Wilson v. City of Charlotte

ERVIN, Chief Judge,

dissenting:

I respectfully dissent.

I cannot agree with the conclusion reached by the majority in interpreting section 207(o). The majority’s position has the inequitable result of resting the rights of public employees under the federal law that purports to protect them, the Fair Labor Standards Act (“the Act”), on the idiosyncracies of state legislatures. Under the majority’s view, public employees in states like North Carolina, which prohibit public agencies from engaging in collective bargaining, have fewer rights than those in states that do not have similar prohibitions. I do not think that Congress intended for the protections afforded by the Act to hinge upon the accident of the state in which the employee happens to reside. I also do not think that Congress intended to allow a public employer to force an individual employee to accept compensatory time instead of cash for overtime worked as a condition of taking the job when the employees have designated a representative to negotiate jointly for them. Such an “agreement” is nothing of the sort; it is in reality a unilateral decision by the employer without employee consultation. If the public agency cannot or will not, for whatever reason, deal with the representative chosen by the employees, then it simply loses its right to use compensatory time in lieu of cash under the terms of the Act.

The majority reaches its result by making an ambiguous statute clear through judicial fiat. As the Tenth Circuit recognized, section 207(o) is ambiguous. See International Ass’n of Firefighters, Local 2203 v. West Adams County Fire Protection Dist, 877 F.2d 814, 81617 & n. 1 (10th Cir.1989). The majority assumes that if a public agency does not enter into an agreement with the representative of its employees to provide compensatory time instead of paid overtime pursuant to subsection 207(o )(2)(A)(i), it may enter into such an agreement with its individual employees pursuant to subsection 207(o)(2)(A)(ii). Maj. op. at 1394. Without discussion, the majority reads subsection (ii), which encompasses “employees not covered by sub-clause (i),” to refer unambiguously to employees whose representative has not reached an agreement with the agency, rather than, as is equally plausible, to employees who have not designated a representative to reach an agreement with the agency.

Answering the question of whether “employees not covered by subclause (i)” refers to those who lack an agreement or those who lack a representative disposes of this case. If the phrase refers to the lack of an agreement, as the majority assumes, the fact that the Fire Fighters did not reach an agreement with the City before April 15, 1986 means that the City’s regular practice of giving only compensatory time constitutes a valid agreement with those employees pursuant to subsection (ii), and the lack of a subsequent agreement means that the City may force individual employees hired after that date to agree to the same policy as a condition of employment. If the phrase refers to the lack of a representative, however, the fact that the Fire Fighters have designated a representative, Local 660, means that the City can only award compensatory time by reaching an agreement with this representative pursuant to subsection (i). The language of this poorly drafted statute simply does not indicate which reading is the correct one.

We must therefore look to other sources to determine the proper construction of section 207(o)(2). The Secretary of Labor (“the Secretary”) has promulgated a regulation interpreting this section. See 29 C.F.R. §§ 553.20-553.28 (1991). Because the statute is ambiguous on the issue, we are bound to accept the Secretary’s interpretation if it is “based on a permissible construction of the statute.” Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984). It matters not if the Secretary’s construction was not the only permissible one or even if we would have reached a contrary interpretation had we had considered the matter de novo. Id. at 843 n. 11, 104 S.Ct. 2778, 2781-82 n. 11. In either case, the Secretary’s interpretation controls.

In relevant part, the regulation provides:

(a) General. (1) As a condition for use of compensatory time in lieu of overtime payment in cash, section 7(o)(2)(A) of the Act requires an agreement or understanding reached prior to the performance of work. This can be accomplished pursuant to a collective bargaining agreement, a memorandum of understanding or any other agreement between the public agency and representatives of the employees. If the employees do not have a representative, compensatory time may be used in lieu of cash overtime compensation only if such an agreement or understanding has been arrived at between the public agency and the individual employee before the performance of work. No agreement or understanding is required with respect to employees hired prior to April 15, 1986, who do not have a representative, if the employer had a regular practice in effect on April 15, 1986, of granting compensatory time off in lieu of overtime pay.

(b) Agreement or understanding between the public agency and a representative of the employees. (1) Where employees have a representative, the agreement or understanding concerning the use of compensatory time must be between the representative and the public agency either through a collective bargaining agreement or through a memorandum of understanding or other type of oral or written agreement. In the absence of a collective bargaining agreement applicable to the employees, the representative need not be a formal ' or recognized bargaining agent as long as the representative is designated by the employees.

(c) Agreement or understanding between the public agency and individual employees. (1) Where employees of a public agency do not have a recognized or otherwise designated representative, the agreement or understanding concerning compensatory time off must be between the public agency and the individual employee and must be reached prior to the performance of work.

29 C.F.R. § 553.23 (1991) (emphasis added).

This regulation’s meaning is plain in two important respects. First, if the employees have selected a representative, an employer may use compensatory time only pursuant to an agreement between the employer and the representative. The concurring opinion in this case concedes that this is “a plausible reading of the regulation,” but suggests an alternative interpretation and states that, if its alternative reading were not available, it would invalidate the regulation as contrary to the statute. Cone. op. at 1394. I submit that this reading is the only logical way to interpret the regulation, and the regulation read this way is not contrary to the statute because it is consistent with one of the two equally possible readings of the statute.

