Brooks v. Village of Ridgefield Park ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
7-21-1999
Brooks v. Village of Ridgefiel
Precedential or Non-Precedential:
Docket 98-6357
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Filed July 21, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 98-6357
ALBERT J. BROOKS, and others similarly situated
v.
VILLAGE OF RIDGEFIELD PARK, New Jersey;
RIDGEFIELD PARK POLICE DEPARTMENT
Village of Ridgefield Park, New Jersey,
Appellant
Appeal from the United States District Court
For the District of New Jersey
D.C. No.: 96-cv-01079
District Judge: Honorable William H. Walls
Argued: May 18, 1999
Before: BECKER, Chief Judge, RENDELL and ROSENN,
Circuit Judges.
(Filed July 21, 1999)
David W. Garland (Argued)
Sills, Cummis, Radin, Tischman,
Epstein & Gross
One Riverfront Plaza
Newark, NJ 07102
Counsel for the Appellant
Alan S. Kaufman (Argued)
Chamberlain & Kaufman
35 Fuller Road
Albany, NJ 12205
Counsel for Appellees
OPINION OF THE COURT
ROSENN, Circuit Judge.
The primary issue raised on this appeal is an unusual
question of statutory interpretation: does a municipality
violate the Fair Labor Standards Act, 29 U.S.C.S 201 et
seq. ("the Act" or "FLSA") when it complies with its
employees' request that their overtime compensation be
accumulated and payment deferred for as much as six
weeks after their regular pay. The plaintiff, Albert J.
Brooks, a K-9 police officer of the Village of Ridgefield Park
(the Village), filed a complaint in the United States District
Court for the District of New Jersey on his behalf and
others similarly situated alleging, inter alia , that the Village
violated Section 207(a) the Act by failing to pay them
overtime promptly. The complaint also sought statutory
liquidated damages in an amount equal to the late overtime
which Brooks already had received in accordance with the
collective bargaining agreement between the police officers
and the Village.
Before trial, seven other police officers employed by the
Village joined the litigation as plaintiffs. Brooks, the initial
plaintiff, and LaTour, another K-9 officer, settled all of their
claims with the Village. As a result, the only claim
remaining was for liquidated damages by the other officers.
The parties cross-moved for summary judgment. The
district court denied the Village motion for summary
judgment and held that the municipality was in violation of
the FLSA because its overtime payments violated the FLSA.
The court awarded liquidated damages to the plaintiffs and
the parties stipulated to the amount. The Village timely
appealed.1 We affirm in part and vacate in part, remanding
_________________________________________________________________
1. We have jurisdiction under 28 U.S.C. S 1291. The district court had
subject matter jurisdiction under 29 U.S.C. S 206. The district court
entered judgment for the plaintiffs in the aggregate amount of
$55,403.53 plus reasonable attorney's fees and costs.
2
for further proceedings with respect to the Village's good
faith defense to the plaintiffs' claims for liquidated
damages.
I.
On March 8, 1996, Brooks commenced this action
alleging that the defendant Village violated the FLSA by
failing to pay him and other Village police officers for the
time they spent outside regular working hours caring for
Village-owned police dogs. He later amended the complaint
to include a second claim, alleging that the Village violated
the FLSA by failing to pay overtime promptly in violation of
29 U.S.C. S 207(a). Subsequently, seven other Village police
officers joined the action as plaintiffs.
The parties agreed to submit the liquidated damages
issue to the district court to determine whether the Village
acted reasonably and in good faith based on stipulated
facts, various documents and legal memoranda. The court
found that the Village failed to comply with the proof
requirements imposed by this court upon employers who
seek to escape the otherwise mandatory award of liquidated
damages. Reluctantly, the district court awarded liquidated
damages to the plaintiffs, but invited the Village to seek
appellate review.
II.
