Flood v. New Hanover County ( 1997 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
JULIA FLOOD; DRAKE FOX; ROBERT
HOWLETT; KATHERINE JOHNSON;
KAREN KEROACK; ANTHONY MARTIN;
JAMES MCLEAN;JOHN MCMILLIAN;
DAVID MILLER; LORA MILLER;
MICHAEL NAVE; POWELL PHILLIPS;
BOBBY PIERCE; JACK POPLIN; DAVID
PRITCHARD; ROBERT PUGH; JOHN
SCIALES; BRIAN SIMONSON; PAMELA
STEWART; RONALD WAHAB; STANLEY
No. 97-1099
G. WARDRIP, JR.; SHEILA
YOUNGBLOOD,
Plaintiffs-Appellants,
and
RUSSELL ASHLEY,
Plaintiff,
v.
NEW HANOVER COUNTY,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of North Carolina, at Wilmington.
James C. Fox, Chief District Judge.
(CA-96-123-7-F-3)
Argued: July 15, 1997
Decided: September 22, 1997
Before MURNAGHAN, Circuit Judge, and BUTZNER and
PHILLIPS, Senior Circuit Judges.
_________________________________________________________________
Affirmed by published opinion. Judge Murnaghan wrote the opinion,
in which Senior Judge Butzner and Senior Judge Phillips joined.
_________________________________________________________________
COUNSEL
ARGUED: Gary Keith Shipman, SHIPMAN & ASSOCIATES,
L.L.P., Wilmington, North Carolina, for Appellants. Andrew William
Olsen, Assistant County Attorney, OFFICE OF THE COUNTY
ATTORNEY, Wilmington, North Carolina, for Appellee.
_________________________________________________________________
OPINION
MURNAGHAN, Circuit Judge:
Plaintiffs-Appellants, a group of present or former full-time emer-
gency medical service ("EMS") personnel (collectively, the "Plain-
tiffs"), filed suit against their employer, Defendant-Appellee New
Hanover County, North Carolina (the "County") for violations of the
Fair Labor Standards Act ("FLSA"), 29 U.S.C.A.§§ 210-19 (West
1965, 1985 & Supp. 1997). The district court dismissed the Plaintiffs'
claims pursuant to Federal Rule of Civil Procedure 12(b)(6) for fail-
ure to state a claim upon which relief may be granted. For the reasons
stated below, we affirm the district court's judgment.
I.
The Plaintiffs all work a nine-day regularly recurring cycle of
24.15 hours on-duty, 24 hours off-duty, 24.15 hours on-duty, 24 hours
off-duty, 24.15 hours on-duty, followed by 96 consecutive hours off-
duty. Although their work schedule never changes, they work a differ-
ent number of total hours each week depending upon the number of
scheduled work days that fall within the week. Thus, their workweek
ranges between 48.3 hours, 56.3 hours, 64.45 hours, and 72.45 hours,
and their amount of overtime consequently ranges between 8.3 hours,
16.3 hours, 24.45 hours, and 32.45 hours. The County also requires
the Plaintiffs to attend regularly scheduled shift meetings and continu-
ing education seminars to maintain their EMS certifications. The
2
County compensates the Plaintiffs for the time that they spend at the
meetings and seminars, and it adds the hours attributable to the meet-
ings and seminars to the Plaintiffs' regularly scheduled hours for that
week.
At all relevant times, the County has compensated the Plaintiffs
pursuant to a "fluctuating workweek" payment method. That method
allows employers to compensate employees at a one-half time rate for
overtime hours, rather than the standard one and one-half time rate,
if the employment meets certain requirements. See 29 C.F.R.
§ 778.114 (1996). The County gave each of its employees a memo-
randum that clearly explained the fluctuating workweek payment
method and that provided examples of how the County would calcu-
late employees' salaries pursuant to that method. The County required
each employee to sign the memorandum under a printed statement
that reads, "The Fluctuating Work Week 29 C.F.R.§ 778.114 of the
Fair Labor Standards Act has been explained to me and I have had
the opportunity to have any questions answered."
On August 5, 1996, the Plaintiffs filed suit against the County.
They claimed that the County's compensation plan did not meet the
requirements of the fluctuating workweek payment method. They
sought declaratory relief, injunctive relief, backpay for unpaid over-
time compensation, liquidated damages, and attorney's fees. The
County subsequently filed a motion to dismiss the Plaintiffs' suit pur-
suant to Federal Rule of Civil Procedure 12(b)(6) for failure to state
a claim upon which relief may be granted. The district court granted
the County's motion to dismiss on the ground that the County's com-
pensation plan satisfied all of the requirements of the fluctuating
workweek payment method.
II.
