Howard, Ronald L. v. City Springfield IL ( 2001 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-1834
RONALD L. HOWARD, SCOTT R. KINCAID,
DONALD M. LOFTUS, et al.,
Plaintiffs-Appellants,
v.
CITY OF SPRINGFIELD, ILLINOIS,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of Illinois.
No. 98 C 3124--Jeanne E. Scott, Judge.
ARGUED SEPTEMBER 28, 2000--DECIDED December 12, 2001
Before MANION, ROVNER, and DIANE P. WOOD,
Circuit Judges.
ROVNER, Circuit Judge. The plaintiffs in
this case are police officers with the
canine unit of the City of Springfield.
The officers are responsible for taking
care of the dogs assigned to them, but
the dogs are owned by the City. Although
the City provides kennels for the dogs,
the officers were encouraged to care for
them at home in order to maintain the
relationship with the dog that makes them
more effective, and each officer elected
to do so.
The collective bargaining agreement
("CBA") between the City and the Police
Benevolent and Protective Association
provides compensation for the "kennel
time"--time spent by the officers caring
for the dogs. Pursuant to that agreement,
the officers are guaranteed the last hour
of paid duty time worked each day for
kennel time, and receive compensation for
one hour of kennel time at 1 times their
regular rate of pay on each regular day
off. The officers are not compensated for
kennel time on vacation, personal or sick
days, or on days in which they use
compensatory time or have in-service
training or training with their dogs.
Moreover, the officers do not receive a
kennel time allotment on days in which
they are called into duty or have their
regular shift extended.
No one contends in this case that the
City has failed to comply with the
provisions of the CBA. The sole issue is
whether the City has violated the Fair
Labor Standards Act ("FLSA") in failing
to compensate the officers for kennel
time on the days not covered in the CBA.
Although the CBA does not require
compensation on those days, that does not
end our inquiry because "congressionally
granted FLSA rights take precedence over
conflicting provisions in a collectively
bargained compensation arrangement."
Barrentine v. Arkansas-Best Freight
System, Inc., 450 U.S. 728, 740-41
(1981).
Although acknowledging that it must
compensate its officers for kennel time
under the FLSA, the City contends that
the CBA provisions are adequate to
compensate the officers for all kennel
time. The City has consistently
maintained that the kennel time takes
less than an hour on many days, and that
by compensating for a full hour on
regular days and regular days off, the
excess compensation on those days covered
the time spent on the unpaid days, thus
averaging out to the required
compensation. The district court held
that there was a genuine dispute of
material fact on whether the compensation
covered all of the kennel time, and
therefore, for purposes of the summary
judgment, it assumed that the payments
were insufficient to cover the non-
compensated days. The court nevertheless
granted summary judgment for the City,
holding that certain premium payments
made by the City could be used to offset
its overtime liability for the unpaid
kennel time and that, as a matter of law,
those premiums exceeded the amount of
overtime liability owed. The officers
appeal that determination on a number of
grounds.
I
First, the officers contend that the
court erred in holding that the two-year
statute of limitations applied to this
action. Under 29 U.S.C. sec. 255(a), the
statute of limitations for FLSA
violations is two years unless the
violation was willful, in which case the
limitations period is three years. The
officers have failed to submit any
evidence that the violation was willful
in this case, and therefore the court
properly held that the two-year period
applied. On appeal, the officers point to
cases such as Nichols v. City of Chicago,
789 F. Supp. 1438, 1445 (N.D. Ill. 1992),
establishing that kennel time is
compensable, and to the CBA which
provided compensation for kennel time on
regular duty days and regular days off.
According to the officers, the prior
cases and the CBA itself establish the
City’s knowledge that it was required to
compensate the officers for all kennel
time, including time spent on personal
days, sick days, and days in which the
officers were conducting in-service
training, using compensatory time, or
training with their dogs. The officers
contend that the City’s failure to do so
constituted at least reckless disregard
of its obligations under the CBA.
The inference that the officers would
have us draw from the CBA provision,
however, is not a reasonable one. Because
the CBA was negotiated, it would require
the corresponding inference that the
union was aware that all of the kennel
time was compensable, and that the union
nevertheless agreed to a provision that
would not provide that compensation which
the law requires. Although the inclusion
of compensation for kennel time in the
CBA may evidence knowledge that the FLSA
requires compensation for that time, it
does not support an inference that the
compensation provided was inadequate to
cover all of the days in which kennel
duties were performed. The district court
properly determined that there was no
genuine issue of fact regarding
willfulness, and that the two-year
limitations period applied.