On appeal, the Village raised two issues. First, did the
district court correctly conclude that the deferred payment
of overtime as contained in the collective bargaining
agreement between the Village and its police officers
violated the FLSA? Second, all overtime wages having been
paid in full within six weeks or less of the time earned, did
the district court err in awarding liquidated damages, a
sum equal to the full overtime already paid? Subsumed in
this question is whether the district court correctly
concluded that the Village failed to establish a good faith
defense.
A.
We turn to the first question and commence with a brief
background of the FLSA. Congress enacted the Act almost
3
at the very depth of the Great Depression of 1932 that
drove this nation into economic and social convulsions.
"Millions of families ... were trying to live on incomes so
meager that the pall of family disaster hung over them day
by day." Lipman, Plesur, and Katz, A Call for Bright-Lines to
Fix the Fair Labor Standards Act, 11 Hofstra Lab. L.J. 357,
359 (Spring, 1994)
One of the objectives of the Act was to increase the size
of the work force, thereby spreading the work and reducing
unemployment. Congress believed that requiring employers
to pay an overtime premium whenever an employee worked
over forty hours in a work week would encourage employers
to hire additional workers rather than pay the overtime
penalty. Another objective of the FLSA was to ensure a
fixed, fair minimum wage and a reasonable workweek for
industries where workers did not have sufficient bargaining
power to achieve "fair working conditions and collective
agreements." Id. at 359-60. The Supreme Court of the
United States observed that the Act recognized the unequal
bargaining power between employer and employee, and that
"certain segments of the population required federal
compulsory legislation to prevent private contracts on their
part which endangered national health and efficiency and
as a result the free movement of goods in interstate
commerce." Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697,
706-07 (1945). (Footnote omitted). To accomplish its
objectives, Congress provided in the FLSA for minimum
wages and a standard work week of forty hours with
premium pay for hours in excess thereof. 29 U.S.C.
S 207(a)(1). When an employer violates the overtime
provisions of the Act, Section 216(b) of the FLSA provides
for payment of both unpaid wages and an equivalent
amount of liquidated damages. 29 U.S.C. S 216(b).
The FLSA originally did not apply to state and local
government. However, the Court's decision in Garcia v. San
Antonio Metro. Transit. Auth., 469 U.S. 528 (1985), extended
the scope of the Act to state and local governments,
reversing its prior decision in National League of Cities v.
Usery, 426 U.S. 833 (1976). In Usery, the Court had held
that states and municipalities were not subject to this kind
of federal regulation. Although the Village was aware of
4
Garcia and of its obligation to abide by the FLSA, Village
officials believed that there was nothing improper about
their deferred overtime payment schedule, especially
because Local 36 of the Policemen's Benevolent Association
("the PBA"), the exclusive bargaining representative for the
local police officers, solicited and agreed to the payment
schedule set forth in the collective bargaining agreement.
Moreover, officials of the Village relied on its labor counsel
for advice and guidance in drafting a labor contract whose
contractual provisions complied with federal and state law.
The agreement ultimately negotiated and drafted also had
the benefit of PBA's labor counsel.
We turn to the initial question whether the FLSA
mandates the payment of overtime wages promptly and, if
so, may the parties be permitted to defer payment by
consensual agreement.
B.
For many years, a collective bargaining agreement had
been in effect between the Village and the PBA governing
the terms and conditions of plaintiffs' employment. The
Village has always paid the plaintiffs their regular pay on a
weekly basis pursuant to the terms of the current collective
bargaining agreement and the Act.
In the negotiations for the 1982-83 collective bargaining
agreement, the Village representatives understood from the
PBA that its members wanted overtime to accumulate and
be paid to them by separate check on a monthly basis
rather than on a weekly basis because it better served their
personal conveniences. The payment schedule at issue here
allowing the accumulation of overtime had remained
unchanged in successive collective bargaining agreements
until December 1996. The Village then modified the
collective bargaining agreement without objection by the
PBA to provide for payment of overtime on a weekly basis
in response to the claims raised in this lawsuit.
