Bailey v. County of Georgetown ( 1996 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CHRISTOPHER C. BAILEY; ARMAND
BERUBE; TERRYL J. COBB; JERRY L.
FARR; MARTHA J. HUNT; JAMES R.
JACKSON; KENNETH M. JOHNSON;
DRURY L. KEESLER, JR.; LARRY M.
LEWIS; JOSEPH D. LIVINGSTON;
J. BARRY MARSH; DAVID W.
MCCONNELL; SAMUEL MOUDTRIE, JR.;
EDWARD WAYNE POPE; WALTER
ALLEN POSTON; ISAAC L. PYATT;
THOMAS L. REA; TERRI SISINNI;
GEORGE W. SMITH; WILBERT H.
THACKER, JR.; WILLIAM M.
TISDALE, JR.; GARY W. TODD; ALAN
WAYNE WALTERS; DAVID A. No. 95-1923
WHEELER; WILLIE B. GRATE;
DAVID L. BARR; DARRYEL C. CARR;
LEROY GASQUE; WILLIAM MARK
MULLINS; LAWRENCE B. SMALLS;
DAVID ALTMAN, JR.; TYRUN Y.
GREENE; ANTHONY CRAIG MITCHUM;
JOSEPH E. HOWELL; FRED LYTLE;
ERNEST A. HAMPTON; WALLACE E.
DINGLE; WALLACE C. MEDLIN;
ANTHONY L. FEAGIN; URSULAR L.
ARMSTRONG; DENISE G. KING;
MATTHEW GRAYSON; WILLIAM A.
PIERCE; MICHAEL COX; KENNETH
WAYNE DAVIS;
Detective BENITO REVES; MARYBETH
MORRIS as the Personal
Representative for the Estate of
WILLIAM ROBERT MORRIS, JR.,
Plaintiffs-Appellants,
v.
COUNTY OF GEORGETOWN,
Defendant-Appellee.
Appeal from the United States District Court
for the District of South Carolina, at Charleston.
C. Weston Houck, Chief District Judge.
(CA-94-928-2-2)
Argued: May 6, 1996
Decided: August 29, 1996
Before MURNAGHAN, WILLIAMS, and MOTZ, Circuit Judges.
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Affirmed by published opinion. Judge Murnaghan wrote the opinion,
in which Judge Williams and Judge Motz joined.
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COUNSEL
ARGUED: Michael Kurt Kendree, LAW OFFICES OF WILLIAM
STUART DUNCAN, Georgetown, South Carolina, for Appellants.
Stephen Terry Savitz, GIGNILLIAT, SAVITZ & BETTIS, Columbia,
South Carolina, for Appellee. ON BRIEF: William S. Duncan, LAW
OFFICES OF WILLIAM STUART DUNCAN, Georgetown, South
Carolina, for Appellants. Linda Pearce Edwards, GIGNILLIAT,
SAVITZ & BETTIS, Columbia, South Carolina, for Appellee.
_________________________________________________________________
2
OPINION
MURNAGHAN, Circuit Judge:
I.
On July 6, 1994, Appellants--forty-seven current and former dep-
uty sheriffs1 for Georgetown County, South Carolina--filed an
amended complaint against Georgetown County in the United States
District Court for the District of South Carolina. In their complaint,
Appellants alleged that the County had violated sections 6 and 7 of
the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 206, 207, by
failing to pay them for overtime work at rates required by that statute.
Appellants requested an award of all unpaid overtime wages covering
the preceding three years, as well as liquidated damages, attorneys'
fees, and an injunction prohibiting the County from violating the
FLSA in the future. Appellants demanded and received a jury trial.
The district court bifurcated the case in the manner described below.
Much of the evidence presented during the first stage of the trial
concerned the "fluctuating pay plan" that the County adopted for the
deputies in 1990 after the United States Department of Labor deter-
mined that overtime wages to which the deputies were entitled under
the FLSA were unlawfully being withheld. Linda J. McCants, the
County's payroll supervisor, explained the pay plan as follows. Each
deputy sheriff is paid a specified annual salary; no additional compen-
sation is paid unless the deputy works more than 171 hours during a
given twenty-eight-day cycle. For each hour in excess of 171 hours
worked by a deputy during such a cycle, the deputy receives overtime
pay. The overtime rate to be paid to the deputy is determined by
dividing his or her base salary for that twenty-eight-day period by the
total number of hours worked, yielding an adjusted hourly rate of pay.
An overtime premium of one-half of that adjusted hourly amount is
then paid for each hour worked in excess of 171 hours.2
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1 One of the appellants is the personal representative of a deceased dep-
uty sheriff.
