Haynes v. Tru-Green Corp.
| Citation | 507 N.E.2d 945,107 Ill.Dec. 792,154 Ill.App.3d 967 |
| Decision Date | 04 May 1987 |
| Docket Number | No. 4-86-0601,TRU-GREEN,4-86-0601 |
| Parties | , 107 Ill.Dec. 792 Jeffrey HAYNES, Plaintiff-Appellant, v.CORPORATION, a Michigan Corporation, Defendant-Appellee. |
| Court | United States Appellate Court of Illinois |
Joseph D. Pavia, Kirtley-Pavia-Marsh, A Professional Corp., Urbana, for plaintiff-appellant.
James C. Kearns, Robert J. Bassett, Heyl, Royster, Voelker & Allen, Urbana, for defendant-appellee.
Plaintiff sued his former employer, Tru-Green Corporation (Tru-Green) for unpaid overtime, liquidated damages, attorney fees, and costs under the provisions of the Fair Labor Standards Act of 1938 (FLSA). (29 U.S.C. sec. 201 et seq. (1982).) He also sought recovery under sections 4a and 12 of the Minimum Wage Law. (Ill.Rev.Stat.1985, ch. 48, pars. 1004a, 1012.) The trial court found for defendant. Plaintiff appeals. First, he argues that the trial court erred in finding that his overtime compensation complied with section 778.114 of the regulations of the Wage and Hour Division of the Department of Labor interpreting the FLSA (regulations). (29 C.F.R. sec. 778.114 (1986).) Second, he argues that the trial court erred in finding that his overtime compensation complied with section 4a of the Minimum Wage Law.
We affirm.
Tru-Green is a Michigan-based, lawn-care specialty firm which has offices in Michigan, Ohio, Wisconsin, Minnesota, and Illinois. Michael Almli testified that he worked for Tru-Green from 1978 until the last day of April in 1984. Tru-Green first employed him as a lawn-care specialist. In 1980, he became manager at the Champaign, Illinois, outlet. He explained the compensation system to his employees and filled out all time sheets. Almli hired plaintiff as a lawn-care specialist in April 1982. The employee compensation plan which Tru-Green started using in 1980 was then in effect.
Almli stated that plaintiff was a salaried employee. He told plaintiff that his salary divided by 52 was his weekly guaranteed salary, whether he worked one hour or 40 hours. He also told plaintiff that overtime was required and during the season, he could expect to work 50 to 70 hours per week. Defendant would receive his weekly guarantee in a regular workweek of 40 hours. He would earn overtime for hours over 40. Almli stated that he also told plaintiff he could probably work less than 40 hours in the winter, with the same salary. Plaintiff never worked under 40 hours per week.
Almli further stated that he explained to plaintiff the method by which the overtime was calculated. At first, he told plaintiff the yearly salary would be divided by 52 to achieve a weekly salary. This salary would then be broken down into an hourly wage. One-half of the hourly wage was the overtime rate, and the more overtime hours worked, the less money would be paid for the overtime. Almli agreed that he told plaintiff the overtime rate was one-half of the regular hourly wage. Additionally Almli told plaintiff that for the first 40 hours of an overtime week, he would receive his salary divided by 52. Almli did not tell plaintiff that the hourly rate for the first 40 hours would change, depending upon the number of hours he worked in a week. He thought the hourly rate for the first 40 hours always stayed the same.
Almli further stated that when he checked plaintiff's gross wages using this method, he discovered that plaintiff was receiving less than he had calculated. The size of the discrepancy depended upon the number of overtime hours worked. In March 1983, Almli called the Tru-Green corporate offices and talked to the assistant comptroller. The compensation plan was explained to Almli again. The explanation yielded this formula:
Yearly Salary
------------------
52
------------------ X 1/2 = Overtime
Total hours worked compensation rate X number
of overtime hours =
overtime pay
(29 C.F.R. sec. 778.114 (1986).) A table, printed by the Federal government, explaining the overtime-compensation method, was posted on the office wall during plaintiff's employment. The back of the table was not posted.
Almli further stated that he again told plaintiff how the overtime was calculated in March of 1983. He explained to all employees because they had questioned the amount of overtime pay. He asked plaintiff if he understood. Almli stated that he believed none of the employees grasped the method of calculating overtime. He never told plaintiff that his regular rate for the first 40 hours would be determined by dividing the weekly guarantee by the total hours worked. Nor did he tell plaintiff that a part of his weekly guarantee would go toward compensating him for overtime.