The Village knew of Garcia and of its obligation to abide
by the FLSA. Village police chief Walter Grossman attended
a seminar jointly held by the New Jersey Association of
Chiefs of Police and the New Jersey Conference of Mayors
5
sometime in the mid-1980's at which Garcia and the FLSA
were discussed. Elizabeth Hannigan, Village Clerk from
1984 to 1993, received information concerning Garcia from
the League of Municipalities sometime in 1985. Fred
Criscuolo, Village Mayor from 1980 to 1992, was aware that
the FLSA had become applicable to municipalities, but did
not know the extent of its application.
All village officials understood that after Garcia the FLSA
required overtime pay after forty hours of work in a week.
Even before Garcia, the Village had complied, and even
went beyond the statutory requirements. In accordance
with the collective bargaining agreement, it paid premium
pay after eight hours in a day, and for work on a regularly
scheduled day off, and premium pay for other time outside
of the regularly scheduled workday, such as court
appearances. Thus, Village police officers were paid
overtime on a daily basis if they worked over eight hours
and whenever they worked more than forty hours in a
week. It is undisputed that all Village police officers have
always received the full amount of overtime compensation
due in accordance with the payment schedule set forth in
the collective bargaining agreement. The overtime
compensation, however, was not paid weekly with the
regular pay but within six weeks or less after the work
week as requested by the police officers.
C.
The FLSA does not specifically address when overtime
compensation must be paid. Many years after its
enactment, the Department of Labor ("DOL") issued an
interpretative bulletin in 1972 fixing a time limit for the
payment of overtime compensation. The Bulletin reads in
pertinent part:
There is no requirement in the Act that overtime
compensation be paid weekly. ... Payment [however]
may not be delayed for a period longer than is
reasonably necessary for the employer to compute and
arrange for payment of the amount due and in no
event may payment be delayed beyond the next pay
day after such computation can be made ... ." 29
C.F.R. S 778.106.
6
The district court adopted the interpretation contained in
DOL's bulletin, although it mistakenly characterized it as a
regulation. See Brook v. Village of Ridgefield Park, New
Jersey, 978 F. Supp. 613, 617 (D.N.J. 1997). The court
thoughtfully reasoned that were it to hold that"an
employer is not obligated to compensate an employee for
overtime worked during a given week on the regular pay
day for that week, this would lead to an ambiguous
standard for determining when wages became ``unpaid'
under the statute. Employers would then be permitted to
withhold overtime compensation for some undefined period
of time without incurring any legal liability and employees
would be left with no recourse during this delay." Id. at
617-18. The court therefore concluded that the Village
violated Section 207(a) of the FLSA unless the Village
satisfied the exception found within the bulletin. The
exception permits an employer to delay payment for a
period "reasonably necessary for the employer to compute
and arrange for payment of the amount due if the correct
amount of overtime compensation cannot be determined
until some time after the regular pay period[.]" Id. at 618.
The court concluded that the Village failed to make any
evidentiary showing that the exception contained in the
bulletin applied. Id. It therefore held that the Village was
required to pay the plaintiffs for overtime on the regular pay
day for each week.2
The Village, however, contends that there is no FLSA
violation. It submits that the district court erred in relying
on the DOL's interpretative bulletin. It further asserts that
the bulletin provides a guideline, not an inflexible rule, for
determining whether the payment schedule satisfied the
FLSA. Admittedly, interpretive bulletins do not rise to the
level of a regulation and do not have the effect of law. A
court is not required to give effect to an administrative
interpretation. See Batterson v. Francis, 432 U.S. 416, 425
n.9 (1977)(citing General Electric Co. v. Gilbert, 429 U.S.
125, 141-145 (1976); Morton v. Ruiz, 415 U.S. 199, 231-37
(1974)). Instead, the level of deference given to an
_________________________________________________________________
2. The district court's interpretation and application of the FLSA is
subject to plenary review. See Martin v. Cooper Elec. Supply Co., 940
F.2d 896, 900 (3d Cir. 1991).
