Roland Electrical Co. v. Black

• Decision Date: 12 August 1947
• Docket Number: No. 5600.,5600.
• Citation: 163 F.2d 417
• Parties: ROLAND ELECTRICAL CO. v. BLACK et al.
• Court: U.S. Court of Appeals — Fourth Circuit

163 F.2d 417 (1947)

ROLAND ELECTRICAL CO. v. BLACK et al.

No. 5600.

Circuit Court of Appeals, Fourth Circuit.

August 12, 1947.

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O. R. McGuire, of Washington, D. C., and David S. Sykes, of Baltimore, Md. (Nyburg, Goldman & Walter, of Baltimore, Md., on the brief), for appellant.

William L. Marbury, of Baltimore, Md. (Franklin G. Allen, of Baltimore, Md., on the brief), amicus curiæ.

Paul Berman and Sigmund Levin, both of Baltimore, Md. (Theodore B. Berman, of Baltimore, Md., on the brief) for appellees.

Before PARKER, SOPER and DOBIE, Circuit Judges.

SOPER, Circuit Judge.

This suit was instituted on March 13, 1945, by employees of the Roland Electrical Company under the Fair Labor Standards Act, 29 U.S.C.A. § 216, to recover overtime compensation, liquidated damages and counsel fees with respect to services rendered during the period from October 24, 1940 to January 10, 1945. During the pendency of the case it was decided in an injunction suit brought by the Administrator of the Wage and Hour Division of the Department of Labor that the contention of the company that it was not subject to the terms of the Act was not tenable. Walling v. Roland Electrical Co., D.C., 54 F.Supp. 733; Id., 4 Cir., 146 F.2d 745; Roland Electrical Co. v. Walling, 326 U.S. 657, 66 S.Ct. 413, 90 L.Ed. 383. In the pending case it was conceded that during certain workweeks the plaintiffs were not paid one and one-half times the regular rate as required by the Act for work done during hours in excess of the statutory minimum; but the defense was set up that the deficiencies were offset (1) by payment in excess of the statutory requirement in other weeks, and (2) by certain sums paid as a regular year-end bonus. The additional defense was made that the claims arising in part of the period covered by the suit were barred by the Maryland statute of limitations, Article 57, § 1, of the Maryland Code of 1939, which provides, inter alia, that all actions in simple contract shall be commenced within three years from the time the cause of action accrues. The District Judge rejected these defenses, Black v. Roland Electrical Co., D.C., 68 F. Supp. 117, and entered judgment for the plaintiffs in varying amounts, and allowed a counsel fee in the sum of $500.

For more than 25 years, the company has been engaged in the business of selling and repairing electrical equipment. It has operated on the basis of a 44 hour week, and has paid its employees an agreed straight-time hourly rate in excess of the statutory minimum. This rate was paid for work done between the hours of 8 a. m. and 4:30 p. m., with a half-hour lunch period, from Monday to Friday, and between 8 a. m. and 12 noon on Saturday. In addition it was frequently necessary for the employees to work before or after these hours, or on Sunday, upon the electrical equipment of customers so as not to interfere with their operations during the usual workday. For services during these less desirable hours of employment, the company, in accordance with a long standing policy, paid its employees one and one-half times the hourly rate fixed for other portions of the day, even though the total hours of service were less than 8 hours per day. In short, the agreed rate for the so-called off-hours' work was one and one-half times the agreed rate for the balance of the day.

The result of this practice was that the employees customarily worked more than the maximum hours per week prescribed by the Act, and were therefore entitled to compensation for the excess at a rate not less than one and one-half times the regular rate; and, if the wages actually paid during the off hours may be considered payment at one and one-half times the regular rate, the plaintiffs in some weeks received more than the minimum compensation required by the Act and in other weeks, less than that amount. It is this excess in certain weeks that the company seeks to offset against the deficiency in other weeks.¹

In addition the company claims the right to offset against the deficiencies certain bonus payments which, instead of Christmas gifts in prior years, were given in each year from 1941 to 1944 on the pay day preceding the year-end holidays in the amount of five per cent. of the gross earnings of the employees as of the end of November of each year. These payments were made voluntarily in the discretion of the company and were not made pursuant to a prior agreement with the employees. However, the payments were treated as ordinary expenses of the business and the amounts paid were deducted from gross income in computing the taxable net income of the company and were subjected to the withholding tax on wages imposed by statute.

