Sneed v. Sneed's Shipbuilding, Inc.
| Decision Date | 17 January 1977 |
| Docket Number | No. 75-2319,75-2319 |
| Citation | 545 F.2d 537 |
| Court | U.S. Court of Appeals — Fifth Circuit |
| Parties | 22 Wage & Hour Cas. (BN 1504, 80 Lab.Cas. P 33,467 Donald SNEED, Plaintiff-Appellee, v. SNEED'S SHIPBUILDING, INC., Defendant-Appellant. |
Jerry V. Pennington, John Cash Smith, Orange, Tex., for defendant-appellant.
Jon B. Burmeister, Port Arthur, Tex., for plaintiff-appellee.
Appeal from the United States District Court for the Eastern District of Texas.
Before COLEMAN, CLARK and TJOFLAT, Circuit Judges.
Plaintiff-employee brought this action pursuant to the Fair Labor Standards Act of 1938 1 to recover overtime compensation, liquidated damages and attorneys' fees from defendant-employer. The case was submitted to the district court on stipulated facts, and final judgment was entered for the employee. On appeal the employer argues (1) that the employee waived his right to bring suit under 29 U.S.C. § 216 (1970 & Supp. IV 1974) and (2) that the court erred in its assessment of damages. We need not address the latter issue, however, for we conclude that there was indeed a waiver by the employee.
From February 1972 through March 1974 the employee was a shipfitter in employer's shipyard. He was paid a wage of $3.00 per hour for a forty hour week and received other benefits (such as the use of a home and an automobile) as additional compensation. 2 During this period he worked a total of 1,045 hours overtime, for which he was paid at his regular rate of $3.00 per hour rather than the statutory rate of one and one-half times the regular rate. See 29 U.S.C. § 207(a)(1) (1970).
When his employment terminated, the employee filed a complaint with the Beaumont Wage and Hour Division of the Employment Standards Administration of the United States Department of Labor charging that his employer had failed to pay him overtime compensation as required by the Act. The complaint was investigated by David Michalovich, a compliance specialist with the Wage and Hour Division, who determined that the employee was entitled to $1,500.00 in overtime compensation. The employer complied with this determination by submitting to the Wage and Hour Division a check in the amount of $901.60, which represented the full amount determined to be due less standard deductions.
Mr. Michalovich presented the check to the employee and told him that in order to receive the check he would have to sign a receipt. Directly above the line on which the employee was requested to sign the following notice appeared:
NOTICE TO EMPLOYEE Your acceptance of back wages due under the Fair Labor Standards Act means that you have given up any right you may have to bring suit for back wages under Section 16(b) of that Act. Section 16(b) provides that an employee may bring suit on his own behalf for unpaid minimum wages and/or overtime compensation and an equal amount as liquidated damages, plus attorney's fees and court cost. Generally, a two year statute of limitations applies to the recovery of back wages. Do not sign this receipt unless you have actually received payment of the back wages due.
The employee signed the receipt and took the check. He then consulted his attorney. On the attorney's advice he returned the check to the employer without cashing it and instituted this action.
In its answer to the complaint the employer asserted that by taking possession of the check and signing the receipt the employee had accepted payment and thereby waived his right to sue. The employee's response to this argument in the trial court and on appeal was that he did not know what he was signing and, in any case, the release was not supported by consideration. The employee has never claimed that the release was obtained through fraud. In its findings the trial court did not address the question of the employee's knowledge, 3 but it did hold that the waiver was null and void for lack of consideration.
The Fair Labor Standards Act requires that employees within its coverage be paid overtime compensation "at a rate not less than one and one-half times" their regular rate of pay. Id. Employers who violate this provision are subject to suit by aggrieved employees who may recover the unpaid wages, liquidated damages equal in amount to those wages, and reasonable attorneys' fees. Id. § 216(b) (Supp. IV 1974). The Secretary of Labor is authorized to investigate alleged violations of the Act and to bring suit on behalf of the employees to enforce its provisions. Id. §§ 211, 216(c) (1970 & Supp. IV 1974). The Act also provides:
The Secretary is authorized to supervise the payment of the unpaid minimum wages or the unpaid overtime compensation owing to any employee or employees under section 206 or 207 of this title, and the agreement of any employee to accept such payment shall upon payment in full constitute a waiver by such employee of any right he may have under subsection (b) of this section to such unpaid minimum wages or unpaid overtime compensation and an additional equal amount as liquidated damages.