7
interpretative bulletin is governed by the bulletin's
persuasiveness. See Reich v. Gateway Press, Inc. , 13 F.3d
685, 699 n.17 (3d Cir. 1994); Goldberg v. Sorvas , 294 F.2d
841, 847 and 847 n.11 (3d Cir. 1961).We believe the DOL
bulletin is a reasonable construction of the FLSA. 3 The
Court's decision in Walling v. Harnischfeger Corp., 325 U.S.
427, 432-33 (1944) and our decision in Dunlop v. New
Jersey, 522 F.2d 504, 510 n.10 (3d Cir. 1975) suggest this
result. The reasons advanced by the district court for
following the bulletin are pragmatic and persuasive. We
therefore perceive no error in the district court's ruling that
the overtime payment schedule of the Village violated the Act.4
_________________________________________________________________
3. "While the interpretative bulletins are not issued as regulations under
statutory authority, they do carry persuasiveness as an expression of the
view of those experienced in the administration of the Act and acting
with the advice of a staff specializing in its interpretation and
application." Overnight Motor Co. v. Missel , 316 U.S. 572, 580-581
(1941).
4. The dissent is apprehensive that we are "superimposing the terms of
the interpretive bulletin" on the statute with respect to overtime
payments which contains no time of payment requirement with respect
to overtime. However, we plainly have stated in the text of this opinion
that "the interpretive bulletin does not have the effect of law" (supra at
9) and that the level of deference given to it depends upon the bulletin's
persuasiveness. Our opinion holds that the FLSA impliedly requires
prompt payment, not because the bulletin trumps the statute or imposes
its terms upon the Act, but to hold otherwise would negate its overtime
provisions. A rejection of the prompt payment requirement for overtime
would leave employers and employees without any standard for
determining when overtime wages become unpaid under the FLSA and
employers would be permitted to withhold them indefinitely without any
recourse for the employee.
Caruso v. Blockbuster - Sony Music Entertainment Center, 174 F.2d
166 (3d Cir. 1999) relied on by the dissent, is inapposite. In Caruso,
Congress directed the Department of Justice to issue regulations with
respect to the Americans with Disabilities Act. Accordingly, regulations,
having the effect of law, require public notice and comment before their
adoption by an administrative agency or any alteration in the agency's
new interpretation of its regulations which result in significantly
different
rights and duties than previously existed. No regulation is involved in
this case and, therefore, there is no issue concerning notice-and-
comment rule making.
8
The Village plausibly argues that the DOL interpretative
bulletin is not controlling in the circumstances before us
because the parties negotiated the overtime compensation
schedule; both possessed equal bargaining power,
negotiated in good faith, and incorporated the schedule in
successive collective bargaining agreements over a period of
years. Furthermore, the Village reminds us that it was at
the behest of the Union that the agreements provided for
the officers to accumulate overtime pay; the schedule, it
urges, served the police officers' personal convenience, did
not offend the objectives of the FLSA, and was not contrary
to law.
The nonwaivable nature of the provisions of the FLSA is
well-settled, even if obtained by negotiations for a collective
bargaining agreement. See Barrentine v. Arkansas-Best
Freight System, Inc., 450 U.S. 728, 740-41 (1981). See also
Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, 463
(1948)("nothing to our knowledge in any act authorizes us
to give decisive weight to contract declarations as to the
regular rate of pay because they are the result of collective
bargaining."); Jewell Ridge Coal Corp. v. Mine Workers, 325
U.S. 161, 167 (1945)("employees are not to be deprived of
the benefits of the Act simply because they are well paid or
because they are represented by strong bargaining
agents.").
We understand the Village's agitation, considering that
the delayed payment of the officers' overtime compensation
was the brainchild of the police officers themselves.
Nonetheless, we hold that as a matter of logic and policy,
the provision of the interpretive bulletin embodies an
important aspect of the FLSA and must be sustained. We
therefore perceive no error in the district court's conclusion
that the Village violated Section 207(a) of the FLSA. We
believe, however, that the Village's argument is more
suitable for consideration in our discussion pertaining to
the plaintiffs' claim for liquidated damages for the Village's
violation. We therefore turn to that issue.
