Local 313, Intern. Ass'n of Firefighters v. City of Morgantown

• Decision Date: 17 October 1984
• Docket Number: No. 16125,16125
• Citation: 174 W.Va. 122,323 S.E.2d 604
• Court: West Virginia Supreme Court
• Parties: , 27 Wage & Hour Cas. (BNA) 347, 102 Lab.Cas. P 34,645 LOCAL 313, INTERNATIONAL ASSOCIATION OF FIREFIGHTERS v. The CITY OF MORGANTOWN, etc.

Page 604

323 S.E.2d 604

174 W.Va. 122, 27 Wage & Hour Cas. (BNA) 347,

102 Lab.Cas. P 34,645

LOCAL 313, INTERNATIONAL ASSOCIATION OF FIREFIGHTERS v. The CITY OF MORGANTOWN, etc.

No. 16125.

Supreme Court of Appeals of

West Virginia.

Decided Oct. 17, 1984.

Dissenting Opinion Oct. 24, 1984.

Dissenting and Concurring Opinion

Nov. 19, 1984.

Syllabus by the Court

1. Our wage and hour law found in W.Va.Code, 21-5C-1, et seq., is modeled to some extent on the federal minimum wage law contained in the Fair Labor Standards Act, 29 U.S.C. § 201, et seq.

2. Under W.Va.Code, 21-5C-3(a), where employees are compensated on a lump sum basis, absent explicit proof of another mutually agreed upon rate of pay, a court must infer that the regular rate actually paid was that obtained by dividing the weekly wage paid by the number of hours actually worked.

3. Where a fixed salary is paid and there is no express agreement or formula shown that sets an amount for a regular rate of pay and an overtime rate of at least one and one-half times the regular rate, such an agreement or formula may not be inferred from hypothetical or retroactive calculations.

MILLER, Justice:

This appeal involves a construction of our wage and hour law, W.Va.Code, 21-5C-3, as it relates to a claim for overtime pay by certain firemen of the City of Morgantown. ¹ The firemen appeal contending that the circuit court erred in not granting them any award. We find that error was committed and, therefore, reverse the judgment of the circuit court.

Many of the basic facts are not in dispute. The City adopted written personnel rules which divided its employees into various classes. In an Appendix B to the personnel rules, each class of employees was given an annual salary which was broken down into monthly, biweekly, and hourly rates. The hourly rate was predicated on a forty-hour workweek. Contained in the personnel rules was this provision found in Section V-1(A): "The standard work week for city employees shall be forty (40) hours and in the case of Fire Department [sic] an average of fifty-six (56) hours per week."

On the pay schedule of Appendix B, firemen were classified along with policemen at Grade 14. Each grade contains six pay steps. ² It is not disputed that the firemen work an average fifty-six-hour workweek, but are paid only the amount of their annual salary.

The firemen contend that they should be paid at the hourly rates set out in Appendix B, that they should receive overtime for working more than forty hours per week, and that their overtime hours should be compensated at one and one-half times the normal rate. Under this payment plan, a fireman at Step 5 of Grade 14 would receive $6.70 for each regular hour, and $10.05 ($6.70 X 1.5) for each overtime hour. With sixteen overtime hours a week, this would mean an additional $160.80 a week (16 hours X $10.05), or a total annual overtime compensation of $8,361.60 ($160.80 X 52 weeks).

The City, on the other hand, argues that the firemen clearly agreed to work an average of fifty-six hours a week for the designated annual salary. It points to W.Va.Code, 8-15-10, which states, in part, that firemen "shall not be required to remain on duty in excess of one hundred twelve hours during any fourteen consecutive days' period." ³ The City argues that this provision should be read in pari materia with our wage and hour law, and that 112 hours for fourteen days translates to fifty-six hours on a seven-day basis. ⁴ It also argues that if overtime is required for time worked in excess of forty hours per week, we should work backward from the annual salary to arrive at regular and overtime rates which result in a sum equal to the annual salary.

The circuit court agreed with the City's position and refused relief to the firemen.

We have indicated in several cases that our wage and hour law found in W.Va.Code, 21-5C-1, et seq., is modeled to some extent on the federal minimum wage law contained in the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. See, e.g., State ex rel. Crosier v. Callaghan, 160 W.Va. 353, 360 n. 1, 236 S.E.2d 321, 325 n. 1 (1977); Kucera v. City of Wheeling, 158 W.Va. 860, 865, 215 S.E.2d 216, 219 (1975). ⁵ Certainly, the language concerning overtime in W.Va.Code, 21-5C-3(a), "no employer shall employ any of his employees for a workweek longer than forty hours, unless such employee receives compensation for his employment in excess of the hours above specified at a rate of not less than one and one-half times the regular rate at which he is employed," is markedly similar to the corresponding language of the federal act. ⁶

The United States Supreme Court in Overnight Motor Transportation Co. v. Missel, 316 U.S. 572, 577-78, 62 S.Ct. 1216, 1220, 86 L.Ed. 1682, 1687-88 (1942), spoke to the policy behind the overtime wage provision of the federal act:

"By this requirement, although overtime was not flatly prohibited, financial pressure was applied to spread employment to avoid the extra wage and workers were assured additional pay to compensate them for the burden of a workweek beyond the hours fixed in the Act.... Reduction of hours was a part of the plan from the beginning."