The waiver provision found in section 216(c) was added to the Act in 1949. Prior to that time employers had been reluctant to reach voluntary settlements with employees over claims for back wages because courts had held that any purported waiver or release of rights to unpaid compensation was null and void as against public policy and lacking in consideration. 4 Thus an employer who settled a claim for back wages could never be sure that the employee with whom he settled would not later sue to collect liquidated damages and attorneys' fees. The addition of the waiver provision was intended to change this situation and create an incentive for employers voluntarily to accept settlements supervised by the Wage and Hour Division. 5
The district court was thus in error when it held that the waiver signed by this employee was null and void for lack of consideration. The proper inquiry is not whether the consideration was adequate but rather whether...
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Karabetis v. Mayor and City Council of Baltimore
...for unpaid overtime wages. See Abbott v. Beatty Lumber Co., 90 Mich.App. 500, 282 N.W.2d 369, 371 (1979), citing Sneed v. Sneed Shipbuilding, Inc., 545 F.2d 537 (5th Cir.1977). The federal government's power to supervise payment of unpaid overtime wages does not, however, extend to prevent ......
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Zhengfang Liang v. Café Spice SB, Inc.
...Indus. de Venezuela, C.A., No. 10 Civ. 0883(SHS), 2011 WL 519295, at *9 (S.D.N.Y. Feb. 15, 2011) (quoting Sneed v. Sneed's Shipbuilding, Inc., 545 F.2d 537, 539 (5th Cir.1977) and citing Walton v. United Consumers Club, Inc., 786 F.2d 303, 305 (7th Cir.1986)). As the Seventh Circuit noted i......
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Martinez v. Bohls Bearing Equipment Co.
...to no lasting effect. The waiver provision in section 16(c) of the FLSA was examined by the Fifth Circuit in Sneed v. Sneed's Shipbuilding, Inc., 545 F.2d 537 (5th Cir.1977). The Court in Sneed noted that the addition of section 16(c) was intended to grant assurances to employers that volun......
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Zhengfang Liang v. Cafe Spice SB, Inc.
...Indus. de Venezuela, C.A., No. 10 Civ. 0883(SHS), 2011 WL 519295, at *9 (S.D.N.Y. Feb. 15, 2011) (quoting Sneed v. Sneed's Shipbuilding, Inc., 545 F.2d 537, 539 (5th Cir. 1977) and citing Walton v. United Consumers Club, Inc., 786 F.2d 303, 305 (7th Cir. 1986)). As the Seventh Circuit noted......
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Wages, hours, and overtime
...claims outside of litigation, employers should seek approval of the U.S. Department of Labor. See, e.g., Sneed v. Sneed’s Shipbuilding , 545 F.2d 537 (5th Cir. 1977). Even when there is litigation, the preferred practice remains to submit the terms and conditions of the settlement to the co......
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Wages, Hours, and Overtime
...claims outside of litigation, employers should seek approval of the U.S. Department of Labor. See, e.g., Sneed v. Sneed’s Shipbuilding , 545 F.2d 537 (5th Cir. 1977). Even when there is litigation, the preferred practice remains to submit the terms and conditions of the settlement to the co......
-
Wages, Hours, and Overtime
...claims outside of litigation, employers should seek approval of the U.S. Department of Labor. See, e.g., Sneed v. Sneed’s Shipbuilding, 545 F.2d 537 (5th Cir. 1977). Even when there is litigation, the preferred practice remains to submit the terms and conditions of the settlement to the cou......
-
Wages, Hours, and Overtime
...claims outside of litigation, employers should seek approval of the U.S. Department of Labor. See, e.g., Sneed v. Sneed’s Shipbuilding , 545 F.2d 537 (5th Cir. 1977). Even when there is litigation, the preferred practice remains to submit the terms and conditions of the settlement to the co......