We review the district court's decision to grant the motion to dis-
miss de novo. See Brooks v. City of Winston-Salem, North Carolina,
85 F.3d 178, 181 (4th Cir. 1996). We must accept the factual allega-
tions in the Plaintiffs' complaint and must construe those facts in the
light most favorable to the Plaintiffs. See Estate Constr. Co. v. Miller
& Smith Holding Co., 14 F.3d 213, 217-18 (4th Cir. 1994). We may
affirm the district court's dismissal only if it appears beyond doubt
3
that the Plaintiffs can prove no set of facts in support of their claim
that would entitle them to relief. See Rogers v. Jefferson-Pilot Life
Ins. Co., 883 F.2d 324, 325 (4th Cir. 1989).
III.
As a general rule, the FLSA provides that an employer may not
employ an employee for a workweek longer than forty hours unless
it pays its employee one and one-half times the employee's "regular
rate" for all hours in excess of forty. See 29 U.S.C.A. § 207(a)(1);
Monahan v. County of Chesterfield, Virginia, 95 F.3d 1263, 1267 (4th
Cir. 1996). The employee's "regular rate" is the hourly rate that the
employer pays the employee for the normal, nonovertime forty-hour
workweek. See Walling v. Youngerman-Reynolds Hardwood Co., 325
U.S. 419, 424 (1945). If the employer employs an employee on a
weekly salary basis, it determines the employee's regular hourly rate
of pay by dividing the weekly salary by the number of hours that it
intends the weekly salary to compensate. See 29 C.F.R. § 778.113(1996).1
However, the Department of Labor's (the "DOL") implementing
regulations provide an alternative way for employers to calculate the
regular rate of pay for certain salaried employees. Section 778.114 of
the implementing regulations provides that a salaried employee whose
hours fluctuate from week to week can reach a mutual understanding
with the employer that he or she will receive a fixed amount of com-
pensation per week, regardless of the number of hours that the
employee works in that week, and that he or she additionally will
receive a rate of fifty percent of the regular hourly pay for any hours
over forty worked in that week. See 29 C.F.R. § 778.114(a). The
employee must clearly understand that the fixed weekly amount com-
_________________________________________________________________
1 Thus, the regulations provide that if an employer pays its employee
$182.70 per week with the understanding that the salary compensates the
employee for a regular workweek of thirty-five hours, the employee's
regular rate of pay is $182.70 divided by thirty-five hours, or $5.22 per
hour. When the employee works overtime, the employer must pay the
employee $5.22 for each of the first forty hours and $7.83 (one and one-
half times $5.22) for each additional hour thereafter. See 29 C.F.R.
§ 778.113.
4
pensates for all of the hours worked in that week, rather than a set
number of hours as in the case of a regular salaried employee hereto-
fore described, and that he or she will receive that amount every week
regardless of whether he or she actually works a long or a short work-
week. Id. The employer calculates the regular hourly pay by dividing
the employee's fixed weekly pay by the total number of hours that the
employee worked during the week. Id.2 The fixed amount must be
sufficient to provide compensation at a regular rate not less than the
minimum hourly rate, and the overtime premium cannot be less than
one-half of the regular rate. Id. Since the employer has already paid
the employee a regular rate of pay for all of the hours that the
employee worked, including the overtime hours, it only has to pay an
additional one-half time pay premium for the overtime hours. Id.;
Monahan, 95 F.3d at 1280-81.
Thus, under the "mathematical payment structure provided under
[the fluctuating workweek] method of overtime compensation, the
more the employee works and the more overtime the employee logs,
the less he or she is paid for each additional hour of overtime."
Monahan, 95 F.3d at 1280. However, section 778.114 does not repre-
sent an "exception" to FLSA. It merely provides an alternative means
by which an employer can determine its employees' regular and over-
time rate of pay. See Bailey v. County of Georgetown, 94 F.3d 152,
154-55 n.5 (4th Cir. 1996).
Here, the County pays the Plaintiffs pursuant to the fluctuating
workweek payment method. The starting salary for EMS personnel is
_________________________________________________________________
2 Thus, the regulations provide that if an employer pays its employee
$250.00 per week with the understanding that the salary compensates the
employee for all hours that the employee works each week, and the
employee works forty-four hours in one particular week, the employee's
regular rate of pay is $250.00 divided by forty-four hours, or $5.68 per
hour. The employer must pay the employee $261.36[$250.00 fixed sal-
ary plus $11.36 (one-half times $5.68 for each of the four hours of over-
time)] for that forty-four hour week. When the employee works fifty
hours in one particular week, the employee's regular rate of pay is
$250.00 divided by fifty hours, or $5.00 per hour. The employer must
pay the employee $275 [$250.00 fixed salary plus $25.00 (one-half times
$5.00 for each of the ten hours of overtime)] for that week. See 29 C.F.R.
§ 778.114(b).
5
$18,574. The employee therefore receives a fixed, weekly salary of
$357.20 ($18,574 divided by fifty-two weeks) regardless of the num-
ber of hours that the employee works in any particular week. Pursuant
to section 778.114, the County then adds fifty percent of the employ-
ee's regular rate of pay for each hour over forty that the employee
works. The County determines the employee's regular hourly rate by
dividing the fixed, weekly amount by the total number of hours that
the employee works in a particular week. The County undisputedly
calculates the Plaintiffs' salaries correctly pursuant to the section
778.114 method. The Plaintiffs argue, however, that the County must
pay them the standard overtime rate of one and one-half times their
regular rate because it does not meet the requirements of section
778.114.
