No. 95-448
 
In The Supreme Court of the United States

OCTOBER TERM, 1995

INTERSTATE BRANDS CORPORATION, PETITIONER

V.

ROBERT B. REICH, SECRETARY OF LABOR

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

THOMAS S. WILLIAMSON, JR.
Solicitor of Labor

ALLEN H. FELDMAN
Associate Solicito

NATHANIEL I. SPILLER
Counsel for Appellate Litigation

ELIZABETH HOPKINS
Attorney
Department of Labor
Washington, D.C. 20210

DREW S. DAYS, III
Solicitor General

Department of Justice
Washington, D.C. 20530
(202) 514-2217


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         QUESTION PRESENTED

    Whether, for the purpose of calculating overtime,
   the "regular rate" of pay under Section 7(a)(1) of the
   Fair Labor Standards Act of 1938,29 U.S.C. 207(a)(1),
   includes "earned work credits," which are annual
   payments made to employees for each workweek in
   which they did not receive two consecutive days off.

(I)

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     TABLE OF CONTENTS

 Page

Opinions below  . . . .  1
Jurisdiction  . . . .  1
Statement  . . . .  2
Argument  . . . .  7
Conclusion . . . . 15

     TABLE OF AUTHORITIES

Cases:

Arnold v. Ben Kanowsky, Inc., 361 U.S. 388
(1960) . . . .  9
Barkentine v. Arkansas-Best Freight Sys., Inc.,
450 U.S. 728 (1981) . . . . 9
Bay Ridge Operating Co. v. Aaron, 334 U.S. 446
(1948) . . . .  10
Idaho Sheet Metal Workers, Inc. v. Wirtz,
383 U. S. 190 (1966) . . . .  9
Minizza v. Stone Container Corp., 842 F.2d 1456
(3d Cir.), cert. denied, 488 U.S. 909 (1988)  . . . . 6,13,14
Mitchell v. Lublin, McGaughy & Assocs., 358 U.S.
207(1959) . . . .  9
Powell v. United States Cartridge C o., 339 U. S. 497
(1950) . . . .  9
Tony & Susan Alamo Found. v. Secretary of Labor,
471 U.S.290 (1985) . . . .  9
Walling v. Youngerman-Reynolds Hardwood Co.,
325 U.S. 419 (1945) . . . .  10

Statutes and regulations:
Fair Labor Standards Act of 1938, 29 U. S. Cl. 201
et seq.:
   7(a), 29 U.S.C. 207(a)  . . . . 2 
   7(a)(l), 29 U.S.C. 207(a)(1) . . . . 2
   7(e), 29 U.S.C. 207(e)  . . . . 2, 7 
  7(e)(2), 29 U.S.C. 207(e)(2) . . . . 2, 4, 5, 6, 7, 8, 10, 12, 13

(III)

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IV

Statutes and regulations-Continued:        

Page

   7(e)(3), 29 U.S.C. 207(e)(3)  . . . . 6, 12
   7(e)(5), 29 U.S.C. 207(e)(5)  . . . . 12
   7(e)(6), 29 US.C. 207(e)(6) . . . . 3, 7, 12
   7(e)(7), 29 U.S.C.  207(e)(7) . . . . 3, 7, 12
   7(h), 29 U.S.C. 207(h)  . . . . 7

29 C.F.R.:
  Section 778.108 . . . .  10
  Section 778.202  . . . .  12
  Section 778.207(a)  . . . .  12
  Section 778.207(b)  . . . . 12
  Section 778.224(a) . . . . 11, 13
  Section 778.224(b)  . . . .11

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In the Supreme Court of the United States

OCTOBER TERM, 1995

  No. 95-448

INTERSTATE BRANDS CORPORATION, PETITIONER

v.

ROBERT B. REICH, SECRETARY OF LABOR

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
   FOR THE SEVENTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

       OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-
10a) is reported at 57 F.3d 574. The March 21, 1994
order of the district court (Pet. App. 15a-19a) is
reported at 849 F. Supp. 1261, and the district court's
September 15, 1993 order (Pet. App. 20a-26a) is
unreported.

       JURISDICTION

The judgment of the court of appeals was entered on
June 15, 1995. The petition for a writ of certiorari
was filed on September 13, 1995. The jurisdiction of
this Court is invoked under 28 U.S. Cl. 1254(1).

(1)

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2

        STATEMENT

1. The Fair Labor Standards Act of 1938 (FLSA)
requires employers to pay employees who work "a
workweek longer than forty hours" at least "one and
one-half times the regular rate" of such employees'
pay for their overtime hours. 29 U.S.C. 207(a). 1.  The
"regular rate" upon which overtime compensation is
calculated includes "all remuneration for employment
paid to, or on behalf of, the employee." 29 U.S.C.
207(e). Several forms of remuneration, however, are
excluded from the "regular rate" of pay, including

payments made for occasional periods when no
work is performed due to vacation, holiday,
illness, failure of the employer to provide suffi-
cient work, or other similar cause; reasonable
payments for traveling expenses, or other expen-
ses, incurred by an employee in the furtherance
of his employer's interests and properly reim-
bursable by the employer; and other similar pay-
ments to an employee which are not made as
compensation for his hours of employment.

___________________(footnotes)

1. Section 7(a)(1) of the FLSA, 29 U.S.C. 207(a)(1), provides
in full:

  Except as otherwise provided in this section, no
employer shall employ any of his employees who in any
workweek is engaged in commerce or in the production of
goods for commerce, or is employed in an enterprise en-
gaged in commerce or in the production of goods for
commerce, for a workweek longer than forty hours unless
such employee receives compensation for his employment
in excess of the hours above specified at a rate not less than
one and one-half times the regular rate at which he is
employed.