2 McCants gave an example. Suppose a deputy worked 230 hours dur-
ing a 28-day period. By subtracting 171 from 230, one finds that the dep-
3
The principal dispute during the first stage of the trial concerned
whether the deputy sheriffs had clearly understood the manner in
which their overtime pay was being calculated under the plan. The
issue is potentially made significant by section 7 of the FLSA and by
29 C.F.R. § 778.114. Section 7 requires that overtime wages be paid
"at a rate not less than one and one-half times the regular rate at
which [an employee] is employed." 29 U.S.C.§ 207(a) (Supp. 1996).
Section 778.114 describes one of the means by which a salaried
employee's "regular rate" of pay may be determined.3 That regulation
states:
An employee employed on a salary basis may have hours of
work which fluctuate from week to week and the salary may
be paid to him pursuant to an understanding with his
employer that he will receive such fixed amount as straight
time pay for whatever hours he is called upon to work in a
workweek, whether few or many. Where there is a clear
mutual understanding of the parties that the fixed salary is
compensation (apart from overtime premiums) for the hours
worked each workweek, whatever their number, rather than
for working 40 hours or some other fixed weekly work
period, such a salary arrangement is permitted by the [Fair
Labor Standards] Act if the amount of the salary is suffi-
cient to provide compensation to the employee at a rate not
less than the applicable minimum wage rate for every hour
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uty worked 59 overtime hours. Suppose his base salary for that cycle is
$1,739.86. When that amount is divided by the total number of hours
worked (230), one determines that the deputy's adjusted hourly rate is
$7.56. One-half of that amount is $3.78. The amount of overtime pay
owed to the deputy is then determined by multiplying $3.78 by the num-
ber of overtime hours worked (59): $223.02. See also 29 C.F.R.
§ 778.114(b) (providing another example of a fluctuating pay plan).
3 See 29 C.F.R. § 778.109 (stating that "[t]he `regular rate' under the
Act is a rate per hour" and that section 778.114 and other sections "give
some examples of the proper method of determining the regular rate of
pay in particular instances"). See generally Overnight Motor Transp. Co.
v. Missel, 316 U.S. 572, 579-80 (1942) (holding that fluctuating pay
plans do not violate the FLSA, even though under such plans "the longer
the hours the less are the earnings per hour").
4
worked in those workweeks in which the number of hours
he works is greatest, and if he receives extra compensation,
in addition to such salary, for all overtime hours worked at
a rate not less than one-half his regular rate of pay. Since the
salary in such a situation is intended to compensate the
employee at straight time rates for whatever hours are
worked in the workweek, the regular rate of the employee
will vary from week to week and is determined by dividing
the number of hours worked in the workweek into the
amount of the salary to obtain the applicable hourly rate for
the week. Payment for overtime hours at one-half such rate
in addition to the salary satisfies the overtime pay require-
ment [of section 7 of the FLSA] because such hours have
already been compensated at the straight time regular rate,
under the salary arrangement.
§ 778.114(a) (emphasis added).4 The County argued that its pay plan
was of the fluctuating variety described in section 778.114. Appel-
lants contended that they did not clearly understand the manner in
which their overtime pay was calculated, that the requirements of sec-
tion 778.114 had therefore not been met, and that the plan therefore
violated the FLSA's requirement that overtime be paid at the rate of
one and one-half their regular rate of pay.5
After both sides had rested, Appellants asked the district court to
instruct the jury that the County was required to prove that each of
them had clearly understood the manner in which his or her overtime
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4 Under 29 U.S.C. § 207(k) (Supp. 1995), a public agency may pay law
enforcement officers on a 28-consecutive-day basis, rather than on a
weekly basis. When, as in the instant case, a 28-day plan has been
adopted, the words "work period" in the regulations are substituted for
the word "workweek." 29 C.F.R. § 553.233.
5 The deputies believe that section 778.114 represents an exception to
the FLSA, rather than an elaboration upon it. See Appellants' Brief at 25-
26 (citing Burgess v. Catawba County, 805 F. Supp. 341, 348 (W.D.N.C.
1992) (stating that "the `fluctuating workweek' is . . . an exception to the
normal requirements of the FLSA")). Appellants are mistaken. As we
have indicated, section 778.114 simply provides one means by which a
salaried employee's regular rate of pay may be determined.
5
pay was being calculated. The court refused to do so, finding that
such an understanding is not required under the FLSA and section
778.114. Instead, the court told the jurors that it was their task to
determine whether the County had shown, by a preponderance of the
evidence, that each deputy had clearly understood (1) "that he was
paid an annual salary in a certain amount, and that that annual salary
was paid to him in twenty-six biweekly installments of a certain
amount;" (2) "that the work year is divided into thirteen work periods
of twenty-eight consecutive days each, and that no matter how many
or how few hours a deputy worked during any such twenty-eight-day
work period, he or she would be paid only [his or her] annual salary
as straight time during that work period;" and (3) "that the deputy will
be paid an overtime premium for all hours in excess of 171 worked
by that particular deputy during any twenty-eight-day work period."