The language of section 778.114 suggests that an employer must
meet the following requirements before it can pay an employee pursu-
ant to the fluctuating workweek method: 1) the employee's hours
must fluctuate from week to week; 2) the employee must receive a
fixed weekly salary that remains the same regardless of the number
of hours that the employee works during the week; 3) the fixed
amount must be sufficient to provide compensation at a regular rate
not less than the legal minimum wage; 4) the employer and the
employee must have a clear, mutual understanding that the employer
will pay the employee the fixed weekly salary regardless of the hours
worked; and 5) the employee must receive a fifty percent overtime
premium in addition to the fixed weekly salary for all hours that the
employee works in excess of forty during that week. See 29 C.F.R.
§ 778.114; Condo v. Sysco Corp., 1 F.3d 599, 601-02 (7th Cir. 1993).
The Plaintiffs argue that the County may not use the fluctuating
workweek method because their hours do not "fluctuate" from week
to week. Although the Plaintiffs admittedly work different hours
every week, i.e., either 48.3, 56.3, 64.45, or 72.45 hours, they contend
that their hours do not fluctuate because they work pursuant to a writ-
ten, fixed, regular, repeating, and perpetual schedule. They would
define the term "fluctuate" in section 778.114 as a requirement of
utter unpredictability. According to the Plaintiffs, an employee's
hours only fluctuate if the employee works different hours every week
and the employer does not set a fixed, predictable schedule.
6
However, the agency charged with administering the FLSA has
rejected the Plaintiffs' argument. The Wage and Hour Division of the
DOL has clearly stated its view that section 778.114 does not require
an unpredictable schedule. In a letter ruling, the DOL determined that
an employer could use the fluctuating workweek method to pay
employees who worked alternating forty-three and fifty-one hour
workweeks pursuant to a fixed schedule. See DOL Administrative
Letter Ruling of May 18, 1966, reprinted in Gilbert J. Ginsburg, et
al., Fair Labor Standards Handbook app. III at 104 (1996). The DOL
noted that although employers generally utilize the fluctuating work-
week method when their employees work "a varying or irregular
number of hours in a workweek," the fixed, alternating workweeks in
that case met the requirements of section 778.114. Id. at 105.
Although the DOL's letter ruling does not bind the Court, it does
"constitute `a body of experienced and informed judgment,'" and we
give it substantial weight. Schultz v. W.R. Hartin & Son, Inc., 428
F.2d 186, 191 (4th Cir. 1970) (quoting Skidmore v. Swift & Co., 323
U.S. 134, 140 (1944)).
The United States District Court for the District of South Carolina
has also rejected the Plaintiffs' argument. In Roy v. County of Lexing-
ton, South Carolina, 948 F.Supp. 529, 531 (D.S.C. 1996), the plain-
tiffs, current and former EMS employees, worked a three-day
regularly recurring cycle of 24.5 hours on-duty followed by 47.5
hours off-duty. The court held that the employees' hours "fluctuated"
for the purposes of section 778.114 even though the employees
worked under a regular, perpetual schedule. The court explained:
The employees . . . argue that § 778.114 is not applicable
because the workweek did not "fluctuate" for purposes of
the regulation. As they note, they worked on a regularly
recurring three-day cycle of twenty-four and one-half hours
on and forty-seven and one-half hours off. Thus, even
though the regular hours they worked in a week were not the
same, their regular hours over a period of weeks were pre-
dictable, and they could rely on the cycle to determine when
they would work on any particular date in the future.
However, the fact that the cycle recurs does not mean that
the hours do not fluctuate. It is not necessary for regular
hours to be sporadic for the regulation to be applied; it is
7
sufficient that the regular hours vary from one workweek to
another, as they do here. The Court therefore rejects this
argument.
Id. at 531 n.1 (emphasis added).3
We similarly reject the Plaintiffs' argument. Even though the Plain-
tiffs work pursuant to a fixed schedule, their hours fluctuate, i.e., they
vary, from workweek to workweek. Therefore, since the Plaintiffs'
hours fluctuate, the County pays them a fixed weekly salary of
$357.20 regardless of the number of hours that they work, and the
County undisputedly satisfies the other requirements of section
778.114, the district court correctly dismissed the Plaintiffs' suit. The
Plaintiffs alleged no claim upon which relief may be granted.
IV.
Accordingly, we affirm the district court's judgment.
AFFIRMED
_________________________________________________________________
3 But see Burgess v. Catawba County, 805 F.Supp. 341, 348 (W.D.N.C.
1992) (noting in dicta that an EMS employee's hours did not fluctuate
for the purposes of section 778.114 when he worked a regular schedule
of twenty-four hours on-duty followed by forty-eight hours off-duty).
8