In re Raymour and Flanigan Fur.

• Decision Date: 02 March 2009
• Docket Number: No. A-4622-07T1.,A-4622-07T1.
• Citation: 964 A.2d 830,405 N.J. Super. 367
• Parties: In the Matter of RAYMOUR AND FLANIGAN FURNITURE, and Neil Goldberg, President And Individually.
• Court: New Jersey Superior Court

964 A.2d 830

405 N.J. Super. 367

In the Matter of RAYMOUR AND FLANIGAN FURNITURE, and Neil Goldberg, President And Individually.

No. A-4622-07T1.

Superior Court of New Jersey, Appellate Division.

Argued January 6, 2009.

Decided March 2, 2009.

Paul DeCamp (Jackson Lewis) of the Virginia, D.C. and California bars, admitted pro hac vice, argued the cause for appellants, Raymour and Flanigan and Neil Goldberg (Jackson Lewis, attorneys; David G. Islinger, Mr. DeCamp and Justin B. Cutlip, on the brief).

Robert M. Strang, Deputy Attorney General, argued the cause for respondent, New Jersey Department of Labor and Workforce Development (Anne Milgram, Attorney General, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Mr. Strang, on the brief).

Before Judges WINKELSTEIN, GILROY and CHAMBERS.

The opinion of the court was delivered by

WINKELSTEIN, P.J.A.D.

The New Jersey Wage and Hour Law, N.J.S.A. 34:11-56a to -56a38, provides that every employer must pay its employees 1½ times the employee's regular hourly wage (the statutory rate) for each hour the employee works in excess of 40 hours in any week. N.J.S.A. 34:11-56a4. The law provides an exemption for, among other employers, "trucking industry employers," which the statute defines as "any business or establishment primarily operating for the purpose of conveying property from one place to another by road or highway, including the storage and warehousing of goods and property." Ibid.

Appellant, Raymour and Flanigan (R & F), is in the retail furniture business. In facilities separate from its retail stores, it operates customer service centers and distribution centers, where it stores and warehouses its goods, and then transports those goods by truck to its customers. R & F asserts that because its trucking operation is a separate "establishment" from its retail facilities, it qualifies as a "trucking industry employer" vis-à-vis its service and distribution center employees, and is consequently exempt from paying those employees overtime at the statutory rate.

The Commissioner of the Department of Labor and Workforce Development (the Department) disagreed with R & F's position, holding that R & F was not exempt from paying the statutory rate to its customer service and distribution center employees. On appeal, we affirm the Commissioner's decision.

I

The facts are not substantially disputed. R & F is a bedding and furniture retail company that operates sixty-seven retail showrooms, five clearance centers, sixteen customer service centers and two distribution centers throughout six northeastern states, including New Jersey. R & F acknowledges that it is in the retail industry and not in the trucking industry, and that it does not move, store or warehouse freight or property owned by others in exchange for a fee. It only delivers the products that it sells.

R & F consists of two divisions, the retail/sales division and the operations/delivery division. The former is responsible for procuring sales of furniture and bedding from customers at the retail showrooms; the latter for ensuring that adequate inventory is maintained to honor the company's "3 Days or Less" delivery guarantee, and for delivering furniture to R & F's customers.

In New Jersey, R & F operates eleven furniture showrooms, three customer service centers and one distribution center. The sole purpose of the customer service centers is to receive furniture by tractor trailer from R & F's distribution centers and from vendors, and to deliver the furniture to its customers. R & F employees at each customer service center are responsible for scheduling and routing truck deliveries, managing loading and dispatch of trucks, managing the delivery teams' performance throughout the day, and managing truck maintenance and repairs. For example, the Dayton customer service center is a 290,000 square foot distribution and warehouse facility, utilizing twenty-seven trucks to deliver approximately 950 pieces of furniture daily to R & F's customers.

