Fleming v. AH Belo Corporation

• Decision Date: 27 June 1941
• Docket Number: No. 9867.,9867.
• Citation: 121 F.2d 207
• Parties: FLEMING v. A. H. BELO CORPORATION.
• Court: U.S. Court of Appeals — Fifth Circuit

121 F.2d 207 (1941)

FLEMING v. A. H. BELO CORPORATION.

No. 9867.

Circuit Court of Appeals, Fifth Circuit.

June 27, 1941.

Irving J. Levy, Asst. Sol., U. S. Dept. of Labor, George B. Searls, Atty., U. S. Dept. of Labor, both of Washington, D. C., and Llewellyn B. Duke, Regional Atty., U. S. Dept. of Labor, and Robert W. Richards, both of Dallas, Tex., for appellant.

Eugene P. Locke and Maurice E. Purnell, both of Dallas, Tex., for appellee.

Before FOSTER, SIBLEY, and HUTCHESON, Circuit Judges.

HUTCHESON, Circuit Judge.

Alleging that defendant was subject to the Fair Labor Standards Act of 1938, U.S.C.A. Title 29, § 201 et seq., appellant brought this suit to enjoin it from violating the provisions of Sections 15(a)(1) and (a)(2), of the act.

The claim was that in violation of Section 7(a),¹ it had employed certain of its employees for work weeks longer than 42 hours, and had failed to compensate them, for overtime, at rates not less than one and one-half times the regular rates, at which they were employed. The defenses were; a denial that defendant was subject to the act; a general denial; and an affirmative claim, that in order to conform with the act, while continuing to pay its employees a fixed weekly salary, as it had been doing before the effective date of the act, defendant, by agreement with them, had provided; for a basic rate of pay; for payment of overtime work performed in each week, at a rate not less than one and one-half times such basic rate of pay; and for a guarantee that the aggregate pay each week for regular work, and overtime work, performed would amount to not less than a certain, definite fixed sum.² A great deal of testimony was taken, some on the jurisdictional point, but most of it on the merits.

On the jurisdictional point, the testimony was sufficient to support the finding that defendant, as to the employees in question, was subject to the act. On the merits, it all came down to this, that the defendant had made with each of its employees, an actual bona fide contract of employment, stipulating a basic hourly rate of pay, providing for payment, for overtime work performed, at a rate of not less than one and one-half times such basic rate of pay, with a guarantee that the aggregate pay for regular and overtime work performed, would amount each week to not less than a certain, definite sum fixed in the employment contract; that instead, for the purpose "of overtime payment, of taking as the regular rate at which he is employed", the rate contended for by plaintiff, a rate arrived at by dividing the weekly salaries of each employee, by the total number of hours worked each week, the defendant took as to each employee, the regular hourly rate stipulated in his contract of employment; that this rate in all cases, was above, and in most, far above, the minimum rate required by the statute; and that on the basis of this rate, defendant had each week paid at least, in some weeks more, and in other weeks much more, than time and a half for overtime.

The district judge, of the opinion;³ that nothing in the statute was intended to, or did, prevent defendant and its employees, from contracting with each other as to the regular rate at which each employee was to be employed, so long as this rate was not below the minimum fixed by statute, and the employee was paid at least one and a half times that regular rate for overtime hours worked each week; that the law and the facts were with defendant and against plaintiff; and that the action had failed for want of equity; entered a judgment dismissing it.

Plaintiff is here urging upon us; that its Interpretative Bulletin, No. 4, Maximum Hours and Overtime Compensation on Salaried Employees,⁴ and the opinion of its general counsel,⁵ set out therein, must be accepted as a proper interpretation of the meaning and application to the facts of this case, of the statutory provision that overtime must be compensated "at a rate not less than one and one-half times the regular rate at which he is employed", and insisting that the findings and judgment of the trial court do violence to the statute, and may not stand.