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3

29 U.S.C. 207(e)(2) (emphasis added). Among the
other exclusions from the "regular rate" are prem-
ium payments for work on "Saturdays, Sundays, holi-
days, or regular days of rest," or, pursuant to a
collective bargaining agreement, "for work outside of
the hours established * * * as the basic, normal, or
regular workday," but only "where such premium
rate is not less than one and one-half times the rate"
for like work performed on other days. 29 U.S.C.
207(e)(6) and (7).
2. Petitioner Interstate Brands Corporation is a
wholesale baker that, as part of a nationwide collec-
tively bargained system, pays to employees on its pay-
roll at the end of the year "earned work credits" for
each workweek in which the employee did not receive
two consecutive days off. Pet. App. 2a, 20a-21a. At
issue in this case is whether that additional compen-
sation is included in, or excluded from, the employees'
"regular rate" of pay for the purpose of calculating
overtime compensation under the FLSA.
The system of earned work credits originated in
1972 when the bakery industry settled a nationwide
strike with the Bakery, Confectionery and Tobacco
Workers International Union, AFL-CIO (BCT). Pet.
App. 2a; Pet. 3. During the strike, the BCT had
demanded that the workers be given weekly schedules
with two consecutive days off; the employers, how-
ever, insisted that a traditional baker's schedule of
Monday, Wednesday, Thursday, Friday and Sunday
was necessary to ensure the freshness of their prod-
ucts on Saturdays and Mondays, the biggest shopping
days for baked goods. Pet. App. 2a. To end the strike,
the parties agreed to a system of "earned work
credits," under which an employer who schedules a
workweek for an employee that does not include two

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4

consecutive days off must pay $12 per employee for
each such week into a fund. Id. at 2a, 21a. Those
"credits" are then distributed in November of each
year to eligible workers according to the number of
weeks without two consecutive days off that they
worked during the year. Ibid.; see Pet. 5. The
collective bargaining agreements incorporating this
system have provided that the credits are not compen-
sation for work performed, but are instead "penalties"
designed to prompt employers, if possible, to provide
two consecutive days off. The agreements have also
provided that the credits are not part of the wage base
upon which overtime is calculated. Pet. App. 2a, 21a.
3. Respondent Secretary of Labor fled this suit in
1991 seeking a prospective injunction requiring peti-
tioner to treat earned work credits as part of its
employees' regular rate of pay. In the district court,
petitioner contended that the earned work credits are
excludable from the regular rate of pay as "other
similar payments * * * not made as compensation"
under Section 7(e)(2) of the FLSA, 29 U.S.C. 207(e)(2),
because they serve as a disincentive "tied to sched-
uling by the employer, rather than hours worked by
an employee." Pet. App. 22a. The Secretary argued
that the credits do not come within the terms of the
exclusion because they are "regular and recurring
remuneration paid to individuals required to work
undesirable work schedules." Ibid. On cross-motions
for summary judgment, the district court found both
interpretations plausible. Id. at 24a. Because the
Secretary had not previously enforced his interpre-
tation during the 20 years that earned work credits
had been in use in the baking industry, however, the
court required the Secretary to provide a" `reasoned
analysis' for [his] change in approach," rather than

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5

give the Secretary's "permissible" interpretation the
"substantial deference" it was otherwise due. Id. at
25a.
 The Secretary then "put forward a sufficient
analysis" of the reasons for interpreting the FLSA as
treating petitioner's "regular and recurring" earned
work credits as "not the type of payment intended for
exclusion from the regular base rate of pay as sug-
gested by the purposes of the statute." Pet. App.
16a, 18a. Because the Secretary's interpretation was
reasonable and because the relief sought was purely
prospective, the court granted summary judgment in
favor of the Secretary. Id. at 19a.
4. The court of appeals affirmed. Pet. App. 1a-10a.
It reasoned that an earned work credit under the
system, "whether or not designed as a `penalty,' is
`remuneration for employment' and counts [as in-
cluded within the regular rate of pay] unless it comes
within one of  7(e)'s many exemptions." Id. at 4a.
Noting that petitioner was relying entirely on the
Section 7(e)(2) exemption, the court rejected peti-
tioner's interpretation of the word "similar" in that
Section as meaning "any payment `not made as com-
pensation for * * * hours of employment', which the
bakery understands to mean `not measured by the
number of hours spent at work.'" Id. at 6a. Rather,
viewing Section 7(e)(2) as "one among many exemp-
tions: the court concluded that it could not be read to
"exclude every payment that is not measured by the
number of hours spent at work." Id. at 7a. The court
also rejected the Secretary's interpretation of Sec-

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6

tion 7(e)(2), which equated "similarity" with "infre-
quency" of payments.2
The court analogized the $12 credits to year-end
bonuses, which, although not dependent on the numb-
er of hours worked, must be included in the regular
rate unless paid entirely at the discretion of the
employer. Pet. App. 7a (discussing FLSA  7(e)(3),
29 U.S.C. 207(e)(3)). Although recognizing that "the
subsections of  7(e) are not mutually exclusive: the
court declined "to read  7(e)(2) as a catch-all, one that
obliterates the qualifications and limitations on the
other subsections and establishes a principle that all
lump-sum payments fall outside the `regular rate.'"
Ibid. The court thus rejected petitioner's argument
that Minizza v. Stone Container Corp., 842 F.2d 1456
(3d Cir.), cert. denied, 488 U.S. 909 (1988, calls for
treating "all lump-sum payments negotiated in the
collective bargaining process [as] excluded from the
`regular rate.'" Pet. App. 8a. Although the lump-sum
payments at issue in Minizza were not deemed part
of the regular rate, the court determined that Min -
izza is distinguishable from the present ease because
"the baking industry's accommodation involves long-
term, planned distributions of a kind dissimilar to the
one-time distribution in Minizza." Ibid.
Because "the right to receive [the $12 credits] is
tied to work schedules that employees dislike," the
court also found the credits analogous to premium pay
for undesirable shifts or unpleasant work environ-
ments. The court noted that such payments are

___________________(footnotes)

2. Stating that Congress "has not delegated to the Secretary
of Labor the power to interpret  7 of the FLSA," the court
said that it was obliged to give the Secretary's interpretations
only "the respect their reasoning earns them." Pet. App. 5a.

