Isaacson v. Penn Community Services, Inc., 15413

• Decision Date: 12 November 1971
• Docket Number: 15414.,No. 15413,15413
• Citation: 450 F.2d 1306
• Parties: Brian ISAACSON, Appellee, v. PENN COMMUNITY SERVICES, INC., Appellant. Brian ISAACSON, Appellant, v. PENN COMMUNITY SERVICES, INC., Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

450 F.2d 1306 (1971)

Brian ISAACSON, Appellee, v. PENN COMMUNITY SERVICES, INC., Appellant.

Brian ISAACSON, Appellant, v. PENN COMMUNITY SERVICES, INC., Appellee.

Nos. 15413, 15414.

United States Court of Appeals, Fourth Circuit.

Argued August 24, 1971.

Decided November 12, 1971.

James L. Felder, Columbia, S. C., and Charles E. Washington, Jr., Beaufort, S. C. (Broadwater, Cureton & Felder, Columbia, S. C., on the brief), for appellant in No. 15,413, and appellee in No. 15,414.

Willis Fuller, Jr., Darlington, S. C., and Samuel H. Altman, Charleston Heights, S. C. (Padgett, Altman & Fuller, Charleston Heights, S. C., on the brief), for appellee in No. 15,413, and appellant in No. 15,414.

Before HAYNSWORTH, Chief Judge, and WINTER and RUSSELL, Circuit Judges.

WINTER, Circuit Judge:

Plaintiff, whose local draft board classified him as a conscientious objector, performed civilian work of national importance in lieu of induction into the armed forces by becoming a training assistant of defendant, Penn Community Services, Inc., an eleemosynary corporation sponsoring adult education programs and rendering services in a rural community of South Carolina. After his selective service local board effected his release, he sued under the Fair Labor Standards Act claiming that during the time that he was performing civilian work of national importance he was paid less than the minimum wage and not paid overtime, both as prescribed by the Act. The district judge awarded him judgment for the difference between the amounts paid and the applicable minimum wage, for unpaid overtime and for attorneys' fees—a total judgment of $7,786.14. Defendant appeals, contending that it owes plaintiff nothing, and plaintiff appeals, contending that he was entitled to double his award, less attorneys' fees, as liquidated damages. We conclude that, under the particular circumstances of this case, plaintiff was not covered by the Fair Labor Standards Act and, hence, we reverse and direct that judgment be entered for defendant.

I

Penn Community is organized under the laws of South Carolina and carries on its activities within that state. Together with its predecessor, Penn School, which was one of the first schools for Negroes in the South, Penn Community has operated on a non-profit charitable basis since 1862. Currently, Penn Community promotes educational, health and community projects through the sponsorship of workshops and seminars; and it offers facilities for interracial conferences with accommodations for as many as 110 guests. Income to carry on its functions is derived from private gifts, institutional and foundation grants, rental of its facilities to the public at large, and rental of its facilities to the government for Peace Corps trainees.

At an undisclosed date prior to the time that plaintiff was classified as a conscientious objector, Penn Community concluded to expand its activities and to create positions to be filled only by qualified unmarried persons performing alternative service as conscientious objectors. As described by its Executive Director who was also a member of its Board of Trustees, Penn Community created various positions for "volunteers" who were in the conscientious objector category. Penn Community distributed recruitment circulars for the various new positions which it concluded to create and, after plaintiff had been classified by his draft board as a conscientious objector, he saw the circular for the position of training assistant. Plaintiff made application to Penn Community to fill the position. After interview, plaintiff was appointed, subject to the approval of his local draft board. The approval was forthcoming and plaintiff began his duties on September 14, 1967, and remained in the position until October 19, 1969—a period of approximately thirty days more than his obligation to perform work of national importance for twenty-four months.

The circular advertising the position plaintiff obtained specified that it was to be filled by an unmarried person performing alternative service as a conscientious objector. The job description set forth the duties of the position: taking materials to trainees in the field, purchasing and keeping a stock of supplies, maintaining equipment, elementary servicing of vehicles, meeting visitors at the airport and taking them around to visit projects in the field, and possibly performance of some general office work, all under the direction of the training director. An applicant was advised that the position would involve work on some week-ends and evenings but compensatory time off would be allowed during the week. The circular stated: "A subsistence salary of $100.00 a month is offered, room and utilities provided, together with hospitalization insurance and a three-week vacation annually. Traveling to and from Penn at the beginning and end of the period will be provided. Board is provided during conferences."

