Martin v. David T. Saunders Const. Co., Inc., Civ. A. No. 91-12472-K.

• Decision Date: 13 October 1992
• Docket Number: Civ. A. No. 91-12472-K.
• Parties: Lynn MARTIN, Secretary of Labor, United States Department of Labor, Plaintiff, v. DAVID T. SAUNDERS CONSTRUCTION CO., INC., Defendant
• Court: U.S. District Court — District of Massachusetts

813 F. Supp. 893

Lynn MARTIN, Secretary of Labor, United States Department of Labor, Plaintiff, v. DAVID T. SAUNDERS CONSTRUCTION CO., INC., Defendant

Civ. A. No. 91-12472-K.

United States District Court, D. Massachusetts.

October 13, 1992.

COPYRIGHT MATERIAL OMITTED

James Glickman, U.S. Dept. of Labor/Secretary of Labor, Boston, MA, for plaintiff.

Richard D. Wayne, Hinckley, Allen, Snyder & Comen, Boston, MA, for defendant.

MEMORANDUM AND ORDER

KEETON, District Judge.

This is a Fair Labor Standards Act action. Now before the court are: (1) plaintiff's motion for partial summary judgment, and accompanying memorandum and affidavit (Docket Nos. 6, 7, and 9, filed March 23, 1992); (2) defendant's opposition and accompanying affidavit (Docket Nos. 14 and 15, filed May 21, 1992); (3) plaintiff's reply (Docket No. 17, filed June 4, 1992); and (4) each party's motion for oral argument (Docket Nos. 8 and 13). For the reasons that follow, the motion for partial summary judgment is allowed in part and denied in part. The parties' positions having been fully noted in the written submissions, I conclude that oral argument is not warranted; the motion and request for oral argument are denied.

The Fair Labor Standards Act, 29 U.S.C. § 201 et seq., requires that employees be paid time and one-half for hours worked over 40 per week. 29 U.S.C. § 207(a). An employer may pay fixed weekly compensation without calculating overtime, however, if the requirements of 29 U.S.C. § 207(f) are met. Plaintiff moves for summary judgment: (1) determining that defendant's employment contracts do not meet the 29 U.S.C. § 207(f) exemption requirements; (2) assessing damages against defendant for failing to comply with 29 U.S.C. § 207(a); (3) determining that defendant lacked good faith in forming the contract and assessing liquidated damages under 29 U.S.C. § 216(b); and (4) granting a prospective injunction against future violations. For the reasons stated below, a partial summary judgment determining that the contract fails to meet the requirements of 29 U.S.C. § 207(f) is granted. Neither party, however, proposed an acceptable measure of damages. Consequently, I direct the parties to confer on the amount of damages using a measure in accordance with this memorandum. Summary judgment for liability on liquidated damages is denied. Summary judgment for a prospective injunction is denied.

I. Introduction.

This civil action arises from an investigation of defendant by the Wage and Hour Division of the U.S. Department of Labor. Plaintiff alleges that defendant failed to pay overtime at work sites in Massachusetts and New Hampshire. This motion for partial summary judgment concerns failure to pay overtime only at a Hanover, New Hampshire work site.

The following facts are undisputed. One hundred thirty-seven employees worked at the New Hampshire site. Each employee signed a form contract. A copy of the form is attached to the Loria affidavit, Exhibit "A" (Docket No. 9). The contract specifies a "weekly salary" for a "maximum of fifty (50) hours per week." According to the contract, "this amount includes overtime calculated at one and one-half (1½) times for hours worked in excess of forty (40)." The contract does not specify an hourly rate of pay.

Defendant claims (and for purposes of summary judgment, plaintiff does not dispute) that weekly salaries were set as follows. First, defendant would negotiate an hourly rate with a prospective employee. Defendant then calculated a weekly salary based on 40 hours at regular pay and 10 hours at time and a half. Defendant then guaranteed pay for 50 hours per week, including 10 hours at the overtime rate, regardless of whether the employee worked a full 50 hours or not. Employees' salaries were prorated for unexcused absences (i.e. one-fifth of the weekly salary was subtracted for each day of unexcused absence). Raises were given in $25.00 or $50.00 increments to the weekly salary.

Under the contract, an employee who worked more than 50 hours per week did not immediately receive any additional overtime pay. Instead, when the employment terminated, the employee would receive additional pay only for hours worked beyond a 50 hours per week average over the entire course of the employment; an employee who averaged 50 hours or less per week received no additional compensation. At the Hanover site, no employee averaged more than 50 hours per week. Thus, although some employees worked more than 50 hours in some weeks, none received extra pay for those hours. Defendant used the contract from June 9, 1991 to December 15, 1991 — 27 weeks. Defendant stopped using the contract during plaintiff's investigation, before work was completed at the site.