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7

included in the regular rate under Section 7(e)(6) and
(7), unless the premium rate amounts to one and one-
half times the normal rate. Pet. App. 8a-9a.
Based on its consideration of the various exceptions
in Section 7(e), the court determined that the word
"similar" in Section 7(e)(2) "refers to other payments
[to an employee] that do not depend at all on when or
how much work is performed." Pet. App. 9a. Pay-
ments of that sort, the court determined, include
"vacation pay, other compensation for hours not
worked, * * * reimbursement of expenses," and
possibly "call-back pay" (i.e., "compensation for ab-
breviated rest between work periods"). Ibid. Such
payments, however, do not include "premium rates for
`lad' shifts," or, in the case of earned work credits,
"compensation for working an unpleasant or incon-
venient schedule." Id. at 9a-10a. The court therefore
held that the exceptions in "7(e)(2) [do] not keep the
$12 credits out of the `regular rate.'" Id. at 10a. 3.

        ARGUMENT

The decision of the court of appeals, which affirms
the permanent injunction against petitioner's treat-
ing "earned work credits" as exempt from the regular
rate of pay for purposes of the Fair Labor Standards

___________________(footnotes)

3. The court noted, however, that Section 7(e)(7), 29 U.S.C.
207(e)(7) (excluding premium pay greater than 150% of the
regular rate), and Section 7(h), 29 U.S.C. 207(h) (providing
that certain extra compensation paid under Section 7(e)(7)
"shall be creditable toward overtime compensation"), might be
applicable "in any follow-on litigation seeking back pay." Pet.
App. 10a. Thus, it hypothesized premium pay for Sunday
work that, when combined with an allocated portion of the
earned work credit, exceeds 150% of the weekday hourly rate
and thereby qualifies for exclusion from the regular rate under
Section 7(e)(6) or (7).

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8

Act, is correct and does not conflict with any decision
of this Court or any other court of appeals. Moreover,
as petitioner acknowledges (Pet. 11), this case arises
out of the "idiosyncratic" practices of the baking
industry and involves the treatment of "modest" an-
nual payments for purposes of the overtime provisions
of the Act. Further review is therefore unwarranted.
1. a. Petitioner first contends (Pet. 13) that the
court of appeals' construction of Section 7(e)(2) con-
travenes the objectives of the FLSA. In petitioner's
view, "none of the concerns toward which Congress
directed the FLSA and its overtime provisions exist
here" because bakery workers are "highly paid," the
credits are the product of "a collectively-bargained
inducement to maintain labor peace between a large
industry and a strong, national union," and "the work
credit system has helped to eliminate unfair com-
petition throughout the baking industry by standard-
izing contract terms and business practices." Pet. 15
(emphasis omitted). The court of appeals, however,
correctly answered that contention by observing that
"the overtime provisions of the FLSA apply without
regard to the level of the standard wage," and that
"[t]here is no collective-bargaining exemption from
the FLSA." Pet. App. 8a.
Petitioner seems to argue that because the baking
industry does not exploit its workers by paying sub-
standard wages or by requiring excessive overtime,
and because the industry has avoided labor trouble by
using the collectively bargained earned work credit
system, the FLSA should not be strictly enforced in
this case. 4. This Court, however, "has consistently

___________________(footnotes)

4. The argument, supported by amicus BCT (Br. 5-7), that
the decision is erroneous because it is "disruptive of labor

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9

construed the Act `liberally to apply to the furthest
reaches consistent with congressional direction.'"
Tony & Susan Alamo Found. v. Secretary of Labor,
471 U.S. 290, 296 (1985) (quoting Mitchell v. Lublin,
McGaughy & As.sots., 358 U.S. 207, 211 (1959)).
Indeed, because "[b]readth of coverage [is] vital to its
mission," Powell v. United States Cartridge Co., 339
U.S. 497, 516 (1950), the FLSA's exceptions are nar-
rowly construed, with the burden placed on the em-
ployer to establish that the exception claimed is
applicable. See, e.g., Idaho Sheet Metal Workers, Inc.
v. Wirtz, 383 U.S. 190, 209 (1966); Arnold v. Ben
Kanowsky, Inc., 361 U.S. 388,392 (1960). Moreover, it
is well established "that congressionally granted
FLSA rights take precedence over conflicting pro-
visions in a collectively bargained compensation ar-
rangement." Barkentine v. Arkansas-Best Freight
Sys., Inc., 450 U.S. 728, 740-741 (1981) (citing cases).
Thus, "[although our public policy recognizes the
effectiveness of collective bargaining and encourages

___________________(footnotes)

relations" (Pet. 23) is unsubstantiated and has no bearing on the
issue at hand. First, it is unconvincing that labor peace in the
baking industry depends upon retaining petitioner's treatment.
of earned worked credits in calculating overtime. What is at
stake in this litigation is not the viability of the entire earned
work credit system, but rather some adjustments to overtime
pay that represent only modest sums of money. See Pet. App.
3a. Second, the fact that the treatment of earned work credits
is beginning to arise at the bargaining table does not in any way
indicate that the issue cannot be resolved by the parties without
resort to "massive strikes and interruption of the stream of
commerce." Pet, 23. As the court of appeals noted, "the par-
ties can adjust the collective bargaining agreement" to respond
to the treatment of credits as part of the regular rate. Pet.
App. 2a-3a.