Plaintiff was actually paid $108.34 per month beginning on September 14, 1967. This sum was increased to $150.00 per month on April 30, 1968, and again increased to $183.00 per month on July 31, 1968. Beginning September 14, 1969, when his two-year obligation to perform work of national importance had been fulfilled, plaintiff was paid $2.00 per hour for his services. At the time that plaintiff began his duties the minimum wage was $1.40 per hour, and this was increased to $1.60 per hour after February 1, 1968. At the trial plaintiff testified generally that he had worked overtime in excess of his normal working hours, which were from 8:30 A.M. to 5:00 P.M., and that he averaged working about twenty hours overtime per week. Defendant was unable to show what hours plaintiff had worked or how many hours he had been allowed for compensatory time.

II

With certain specifically designated exceptions, none of which is claimed to be applicable here, the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq., fixes minimum wages and requires overtime compensation to be paid by an employer to an employee. An "employer" is defined as "any person acting directly or indirectly in the interest of an employer in relation to an employee" with certain exceptions not applicable here; "employee" is defined to include "any individual employed by an employer;" and "`employ' includes to suffer or to permit to work." 29 U.S.C. A. § 203(d), (e) and (g).

The scope of the definitions of "employer," "employee" and "employ" is so broad that one might well conclude, as did the district judge, that plaintiff was an employee of Penn Community. But the teaching of Walling v. Portland Terminal Co., 330 U.S. 148, 67 S.Ct. 639, 91 L.Ed. 809 (1947), and the administrative interpretation placed upon the Act by the Wage-Hour Administrator lead us to conclude otherwise on the facts of this case.

Portland Terminal concerned yard brakemen trainees during the period of their training. The trainees, who were required to undergo a successful period of training in order to be eligible for employment as brakemen, were first obliged to observe a railroad yard brakemen crew at work. After learning by observation, a trainee was gradually permitted to do actual work under close scrutiny. Regular employees were not displaced because they were required to supervise work performed by the trainees. The trainees did not expedite the railroad's business but in some cases actually impeded and retarded it. If a trainee successfully completed his course of instruction, he was paid $4.00 per day for his training period, and he was either hired as a regular employee or his name placed upon a list of eligibles from which future regular employees would be selected.

Notwithstanding its recognition that if literally applied the definitions of "employ" and "employee" were sufficiently broad to render the Act applicable to these trainees, as well as all students of schools or colleges that they attended, the Court said:

they "employ" and "employee" cannot be interpreted so as to make a person whose work serves only his own interest an employee of another person who gives him aid and instruction. Had these trainees taken courses in railroading in a public or private vocational school, wholly disassociated from the railroad, it could not reasonably be suggested that they were employees of the school within the meaning of the Act. Nor could they, in that situation, have been considered as employees of the railroad merely because the school\'s graduates would constitute a labor pool from which the railroad could later draw its employees. * * *

Accepting the unchallenged findings here that the railroads receive no "immediate advantage" from any work done by the trainees, we hold that they are not employees within the Act\'s meaning. 330 U.S. at 152-153, 67 S.Ct. at 641.

It should be stressed that these statements were made in a case in which the trainees received compensation upon successful completion of their training at approximately the same rate that plaintiff received subsistence during the time that he was a training assistant with Penn Community.

Particularly in the case of eleemosynary corporations such as hospitals, museums and schools, the role of the volunteer is not unknown. The volunteer nurse's aid, the person who mans a canteen or sales booth without compensation, the parent who donates services for an entertainment or fund-raising activity are familiar figures in everyday life. And sometimes such persons are provided a meal or reimbursement of transportation expenses or other benefit other than fixed compensation for services. In such cases the Wage-Hour Administrator has deemed such persons not employees covered by the Act, despite the fact that no single exemption contained in the Act excludes them. See, e. g., Opinion Letter No. 927, CCH W-H Admin.Rul. Nov. 1966-March 1969 ¶ 30,939 (May 29, 1968); see also, Opinion Letter No. 249, CCH W-H Admin. Rul. Aug. 1961-Nov. 1966 ¶ 30,843 (April 30,...