Mitchell v. Adams, 15659.

• Decision Date: 07 March 1956
• Docket Number: No. 15659.,15659.
• Citation: 230 F.2d 527
• Parties: James P. MITCHELL, Secretary of Labor, United States Department of Labor, Appellant, v. Ralph ADAMS, d/b/a Macon Shirt Company, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

230 F.2d 527 (1956)

James P. MITCHELL, Secretary of Labor, United States Department of Labor, Appellant, v. Ralph ADAMS, d/b/a Macon Shirt Company, Appellee.

No. 15659.

United States Court of Appeals Fifth Circuit.

March 7, 1956.

Bessie Margolin, Asst. Sol. U. S. Dept. of Labor, Washington, D. C., Stuart Rothman, Solicitor, Sylvia S. Ellison, Harry A. Tuell, James R. Billingsley, Attorneys, United States Department of Labor, Washington, D. C., Beverley R. Worrell, Regional Attorney, Birmingham, Ala., for appellant.

C. Baxter Jones, Macon, Ga., Charles M. Cork, Macon, Ga., for appellee.

Before HUTCHESON, Chief Judge, and JONES and BROWN, Circuit Judges.

BROWN, Circuit Judge.

The District Court denied an injunction sought by the Secretary of Labor, 29 U.S.C.A. § 201 et seq., Section 217, against the use by the employer of a "Belo" contract¹ holding that it was valid under the Belo decision and the Amendment to the Fair Labor Standards Act.²

No question is raised that the affected employees qualified as workers whose duties necessitated irregular hours, or that the individual contracts, as such, were not actually executed in good faith. The sole attack made on the contracts, and the decision of the District Judge sustaining them, is that the proof did not show that each concerned employee worked a "sufficient", "significant", or "frequent" number of hours in excess of 60, the contract maximum.

Stated in various ways,³ the Secretary insists that Belo and, what it in effect calls the "Belo Statute" requires that the actual hours of work, at least to some extent, equal and exceed the contract maximum period. We think this misreads both the Belo decisional law and the specific 1949 Amendment and is again the search for handy, arbitrary rule-of-thumb criteria, displacing inquiry and deliberative judgment, leaving it all to the wisdom of the Administrator.

The thrust of the trial court's findings, amply sustained, Fed.Rules Civ. Proc. rule 52(a), 28 U.S.C.A.; Galena Oaks Corp. v. Scofield, 5 Cir., 218 F.2d 217, is that while none⁴ of the Belo employees, since the inauguration of the contract in 1950, had ever worked in excess of 60 hours, the contracts had been made in the good-faith business judgment of management that on the return of increased volume of sales (and hence production of shirts) confidently expected each season, the work of these individuals would frequently exceed 60 hours per week. In the meantime, of course, it was uncontradicted that they each frequently worked beyond a 40-hour week for substantial, but irregular, periods, and some, at least, had worked up to 60 hours.⁵

We think that this complies with the Belo doctrine and the 1949 Amendment. Every element in Belo is present here: (a) a job requiring irregular hours of work, (b) a guarantee of a minimum weekly wage, (c) a maximum contract workweek of 60 hours, and (d) a specified regular hourly rate and a specified overtime rate of one and one-half times the regular rate. There, with a weekly guarantee of $40.00 and a 67-cent hourly rate, the question was, 316 U.S. 624, 632, 62 S.Ct. 1223, 1227, 86 L. Ed. 1716, 1722: "* * * Whether the $40 contemplates compensation for overtime as well as basic pay * * *"; and, determining that it did, the court sustained it even though, on analysis, where work actually performed in any given week was less than the maximum (there 54½, here 60 hours), the rate of overtime was in excess of 150% and would itself fluctuate in amount and rate as excess hours varied, "But the Act does not prohibit paying more; it requires only that the overtime rate be `not less than' 150% of the basic rate. It is also true that under this formula the overtime rate per hour may vary from week to week. But nothing in the Act forbids such fluctuation." And see, Walling v. Youngerman-Reynolds Hardwood Co., Inc., 325 U.S. 419, 426, 65 S.Ct. 1242, 1246, 89 L.Ed. 1705, 1711, "The particular wage agreements there Belo involved were upheld because it was felt that in fixing a rate of 67 cents an hour and contracts did in fact set the actual regular rate at which the workers were employed * * *."

It was implicit in Belo and spelled out in the 1949 Amendment that the contract be genuine and in good faith, not a sham or subterfuge. But what was mentioned by the Supreme Court as merely a specific proof of good faith — actual payment for a few instances of overtime in excess of the contract period calculated on the contract regular rate — the Secretary now turns into an indispensable ingredient of the contractual operations: e.g., "* * * the contract hourly rate is never in fact used to determine their employees' earnings." It is required, "* * * that the stipulated hourly rate is actually operative to produce earnings in excess of the guarantee with sufficient frequency to demonstrate that it is not wholly fictitious." (See note 3, supra.)

