Walling v. Harnischfeger Corp.

• Decision Date: 31 December 1943
• Docket Number: Civ. No. 1087.
• Citation: 54 F. Supp. 326
• Parties: WALLING, Administrator of Wage and Hour Division, United States Department of Labor v. HARNISCHFEGER CORPORATION.
• Court: U.S. District Court — Eastern District of Wisconsin

54 F. Supp. 326

WALLING, Administrator of Wage and Hour Division, United States Department of Labor v. HARNISCHFEGER CORPORATION.

Civ. No. 1087.

District Court, E. D. Wisconsin.

December 31, 1943.

Victor M. Harding, Joseph D. Donahue, and Frank J. Delany, all of Chicago, Ill., for plaintiff.

Lines, Spooner & Quarles, Maxwell Herriott, and Leo Mann, all of Milwaukee, Wis., for defendant.

DUFFY, District Judge.

The question for decision in this case involves an interpretation of the overtime section of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201, et seq. More particularly, a determination must be made as to the meaning of "regular rate" in Sec. 7(a) of the act, 29 U.S.C.A., § 207 (a), which provides that an employee shall receive compensation for work in excess of specified hours "at a rate not less than one and one-half times the regular rate at which he is employed." As a result of collective bargaining between defendant and the union which is the collective bargaining agent for defendant's employees, a contract was executed on December 9, 1942, superseding previous collective bargaining agreements. The contract classifies production employees into two groups called incentive and non-incentive workers, and provides for a basic hourly rate of pay for each of these types of workers. It also includes a provision for a defense wage adjustment and a bonus, both of which are applicable to each group.

Defendant's incentive or piece-rate system operates in the following manner: The various jobs performed by incentive workers are time studied by the management. The time which the job is shown to consume is multiplied by a "standard earning rate". The amount so computed becomes the "price" placed on that job. Thereafter when an employee is given work on a job which has been priced, he receives a job card bearing that price. The incentive to perform his job speedily and efficiently is held out to the worker, for he will then receive in compensation the price on the job and not merely his base rate of pay, assuming that he performs the work in less than the scheduled time shown in the time-study. Both employer and employee profit, the latter by earning piece rate compensation over and above his base rate, and the employer by increased production. The union contract contains provisions for correcting piece rates which turn out to be too high or too low. The testimony shows that an incentive worker averages between 10% and 25% over his base rate.

Secion 3(e) of the contract provides: "* * * for all purposes, the regular rate of pay at which each employee who participates in an incentive plan is employed, is the base rate of each such employee. * * *" Section 4(a) of the contract provides: "The Company will operate all shop departments on a basic eight (8) hour day and forty (40) hour week with time and one-half, computed for incentive workers on their base rate as heretofore defined in Section 3, paragraph (e) * * *."

Approximately 50% of defendant's production employees are incentive workers. On each payday about 98% of all incentive workers receive some compensation over and above their base rate. In each payroll for incentive workers, piece-rate bonuses form about 22% of the compensation received by such workers, overtime excluded. These workers are paid overtime at one and one-half times their base rate. Plaintiff here contends that irrespective of the wording of the contract, the incentive employees of the...