The officers also assert that the court
erred in holding that they were was not
entitled to injunctive relief. Section
217 of the FLSA provides that courts have
jurisdiction to enter injunctive relief
for violations of the FLSA. In sec. 211,
the FLSA sets forth the authority of the
Secretary of Labor to conduct
investigations and inspections for
violations of the FLSA, and further
states that "[e]xcept as provided in
section 212 of this title, the
Administrator shall bring all actions
under section 217 of this title to
restrain violations of this chapter."/1
Courts facing the issue have uniformly
held that according to that plain
language, the right to seek injunctive
relief rests exclusively with the
Secretary of Labor. See, e.g., United
Food & Commercial Workers Union, Local
1564 of New Mexico v. Albertson’s, Inc.,
207 F.3d 1193, 1197-98 (10th Cir. 2000);
Powell v. Florida, 132 F.3d 677, 678
(11th Cir. 1998) (collecting cases).
Plaintiffs have provided no basis for
departing from that line of cases, and we
hold consistent with those courts that
private parties may not seek injunctive
relief under the FLSA.
II
Turning to the merits of the claim, the
officers also contend that the court
erred in determining which premium
payments could be used to offset the
overtime liability and in applying those
premium credits. First, the officers
assert that payments for court time and
for regular days off should not
constitute premiums which could offset
overtime liability.
Pursuant to the FLSA, an employer may
credit some payments against any overtime
it owes. Specifically, 29 U.S.C. sec.
207(h)(2) provides that "[e]xtra
compensation paid as described in
paragraphs (5), (6), and (7) of
subsection (e) of this section shall be
creditable towards overtime compensation
payable pursuant to this section." Those
subsections include:
(5) extra compensation provided by a
premium rate paid for certain hours
worked by the employee in any day or
workweek because such hours are hours
worked in excess of eight in a day or in
excess of the maximum workweek applicable
to such employee under subsection (a) of
this section or in excess of the
employee’s normal working hours or
regular working hours, as the case may
be;
(6) extra compensation provided by a
premium rate paid for work by the
employee on Saturdays, Sundays, holidays,
or regular days of rest, or on the sixth
or seventh day of the workweek, where
such premium rate is not less than one
and one-half times the rate established
in good faith for like work performed in
nonovertime hours on other days; or
(7) extra compensation provided by a
premium rate paid to the employee, in
pursuance of an applicable employee
contract or collective-bargaining
agreement, for work outside of the hours
established in good faith by the contract
or agreement as the basic, normal, or
regular workday (not exceeding eight
hours) or workweek (not exceeding the
maximum workweek applicable to such
employee under subsection (a) of this
section), where such premium rate is not
less than one and one-half times the rate
established in good faith by the contract
or agreement for like work performed
during such workday or workweek.
29 U.S.C. sec. 207(e)(5)-(7). The City
asserts that those subsections encompass
premium payments made to the officers for
holidays, for court time, and for regular
days off. The officers object to the
inclusion of court time and the payments
made on regular days off.
We turn first to court payments. The CBA
provides that an officer appearing in
court shall receive not less than two
hours at the overtime rate, and that time
spent in court in excess of one-half hour
shall be paid at the overtime rate in
addition to the guaranteed minimum. The
City argues that payments for court time
fall within sec. 207(e)(7), and may
therefore be used to offset any overtime
liability. Section 207(e)(7) encompasses
premium pay required by the CBA for work
outside of the hours established in good
faith by the CBA as the basic, normal, or
regular workday, where the premium rate
is at least one and one-half times the
rate provided for like work during the
workday. There are a number of problems
with holding as a matter of law that the
payments for court time fall within this
provision. First, no party has pointed to
any language in the CBA establishing
certain hours as the basic, normal or
regular workday, and the statutory
provision explicitly limits itself to in
stances in which that workday is
established by contract or agreement.
Second, the premium pay for court time
occurs regardless of whether that court
time falls within the hours established
as part of the regular day. In fact, a
common sense view would suggest that
court time generally falls within a
regular workday. Rather than focus on the
language of the statute, the parties get
bogged down in the language of 29 C.F.R.
sec. 778.204 interpreting this provision.