9
III.
A.
The FLSA provides that "[a]n employer who violates the
[overtime] provisions of ... section 207 ... shall be liable to
the employee or employees affected in the amount of ...
their unpaid overtime compensation, ... and in an
additional equal amount as liquidated damages ... ." 29
U.S.C. S216(b). The liquidated damages provision amounts
to a Congressional recognition that failure to pay the
statutory minimum and overtime wages may be so
detrimental to the maintenance of the minimum standard
of living "necessary for health, efficiency and general well-
being of workers"5 that double payment must be made to
compensate employees for losses they might suffer by not
receiving their lawful pay when it was due. See Brooklyn
Savings, 324 U.S. at 707; Martin v. Cooper Elec. Supply Co.,
940 F.2d 896, 907 (3d Cir. 1991).
Congress subsequently mitigated the harshness of the
liquidated damage provision of Section 216(b) with the
enactment of Section 260 of the Portal-to-Portal Act. This
section permits the district court in its sound discretion to
withhold or reduce the amount of liquidated damages"if
the employer shows ... that the act or omission giving rise
to such action was in good faith and that he had
reasonable grounds for believing that his act or omission
was not a violation of the [FLSA]." 29 U.S.C. S 260. In
Martin, this court explained:
The good faith requirement is a subjective one that
"requires that the employer have an honest intention to
ascertain and follow the dictates of the Act." ... The
reasonableness requirement imposes an objective
standard by which to judge the employer's conduct ...
Ignorance alone will not exonerate the employer under
the objective reasonableness test ...
If the employer fails to come forward with plain and
substantial evidence to satisfy the good faith and
_________________________________________________________________
5. Section 2(a), 52 Stat. 1060.
10
reasonableness requirements, the district court is
without discretion to deny liquidated damages.
713940 F.2d at 907-08 (quoting Williams v. Tri-County
Growers, Inc., 747 F.2d 121, 129 (3d Cir. 1984))(emphasis
in original).
In determining an employer's subjective good faith, a
court must find that the employer had an honest intention
to ascertain and follow the dictates of the FLSA. Marshall v.
Brunner, 668 F.2d 748, 753 (3d Cir. 1982). Meanwhile, the
reasonableness of an employer's conduct is determined by
an objective standard. Id. To satisfy the objective standard,
"the employer must act ``as a reasonably prudent man
would have acted under the same circumstances.' " Addison
v. Huron Stevedoring Corp., 204 F.2d 88, 92 (2d Cir.
1953)(quoting Addison v. Huron Stevedoring Corp. , 96
F. Supp. 142, 155 (S.D.N.Y. 1950). Hence, an employer's
ignorance alone is not sufficient in meeting the objective
test. See Brunner, 668 F.2d at 753.
B.
The Village argues that it made a good faith effort to
comply with the FLSA by taking affirmative steps to meet
its obligations under the Act. The Village noted that it, as
well as the PBA, retained experienced labor counsel and
relied on counsels' advice during the collective bargaining
negotiations. It reasonably expected of counsel that the
terms and conditions negotiated by them in good faith
complied with the law. In rejecting the Village's defense that
it acted reasonably and in good faith, the district court
reluctantly concluded that our decision in Martin precluded
such a defense. We do not agree.
