Graves v. Armstrong Creamery Co.

• Decision Date: 08 November 1941
• Docket Number: 35275.
• Parties: GRAVES v. ARMSTRONG CREAMERY CO.
• Court: Kansas Supreme Court

118 P.2d 613

154 Kan. 365

GRAVES v. ARMSTRONG CREAMERY CO.

No. 35275.

Supreme Court of Kansas

November 8, 1941

Rehearing Denied Dec. 11, 1941.

Syllabus by the Court.

Where an employee is employed at a regular monthly salary with no fixed number of hours of work per week and with a work week whose number of hours fluctuates from week to week, the hourly wage rate for overtime compensation within the Fair Labor Standards Act should be computed by determining first the regular hourly wage rate for each week by dividing the regular weekly salary by the number of hours actually worked in that week and then multiplying the regular hourly wage rate so determined by 1 1/2. Fair Labor Standards Act 1938, § 7, 29 U.S.C.A. § 207.

The interpretation placed on a statute by the executive agency charged with the duty of administering it should be given great weight by a court, but the court should not follow that interpretation if it appears to be clearly erroneous.

In the case of an employee subject to the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et seq., who is employed at a regular monthly salary or wage, with no fixed number of hours of work per week and with a workweek whose number of hours fluctuates from week to week, the correct method of computing the hourly wage rate for overtime (hours of work in excess of those specified in section 207 of the Act cited above) is to determine, first, the regular hourly wage rate for each week by dividing the regular weekly salary or wage by the number of hours actually worked in that week, and then multiplying the regular hourly wage rate so determined by one and one-half (1 1/2).

Appeal from District Court, Sedgwick County, Division No. 2; Robert L. NeSmith, Judge.

Action by Howard Graves, Jr., against the Armstrong Creamery Company to recover overtime pay under the Fair Labor Standards Act of 1938, § 1 et seq., 29 U.S.C.A. § 201 et seq. From a judgment for plaintiff, defendant appeals.

Judgment reversed except with respect to allowance of an attorney's fee and case remanded with directions.

A. W Hershberger, J. B. Patterson, Enos E. Hook, Patrick J Warnick, R. E. Kirkpatrick, and Richard Jones, all of Wichita, for appellant.

Z Wetmore, George M. Ashford, and Waldo B. Wetmore, all of Wichita, for appellee.

HOCH Justice.

This appeal relates to overtime pay due an employee under the Federal Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et seq. (often called the "Wages and Hours Act") hereinafter referred to as the Act. The employer agrees that overtime pay was due the employee. The only issue is the method of computing it. The employee had a fixed monthly salary or wage covering no fixed or agreed number of hours of work and the number of hours he worked fluctuated from week to week.

Appellant, the Armstrong Creamery Company, manufactures butter and perhaps other products. Appellee, Howard Graves, Jr., was employed by the creamery company from October 7, 1939, to August 31, 1940, at a wage or salary of $95 per month, paid bi-monthly. The Federal administrator of the Act ruled that the employer's business was interstate in character and therefore subject to the Act. After his employment had terminated the employee brought action in the city court of Wichita to collect pay for "overtime" work covering the period from October 1, 1939, to August 10, 1940. The employer offered to confess judgment but there was disagreement over the method of computation. From an adverse judgment in the city court the employer appealed to the district court, where, again, the only issue was the method of computation. The district court adopted the method supported by the employee and gave judgment against the employer for $267.78 for overtime pay, for a like amount for "liquidated damages" provided under the act, and for $150 attorney's fees, making a total judgment of $685.56. From that judgment the appeal is taken.

The Fair Labor Standards Act went into effect on June 25, 1938. Its primary purpose, stated in the act, was to correct, as to industries engaged in interstate commerce, "labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers." 29 U.S.C.A. § 202. By the terms of the Act its administration was placed in a Wage and Hour Division created in the United States Department of Labor and under an Administrator to be appointed by the President by and with the advice and consent of the Senate and to be paid a salary of $10,000 a year. The minimum wage provisions of the Act, as such, are not here involved. We need to note specifically only the provisions for maximum hours and for overtime pay.

It is not unlawful under the Act to employ workers for more than the number of hours per week specified in the Act. The Act only prohibits such overtime employment "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" (italics ours). 29 U.S.C.A.§ 207. The "hours above specified" are forty-four hours per week during the first year following enactment of the Act, forty-two hours per week during the second year, and forty hours thereafter. While the period of employment here involved covered portions of the first and second year, we can simplify the issue without otherwise affecting it by treating the whole period as subject to the forty-two hour provision.

The Act further provides that any employer who violates the provisions of section 207, supra, shall not only be liable to the employee for the overtime pay but also for a like amount as "liquidated damages," and also for a reasonable attorney's fee and for costs of the action. The action to enforce such liability may be brought "in any court of competent jurisdiction." 29 U.S.C.A. § 216.

A few further statements will help clarify the situation. Appellant did not contest the contention that it was engaged in interstate commerce nor that appellee's work brought him within the Act. Appellant did not deny that the appellee worked overtime as defined in the Act or that he is entitled to overtime pay therefor. Nor does appellant contend that it is not liable for "liquidated damages" in an amount equal to the overtime pay properly computed. It is not charged that appellant willfully violated the Act. In the trial court appellant "offered to confess judgment" in the amount of $139.22 and left the matter of attorney's fees to be allowed the employee "for the consideration of the court."

Appellee was employed at a fixed salary of $95 a month. There was no agreement for any specific number of hours per week, and the number of hours actually worked fluctuated from week to week as the circumstances each week might require. There is no dispute as to the correct method of determining the regular weekly wage. It was arrived at by multiplying the monthly wage of $95 by 12 and dividing by 52, which gives $21.92 as the regular weekly wage.

Appellee contends that in order to determine the "regular rate" per hour "at which he is employed", section 207, supra, the weekly wage of $21.92 should be divided by 42, with a resultant regular hourly wage rate of $0.5219. This amount would then be multiplied by one and one-half (1 1/2) to arrive at the overtime rate of pay for the hours worked "in excess of the hours above specified", section 207. Appellant contends that the correct way to determine the regular hourly rate of pay in any particular week is to divide the weekly wage of $21.92 by the number of hours actually worked during that week. The rate thus arrived at would then be multiplied by one and one-half (1 1/2) to determine the overtime rate for that week. For instance, if in a certain week the employee worked 46 hours, his regular hourly rate of pay for that week would be $21.92/46, or $0.4765. The overtime hourly rate, accordingly, for the four overtime hours that week would be one and one-half (1 1/2) times $0.4765 or $0.7147 per hour.

At this point it should be made clear that there is no contention here that the employer has any right to require the employee to work a longer number of hours in any workweek than reasonably contemplated within the terms of his employment. The appellee does not complain about the number of hours worked. Nor is any question of minimum wages involved. And in this whole discussion we are assuming, of course--as the administrator's bulletin hereinafter referred to must assume--that the number of hours used in making the computation falls within the reasonable limits of the employment. Any argument which assumes a number of hours per week which is outside the reasonable limits of the employment or which results in violation of minimum wage provisions and then poses extreme illustrations based upon such false assumption is fanciful and without persuasion.

The Federal Administrator of the Act, clothed with broad powers of administration, has issued various bulletins for the...