II. Summary Judgment Standard.

A court may grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c). The party seeking summary judgment bears the "responsibility of suggesting" the absence of a genuine issue of material fact. Quintero de Quintero v. Aponte-Roque, 974 F.2d 226, 228 (1st Cir. 1992); see Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). The court then considers the record "in the light most favorable to the party opposing the motion and must indulge all inferences favorable to that party." Stepanischen v. Merchants Despatch Transp. Corp., 722 F.2d 922, 928 (1st Cir. 1983).

To defeat a motion for summary judgment "the non-moving party must demonstrate the existence of a genuine issue of material fact pertaining to those issues on which it would have the burden of proof at trial." Kauffman v. Puerto Rico Tel. Co., 841 F.2d 1169, 1171 (1st Cir.1988). Here, defendant has the burden to prove it is exempt from 29 U.S.C. § 207(a) through application of § 207(f). See Donovan v. Brown Equip. & Serv. Tools Inc., 666 F.2d 148, 153 (5th Cir.1982).

A genuine issue of fact is "one in which the party opposing summary judgment provides evidence `such that a reasonable jury could return a verdict for the non-moving party.'" Perez De La Cruz v. Crowley Towing and Transp. Co., 807 F.2d 1084, 1086 (1st Cir.1986) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986)), cert. denied, 481 U.S. 1050, 107 S.Ct. 2182, 95 L.Ed.2d 838 (1987).

III. § 207(f) Requirements.

A. In General.

Contracts satisfying the § 207(f) requirements are referred to as "Belo contracts," after the Supreme Court case that inspired enactment of § 207(f). See Walling v. A.H. Belo Corp., 316 U.S. 624, 62 S.Ct. 1223, 86 L.Ed. 1716 (1942). Belo contracts are exceptions to the overtime requirements. The standards for establishing Belo contracts are "to be narrowly construed against the employer asserting them." Brown Equip., 666 F.2d at 153.

29 U.S.C. § 207(f) provides:

No employer shall be deemed to have violated subsection (a) of this section by employing any employee for a workweek in excess of the maximum workweek ... if such employee is employed pursuant to a bona fide individual contract, or pursuant to an agreement made as a result of collective bargaining by representative of employees, if the duties of such employee necessitate irregular hours of work, and the contract or agreement (1) specifies a regular rate of pay of not less than the minimum hourly rate ... and compensation at not less than one and one-half times such rate for all hours worked in excess of the maximum workweek, and (2) provides a weekly guaranty of pay for not more than sixty hours based on the rates so specified.

A valid Belo contract must, therefore, meet four requirements: 1) bona fide contract, 2) the job necessitates irregular hours of work, 3) the contract specifies a regular rate of pay and at least time and a half overtime, and 4) the contract provides a weekly guaranty (of not more than 60 hours) based on the specified rates. Plaintiff does not challenge the satisfaction of the bona fide contract requirement. Instead, plaintiff charges that the job does not necessitate irregular hours of work, that the contract does not specify a "regular rate of pay," and that the contract fails to provide pay for all overtime hours.

The Secretary of Labor adopted regulations interpreting § 207, found at 29 C.F.R. § 778.0 et seq. The regulations constitute the Department of Labor's interpretation of the statute. They do not bind judicial interpretation. Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 164, 89 L.Ed. 124 (1944). The regulations do, however, "constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance." Id. See also Marshall v. New Hampshire Jockey Club, Inc., 562 F.2d 1323, 1330 (1st Cir.1977) (although regulations not on point, they suggested the "proper approach").

B. Overtime Pay.

The form of the contract is not disputed by the parties. As a matter of law, I conclude that the contract is not a valid Belo contract. A central reason this contract does not qualify as a Belo contract is the nature of the contract clause concerning additional overtime pay for hours over 50 per week. This clause provides for additional pay only when the employee averages more than 50 hours per week. This prevents the contract from qualifying for the § 207(f) exemption, because, as a matter of law, it fails to provide "compensation at not less than one and one-half times such rate for all hours worked in excess of the maximum workweek." 29 U.S.C. § 207(f) (emphasis added).

The contract does not pay employees for any hours over 50 worked in a particular week, unless the employee averages more than 50 hours per week over the entire course of the employment. The Fair Labor Standards Act, however, requires overtime pay for hours worked...