Webster v. Bechtel, Inc., s. 3979
| Decision Date | 12 December 1980 |
| Docket Number | 4139,Nos. 3979,s. 3979 |
| Parties | 24 Wage & Hour Cas. (BNA) 1123, 90 Lab.Cas. P 33,958 Thomas B. WEBSTER, Eric Schrank, Van A. Bulf, Peter Churgel, Dean Hoke, Sam C. Bittetti, individually and on behalf of all persons similarly situated, Appellants, v. BECHTEL, INC., Appellee. STATE of Alaska, Cross-Appellant, v. BECHTEL, INC., Cross-Appellee. |
| Court | Alaska Supreme Court |
Before RABINOWITZ, C. J., and CONNOR, BURKE and MATTHEWS, JJ.
This matter concerns an action by Bechtel employees to recover unpaid overtime compensation and damages provided by the Alaska Wage and Hour Act (hereinafter "Alaska Act"), AS 23.10.050-.150. The primary issue presented is whether the Alaska Act is preempted by the federal Fair Labor Standards Act (hereinafter "FLSA"), 29 U.S.C.A. §§ 201-19. We conclude that the Alaska Act is not preempted.
On July 18, 1977, Thomas B. Webster and five other named plaintiffs filed a complaint in an Alaska superior court alleging that their employer, Bechtel, Inc., failed to pay overtime compensation in violation of the Alaska Act (hereinafter "Webster action"). The plaintiffs also filed a motion for certification as a class action, seeking recovery for all other similarly situated Bechtel employees.
The plaintiffs were quality control inspectors and engineers employed by Bechtel in connection with the construction of the Trans-Alaska Oil Pipeline Project. 1 The complaint alleged that the plaintiffs, working an average of eighty-four hours per week, and on occasion as much as twenty-four hours per day, were not compensated for their overtime hours. Additionally, it was asserted that some plaintiffs were instructed by Bechtel to report only ten hours of work per day when in fact they actually worked an average of twelve hours per day. It was further alleged that Bechtel had violated provisions of the Alaska Act requiring that employees receive compensation of the rate of one and one-half times the regular rate for all hours worked in excess of forty hours per week or eight hours per day. 2 Liquidated damages equal to the amount of unpaid overtime wages were sought by plaintiffs. 3
In August, 1977, the United States Secretary of Labor filed a complaint on behalf of these same employees against Bechtel in federal district court in California (hereinafter "Marshall action"). The federal complaint alleged that Bechtel had violated the overtime provisions of the FLSA and sought back wages and the restraint of future violations.
In the same month, the Alaska superior court certified the Webster action as a class action. Bechtel, however, petitioned the federal district court in Alaska to remove the Webster action to federal court asserting that the Alaska Act was preempted by the federal FLSA. The federal district court declined to reach the issue of preemption, holding that the complaint did not present a federal question. It ruled that if preemption existed, it served only as a defense to the state action. Therefore, the federal district court ordered the case remanded to the state superior court.
Following the remand, Bechtel moved to dismiss the Webster action arguing that the Alaska Act was preempted by the FLSA. The State of Alaska sought to intervene because of the state's interest in the constitutionality of the Alaska Act and in enforcement of claims under the Act. The state's intervention motion was granted.
Treating Bechtel's motion to dismiss as a motion for partial summary judgment under Alaska Civil Rules 12(b)(1), 54(b), and 56, the superior court granted the motion. In reaching this ruling, the superior court found that the Webster "action include(d) claims for wages which are covered and preempted by the provisions of the federal Fair Labor Standards Act...." The court entered a judgment in favor of Bechtel "with respect to claims which are within the scope of benefits provided for them by the federal (FLSA)." The superior court noted that such benefits were being sought in the Marshall action.