In 2005, the Department investigated an employee complaint that alleged that R & F was not paying its delivery employees the statutory overtime rate. Following its investigation, the Department instructed R & F to provide an audit of its employee overtime payments. R & F declined to do so, claiming that in light of its trucking operations, it was exempt, as a trucking industry employer, from paying the statutory overtime rate to its customer service and distribution center employees. The exemption would allow R & F to pay those employees not less than 1½ times the minimum wage, rather than the statutory overtime rate of 1½ times the employee's regular hourly wage. The exemption states:

Notwithstanding the provisions of this section to the contrary, every trucking industry employer shall pay to all drivers, helpers, loaders and mechanics for whom the Secretary of Transportation may prescribe maximum hours of work for the safe operation of vehicles, pursuant to section 31502(b) of the federal Motor Carrier Act, 49 U.S.C. s.31502(b), an overtime rate not less than 1½ times the minimum wage required pursuant to this section and N.J.A.C. 12:56-3.1.... As used in this section, "trucking industry employer" means any business or establishment primarily operating for the purpose of conveying property from one place to another by road or highway, including the storage and warehousing of goods and property. Such an employer shall also be subject to the jurisdiction of the Secretary of Transportation pursuant to the federal Motor Carrier Act, 49 U.S.C. s.31501 et seq., whose employees are exempt under section 213(b)(1), which provides an exemption to employees regulated by section 207 of the federal Fair Labor Standards Act, 29 U.S.C. 207, and the Interstate Commerce Act, 49 U.S.C. 501 et al.

[N.J.S.A. 34:11-56a4 (emphasis added.)]

R & F submitted that because the sole purpose of the customer service centers is to receive furniture from its distribution centers and vendors for subsequent delivery, by truck, to customers who have purchased furniture from R & F's retail showrooms, each customer service and distribution center is an "establishment," "primarily operating for the purpose of conveying property from one place to another by road or highway." Ibid. Consequently, R & F claimed that it was entitled to the trucking industry overtime exemption relative to its drivers, helpers, loaders, and mechanics who worked at those facilities and, therefore, it was only required to pay those employees an overtime rate of not less than 1½ times the minimum wage established by N.J.S.A. 34:11-56a4 and N.J.A.C. 12:56-3.1.

The minimum wage in New Jersey is the federal minimum hourly wage rate established by section 6(a)(1) of the Federal Labor Standards Act of 1938 (FLSA), 29 U.S.C.A. § 206(a)(1). N.J.S.A. 34:11-56a4; N.J.A.C. 12:56-3.1. Effective October 1, 2006, $7.15 per hour is the minimum hourly wage for 40 hours of working time in any week. N.J.S.A. 34:11-56a4. Because the regular hourly wage of R & F's drivers, helpers, loaders, and mechanics at its customer service and distribution centers is more than 1½ times the statutory minimum wage, R & F paid them their regular hourly wage, not time-and-a-half, for hours in excess of 40 per week.

The Department transmitted the matter to the Office of Administrative Law for a ruling by an Administrative Law Judge (ALJ) as to whether R & F qualified for the exemption. On stipulated facts, the parties cross-moved for summary decision. After examining the statute's legislative history, the ALJ found in favor of the Department, and ruled that R & F did not qualify as a trucking industry employer. The ALJ concluded:

The statute must be applied conjunctively to trucking industry employers to avoid applying the exception too broadly and extending it to retailers such as [R & F], and circumventing the intent of the statute to provide broad support to workers in the form of a statewide minimum wage. It would appear contrary to the intent and meaning of the above statute and regulation to interpret that any business would be eligible for the exemption, but only an establishment primarily engaged in the conveying [of] property from one place to another by road or highway be given the exemption. The legislation was intended to benefit the trucking industry. [R & F] as a business entity is not primarily engaged in the trucking industry business, but is a retailer of furniture and bedding.

Although using a different rationale, the Commissioner agreed with the ALJ's conclusion that R & F did not meet the statutory definition of a trucking industry employer. The Commissioner rejected R & F's argument that its customer service centers operated as separate establishments engaged in the trucking industry, in that those facilities remained part of R & F's overall retail business. Thus, the Commissioner held that R & F was required to pay its employees the statutory rate for hours worked in excess of 40 in a week.

In reaching its conclusion, the Commissioner relied on the meeting transcripts of a wage board the Commissioner of Labor appointed in 1995 to study and make recommendations concerning wages and overtime payments in the trucking industry.¹ After reviewing those transcripts, the Commissioner stated:

In my opinion, the transcripts of those Wage Board hearings establish unequivocally that the `trucking industry employer' exception to the overtime requirement is intended to apply only to trucking companies, which primarily operate for the purpose of conveying property from one place to another by road or highway, and not to a company like [R & F], which is in the retail industry, with a division or divisions within the company focusing solely on the warehousing and delivery of the goods being offered by the company for retail sale. As noted by [the Department], in support of its motion for summary decision before the ALJ,...