Frito-Lay, Inc. v. Rhode Island Department of Labor and Training

• Decision Date: 12 April 2013
• Docket Number: C. A. PC-2012-1488
• Parties: FRITO-LAY, INC. v. RHODE ISLAND DEPARTMENT OF LABOR AND TRAINING, LABOR STANDARDS DIVISION, through its Director, CHARLES J. FOGARTY; ROBERT E. HORDERN; JOSEPH F. COSTA; RANDY N. PROULX; STEVEN POTRZEBA; SUZANNE MORRA; MICHAEL MORRA; ALBERT LOBO; and JONATHAN SWICKER
• Court: Rhode Island Superior Court

FRITO-LAY, INC.
v.
RHODE ISLAND DEPARTMENT OF LABOR AND TRAINING, LABOR STANDARDS DIVISION, through its Director, CHARLES J. FOGARTY; ROBERT E. HORDERN; JOSEPH F. COSTA; RANDY N. PROULX; STEVEN POTRZEBA; SUZANNE MORRA; MICHAEL MORRA; ALBERT LOBO; and JONATHAN SWICKER

C. A. No. PC-2012-1488

Superior Court of Rhode Island, Providence

April 12, 2013

For Plaintiff: Michael D. Chittick, Esq.

For Defendant: Elizabeth A. Wiens, Esq. Tedford B. Radway, Esq.

DECISION

TAFT-CARTER, J.

In this administrative appeal, Appellant Frito-Lay, Inc. (Frito-Lay) challenges a decision by the Rhode Island Department of Labor and Training (DLT), finding it liable for unpaid overtime to claimants Robert Hordern, Joseph Costa, Randy Proulx, Steven Potrzeba, Suzanne Morra, Michael Morra, Albert Lobo, and Jonathan Swicker (collectively, "Claimants"). Jurisdiction is pursuant to G.L. 1956 § 42-35-15.

I

Facts and Travel

A

Background

Minimum wage rates and the payment of overtime compensation are governed by the Rhode Island Minimum Wage Act, §§ 28-12-1 et seq. The regulation of overtime pay is dictated by statute. The law requires employers to pay employees who are not otherwise exempt, a premium for all hours worked in excess of forty per week. See Sec. 28-12-4.1(a). Effective June 1, 2011, the Legislature amended § 28-12-4.1(a) to read as follows:

Except as otherwise provided in this chapter, no employer shall employ any employee for a workweek longer than forty (40) hours unless the employee is compensated at a rate of one and one-half (11/2) times the regular rate at which he or she is employed for all hours worked in excess of forty (40) hours per week. Provided however, employers that pay any delivery drivers or sales merchandisers an overtime rate of compensation for hours worked in excess of forty (40) hours in any one week shall not calculate such overtime rate of compensation by fluctuating workweek method of overtime payment under 29 C.F.R. § 778.114

Sec. 28-12-4.1(a).

The Minimum Wage Act provides for exemptions to the overtime pay statute. See Sec. 28-12-4.3(a). One such exemption, contained in § 28-12-4.3(a)(7), exists for those employees whose hours of service are subject to regulation by the Federal Department of Transportation (DOT).^[1] That section, known as the motor carrier exemption, provides:

(a) The provisions of []§ 28-12-4.1 . . . do not apply to the following employees

(7) Any employee, including drivers, driver's helpers mechanics, and loaders of any motor carrier, including private carriers, with respect to whom the U.S. secretary of transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of 49 U.S.C. § 3102.^[2]

Sec. 28-12-4.3(a). The Legislature has not altered, amended, or repealed § 28-12-4.3(a)(7).^[3]

B

Procedural History

The material facts in this matter are largely undisputed.^[4] All of the Claimants work for Frito-Lay as Route Sales Representatives (RSRs). See Agreed Statement of Facts, ¶ 1. As RSRs, the Claimants transport products, manufactured outside of Rhode Island, from warehouses located within Rhode Island, and deliver those products to retail establishments throughout the State. Id. at ¶ 4. It is undisputed that Claimants' maximum hours and qualifications are subject to DOT regulation under 49 U.S.C. § 31502. Id. at ¶ 7. Frito-Lay has paid Claimants using a three-part compensation structure, consisting of a regular base salary, plus sales commissions, plus variable rate overtime compensation for hours worked in excess of forty per week.^[5] Id. at ¶ 9; Tr. 19-20. Frito-Lay's variable rate method of calculating overtime is equivalent to the fluctuating workweek (FWW) method, as described in 29 C.F.R. § 778.114.^[6] See Tr. at 19; Appellant's Reply Brief at 4.

Between June 8 and August 13, 2011, each of the Claimants filed a claim for nonpayment of overtime wages with the DLT, asserting that as of June 1, 2011, the amendment to § 28-12-4.1(a) prohibited Frito-Lay from compensating them using variable rate overtime. See Hearing Officer Decision at 1; Tr. at 19. Pursuant to § 28-14-19, the DLT held a consolidated hearing on all eight claims on February 1, 2012, before hearing officer Valentino Lombardi, Esq. (Hearing Officer). (Tr. at 2.) Before the hearing, the Parties submitted an Agreed Statement of Facts, photographs of one of the trucks operated by Claimants, a copy of the job description for RSRs, and memoranda to the Hearing Officer. See id.; Agreed Statement of Facts, Exs. A, B, and C. At the hearing, Michael Chittick, Esq. represented Frito-Lay, and Elizabeth Wiens, Esq. represented the Claimants. See Hearing Officer Decision at 1.