We note that sec. 778.204 is an
interpretive bulletin from the Department
of Labor, as are all sections in Part
778. See 29 C.F.R. sec. 778.1. As an
interpretive regulation, it does not have
the force of binding law. Shaw v.
Prentice Hall Computer Publishing, Inc.,
151 F.3d 640, 642 (7th Cir. 1998). It is
therefore not entitled to deference,
although courts may rely on it as
persuasive evidence both of Congress’s
legislative and the Secretary’s
regulatory intent. Id.
That interpretive regulation, in
relevant part, explains the statutory
language as follows:
(b) Premiums for hours outside
established working hours. To qualify as
an overtime premium under section 7(e)(7)
the premium must be paid because the work
was performed during hours "outside of
the hours established * * * as the basic
* * * workday or workweek" and not for
some other reason. Thus, if the basic
workday is established in good faith as
the hours from 8 a.m. to 5 p.m. a premium
of time and one-half paid for hours
between 5 p.m. and 8 a.m. would qualify
as an overtime premium. However, where
the contract does not provide for the
payment of a premium except for work
between midnight and 6 a.m. the premium
would not qualify under this section
since it is not a premium paid for work
outside the established workday but only
for certain special hours outside the
established workday, in most instances
because they are undesirable hours.
Similarly, where payments of premium
rates for work are made after 5 p.m. only
if the employee has not had a meal period
or rest period, they are not regarded as
overtime premiums; they are premiums paid
because of undesirable working
conditions.
29 C.F.R. sec. 778.204(b). The parties
devote much time to arguing whether court
time can be considered "undesirable." The
district court also took that approach,
declaring that "[b]y its very language,
sec. 778.204(b) addresses premiums paid
’only for certain special hours outside
the established workday, in most
instances because they are undesirable
hours . . . .’" [emphasis in dist. ct.
order] Order at 21. The court concluded
that "[c]ourt time payments are not tied
to ’certain special hours outside the
established workday,’" and "[t]hus, the
City may use court time premiums to
offset the Plaintiffs’ FLSA claims
pursuant to sec. 207(e)(7)." Id. That
approach, however, elevates the examples
of cases that fall outside the statute
into the rule for determining what cases
fall within it. The appropriate test here
is not whether the payments for court
time are made because the hours were
undesirable or because they were certain
special hours. The test is set forth in
the statute, and is whether the payments
are made because the hours are outside
the regular workday. The examples in the
interpretive regulation merely clarify
what type of payments made for hours
outside the regular workday may still not
qualify. The statute is clear that the
reason for the payment must be that the
hours fall outside the regular
established workday. Payments made for
another reason will not fall within sec.
207(e)(7). Therefore, payments made for
only the most undesirable hours such as
midnight to six, or for periods of time
in which a person must work without a
meal break, are payments that do not fall
within that provision. In those examples,
a factor other than the regular work
hours motivated the payment. That does
not mean, however, that those examples
are exhaustive. A payment can fall
outside sec. 207(e)(7) even if made for a
reason other than the undesirability of
the work; the test is whether the
payments were made because the work fell
outside the regular hours. Here, the
payments were made for time spent in
court. Whatever the motivation was for
that payment, there is no evidence here
that the payments were made because it
fell outside the regular workday
established by contract. As such, it does
not fall within sec. 207(e)(7) of the
statute. The City does not assert that
the court time payments fall within any
other provision, and therefore the
district court erred in holding that the
City could use the court time payments to
offset any overtime liability it might
incur.
The officers also argue that payments
made for work performed on their regular
days off do not constitute creditable
premiums. Section 207(e)(6) provides that
premium payments made on regular days off
may be used as offsets "where such
premium rate is not less than one and
one-half times the rate established in
good faith for like work performed in
non-overtime hours on other days."
[emphasis added] The officers received 1
times their regular pay on those days,
but inexplicably contend that such
compensation does not become a premium
rate until it exceeds 1 times the
employee’s regular rate. That is simply
irreconcilable with the plain language of
the statute, which excludes only payments
less than, not equal to, 1 times the
regular rate. Because this payment is
equal to 1 times the regular rate, it
falls within the statutory provision, and
may be used to offset the overtime
liability. See Reich v. Interstate Brands
Corp., 57 F.3d 574, 578 (7th Cir. 1995);
Nolan v. City of Chicago, 125 F. Supp. 2d
324, 331 (N.D. Ill. 2000).