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10

its use," nothing in that general policy authorizes a
court "to give decisive weight to contract declara-
tions as to the regular rate because they are the re-
sult of collective bargaining." Bay Ridge operating
Co. v. Aaron, 334 U.S. 446, 463 (1948); see also
Walling v. Youngerman-Reynolds Hardwood Co.,
325 U.S. 419, 424 (1945) (the regular rate "is not an
arbitrary label chosen by the parties; it is an actual
fact"); 29 C.F.R. 778.108. Consequently, contrary to
petitioner's argument, the decision below is entirely
consistent with the FLSA's broad purposes.
b. Petitioner's assertion (Pet. 17-18) that the court
of appeals "usurp[ed] the role of Congress" by
"amend[ing]" the statutory provision at issue is like-
wise meritless. The phrase in contention is Section
7(e)(2)'s exclusion from the regular rate of "other
similar payments to an employee which are not made
as compensation for his hours of employment." 29
U.S.C. 207(e)(2). The "similar payments" refer back
to "payments made for occasional periods when no
work is performed" (i.e., for "vacation, holiday,
illness, failure of the employer to provide sufficient
work, or other similar cause") and "reasonable pay-
ments for traveling expenses, or other expenses, in-
curred by an employee * * *  and properly
reimbursable by the employer." Ibid.; see Pet. App.
9a. Here, the "earned work credits" are neither pay-
ments for "periods when no work is performed" nor
reimbursements for "expenses * * * incurred by an
employee." 5.

___________________(footnotes)

5. The Secretary's regulatory interpretation of Section
7(e)(2) explains that payments under the "other similar pay-
ments" exclusion must "be `similar' in character to the pay-

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11

The earned work credits are compensation for
being required to work an undesirable schedule,
namely one in which the employee is not given two
consecutive days off in a workweek.  Such extra
payments "tied to work schedules that employees
dislike" are, as the court of appeals determined, most
similar to "premium wages for working weekends, or
the night shift, or in noisy plants." Pet. App. 8a. 6. As

___________________(footnotes)

ments specifically described in section 7(e)(2)." 29 C.F.R.
778.224(a). As examples, it lists:
  (1) Sums paid to an employee for the rental of his truck
or car.

  (2) Loans or advances made by the employer to the
employee.

  (3) The cost to the employer of conveniences furnished
to the employee such as parking space, restrooms, lockers,
on-the-job medical care and recreational facilities.
29 C.F.R. 778.224(b). Obviously, the earned work credits in
this case are not at all similar in character to these exemplary
payments.
6. Petitioner takes issue with this characterization on the
ground that, unlike a "Sunday rate" or a "nighttime rate," the
earned work credit "is indifferent to what hours of the day or
days of the week the work is done." Pet. 24. However, the
extra payment for working a week without having two con-
secutive days off is comparable to the other forms of premiums,
which likewise compensate for intrusions on the employee's
leisure time. Moreover, petitioner is mistaken in asserting that
the characterization of the earned work credit system as "an
incentive to employers" (ibid.), or "a penalty on the employer
for * * * lowering the quality of their employees' time off"
(Pet. 25), somehow precludes the payments from being incor-
porated in the regular rate. Other forms of premium pay, such
as for working nights or Sundaysj may also function as an "in-
centive" for employers to minimize such work and a "penalty"

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12

the court of appeals pointed out, premium wages of
this sort may be excluded from the regular rate upon
which overtime is calculated only if specified statu-
tory conditions are met. Such wages are excludable
if, for instance, they are paid entirely at the discre-
tion of the employer, 29 U.S.C. 207(e)(3), or if they are
one and one-half times the rate that is normally paid,
29 U.S.C. 207(e)(6) and (7). 7. Otherwise, they are in-
cluded in the regular rate. See 29 C.F.R. 778.207(a)
("extra compensation provided by premium rates
other than those described cannot be treated as over-
time premiums"), (b) ("The Act requires the inclusion
in the regular rate of such extra premiums as night-
shirt differentials * * * and premiums paid for
hazardous, arduous or dirty work.").
The court of appeals was correct not to read
Section 7(e)(2) "in isolation," and to reject a reading,
offered by petitioner, that would exclude "every pay-

___________________(footnotes)

for employers when they do not, yet those attributes do not
altogether remove such payments from the regular rate. Ac-
cordingly, the court of appeals was correct in holding that
"[t]he $12 credit, whether or not designed as a `penalty,' is
`remuneration for employment' and counts unless it comes
within one of  7(e)'s many exemptions." Pet. .App. 4a.
7. Petitioner mischaracterizes Section 7(e)(6) and (7), stating
(Pet. 25) that those exceptions were designed solely "to prevent
requiring `overtime to be paid on overtime.'" The exceptions
for premium payments (e.g., for Sunday work or irregular off-
hours work) that are at least one and one-half times the normal
rate apply whether or not the premiums are paid to employees
who have already worked at least 40 hours in the week. In
other words, the extra payments are for working on Sunday or
outside normal working hours, not for working overtime.
Compare 29 U.S.C. 207(e)(5); 29 C.F.R. 778.202 (premium pay
for hours in excess of daily or weekly standard).