Frito-Lay's Senior Human Resources Director, Robert Sanchez, was the only witness to testify at the hearing. (Tr. at 9.) Mr. Sanchez generally confirmed that each of the Claimants has operated a DOT-regulated truck at all times relevant to this matter. See id. at 13-18. Mr. Sanchez explained that as Human Resources Director, he is responsible for ensuring that Frito-Lay complies with all applicable employment laws. Id. at 10. Mr. Sanchez testified that he is familiar with the types of trucks that the Claimants operate in performance of their duties as RSRs. Id. at 11. He explained that DOT regulations govern trucks with a gross vehicle weight of 10, 001 pounds or more. Id. at 12; see supra note 1. Prior to April 17, 2011, Frito-Lay's Rhode Island fleet of trucks included vehicles with a gross vehicle weight of 10, 001 pounds or more, as well as vehicles with a gross vehicle weight of less than 10, 001 pounds. Id. at 14. Thus, Frito-Lay's Rhode Island fleet had previously contained both DOT-regulated and non-DOT-regulated trucks. Id.; see supra note 1. According to Mr. Sanchez, between February 2011 and April 2011, Frito-Lay had undertaken to convert its entire fleet of trucks to DOT-regulated vehicles. Id. at 13. He testified that Frito-Lay had completed the conversion on April 17, 2011 and therefore, as of that date, one hundred percent of the trucks in Frito-Lay's Rhode Island fleet are subject to DOT regulation. Id. at 14, 17-18.

At the close of testimony, Frito-Lay, through counsel, argued that since the Claimants are subject to DOT regulation, they are exempt under § 28-12-4.3(a)(7) from the overtime requirements of § 28-1-4.1, including the prohibition on use of the FWW method. See Tr. at 20. Thus, according to Frito-Lay, it is under no obligation to pay the Claimants overtime. In the event that it chooses to provide Claimants overtime pay, it is free to calculate that overtime pay using variable rate overtime. See id. It was the Claimants' position that the June 1, 2011 amendment to § 28-12-4.1(a) applied to them, irrespective of their regulation by the DOT.^[7] See id. Thus, according to the Claimants, as of June 1, 2011, Frito-Lay is no longer allowed to compensate them using variable rate overtime.^[8] Id.

On March 8, 2012, the Hearing Officer issued a written decision finding Frito-Lay liable to Claimants for unpaid overtime.^[9] (Hearing Officer Decision at 5-6.) In his decision, the Hearing Officer found that since prior to June 1, 2011, all of the Claimants had operated DOT-regulated trucks. Id. at 2. He stated that the DLT has historically allowed an exemption to § 28-12-4.1(a)'s overtime requirement for those employers whose employees fell within the motor carrier exemption contained in § 28-12-4.3(a)(7). Id. He determined, however, that as of June 1, 2011, Frito-Lay is no longer exempt from the requirements of § 28-12-4.1(a). Id. at 5. In reaching this conclusion, the Hearing Officer noted that it is a principle of statutory construction that "when two statutes are irreconcilably repugnant, the court shall imply a repeal and give effect to the more recently passed statute." Id. He found that §§ 28-12-4.1(a), as amended, and 28-12-4.3(a)(7) are "difficult if not impossible to harmonize[.]" Id. He further concluded that in amending § 28-12-4.1(a) to prohibit use of the FWW, "the General Assembly intended in a more comprehensive and specific manner to allow all delivery drives [sic] . . . to be covered by RIGL § 28-14-4.1(a) [sic] regardless of their regulation by the USDOT." Id. Thus, the Hearing Officer determined that the Claimants are "due overtime wages from [Frito-Lay.]-^[10] Id. at 5-6.

Frito-Lay timely filed an appeal to this Court for review on March 3, 2012. By stipulation of all Parties, the Court held oral arguments on this matter on January 25, 2013.^[11]

II

Standard of Review

The Rhode Island Administrative Procedures Act, G.L. §§ 42-35-1, et seq. governs this Court's review on appeal from an agency decision. See Rossi v. Employees' Ret. Sys. of R.I., 895 A.2d 106, 109 (R.I. 2006). Pursuant to § 42-35-15, "[a]ny person, . . . who has exhausted all administrative remedies available to him or her within [an] agency, and who is aggrieved by a final order in a contested case is entitled to judicial review" by this Court. Sec. 42-35-15. This Court "may affirm the decision of the agency or remand the case for further proceedings." Sec. 42-35-15(g). This Court may reverse or modify an agency's decision if:

[S]ubstantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions or decisions are:

(1)In violation of constitutional or statutory provisions;

(2)In excess of the statutory authority of the agency;

(3)Made upon unlawful procedure;

(4)Affected by other error or law;

(5)Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or

(6)Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

Sec. 42-35-15(g).

This Court's review of an agency decision is, in essence, "an extension of the administrative...