional results
18 cases
  • Laffey v. Northwest Airlines, Inc., Nos. 74-1791 and 75-1334
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • September 8, 1977
    ...F.2d 335 (1974); Brennan v. Westinghouse Credit Corp., 21 Wage & Hour Cas. 871, 875-876 (E.D.Tenn.1973). See also Dunlop v. New Jersey, 522 F.2d 504, 518 (3d Cir. 1975); Hodgson v. Cactus Craft of Arizona, 481 F.2d 464, 467 (8th Cir. 1973); Hodgson v. Barge, Waggoner & Sumner, Inc., 377 F.S......
  • Hughes-Bechtol, Inc. v. W. Va. Bd. of Regents, No. C-3-81-038.
    • United States
    • United States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
    • December 4, 1981
    ...and remanded by the Supreme Court in light of the decision in National League of Cities v. Usery. See, Dunlop v. State of New Jersey, 522 F.2d 504 (3rd Cir. 1975) vacated and remanded sub. nom. New Jersey v. Usery, 427 U.S. 909, 96 S.Ct. 3196, 49 L.Ed.2d 1202 The preceding discussion has il......
  • Solis v. A-1 Mortg. Corp., Civil Action No. 09-1265
    • United States
    • U.S. District Court — Western District of Pennsylvania
    • March 21, 2013
    ...liability for liquidated damages may lie where employees do not receive their wages "at the time they were due"); Dunlop v. State of N.J., 522 F.2d 504, 512 (3d Cir. 1975) (recognizing FLSA's "immediacy of payment" requirement), vacated on other grounds sub nom. New Jersey v. Usery, 427 U.S......
  • Solis v. A-1 Mortg. Corp., Civil Action No. 09–1265.
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. Western District of Pennsylvania
    • March 21, 2013
    ...liability for liquidated damages may lie where employees do not receive their wages “at the time they were due”); Dunlop v. State of N.J., 522 F.2d 504, 512 (3d Cir.1975) (recognizing FLSA's “immediacy of payment” requirement), vacated on other grounds sub nom. New Jersey v. Usery, 427 U.S.......
  • Request a trial to view additional results

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