But what faces us here was the problem before the Court there for, "It appears from the record in that Belo case that the employees there involved also worked fluctuating workweeks, and that the average workweek was substantially less than 54½ contract period hours." Walling v. Halliburton Oil Well Cementing Co., 331 U.S. 17, 21, 67 S.Ct. 1056, 1058, 91 L.Ed. 1312, 1316. Legality of the Belo contract depended not upon how it affected the same or other employees for excess-contract overtime, but on its operations in the other and usual workweeks. Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, 463, 470, 471, 475, 68 S.Ct. 1186, 92 L.Ed. 1502, 1516, 1520, 1523. The Court, Walling v. Halliburton Oil Well Cementing Co., 331 U.S. 17, 22, 67 S.Ct. 1056, 1058, 91 L.Ed. 1312, 1317, rejecting the Government's contention that "(b) * * * Belo has been implicitly overruled by later decisions * * *" of the court, plainly stated that, "* * * as to weeks in which they worked less, the Court inferred from the collateral specification of a basic rate and provision for a legal but variable rate of overtime pay that the guaranteed flat sum then due also contemplated both basic pay and overtime * * *"; and that, "* * * On the other hand, we find that in the three later cases relied on by petitioner Walling v. Helmerich & Payne, 323 U.S. 37, 65 S.Ct. 11, 89 L.Ed. 29; Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 65 S.Ct. 1242, 89 L.Ed. 1705; Walling v. Harnischfeger Corp., 325 U.S. 427, 65 S.Ct. 1246, 89 L.Ed. 1711, the agreed method by which wages were computed made a like inference impossible." (Emphasis supplied.)

Belo is still very much alive, Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, at page 462, 68 S.Ct. 1186, at page 1195, 92 L.Ed. 1502, at page 1516, and where efforts to meet the standard have failed, there has been striking evidence that the contractual arrangement did not reflect the true situation.⁶

Here the contracts have been adhered to with scrupulous exactness. The employment contract, as it may under the Act, Atlantic Co. v. Walling, 5 Cir., 131 F.2d 518, calls for the payment of a specified hourly, straight-time and overtime rate but with a guarantee of a minimum weekly amount. The payment, week after week, of that minimum is not the substitution of some other standard or the use of a formula or method differing from the agreement. It is, on the contrary, performance in full of that undertaking.

Moreover, there can be no suggestion here that it has been done for, or has achieved, any ulterior purpose. Since the wage rates involved are so much in excess of the statutory minimum, the employer, without cutting wages, reducing its labor force, increasing the individual's hours of work or take-home pay, or appreciably increasing its labor cost, could literally comply⁷ with the standard urged here.

These conclusions being supported, as we think they plainly are, by Belo decisional law (see also McComb v. Pacific & Atlantic Shippers Ass'n, Inc., 7 Cir., 175 F.2d 411; Tobin v. Little Rock Packing Co., 8 Cir., 202 F.2d 234), find further and completely sufficient foundation in the 1949 Amendment, an enactment sufficient within itself to reflect its own standards and bearing no inscription, "Belo" or otherwise, which would tie it to the case law out of which the colloquial term arose. We find it unnecessary to determine the full extent to which it added to the doctrine. We are clear though that it was meant by Congress to be an important part of the entire Act, removing the basic Belo philosophy from the peril of outright eradication or erosion under case-by-case attack. Congress, obviously, was not completely satisfied with things as they were.⁸ Legislation was a way to give effective, full voice to the underlying policy that contracts genuinely entered into in good faith are not to be subjected to interpretations which, themselves, are artificial and ignore the necessary adjustment, achieved thus by employer and employee, required in adapting the broad, imprecise standards of the Act to the endless variables of the business world.

The elements of the statute are plainly indicated, one of which is the 60-hour contract maximum. Its use where hours frequently worked substantially exceed the statutory 40-hour straight time is certainly a compliance. It would, we agree with the First Circuit, Mitchell v. Brandtjen & Kluge, Inc., 228 F.2d 291, 298, affirming D.C., 129 F.Supp. 675, "* * * be unwarranted judicial legislation * * * to read into § 7(e) * * that * * * the employees concerned must, in a certain percentage of workweeks, or in a `substantial' or a `significant' number of workweeks, actually have worked enough hours to exceed their respective guaranties * * *."

Little need be said of the appeal concerning the four non-Belo office employees whose "regular rate" the Government insists should have been determined by the hours actually and customarily worked, Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 62 S.Ct. 1216, 86 L.Ed. 1682, and not on the 44-hour contract period. It...