The focal point of our decision in Martin concerned the
basic overtime pay and record keeping provisions of the
FLSA, as well as the "administrative" exemption provided
under Section 213(a)(1) of the Act. 940 F.2d at 899. The
decision did not concern delay in overtime payments,
particularly when the delay is at the employees' Union's
request. In Martin, it was undisputed that the employer
failed to pay any overtime compensation to its assistant
warehouse managers, computer operators, purchasing
11
agents and inside sales persons. Id. Instead, the employer
argued that its inside salespersons and purchasing agents
were exempt from the Act's overtime payment requirement
under Section 213(a)(1), despite stipulating that its
assistant warehouse managers and computer operators
were not exempt. Id. As a threshold matter, the employer
claimed that its inside salespersons and purchasing agents
occupied bona fide administrative positions that exempted
them from the forty hour weekly maximum provision under
the Section 207(a) of the Act. Id.6
Disagreeing with the employer's claimed exemption, the
district court in Martin determined that the employer's
"inside sales persons ``[we]re not engaged in ``servicing' the
business,' " and thus, the employees failed to qualify for
exemption under the Act. Id. at 904. We affirmed in part on
the basis that the district court's determination was not
clearly erroneous within the meaning of Section 213(a)(1) of
the FLSA because the employees did not qualify under the
first prong of the Secretary of Labor's short test regulation
codified under 29 C.F.R. SS 541.2(e)(2) and 541.214. This
regulation focuses on whether a particular employee's
primary duties are related to management policies or
general business operations. See Id. at 901, 905, 906-07,
907 n.10.7
The plaintiffs in the instant case, unlike the plaintiff in
Martin, can only point to an obscure interpretive bulletin,
which does not carry with it the mandatory weight of the
Act, nor does it even rise to the level of a regulation. What
constitutes "prompt" payment for overtime compensation is
neither a provision of the FLSA itself nor is it defined by the
_________________________________________________________________
6. In addition to Martin, the district court cited Williams as precedent
obligating an award for liquidated damages. However, the employer in
Williams, like the employer in Martin, violated among other things the
mandatory requirements specifically set forth under the FLSA. In
particular, in Williams, the employer not only failed to pay its employees
the minimum wage rate for all hours worked mandated under Sections
206 (a)(5) & (a)(1), but also failed to maintain accurate records as
explicitly required under Section 211(c) of the FLSA. 747 F.2d at 127.
7. As we previously noted, unlike interpretive bulletins, regulations are
given " ``considerable and in some cases decisive weight.' " Skidmore v.
Swift, 323 U.S. 134, 140 (1944).
12
Act. Moreover, the text of the DOL interpretative bulletin
notes that "[t]here is no requirement in the Act that
overtime compensation be paid weekly." See 29 C.F.R.
S 778.106.
Thus, considering the record before us, and the
circumstances under which the employer acquiesced to the
deferral of overtime payment, there was little, if any, reason
to put the Village on notice that it was potentially violating
the DOL's bulletin. At oral argument, plaintiffs argued that
counsel representing the Village should have inquired on
his own as to whether the parties' delayed payment
arrangement complied with the FLSA. Nothing occurred,
and no one suggested that some further inquiry should be
made, especially since the time scheduled for premium
payment was consensual. Under such circumstances,
counsel's failure to make further inquiry does not
necessarily constitute a lack of good faith and reasonable
conduct on the part of the Village officials.
The anomaly of this litigation is highlighted by an
analysis of the Village's good faith argument. The essence of
this lawsuit arises out of the plaintiffs' persistent request
over many years that their overtime be paid separately and
accumulated. The employer now is being sued by the
plaintiffs for having complied with their request made
through their exclusive bargaining agent, the PBA, during
the course of collective bargaining. Under the Labor
Relations Act, collective bargaining is required to be
conducted in good faith. Instituting this litigation by the
plaintiffs suggests, therefore, that the plaintiffs did not
bargain in good faith. In no time during the negotiation of
successive collective bargaining contracts did the employees
or their Union raise any objection to the deferred payment
of overtime or its legality. Because the deferment of
overtime originated with the plaintiffs and their Union, it is
understandable that the Village had no reason to believe
that the overtime pay could not be legally delayed.
Nonetheless, the plaintiffs argue that the Village took no
steps to ascertain or follow the FLSA; that the Village was
on notice that the FLSA barred it from satisfying the
employees' request for deferment and that it should have
taken affirmative steps to inquire whether deferment was
13
legally permissible. The defendants stipulated that they
have no evidence that they ever researched the legality
under the FLSA of the payment schedule in the collective
bargaining agreement or that they ever asked counsel to
review the legality of overtime payment structure before the
amended complaint was filed. The Village officials and their
counsel had no recollection of ever researching or seeking
advice on the legality under the FLSA or any provision of
the FLSA before the filing of the amended complaint.