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13

ment that is not measured by the number of hours)'
worked. Pet. App. 7a  (declining to read Section 7(e)(2)
"as a catch-all, one that obliterates the qualifications
and limitations on the other subsections and estab-
lishes a principle that all lump-sum payments fall
outside the `regular rate' "). The court's holding (id.
at 9a) that "[t]he word `similar' [in Section 7(e)(2)]
refers to other payments that do not depend at all on
when or how much work is performed" is consistent
with the Act's scheme of exceptions and does not, as
petitioner asserts (Pet. 18), "rewrit[e] the FLSA."
2. The court of appeals' decision does not conflict
with the Third Circuit's decision in Minizza v. Stone
Container Corp., 842 F.2d 1456, cert. denied, 488 U.S.
909 (1988). In Minizza, the Third Circuit held that
two lump-sum payments made to induce employees
to ratify a collective bargaining agreement were
exempted from the definition of "regular rate" under
Section 7(e)(2). The court determined that those
lump-sum payments "share[d] the essential char-
acteristic with the other types of compensation"
specifically included in [Section 7(e)(2)] of not being
compensation for hours worked or services ren-
dered." 842 F.2d at 1462 (emphasis added). Minizza's
holding is thus substantially similar to that of the
Seventh Circuit in this case, which stated that pay-
ments not tied to "when or how much work is
performed" are excluded from the regular rate. Pet.
App. 9a. Under either court's formulation, earned
work credits must be included in the regular rate
because they are paid for "services rendered" or
"work performed" during weeks in which an employee
did not receive two consecutive days off. See 29
C.F.R. 778.224(a) (the "other similar payments" lan-
guage in Section 7(e)(2) "was not intended to permit

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14

the exclusion * * * of payments such as bonuses
* * * which, though not directly attributable to any
particular hours of work are, nevertheless, clearly
understood to be compensation for services"}. The
lump-sum payments that were excluded in Minizza
are distinguishable because they were not tied to
work performed or services rendered their purpose
was to encourage employees to ratify a collective
bargaining agreement each employee received the
same amount of money regardless of how much work
he or she had done; and the payments were one-time
distributions. 842 F.2d at 1453.
Contrary to petitioner's contention (Pet. 21), the
court below did not "overlook[] the fact that the
earned work credit system was * * * an inducement
to contract ratification" or that the payments were
intended to operate as penalties for employers who
impose unfavorable work schedules.  Rather, the
court determined that, irrespective of how the parties
describe the earned work credits or their motives for
incorporating them in collective bargaining agree-
ments, the credits function as "remuneration for em-
ployment" that is not subject to any of the enumer-
ated exceptions. Pet. App. 4a; see also id. at 8a ("That
there was a strike in 1972 cannot detract from the
fact that the baking industry's accommodation in-
volves long-term, planned distributions of a kind
dissimilar to the one-time distribution in Minizza.").
Thus, the court below, like the Third Circuit in
Minizza, properly focused on the substantive charac-
ter of the payments and the manner in which they
were made in order to determine whether the pay-
ments were tied to work performed or services
rendered. See Minizza, 842 F.2d at 1462 n.9 (What is
important is the substantive characterization of the

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15

payments," as opposed to "what the payments are
termed."). The conclusion by the court below that
earned work credits are, in fact, payments for
working an undesirable schedule is thus consistent
with the holding of Minima.

        CONCLUSION

The petition for a writ of certiorari should be
denied.

Respectfully submitted.

           DREW S. DAYS, III
           Solicitor General

THOMAS S. WILLIAMSON, JR.
Solicitor of Labor

ALLEN H. FELDMAN
Associate Solicitor

NATHANIEL I. SPILLER
Counsel for Appellate Litigation

ELIZABETH HOPKINS
Attorney
Department of Labor

DECEMBER 1995

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     QUESTION PRESENTED

Whether, for the purpose of calculating overtime,
the "regular rate" of pay under Section 7(a)(1) of the
Fair Labor Standards Act of 1938,29 U.S.C. 207(a)(1),
includes "earned work credits," which are annual
payments made to employees for each workweek in
which they did not receive two consecutive days off.

(I)

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     TABLE OF CONTENTS

                    Page

Opinions below  . . . .  1
Jurisdiction . . . . 1
Statement . . . .  2
Argument  . . . .  7
Conclusion . . . .15
   
TABLE OF AUTHORITIES

Arnold v. Ben Kanowsky, Inc., 361 U.S. 388
(1960) . . . . 9
Barkentine v. Arkansas-Best Freight Sys., Inc.,
450 U.S. 728 (1981) . . . . g
Bay Ridge Operating Co. v. Aaron, 334 U.S. 446
(1948) . . . . 10
Idaho Sheet Metal Workers, Inc. v. Wirtz,
383 U.S. 190 (1966) . . . .9
Minizza v. Stone Container Corp., 842 F.2d 1456
(3d Cir.), cert. denied, 488 U.S. 909 (1988)  . . . .6, 13, 14
Mitchell v. Lublin, McGaughy & Assocs., 358 U.S.
207 (1959) . . . . 9
Powell v. United States Cartridge Co., 339 U.S. 497
(1950)  . . . .  9
Tony & Susan Alamo Found. v. Secretary of Labor,
471 U.S. 290 (1985)  . . . .  9
Wailing v. Youngerman-Reynolds Hardwood CO.,
325 U.S. 419 (1945) . . . .10

Statutes and regulations:

Fair Labor Standards Act of 1938,29 U.S.C. 201
et seq.:
   7(a), 29 U.S.C. 207(a)  . . . . 
   7(a)(1), 29 U.S.C.  207(a)(1)          2
             . . . .  2
   7(e), 29 U.S.C. 207(e)  . . . . 
   7(e)(2), 29 U.S.C. 207(e)(2) . . . 2, 4, 5, 6, 7, 8, 10, 12, 13

(III)

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IV

Statutes and regulations-Continued:        Page
   7(e)(3), 29 U.S.C. 207(e)(3) . . . .  6,12
   7(e)(5), 29 U.S.C. 207(e)(5)  . . . .  7(e)(6), 29 U.S.C. 207(e)(6)          12
             .                                . . .  3,7, 12
   7(e)(7), 29 U.S.C. 207(e)(7) . . . .3, 7, 12
   7(h), 29 U.S.C. 207(h)  . . . . 7
29 C.F.R.:
  Section 778.108 . . . . 10
  Section 778.202 . . . .12
  Section 778.207(a) . . . .12
  Section 778.207(b) . . . .12
  Section 778.224(a) . . . .11,13
  Section 778.224(b) . . . .11

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In the Supreme Court of the United States

     OCTOBER TERM, 1995 

       No. 95-448

INTERSTATE BRANDS CORPORATION, PETITIONER -

v.

ROBERT B. REICH, SECRETARY OF LABOR

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
   FOR THE SEVENTH CIRCUIT

BRIEF FOR THE RESPONDENT IN APPOSITION
   
      OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-
10a) is reported at 57 F.3d 574. The March 21, 1994
order of the district court (Pet. App. 15a-19a) is
reported at 849 F. Supp. 1261, and the district court's
September 15, 1993 order (Pet. App. 20a-26a) is
unreported.

      JURISDICTION

The judgment of the court of appeals was entered on
June 15, 1995. The petition for a writ of certiorari
was filed on September 13, 1995. The jurisdiction of
this Court is invoked under 28 U.S.C. 1254(1).

(1)

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2

       STATEMENT

1. The Fair Labor Standards Act of 1938 (FLSA)
requires employers to pay employees who work "a
workweek longer, than forty hours" at least "one and
one-half times the regular rate" of such employees'
pay for their overtime hours. 29 U.S.C. 207(a). 1 The
"regular rate" upon which overtime compensation is
calculated includes "all remuneration for employment
paid to, or on behalf of, the employee." 29 U.S.C.
207(e). Several forms of remuneration, however, are
excluded from the "regular rate" of pay, including
payments made for occasional periods when no
work is performed due to vacation, holiday,
illness, failure of the employer to provide suffi-
cient work, or other similar Cause; reasonable
payments for traveling expenses, or other expen-
ses, incurred by an employee in the furtherance
of his employer's interests and properly reim-
bursable by the employer and other similar pay-
ments to an employee which are not made as
compensation for his hours of employment.

1. Section 7(a)(1) of the FLSA, 29 U.S.C. 207(a)(1), provides
in full:
  Except as otherwise provided in this section, no
employer shall employ any of his employees who in any
workweek is engaged in commerce or in the production of
goods for commerce, or is employed in an enterprise en-
gaged in commerce or in the production of goods for
commerce, for a workweek longer than forty hours unless
such employee receives compensation for his employment
in excess of the hours above specified at a rate not less than
one and one-half times the regular rate at which he is
employed.

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         3

29 U.S.C. 207(e)(2) (emphasis added). Among the
other exclusions from the "regular rate" are prem-
ium payments for work on "Saturdays, Sundays, holi-
days, or regular days of rest," or, pursuant to a
collective bargaining agreement, "for work outside of
the hours established * * * as the basic, normal, or
regular workday," but only "where such premium
rate is not less than one and one-half times the rate"
for like work performed on other days. 29 U.S.C.
207(e)(6) and (7).
2. Petitioner Interstate Brands Corporation is a
wholesale baker that, as part of a nationwide collec-
tively bargained system, pays to employees on its pay-
roll at the end of the year "earned work credits" for
each workweek in which the employee did not receive
two consecutive days off, Pet. App. 2a, 20a-21a. At
issue in this case is whether that additional compen-
sation is included in, or excluded from, the employees'
"regular rate" of pay for the purpose of calculating
overtime compensation under the FLSA.
The system of earned work credits originated in
1972 when the bakery industry settled a nationwide
strike with the Bakery, Confectionery and Tobacco
Workers International Union, AFL-CIO (BCT). Pet.
App. 2a; Pet. 3. During the strike, the BCT had
demanded that the workers be given weekly schedules
with two consecutive days off the employers, how-
ever, insisted that a traditional baker's schedule of
Monday, Wednesday, Thursday, Friday and Sunday
was necessary to ensure the freshness of their prod-
ucts on Saturdays and Mondays, the biggest shopping
days for baked goods. Pet. App. 2a. To end the strike,
the parties agreed to a system of "earned work
credits," under which an employer who schedules a
workweek for an employee that does not include two