On cross-examination, Almli stated that there was never more than one way to compensate lawn-care specialists. Plaintiff's pay fell short only one week during the time he worked for Tru-Green. Almli never told plaintiff that he was an hourly employee or that he had an hourly rate of pay. Almli admitted that although he knew how to work the overtime formula, he never understood that plaintiff was already paid regular time for his overtime hours and therefore entitled to only 50% more for overtime pay.
Plaintiff testified that he was a salaried employee and was told that the nonovertime workweek was 40 hours. His salary divided by 52 was his weekly pay. He was also told that he would work less in winter but still receive his weekly guarantee. Almli told plaintiff that he would receive overtime for any hours worked over 40 hours in one week and that his overtime pay would be one-half his hourly wage. He was not told that his hourly rate for the first 40 hours would vary in an overtime week or that his regular weekly pay applied to his overtime hours as well as nonovertime hours. Plaintiff often tried to calculate his overtime. He discussed the discrepancies with Almli after he received his first paycheck and a few other times.
On cross-examination, plaintiff admitted that Almli told him the first check was correct and explained that the more overtime he worked, the lower his rate of pay for overtime would be. Whenever he talked to Almli, Almli emphasized that plaintiff was on a salary as opposed to an hourly rate. Plaintiff also admitted that he was told overtime was mandatory. When Almli explained the way plaintiff was paid, Almli stated that plaintiff would receive half-time for overtime and the more hours he worked, the lower his rate of pay would be. Plaintiff did not recall the March 1983 employee meeting. Although he did not understand how to use the coefficient table posted in the office, he knew it was the method of calculating overtime pay.
The trial court found that Tru-Green's method of payment fell within the Federal regulations delineating payment methods for employees with fixed salaries and fluctuating hours (29 C.F.R. sec. 778.114 (1986)), that the conditions precedent to using the formula were satisfied, and that plaintiff need not have understood the precise method of payment. The court then found for defendant.
In ruling on plaintiff's motion to vacate the judgment, the judge noted that he had struggled with the "clear and mutual understanding" requirement for application of section 778.114 of the regulations but believed his determination was consistent with the evidence.
The FLSA specifically provides that actions to enforce its provisions may be brought in State or Federal court. (29 U.S.C. sec. 216 (1982).) The crux of plaintiff's argument is that the trial court erred in determining that the requirements for paying overtime based upon a fixed salary for fluctuating hours formula were met, that the requirements should be interpreted in the same fashion as the requirements of section 207(f) of the FLSA (29 U.S.C. sec. 207(f)), and given that interpretation, the evidence did not support the trial court's determination. Tru-Green maintains that section 207(f) of the FLSA is not applicable, section 207(a) of the FLSA permits the payment plan utilized by Tru-Green, the requirements of section 207(f) of the FLSA are irrelevant, and that the evidence supports the trial court's determination that the requirements, which are predicate to application of section 778.114 of the regulations, were satisfied.
Congress determined that employers involved in interstate commerce must pay their employees premium pay for overtime worked. Section 207(a)(1) of the FLSA provides that employees must receive compensation for hours worked in excess of 40 hours per week at a rate not less than one and one-half times the regular rate at which the employee is employed. (29 U.S.C. sec. 207(a)(1) (1982).) The purpose of the overtime-pay requirement is twofold. (1) To spread employment by encouraging employers to avoid overtime by hiring more workers at regular pay; and (2) where the employer prefers overtime, to compensate the employee for the burden of working additional hours. Donovan v. McKissick Products Co. (10th Cir.1983), 719 F.2d 350; Donovan v. Brown Equipment & Service Tools, Inc. (5th Cir.1982), 666 F.2d 148, 152.
The determination of the regular rate of pay is the critical factor, since that rate determines the amount of overtime pay. Although the "regular rate" is an hourly rate, an employee may be compensated on a piece-rate, salary, commission, or any other basis. (29 C.F.R. sec. 778.109 (1986).) In general, the regular rate is the hourly rate actually paid an employee for the normal, nonovertime workweek. (Walling v. Youngerman-Reynolds Hardwood Co. (1945), 325 U.S. 419, 424, 65 S.Ct. 1242, 1245, 89 L.Ed. 1705, 1709; 29 C.F.R. sec. 778.108 (1986).) However, depending upon the nature of the employment, the regulations of the Wage and Hour Division of the Department of Labor provide differing methods of calculating the regular rate of pay. See generally Clark v. Atlanta Newspapers, Inc. (N.D.Ga.1973), 366 F.Supp....
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