On March 24, 1995, the jury found that each deputy had clearly
understood each of the three propositions enumerated by the district
court.
In the second stage of the trial, the parties took up the question of
whether the County had known that approximately twenty of the
forty-seven deputies had been working hours that were not being
recorded on their time sheets. If the County had had such knowledge,
the deputies argued, it was required under the FLSA to compensate
them for those unreported hours. After the parties presented testimony
on the matter, the court entered a directed verdict in favor of the
County. The court found that there was "absolutely nothing in this
record, not one iota of evidence that would support knowledge on the
part of the County of a consistent plan of working off-the-clock hours
by the deputy sheriffs of Georgetown County during the period in
question."
The deputies have appealed. They believe that the district court
failed properly to instruct the jury on the issue of what they were
required clearly to understand with respect to the pay plan and that
the district court erred when it entered the directed verdict. Finding
no merit in Appellants' contentions, we affirm.
II.
Appellants have argued that the district court erred when it refused
to instruct the jury that the County was required to prove that each
6
Appellant had clearly understood that his or her hourly overtime pre-
mium was equal to one-half his or her adjusted hourly rate. Putting
the matter another way, Appellants have contended that the County
was required to prove that each Appellant knew that the more over-
time he or she worked, the less he or she would be paid for each of
those overtime hours. Appellants rely principally upon two cases:
Condo v. Sysco Corp., 1 F.3d 599 (7th Cir. 1993), cert. denied, ___
U.S. ___, 114 S. Ct. 1051 (1994), and Highlander v. K.F.C. Nat'l
Management Co., 805 F.2d 644 (6th Cir. 1986).
In Condo, an employer had chosen to pay an employee according
to a fluctuating pay plan. 1 F.3d at 600. The employee's employment
contract explained that plan, providing examples of the manner in
which his rate of pay for overtime work would be calculated. Id. The
issues on appeal were whether section 778.114 could be applied to the
given employment contract and whether the regulation violated the
FLSA. The Seventh Circuit answered the first question in the affirma-
tive and the second question in the negative. Id . at 601-05. Before
addressing those issues, though, the court stated that, under section
778.114, an employee and employer "may reach a mutual understand-
ing [that the employee] will receive a fixed amount as straight-time
pay for whatever hours he is called upon to work . .. and that he will
be compensated for his overtime work at a rate of fifty percent of his
regular hourly pay." Id. at 601. The court then observed that the
requirements of section 778.114 had been met in the case before it
because the employee and the employer "had a mutual understanding
that [the employee] would be paid according to the system that is set
forth in § 778.114 and the employment contract." Id. at 602. The
court further noted, though, that the employee had contended at trial
that he never understood how his wages were calculated; that the dis-
trict court had concluded that the employee did indeed understand
how his wages were calculated; and that the employee had abandoned
the issue on appeal. Id. at n.4. Despite the fact that the Seventh Circuit
expressly stated that the issue was not then before it, Appellants in the
instant case believe that Condo stands for the proposition that, if a
fluctuating pay plan is to be permitted under the regulations, an
employee must understand the manner in which his or her overtime
premium will be calculated.
In Highlander, the Sixth Circuit held that the district court had not
clearly erred when it found that the employee in that case had under-
7
stood the manner in which her overtime compensation was being cal-
culated. 805 F.2d at 648. The court reached that conclusion because
the employee had been given a form which explained the pay system
and provided examples of how that system would be applied; the
employee had signed a statement acknowledging that she had
received such an explanation; the employee had presented no evi-
dence at trial indicating that she had not understood the pay plan; and
the employee's testimony had been incredible. Id . at 645-48. Appel-
lants in the instant case believe that Highlander stands for the propo-
sition that, if an employer wishes to implement a fluctuating pay plan
pursuant to section 778.114, it must obtain from its employees signed
documents indicating that the employees have received an explana-
tion of the plan. Appellants have stated that only five of them signed
such acknowledgements.
"In reviewing the adequacy of the district court's choice of jury
instructions, we accord the district court much discretion and will not
reverse provided that the instructions, taken as a whole, adequately
state the controlling law." Teague v. Bakker , 35 F.3d 978, 985 (4th
Cir. 1994), cert. denied, ___ U.S. ___, 115 S. Ct. 1107 (1995). "The
test of adequacy of instructions . . . is not one of technical accuracy
in every detail[, but is instead] simply the practical one of whether the
instructions construed as a whole, and in light of the whole record,
adequately informed the jury of the controlling legal principles with-
out misleading or confusing the jury to the prejudice of the objecting
party." Spell v. McDaniel, 824 F.2d 1380, 1395 (4th Cir. 1987), cert.
denied, 484 U.S. 1027 (1988).