Missel involved a question that is related to ours. An employee was paid a flat weekly amount and worked more than the maximum hours allowed without payment of overtime. The employer contended that if regular hours were calculated at the minimum wage, and overtime hours were calculated at one and one-half times that rate, the fixed salary would satisfy both the minimum wage and overtime provisions of the Act. The Court rejected this contention pointing to the fact that the Act spoke in terms of an hourly computation--a workweek of a stated number of hours. Thus, the starting point for computing overtime was ascertaining the regular hourly rate of pay. See also Masters v. Maryland Management Co., 493 F.2d 1329 (4th Cir.1974). It stated this cryptic formula: "Wage divided by hours equals regular rate. Time and a half regular rate for hours employed beyond statutory maximum equals compensation for overtime hours." 316 U.S. at 580 n. 16, 62 S.Ct. at 1221 n. 16, 86 L.Ed. at 1689 n. 16.

In 149 Madison Avenue Corp. v. Asselta, 331 U.S. 199, 67 S.Ct. 1178, 91 L.Ed. 1432 (1947), the Court was confronted by a wage plan that specified a weekly wage based on a specified workweek exceeding the forty-hour maximum. The "hourly rate" was determined under the wage plan by taking the actual weekly hours worked and adding one-half the hours worked in excess of forty hours and dividing this total into the weekly salary. The Court found that this plan did not comport with the actual hours worked and held that there was no compliance with the federal act.

In Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, 459-60, 68 S.Ct. 1186, 1194, 92 L.Ed. 1502, 1514 (1948), the Court made this general statement:

"Where there are no overtime premium payments the rule for determining the regular rate of pay is to divide the wages actually paid by the hours actually worked in any workweek and adjudge additional payment to each individual on that basis for time in excess of forty hours worked for a single employer."

These and other cases have defined the federal method for determining the regular rate of pay where employees are paid on a lump sum basis whether weekly, monthly or annually, which is summarized in Marshall v. Chala Enterprises, Inc., 645 F.2d 799, 801 (9th Cir.1981):

"This court has held that when employees are compensated on a lump sum basis, '[a]bsent explicit proof of another mutually agreed upon rate of pay, the court must infer that "the regular rate actually paid was substantially that obtained by dividing the weekly wage payable for the working of the scheduled workweek by the number of hours in such scheduled workweek." ' Brennan v. Valley Towing Co., Inc., 515 F.2d 100, 106 (9th Cir.1975) (emphasis added) (quoting 149 Madison Ave. Corp. v. Asselta, 331 U.S. 199, 204, 67 S.Ct. 1178, 1181, 91 L.Ed. 1432 (1947). See also Brennan v. Elmer's Disposal Service, Inc., 510 F.2d 84, 87 (9th Cir.1975). Thus, when a weekly salary is paid, the employer is deemed to have paid the same rate for all hours worked, rather than the requisite overtime compensation, unless it can demonstrate the existence of a mutual agreement regarding the regular rate to be paid for the first forty hours." (Emphasis in original; footnote omitted) ⁷

See also Yadav v. Coleman Oldsmobile, Inc., 538 F.2d 1206, 1207 n. 1 (5th Cir.1976) (per curiam); Mumbower v. Callicott, 526 F.2d 1183 (8th Cir.1975); Joseph G. Moretti, Inc. v. Boogers, 376 F.2d 27, 28 (5th Cir.1967) (per curiam); Rigney v. Wilson & Co., 61 F.Supp. 801, 803 (S.D.W.Va.1945). See generally 4 FRES, Wage and Hour Laws §§ 29:12, :13 and : 17 (1982). Furthermore, federal law imposes on the employer the burden of establishing the existence of an express agreement as to how the lump sum payment is broken down into regular and overtime pay. Marshall v. Chala Enterprises, Inc., supra; Mumbower v. Callicott, supra; Brennan v. Elmer's Disposal Service, 510 F.2d 84, 86-87 n. 1 (9th Cir.1975).

We believe that these same principles govern the operation of W.Va.Code, 21-5C-3(a), so that where employees are compensated on a lump sum basis, absent explicit proof of another mutually agreed upon rate of pay, a court must infer that the regular rate actually paid was that obtained by dividing the weekly wage paid by the number of hours actually worked.

In the present case, the circuit court found as a fact that the firemen were working an average of fifty-six hours per week, that the personnel rules contemplated an average week of fifty-six hours, and that these facts controlled over the hourly rate set out in the pay schedule which was based on a forty-hour workweek. ⁸ However this conclusion does not resolve the overtime issue as there was no finding that there was an express agreement between the...