Federal Rules of Civil Procedure, Rule 52, 28 U.S.C.A. following section 723c, provides that "findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given the opportunity of the trial court to judge of the credibility of the witnesses." Upon a full disclosure, and upon a record, which not only does not show them to be clearly erroneous but lends the support of undisputed testimony to the findings, the district judge found; that the contracts between employer and employee were actual bona fide contracts of employment; that they were intended to, and did, really fix the regular rates at which each employee was employed; and that as made and carried out, they compensated the employees at a regular rate considerably in excess of the minimum fixed by the statute, and for overtime at a rate not less than one and one-half times that regular rate. While then, the meaning of the statute must be drawn as a conclusion of law from its language as a whole, the question of its application to the facts in this case, must be examined by us from the standpoint of those findings, and not from the standpoint of appellant's assumptions, that the arrangements, made between employer and employee, were not real contracts for employment, but were fictitious and unreal, a mere sham and pretense behind which appellee masked, to stalk and defeat the statute and its purpose.

Examined in the light of the district judge's findings, we think it may not be doubted that the district judge was right in his conclusion, that what appellee and its employees did, was not a violation, but a carrying out, both of the letter, and the purpose of the statute, as that purpose is expressed in the language it employs.

Appellant recognizes; that the payments made to the employees are not, as absolutes, in question here, as substandard wages; that if appellee had changed the form of its employment contracts to conform to appellant's view, it could have paid its employees considerably less than it did, and still have been within the law; that the minimum wage provisions of the act are not involved; and that appellee's labor policies are not in issue. It has brought this case and has stood throughout, upon the bold proposition,⁶ that where weekly salaries are paid, no matter how large the salary or how it was arrived at or agreed to, the "regular rate" referred to in the statute must always, and can only, be determined, by dividing the weekly compensation, by the total number of hours the employee actually works during each work week, and employer and employee cannot contract otherwise.

Appellant does not support this position by pointing to words in the act which purport to prohibit agreements, as here, between employer and employee fixing "the regular rate at which he is employed," and agreeing to pay, for overtime, at a rate more than one and one half times the regular rate fixed by the agreement. Nor does he support it, by pointing to provisions in the act, in any wise limiting the amount of overtime that may be worked and paid for. Of course, he cannot do this since the act contains absolutely none, and in his Interpretative Bulletin No. 4, he has declared: "It is clear that there is no absolute limitation upon the number of hours that an employee may work. If he is paid time and one-half for overtime, he may work as many hours a week as he and his employer see fit." His only support for his position that the act has this effect, is the claim that the general purpose of the act as expressed in Section 2, shows that it was designed and drawn to penalize and limit overtime. His only attack upon the agreements is, that thereby defendant has been enabled to continue to pay, without increasing it, the same compensation he paid before the act. His insistence is that the act must be construed and applied as he contends for, and defendant must be required to pay more than it agreed to pay and its employees agreed to receive, because the pay which by the agreement was fixed to cover both regular and overtime, must, under that construction, be considered as covering only regular time, and for the overtime worked, there must be additional compensation.

We cannot agree with appellant that the statutory words under consideration, "regular rate at which he is employed", are at all ambiguous, or that for their construction they require resort to the declaration of policy and the legislative history of the act. We think it clear that their meaning is plain and simple and their application equally so. In cases where there is no express agreement as to the regular rate at which the employee is employed, but only an agreement for a weekly wage, appellant's method of arriving at the regular rate by assuming that the wage stipulated for is not intended to cover overtime worked, would, we think, be unexceptionable. But in cases where, as here, the contract of employment fixes the regular rate, that method will not do, for here within the very words of the statute, "the regular rate at which he is employed", is fixed as to each employee in his contract of employment.

But, if we could agree with appellant, that the words of the act are ambiguous and that for its construction, resort to the purpose clause and the legislative history of the act is necessary or proper, we can find nothing in either to support appellant's view. Section 2 deals with doing away with a substandard, and the establishment and maintenance of a minimum standard, of living. It says nothing about spreading the work or reducing hours of working. Section 2(b) declares it to be the policy of the act, through the exercise by Congress of its power to regulate commerce, "to correct and as rapidly as practicable to eliminate the conditions above referred to "Labor conditions detrimental to the...