We hold that the district court's instructions in the case at bar cor-
rectly and adequately articulated the applicable law. Section 778.114
clearly states that, if a fluctuating pay plan is to be used, the employer
and employee must have reached "a clear mutual understanding . . .
that the fixed salary is compensation (apart from overtime premiums)
for the hours worked each workweek, whatever their number, rather
than for working 40 hours or some other fixed weekly work period."
Neither the regulation nor the FLSA in any way indicates that an
employee must also understand the manner in which his or her over-
time pay is calculated. Nor do the regulation and the FLSA in any
way indicate that an employer must secure from its employees written
8
acknowledgements indicating that the employees' pay plan has been
explained to them.
We do not read the Seventh Circuit's decision in Condo or the
Sixth Circuit's decision in Highlander as adopting contrary interpreta-
tions of the statutory and regulatory texts. In Condo, the Seventh Cir-
cuit made clear that the employee had abandoned the"clear mutual
understanding" issue on appeal. In Highlander , the Sixth Circuit
merely held that it was not clear error to conclude that the employee
had clearly understood the manner in which her overtime pay was cal-
culated. The Highlander court did not have occasion to consider what
legal consequences, if any, would flow from an absence of such an
understanding.
To the extent that those or other cases do suggest that employees
whose employer has adopted a fluctuating pay plan must understand
the manner in which their overtime pay is calculated, see, e.g., Duck
v. Wallace Assoc., 438 S.E.2d 269 (S.C. App. 1993); Marshall v.
Hamburg Shirt Corp., 444 F. Supp. 18 (W.D. Ark. 1977), rev'd, 577
F.2d 444 (8th Cir. 1978),6 or that the employer must secure written
acknowledgements that the pay plan had been explained to the
employees, we reject their reasoning as contrary to the plain language
of the FLSA and section 778.114.
III.
In order to be liable for overtime wages under the FLSA, an
employer must have "knowledge, either actual or constructive, of
[that] overtime work." Davis v. Food Lion, 792 F.2d 1274, 1276 (4th
Cir. 1986).7 In order to recover unpaid wages for overtime hours that
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6 In their brief, Appellants have cited both Duck and Marshall. Those
cases are less than persuasive authorities, not only because--if read as
Appellants read them--they are contrary to the plain language of the
FLSA and § 778.114, but also because, in Duck, the plaintiff filed suit
pursuant to state law, rather than federal law, and in Marshall, as the
above citation indicates, the district court's decision was reversed by the
Eighth Circuit.
7 We reached that conclusion in Davis after examining the term "em-
ployed," as it is used in section 7(a)(1) of the FLSA. See 29 U.S.C.
§ 207(a)(1).
9
were not recorded on their time sheets, Appellants were therefore
required to prove that the County knew, either actually or construc-
tively, that they were working unrecorded overtime hours. The district
court entered a directed verdict in favor of the County, having found
"not one iota of evidence that would support knowledge on the part
of the County of a consistent plan of working off-the-clock hours by
the deputy sheriffs."
We must uphold the district court's entry of a directed verdict if,
viewing the evidence in the light most favorable to the deputies, there
could be only "`one reasonable conclusion as to the verdict'" under
the applicable law. Alevromagiros v. Hechinger Co., 993 F.2d 417,
420 (4th Cir. 1993) (quoting Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 250 (1986)). A motion for a directed verdict may be
defeated, and an issue submitted to a jury, only when that issue "is
supported by substantial evidence which shows a probability and not
a mere possibility of proof." Eastern Auto Distrib. v. Peugeot Motors
of Am., 795 F.2d 329, 335 (4th Cir. 1986).
The deputies have argued that the district court erred when it
entered a directed verdict in the County's favor. They have pointed
out that McCants, the County's payroll supervisor, testified that she
had been told by the sheriff's secretary in the summer of 1990 that
some of the deputies were not recording all of their hours, and that,
in late 1992, Deputy Terryl Cobb, then a new employee, told her that
he had not reported "a couple of hours" on his time sheet. (McCants
also testified that, on both occasions, she stated that the deputies
should report all hours worked.) Appellants have also pointed out that
Deputy Isaac Pyatt testified that he told County Councilmen Glenn
Cox and Hughey Walker that deputies were not allowed to record all
of the hours they worked.
The district court held that those apparently isolated incidents were
not sufficient to put the County on notice that, over the three-year
period in question, deputies routinely did not report all of the hours
they worked. We agree. The evidence presented by the deputies falls
short of the degree of proof required to enable a reasonable juror to
conclude that the County knew that the deputies, as a matter of
course, were not recording all of their hours during the period in ques-
tion.
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The judgment below is accordingly
AFFIRMED.
11