The officers fare better with their
argument that premium pay credits should
only offset overtime liabilities that
accrued in the same time period. As set
forth above, the statute provides in
relevant part that premium payments
described in sec.sec. 207(e)(5),(6), &
(7) "shall be creditable towards overtime
compensation payable pursuant to this
section." The City maintains that it can
use all premium payments made during the
years in issue to offset all overtime
liability, regardless of when the
payments were made and when the overtime
was owed. The officers seek a more narrow
construction of the statute that would
allow such overpayments made during a
given work period to be credited against
amounts due during that same work period.
The courts that have addressed this issue
have taken divergent views, with no
consensus at this point. Compare, e.g.,
Abbey v. City of Jackson, 883 F. Supp.
181 (E.D. Mich. 1995) with Roland
Electrical Co. v. Black, 163 F.2d 417
(4th Cir. 1947) and Nolan, 125 F. Supp.
2d at 331-33. The district court here
adopted the City’s position, holding that
all such premium payments could be used
to offset the total liability. Because
that amount exceeded the overtime owed,
the court granted summary judgment for
the City.
The court’s decision was based in part
on its conclusion that if the City was
restricted to using premium pay offsets
only in the pay period in which they were
earned, the officers would receive an
undeserved windfall. We disagree. In
fact, if the City were able to use
premium payments in the manner
contemplated by the district court, the
City would be the recipient of the
windfall, and in fact would be placed in
a substantially better position than if
it had complied with the overtime
requirements of the FLSA all along. An
example may help illustrate this point.
If the City complied with the FLSA all
along, it would have paid the overtime
each pay period as it accrued. Subsequent
premiums payments could not be used to
reduce those overtime payments, because
they would have already have been
calculated and paid. For instance, a
premium payment made for the Thanksgiving
holiday would not be used by a conforming
employer to offset overtime paid back in
March. But that is precisely what the
City seeks to do here. It is contrary to
the language and the purpose of the
statute.
The credit provision must be read in the
context of the statute as a whole, which
is designed to protect workers from the
twin evils of excessive work hours and
substandard wages. Barrentine, 450 U.S.
at 739; Monahan v. County of
Chesterfield, Virg., 95 F.3d 1263, 1267
(4th Cir. 1996). Toward that end, the
statute requires the payment of time and
a half for overtime work. Courts have
long interpreted the FLSA as requiring
that those payments be timely made.
Brooklyn Savings Bank v. O’Neil, 324 U.S.
697, 703-07 (1945); Calderon v. Witvoet,
999 F.2d 1101, 1107 (7th Cir. 1993);
Rogers v. City of Troy, New York, 148
F.3d 52, 55 (2d Cir. 1998). Thus, the
statute is violated even if the employer
eventually pays the overtime amount that
was due. See id. In fact, that
requirement may not be waived, and "even
the workers’ enthusiastic assent to
deferred payment--a form of employer-held
savings account--is ineffectual."
Calderon, 999 F.2d at 1107. That
principle is also found at 29 C.F.R. sec.
778.106, which provides in relevant part:
The general rule is that overtime
compensation earned in a particular
workweek must be paid on the regular pay
day for the period in which such workweek
ends. When the correct amount of the
overtime compensation cannot be
determined until some time after the
regular pay period, however, the
requirements of the FLSA will be
satisfied if the employer pays the excess
overtime compensation as soon after the
regular pay period as is practicable.
Payment 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
payday after such computation can be
made.
Although that regulation is not entitled
to deference, Shaw, 151 F.3d at 642, it
is nonetheless persuasive as it is
consistent with the interpretation of the
FLSA that the courts have reached.
Therefore, under the statute, overtime
generally must be calculated and paid on
a pay period by pay period basis. The
City, however, advocates a method of pay
ment that would allow it to pay its
overtime obligations at a time far
removed from when that overtime amount
was due. That is inconsistent with the
statutory requirement that overtime
payments must be timely made.
The City’s argument would eviscerate the
protection intended by the overtime
payment requirement. Consider an extreme
example of the potential effects of this
interpretation. An employer could require
an employee to work long overtime hours
without the FLSA-mandated overtime
payments in one year in which the economy
was depressed, thus depriving the
employee of both the quality of life
sought by the FLSA and the ability to
supplement her income with a second job.