The regulation must control if it is reasonable. Chevron, supra. The legislative history clearly supports the Secretary’s construction of the statute. See S.Rep. No. 159, 99th Cong., 1st Sess. 10-11 (1985), reprinted in 1985 U.S.C.C.A.N. 658-59 [“Senate Report”] (“Where employees have a recognized representative, the agreement or understanding must be between that representative and the employer;” employer’s regular practice may constitute an agreement in the case of employees who have no representative); H.R.Rep. No. 331, 99th Cong., 1st Sess. 20-21 (1985), reprinted in 13656 U.S.Cong. Serial Set (Oct. 24, 1985) [“House Report"] (“Where employees have selected a representative, ... the agreement or understanding must be between the representative and the employer;” regular practice constitutes agreement where employees lack representative). Therefore, the Secretary’s position that if employees are represented, an employer can only use compensatory time if it reaches an agreement with the representative is reasonable and we are bound by it. See Local 2203, 877 F.2d at 819; Nevada Highway Patrol Ass’n v. Nevada, 899 F.2d 1549, 1553 (9th Cir.1990).

Second, the regulation states that employees are deemed to be represented under section 207(o)(2) if they merely designate a representative; the representative need not be recognized by the employer. This means that a state law that prevents an agency from recognizing a public employee union does not preclude the employees from designating a representative for purposes of this section. Again, if reasonable, the Secretary’s reading qf the provision must control. Congress’ choice of words clearly supports this reading. If, as the majority holds, Congress intended that public employees could not designate a representative in states that did not allow collective bargaining, Congress need have gone no further than say that the agreement must be part of a collective bargaining agreement. Instead, the statute states that the agency may provide compensatory time pursuant to “applicable provisions of a collective bargaining agreement, memorandum of understanding, or any other agreement between the public agency and representatives of such employees.” 29 U.S.C. § 207(o)(2)(A)(i) (emphasis added). The fact that Congress included the possibility of agreement being in .some other form indicates that this agreement could be reached in states like North Carolina that do not allow public collective bargaining.

The legislative history also provides ambiguous but sufficient support for the proposition that the representative need only be designated, not recognized; the House Report supports the view and the Senate Report does not. Compare House Report at 20, reprinted in 13656 U.S.Cong. Serial Set (“Where employees have selected a representative, which need not be a formal or recognized collective bargaining agent as long as it is a representative designated by the employees, the agreement or understanding must be between the representative and the employer____”) with Senate Report at 10-11; reprinted in 1985 U.S.C.C.A.N. 658-59 (“Where employees have a recognized representative, the agreement or understanding must be between the representative and the employer;” an employer may use compensatory time pursuant to a regular practice “[i]n the case of employees who have no recognized representative”) (emphasis added). Unfortunately, the report of the Joint Committee on Conference fails to address these differing views. See H.R.Conf.Rep. No. 357, 99th Cong., 1st Sess. 7-10 (1985), reprinted in 1985 U.S.C.C.A.N. 668-71. However, the Senate receded and accepted the House version of the legislation in the Joint Committee on Conference. Id. Thus the House’s view supportive of the Secretary should be given more weight than the Senate’s view, although even one branch’s support would be sufficient to find the Secretary’s interpretation reasonable. As the concurring opinion notes, the majority’s reliance on an isolated statement in the preamble to the Secretary’s final regulation, which was later codified at 29 C.F.R. Part 553, that was contradicted elsewhere in the preamble and in the final regulation itself, cannot require state law to control whether employees have a “representative” under the statute. See cone. op. at 1398 n. 2; 52 Fed.Reg. 2012, 2015 (Jan. 16, 1987). Therefore, the Secretary’s interpretation that the representative need only be designated, not recognized, is eminently reasonable and should control this case. See Local 2203, 877 F.2d at 820. But see Nevada Highway Patrol, 899 F.2d at 1554; Dillard v. Harris, 885 F.2d 1549, 1554 (11th Cir.1989), cert. denied, — U.S. -, 111 S.Ct. 210, 112 L.Ed.2d 170 (1990).

The concurring opinion persuasively refutes the majority’s formalistic view that the Fire Fighters have no “representative” under section 207(o) because North Carolina law does not allow the City to recognize one. The concurring opinion goes wrong, in my view, just as the majority does, by forcing one plausible reading of the statute on language that equally supports two such readings and by ignoring the plain import of the Secretary’s interpretation of the statute. The Supreme Court has told us in unmistakable terms that we should not substitute our views for that of the agency when the statute is ambiguous, but the majority has done just that. See Chevron, 467 U.S. at 865-66, 104 S.Ct. at 844.

The practical result of the majority’s decision is that the City can refuse to bargain with the employees’ representative with the excuse that state law requires this result, thus unilaterally eviscerating the employees’ choice in the matter and effectively circumventing the requirements of the Fair Labor Standards Act. According to the majority, employees who reside in states that prohibit public agencies from engaging in collective bargaining have fewer rights under federal law than their counterparts who live in states with no such prohibition. I do not believe that Congress intended for employees’ rights under the Act to hinge upon the mere fortuity of geography.

As a panel of this court has previously stated, Congress intended to give employees an element of choice with respect to overtime pay in enacting section 207(o), in addition to providing the state and local governments flexibility in how to pay for overtime work. Abbott v. Virginia Beach, 879 F.2d 132, 136-37 (4th Cir.1989) (quoting House Report at 19), cert. denied, 493 U.S. 1051, 110 S.Ct. 854, 107 L.Ed.2d 848 (1990). The Charlotte Fire Fighters have had no real choice in this matter — those hired before April 15, 1986 must abide by the previous City-imposed practice of compensatory time, and those hired later must agree individually, under highly coercive circumstances where they lack real bargaining leverage, to accept compensatory time as the price for accepting the job. I cannot believe that Congress intended such a result. Because the City of Charlotte retains the sole discretion to award compensatory time instead of cash under the majority’s analysis, I agree with the district court that the Act does not permit the City to take advantage of the compensatory time option without entering into an agreement with the employees’ designated representative.

For these reasons, I would affirm the district court’s decision below.

I am authorized to say that Judge HALL, Judge PHILLIPS, Judge MURNA-GHAN and Judge SPROUSE join in this dissent.