Under these circumstances, we are in accord with the decision of the District Court in so far as it holds that payments in excess of the amount required by the statute to an employee for work done in certain weeks do not relieve the employer from the obligation to compensate the employee for deficiencies in other weeks, or from the obligation to pay him in addition an equal sum for liquidated damages. The opposing argument fails to take account of two principles basic to the Act and buttressed by the force of judicial decision and the persuasiveness of administrative interpretation. Initially, it disregards the now well settled construction that the Act takes as its standard a single workweek consisting of seven consecutive days. See Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 579, 62 S.Ct. 1216, 86 L.Ed. 1682. And even where it is conceded that the employer believed in good faith that he was not covered by the Act, nevertheless, if he fails to pay overtime compensation promptly and when due on any regular payment date, the statutory action for the unpaid minimum and liquidated damages given under Section 16(b) immediately arises in favor of the aggrieved employee. Seneca Coal & Coke Co. v. Lofton, 10 Cir., 136 F.2d 359, 363, certiorari denied, 320 U.S. 772, 64 S.Ct. 77, 88 L.Ed. 462; Rigopoulos v. Kervan, 2 Cir., 140 F.2d 506, 507, 151 A. L.R. 1126; Atlantic Co. v. Broughton, 5 Cir., 146 F.2d 480, 482; Keen v. Mid-Continent Petroleum Corp., D.C.Iowa, 63 F. Supp. 120, 128, 129, affirmed 8 Cir., 157 F.2d 310. This accords with the public policy embodied in the Act with respect to minimum wages and maximum hours alike, so that an employer is not allowed to compromise or settle with his employees and thereby reduce the sum fixed by Congress as proper compensation for withholding wages beyond the time when they should be paid. Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 704, 705 note 14, 65 S.Ct. 895, 89 L.Ed. 1296; D. A. Schulte Inc. v. Gangi, 328 U.S. 108, 116, 66 S.Ct. 925, 90 L.Ed. 1114, 167 A.L.R. 208. Cf. Guess v. Montague, 4 Cir., 140 F.2d 500.²

Furthermore, the so-called excess payments in certain weeks were not made or intended to be made as compensation for overtime work within the contemplation of the Act, but as additional compensation for work done by the employees during the less desirable parts of the day; and it cannot be contended that the increased pay for work during inconvenient hours should now be considered as payment at one and one-half times the regular rate required for excess hours under the statute.

Much the same reasoning may be applied to the rejection of the credit claimed by the defendant on account of the payment to its employees of the year-end bonuses. These payments did not constitute the timely week-end payments which the defendant should have made. They were obviously paid as compensation for services previously rendered in order to allow the employees to share in the profits of the business and to incite them to further efforts in the company's behalf. They were given, as such bonuses usually are, as additions to the regular pay when at the end of the year it was found that the business could afford them, and they were not intended either as overtime compensation or as a substitute for weekly payments due under the Act.

We find nothing in Bumpus v. Continental Baking Co., 6 Cir., 124 F.2d 549, 140 A.L.R. 1258, or Corey v. Detroit Steel Corporation, D.C.,E.D. Mich, 52 F.Supp. 138, upon which the defendant relies, at variance with the conclusions we have reached.

This discussion leads to the conclusion that the company in fact made no payments to its employees which may be treated as excess or overpayments in the contemplation of the statute, even if the rule as to prompt payment at each pay period should be disregarded. The evidence shows conclusively that the defendant maintained two rates of pay; one for the hours between 8. a. m. and 4:30 p. m., and the other, one and one-half times higher, for the remaining hours of the day, so that each rate was the "regular rate" for the period to which it applied. These rates were in fact the contract rates between the parties, and the higher pay for the off-hours period was not an overpayment but merely compensation in accordance with the contract between them.³

The basic rules for computing the "regular" and "overtime" rates of pay under the statute, as they have emerged in the litigated cases, require this conclusion. Thus in Walling v. Helmerich & Payne, 323 U.S. 37, 65 S.Ct. 11, 12, 89 L.Ed. 29, the court condemned as a violation of the statute the split-day plan of computation which was designed to insure that the total wages paid would remain the same notwithstanding the provisions of the Act. Under this method, the daily shifts or tours of duty of the employees were arbitrarily divided into two parts so that, for example, the first 4 hours of an 8-hour shift were given a specified or "base or regular rate" and the remaining hours were treated as "overtime" and called for payment at one and one-half times the basic rate. With respect to this plan the court said at page 42 of 323 U.S., at page 14 of 65 S.Ct., 89 L.Ed. 29: "It is no answer that the artificial regular rate...