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4

consecutive days off must pay $12 per employee for
each such week into a fund. Id. at 2a, 21a. Those
"credits" are then distributed in November of each
year to eligible workers according to the number of
weeks without two consecutive days off that they
worked during the year. Ibid.; see Pet. 5. The
collective bargaining agreements incorporating this
system have provided that the credits are not compen-
sation for work performed, but are instead "penalties"
designed to prompt employers, if possible, to provide
two consecutive days off. The agreements have also
provided that the credits are not part of the wage base
upon which overtime is calculated. Pet. App. 2a, 21a.
3. Respondent Secretary of Labor filed this suit in
1991 seeking a prospective injunction requiring peti-
tioner to treat earned work credits as part of its
employees' regular rate of pay. In the district court,
petitioner contended that the earned work credits are
excludable from the regular rate of pay as "other
similar payments * * * not made as compensation"
under Section 7(e)(2) of the FLSA, 29 U. S. C-. 207(e)(2),
because they serve as a disincentive "tied to sched-
uling by the employer, rather than hours worked by
an employee." Pet. App. 22a. The Secretary argued
that the credits do not come within the terms of the
exclusion because they are "regular and recurring
remuneration paid to individuals required to work
undesirable work schedules." Ibid. On cross-motions
for summary judgment, the district court found both
interpretations plausible. Id. at 24a. Because the
Secretary had not previously enforced his interpre-
tation during the_ 20 years that earned work credits
had been in use in the baking industry, however, the
court required the Secretary to provide a " `reasoned
analysis' for [his] change in approach," rather than

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5

give the Secretary's "permissible" interpretation the
"substantial deference" it was otherwise due. Id. at
25a. The Secretary then "put forward a sufficient
analysis" of the reasons for interpreting the FLSA as
treating petitioner's "regular and recurring" earned
work credits as "not the type of payment intended for
exclusion from the regular base rate of pay as sug-
gested by the purposes of the statute." Pet. App.
16a, 18a. Because the Secretary's interpretation was
reasonable and because the relief sought was purely
prospective, the court granted summary judgment in
favor of the Secretary. Id. at 19a.
4. The court of appeals affirmed. Pet. App. 1a-10a.
It reasoned that an earned work credit under the
system, " "whether or not designed as a 'penalty,' is
`remuneration for employment' and counts [as in-
cluded within the regular rate of pay] unless it comes
within one of  7(e)'s many exemptions." Id. at 4a.
Noting that petitioner was relying entirely on the
Section 7(e)(2) exemption, the court rejected peti-
tioner's interpretation of the word "similar" in that
Section as meaning "any payment `not made as com-
pensation for * * * hours of employment', which the
bakery understands to mean `not measured by the
number of hours spent at work.'" Id. at 6a. Rather,
viewing Section 7(e)(2) as "one among many exe-rep  "
tions," the court concluded that it could not be read to
"exclude every payment that is not measured by the
number of hours spent at work." Id. at 7a. The court
also rejected the Secretary's interpretation of Sec-

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6

tion 7(e)(2), which equated "similarity" with "infre-
quency" of payments?
The court analogized the $12 credits to year-end
bonuses, which, although not dependent on the num-
ber of hours worked, must be included in the regular
rate unless paid entirely at the discretion of the
employer. Pet. App. 7a (discussing FLSA  7(e)(3),
29 U.S.C. 207(e)(3)). Although recognizing that "the
subsections of  7(e) are not mutually exclusive," the
court declined "to read  7(e)(2) as a catch-all, one that
obliterates the qualifications and limitations on the
other subsections and establishes a principle that all
lump-sum payments fall outside the `regular rate.'"
Ibid. The court thus rejected petitioner's argument
that Minizza  v. Stone Container Corp., 842 F.2d 1456
(3d Cir.), cert. denied, 488 U.S. 909 (1988), calls for
treating "all lump-sum payments negotiated in the
collective bargaining process [as] excluded from the
`regular rate.'" Pet. App. 8a. Although the lump-sum
payments at issue in Minizza were not deemed part
of the regular rate, the court determined that Min-
izza is distinguishable from the present case because
"the baking industry's accommodation involves long-
term, planned distributions of a kind dissimilar to the
one-time distribution in Minizza." Ibid.
Because "the right to receive [the $12 credits] is
tied to work schedules that employees dislike," the
court also found the credits analogous to premium pay
for undesirable shifts or unpleasant work environ-
ments. The court noted that such payments are

___________________(footnotes)

2 Stating that Congress "has not delegated to the Secretary
of Labor the power to interpret 7 of the FLSA," the court
said that it was obliged to give the Secretary's interpretations
only "the respect their reasoning earns them." Pet. App. 5a.

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7

included in the regular rate under Section 7(e)(6) and
(7), unless the premium rate amounts- to one and one-
half times the normal rate. Pet. App. 8a-9a.
Based on its consideration of the various exceptions
in Section 7(e), the court determined that the word
"similar" in Section 7(e)(2) "refers to other payments
[to an employee] that do not depend at all on when or
how much work is performed." Pet. App. 9a. Pay-
ments of that sort, the court determined, include
"vacation pay, other compensation for hours not
worked, * * * reimbursement of expenses," and
possibly "call-back pay" (i.e., "compensation for ab-
breviated rest between work periods"). Ibid. Such
payments, however, do not include "premium rates for
`bad' shifts," or, in the case of earned work credits,
"compensation for working an unpleasant or incon-
venient schedule." Id. at 9a-10a. The court therefore
held that the exceptions in " 7(e)(2) [do] not keep the
$12 credits out of the `regular rate.'" Id. at 10a. 3.

       ARGUMENT

The decision of the court of appeals, which affirms
the permanent injunction against petitioner's treat-
ing "earned work credits" as exempt from the regular
rate of pay for purposes of the Fair Labor Standards
               

___________________(footnotes)

3.  The court noted, however, that Section 7(e)(7), 29 U.S.C.
207(e)(7) (excluding premium pay greater than 150% of the
regular rate), and Section 7(h), 29 U.S.C. 207(h) (providing
that certain extra compensation paid under Section 7(e)(7)
"shall be creditable toward overtime compensation"), might be
applicable "in any follow-on litigation seeking back pay." Pet.
App. 10a. Thus, it hypothesized premium pay for Sunday
work that, when combined with an allocated portion of the
earned work credit, exceeds 150% of the weekday hourly rate
and thereby qualifies for exclusion from the regular rate under
Section 7(e)(6) or (7).