Then, in the next year in which economic
conditions are improved, the employer
could pay premiums to the employee, and
then use those premiums to offset the
overtime liability. Or an employer
engaged in the filing of tax returns
could require substantial overtime in the
tax season without incurring the costs of
that overtime at that time, and could
"pay" for that overtime with the double
or triple time holiday pay in its
contract for the rest of the year. In
essence, the employer could manipulate
the payments to suit its economic
concerns. That interpretation is
completely divorced from the purpose of
the FLSA. Accord Nolan, 125 F. Supp. 2d
at 331-33. The language of the statute
provides that those premium payments are
creditable "towards overtime compensation
payable pursuant to this section."
Because the statute contemplates that
overtime will be paid and calculated on a
pay period basis, it is consistent with
that language to calculate and apply
credits in the same manner. See also 29
C.F.R. sec. 778.202(c) (credits may be
given for daily compensation "against the
overtime compensation which is due under
the statute for hours in excess of 40 in
that workweek" [emphasis added]).
Other regulations similarly point to
that conclusion. For instance, 29 C.F.R.
sec. 778.104 provides that an employer
may not average the number of hours
worked over two weeks in order to avoid
paying overtime. Therefore, if an
employee works 20 hours one week and 60
the next, theemployer owes overtime in
the second week even though the two weeks
average to 40 hours each. Just as that
averaging would constitute an end-run
around the overtime requirement, the
City’s attempt to apply credits whenever
paid to all overtime liability attempts
to accomplish the same result.
Accordingly, the district court erred in
allowing the blanket application of all
premium payments to all overtime
liabilities, and in permitting the City
to credit court time payments against
overtime liability. We therefore remand
the case in order for the court to
recalculate the damages consistent with
this opinion. The parties will bear their
own costs of this appeal.
AFFIRMED IN PART,
REVERSED IN PART, AND REMANDED
FOOTNOTE
/1 Section 212 is inapplicable here because it
applies to child labor provisions, and directs
the Administrator to bring all actions for in-
junctive relief "subject to the direction and
control of the Attorney General."
MANION, Circuit Judge, concurring in part and
dissenting in part. Although I agree with most
of the court’s analysis and conclusions of law in
this case, I write separately to express my
disagreement with the court’s determination that
the City may use premium pay credits to offset
liabilities only when they occur during the same
pay period. On this issue, I respectfully dis-
sent.
Neither the provisions of sec. 207(h)(2) of the
FLSA, nor its accompanying regulations, require
such a limitation. The reasoning articulated in
Abbey v. City of Jackson, 883 F. Supp. 181, 186-
87 (E.D. Mich. 1995),/1 makes more sense. There,
the district court, presented with this very
issue, held that:
Forcing an employer, who has given a premium rate
of pay for overtime, to forego the receipt of
credit and to pay additional overtime punishes
the employer without regard to whether it was
attempting to avoid its obligation to adequately
compensate employees for extra hours worked.
Plaintiffs have not pointed to any regulations,
statutes or current cases, which state that there
is a congressional will to penalize an employer
that inadvertently fails to follow FLSA by, in
effect, assessing civil money damages beyond
those enunciated in 29 U.S.C. sec. 216(b). Con-
versely, there is a clear congressional intent to
allow an employer to offset premium rates of pay
against overtime owed. 29 U.S.C. sec. 207(h). If
I were to follow plaintiffs’ reasoning, plain-
tiffs would receive a windfall and the purposes
and goals of the statute would not be served.
Therefore, defendant may offset the . . . premium
payments against overtime owed.
This reasoning is especially persuasive in this
case where, as the majority acknowledges, the
officers have failed to submit any evidence that
the City willfully violated the FLSA. I would,
therefore, affirm the district court’s decision
allowing the City to use the premium payments
(i.e., those recognized by this court) to offset
any overtime compensation owed to the officers
under the FLSA, and remand the case back to the
court for a determination as to whether summary
judgment was still appropriate in light of this
decision.
FOOTNOTE
/1 See also Alexander v. United States, 32 F.3d
1571, 1577 (Fed. Cir. 1994) (premium pay is
creditable toward any overtime compensation due
under the FLSA); Kohlheim v. Glynn County, Geor-
gia, 915 F.2d 1473, 1481 (11th Cir. 1990) (em-
ployer should be allowed to set off "all" previ-
ously paid overtime premiums against overtime
found to be due and owing under the FLSA).