Furthermore, the plaintiffs argue that the Village had in
its possession since 1986 an approximately five hundred
page tome entitled "Special Report, FLSA: What It Means,
What To Do," which might have advised it whether
employees could waive their rights. The book attempts to
assist readers in familiarizing themselves with the FLSA
and its impact on states and municipalities after Garcia.
The stipulation of facts refers to four places in the book
with respect to general principles of overtime, its
computation, and questions and answers pertaining to
"cash overtime." Our perusal of the book does not disclose
a single page dedicated to the precise issue before us. The
plaintiffs may be stretching too far when they expect lay
officials of a municipality to thoroughly review, have the
ability to know the substance and legal interpretation of the
contents, and find the answer to this issue, in that huge
volume.
In response, the Village notes its reliance on the collective
bargaining negotiations, as well as the retention by the PBA
of experienced labor counsel and the Village's reliance on
its own counsel during the collective bargaining
negotiations. Therefore, it asserts that it was reasonably
entitled to believe that the provisions of the contract did not
controvert the law, including the FLSA.8 The district court,
_________________________________________________________________
8. In support of its position, the Village cites Featsent v. City of
Youngstown, 70 F.3d 900 (6th Cir. 1995). In that case, as in this,
municipal counsel represented the City in collective bargaining
negotiations and there was no evidence that at any time the City's
attorney advised it that the contractual method of calculating overtime
violated the FLSA. The court stated that "[f]rom its attorney's silence,
the
City was entitled to the reasonable belief that the Agreement did not
14
however, believed that under precedents of this circuit, the
Village had to present proof "that it took any affirmative
steps to determine the FLSA's requirements as to the timing
of overtime payments," and, in the absence of such
evidence, it was "precluded from finding that the Village
had a good faith and reasonable belief that its overtime
payment schedule did not violate the statute." Brooks, et al.
v. Village of Ridgefield Park, et al., unpublished letter order,
issued August 27, 1998 (Cir. No. 96-1079) at 5.
We do not believe that the affirmative action required
under the facts in Martin precludes a determination by the
court of good faith and reasonableness by the Village in the
circumstances of this case in complying with its obligations
under the FLSA. In Martin, the employer was concerned
with the mandatory core requirements of the Act itself on
the delicate and highly important question of whether a
segment of its employees was totally exempt from
compliance with the minimum wage, hour, and record
requirements of the Act. Here, the employer is concerned
with none of the mandatory requirements of the Act, but
only compliance with an interpretive bulletin relating
merely to a consensual deferment of overtime pay only. In
Martin, the employer unilaterally adopted a practice that
would permit it to escape payment required under the
minimum wage and hour provisions of the Act. Here, the
employer fulfilled all of the basic wage and hour
requirements of the Act; the only issue is the timeliness of
overtime payment. In Martin, the employer unilaterally
eliminated a segment of its labor force from the mandatory
provisions of the Act. In this case, the employer acted
consensually with its employees pursuant to collective
bargaining in good faith under the Labor Relations Act. In
this case, deferring payment of the required overtime served
the convenience of the workers and in no way constituted
_________________________________________________________________
violate the law, including the FLSA." Id. at 907. The Featsent court also
cited with approval similar decisions of the Fourth and Fifth Circuits:
Foremost Dairies v. Ivey, 204 F.2d 186, 190 (5th Cir. 1953); Hill v. J. C.
Penney Co., Inc., 668 F.2d 370,375 (5th Cir. 1982); Van Dyke v. Blufield
Gas Co., 210 F.2d 620, 622 (4th Cir. 1954).