Plaintiffs appealed, contending that the Alaska Act is not preempted by the FLSA. After the filing of the notice of appeal to this court, Bechtel and the United States Secretary of Labor entered a consent judgment in the Marshall action settling for an amount not to exceed $3,000,000. The settlement applies to all members of the Webster action except for the thirty-five members who filed formal written consents in the Webster action prior to the commencement of the Marshall action.
Before undertaking an analysis of the preemption issue, it is necessary to set forth some background information regarding the FLSA and the Alaska Act. The FLSA, 29 U.S.C.A. §§ 201-219, sets forth the national minimum wage, the maximum workweek and rules concerning child labor. The congressional findings and declaration of policy in the act are as follows:
(a) The Congress finds that the existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers (1) causes commerce and the channels and instrumentalities of commerce to be used to spread and perpetuate such labor conditions among the workers of the several States; (2) burdens commerce and the free flow of goods in commerce; (3) constitutes an unfair method of competition in commerce; (4) leads to labor disputes burdening and obstructing commerce and the free flow of goods in commerce; and (5) interferes with the orderly and fair marketing of goods in commerce. That Congress further finds that the employment of persons in domestic service in households affects commerce.
(b) It is declared to be the policy of this chapter, through the exercise by Congress of its power to regulate commerce among the several States and with foreign nations, to correct and as rapidly as practicable to eliminate the conditions above referred to in such industries without substantially curtailing employment or earning power.
29 U.S.C.A. § 202 (West 1978). A recent law review gave the following factual background on the FLSA:
The Fair Labor Standards Act of 1938 (FLSA) was the original anti-poverty law, enacted by Congress as the country was struggling out of throes of the Great Depression. To stimulate the devastated economy, wage and hour controls were placed upon employment of the nation's work force, resulting in a minimum wage floor and a maximum hours limitation on the workweek. The premise that the FLSA's main thrust was directed at alleviating the Depression's destitution of the nation's workers was reiterated as recently as 1966. During deliberations on the proposed 1966 amendments to the FLSA, the Senate Committee on Labor and Public Welfare commented:
The Fair Labor Standards Act was enacted in 1938 to meet the economic and social problems of that era. Low wages, long working hours and high unemployment plagued the Nation, which was then in the midst of an unprecedented depression. The policy of the act, as set forth therein, was to correct and as rapidly as practicable to eliminate labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well-being of workers. 4
The most important amendment to the FLSA and the one central to this appeal is the Portal-to-Portal Act, 29 U.S.C.A. §§ 251-262. The United States Supreme Court's decision in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515, reh. denied, 329 U.S. 822, 67 S.Ct. 25, 91 L.Ed. 699 (1946) held that employers were liable for pay to employees not only for customary work hours but also for time spent on the employer's premises getting to and from work. Large numbers of suits were instituted, with potential liability in the billions. Finding this enormous potential liability to be a threat to the national economy, Congress in 1947 passed the Portal-to-Portal Act extinguishing any right to such pay. 5 This act also changed certain procedures as to claims under the FLSA, creating a national statute of limitations, establishing a "good faith" defense of reliance on prior regulations, and making the liquidated damages discretionary in the absence of bad faith. 6
The Alaska Act, AS 23.10.050-.150, enacted in 1959 (ch. 171 SLA 1959), has similar purposes to the federal act and is based upon it. McGinnis v. Stevens, 543 P.2d 1221, 1238-39 (Alaska 1975), appeal after remand, 570 P.2d 735 (Alaska 1977). AS 23.10.050 provides:
It is the public policy of the state to
(1) establish minimum wage and overtime compensation standards for workers at levels consistent with their health, efficiency and general well-being, and
(2) safeguard existing minimum wage and overtime compensation standards which are adequate to maintain the health, efficiency and general well-being of workers against the unfair competition of wage and hour standards which do not provide adequate standards of living.
The distinctive provisions of the Alaska Act which are important to the present case are: (1) the Alaska Act provides for fifty cents higher minimum wage than the federal minimum; 7 (2) the Alaska Act provides for payment of one and...
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