15
an attempt to escape the minimum wage and hours
provision of the FLSA.9
Because the district court believed it was precluded from
finding that the Village had acted in good faith and
reasonably believed that its overtime payments did not
violate the Act, the court made no findings of fact on the
issue. We believe that neither Martin nor any of our
precedents preclude the district court in the circumstances
of this case from determining whether the Village acted
reasonably and in good faith in complying with the request
of their employees. Accordingly, we will remand this case to
the district court with instructions to make the requisite
findings of fact on this issue.
IV.
In summary, we hold that the failure of an employer
subject to the FLSA to pay overtime promptly in accordance
with the DOL's 1972 bulletin violates the Fair Labor
Standards Act. However, we believe that Martin and earlier
precedents of this court are inapposite to the facts and
circumstances of this case and do not preclude the trial
court from determining whether the defendant acted
reasonably and in good faith in consensually deferring
payment of the overtime due the plaintiffs. Accordingly, the
judgment of the district court with respect to liquidated
damages will be vacated and the case remanded for
proceedings consistent with this opinion and for the
_________________________________________________________________
9. We note that in Martin, the employer's failure to comply with the
minimum wage, hour and record provisions struck at the objectives and
purpose of the Act - the maintenance of a standard of living "necessary
for the health, efficiency, and general well being of workers." In this
case,
deferring payment of the required overtime served the convenience of the
workers and in no way constituted a threat to their health and general
well being or an attempt to escape the minimum wage, hour and
overtime pay. Granting liquidated damages under such circumstances
may, in the words of the district court, "result in a windfall to the
plaintiffs that runs contrary to the compensatory purposes of this
remedy." 978 F. Supp. at 619.
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requisite findings of fact.
Each side to bear its own costs.
17
RENDELL, Circuit Judge, dissenting:
My difficulty with my colleagues' ruling stems from their
initial determination that the interpretive bulletin at issue
should be engrafted on the statute, so that the Village is
held to have violated "the Act." The majority then follows a
tortuous route to essentially strip the bulletin of its force by
crafting a new element of the "good faith" test whereby if
the violation was based upon a mere interpretative bulletin
and was consensual, the good faith exception may apply.
Instead, I urge that we should conclude, as we did in
Caruso v. Blockbuster-Sony Music Entertainment Centre,
Nos. 97-5693, 97-5764, 1999 WL 185040 (3d Cir. Apr. 6
1999), that an agency's interpretive pronouncement that
effects a substantive change in the law (as opposed to
merely providing an interpretation of an ambiguous
statutory provision) does not have the force of law. By
superimposing the terms of the interpretive bulletin
regarding the time within which overtime payments must
be made on a statute which contains absolutely no time of
payment requirement with respect to overtime, we are not
deferring to an interpretation, but, rather, we are effecting
a substantive change, which, as we pointed out in Caruso,
should occur only after the notice and comment that
precede the enactment of a regulation.1 Id. at *9 ("[I]f an
agency's new interpretation will result in significantly
different rights and duties . . . , notice and comment is
required."); see also Dia Navigation Co. v. Pomeroy, 34 F.3d
1255, 1265 (3d Cir. 1994) (rejecting an agency regulation
imposing new duties and obligations beyond the reach of
the statute without the benefit of notice and comment).
Case law has viewed this particular bulletin as a"guide,"
and I suggest that we should not heighten its significance
by endowing it with the force of law. See Reich v. Interstate
Brands Corp., 57 F.3d 574, 576 (7th Cir. 1995); Beaston v.
Scotland School for Veterans' Children, 693 F. Supp. 234
_________________________________________________________________
1. The concept of "prompt" payment of overtime originated in caselaw.
See Brooklyn Savings Bank v. O'Neill, 324 U.S. 697 (1945). I do not
quarrel with that requirement and believe the payment here could be
said to be "prompt." However, the agency interpretation at issue goes far
beyond "prompt," mandating, in this case, next paycheck swiftness.
18
(M.D. Pa. 1988). Accordingly, I would reverse because there
has been no violation of the Fair Labor Standards Act.
Therefore, I respectfully dissent.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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