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8

Act, is correct and does not conflict with any decision
of this Court or any other court of appeals. Moreover,
as petitioner acknowledges (Pet. 11), this case arises
out of the "idiosyncratic" practices of the baking
industry and involves the treatment of "modest" an-
nual payments for purposes of the overtime provisions
of the Act. Further review is therefore unwarranted.
1. a. Petitioner first contends (Pet. 13) that the
court of appeals'_ construction of Section 7(e)(2) con-
travenes the objectives of the  FLSA. In petitioner's
view, "none of the concerns toward which Congress
directed the FLSA and its overtime provisions exist
here" because bakery workers are "highly paid," the
credits are the product of "a collectively-bargained
inducement to maintain labor peace between a large
industry and a strong, national union," and "the work
credit system has helped to eliminate unfair comp-
etition throughout the baking industry by standard-
izing contract terms and business practices." Pet. 15
(emphasis omitted). The court of appeals, however,
correctly answered that contention by observing that
"the overtime provisions of the FLSA apply without
regard to the level of the standard wage," and that
"[t]here is no collective-bargaining exemption from
the FLSA." Pet, App. 8a.
Petitioner seems to argue that because the baking
industry does not exploit its workers by paying sub-
standard wages or by requiring excessive overtime,
and because the industry has avoided labor trouble by
using the collectively bargained earned work credit
system, the FLSA should not be strictly enforced in
this case. 4. This Court, however, "has consistently

___________________(footnotes)

4.  The argument, supported by amicus BCT  (Br. 5-7), that
the decision is erroneous because it is "disruptive of labor

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9

construed the Act `liberally to apply to the furthest
reaches consistent with congressional direction.'"
Tony & Susan Alamo Found. v. Secretary of Labor,
471 U.S. 290, 296 (1985) (quoting Mitchell v. Lublin,
McGaughy & Assocs., 358 U.S. 207, 211 (1959)).
Indeed, because "[b]readth of coverage [is] vital to its
mission," Powell v. United States Cartridge Co., 339
U.S. 497, 516 (1950), the FLSA's exceptions are nar-
rowly construed, with the burden placed on the em-
ployer to establish that the exception claimed is
applicable. See, e.g., Idaho Sheet Metal Workers, Inc.
v. Wirtz, 383 U.S. 190, 209 (1966); Arnold v. Ben
Kanowsky, Inc., 361 U.S. 388,392 (1960). Moreover, it
is well established "that congressionally granted
FLSA rights take precedence over conflicting pro-
visions in a collectively bargained compensation ar-
rangement." Barkentine v. Arkansas-Best Freight
Sys., Inc., 450 U.S. 728, 740-741 (1981) (citing cases).
Thus, "[although our public policy recognizes the
effectiveness of collective bargaining and encourages

___________________(footnotes)

relations" (Pet. 23) is unsubstantiated and has no bearing on the
issue at hand. First, it is unconvincing that labor peace in the
baking industry depends upon retaining petitioner's treatment
of earned worked credits in calculating overtime. What is at
stake in this litigation is not the viability of the entire earned
work credit system, but rather some adjustments to overtime
pay that represent only modest sums of money. See Pet. App.
3a. Second, the fact that the treatment of earned work credits
is beginning to arise at the bargaining table does not in any way
indicate that the issue cannot be resolved by the parties without
resort to "massive strikes and interruption of the stream of
commerce." Pet. 23. As the court of appeals noted, "the par-
ties can adjust the collective bargaining agreement" to respond
to the treatment of credits as part of the regular rate. Pet.
App. 2a-3a.

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10

its use," nothing in that general policy authorizes a
court "to give decisive weight to contract declara-
tions as to the regular rate because they are the re-
sult of collective bargaining." Bay Ridge Operating
Co. v. Aaron, 334 U.S. 446, 463 (1948); see also
Walling v. Youngerman-Reynolds Hardwood Co.,
325 U.S. 419, 424 (1945) (the regular rate "is not an
arbitrary label chosen by the parties; it is an actual
fact"); 29 C.F.R. 778.108. Consequently, contrary to
petitioner's argument, the decision below is entirely
consistent with the FLSA's broad purposes.
b. Petitioner's assertion (Pet. 17-18) that the court
of appeals "usurp[ed] the role of Congress" by
"amending]" the statutory provision at issue is like-
wise meritless. The phrase in contention is Section
7(e)(2)'s exclusion from the regular rate of "other
similar payments to an employee which are not made
as compensation for his hours of employment." 29
U.S.C. 207(e)(2). The "similar payments" refer back
to "payments made for occasional periods when no
work is performed" (i.e., for "vacation, holiday,
illness, failure of the employer to provide sufficient
work, or other similar cause") and "reasonable pay-
ments for traveling expenses, or other expenses, in-
curred by an employee * * *  and properly
reimbursable by the employer." Ibid.; see Pet. App.
9a. Here, the "earned work credits" are neither pay-
ments for "periods when no work is performed" nor
reimbursements for "expenses * * * incurred by an
employee."  5.

___________________(footnotes)

5. The Secretary's regulatory interpretation of Section
7(e)(2) expIains that payments under the "other similar pay-
ments" exclusion must "be `similar' in character to the pay-

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11

The earned work credits are compensation for
being required to work an undesirable schedule,
namely one in which the employee is not given two
consecutive days off in a workweek.  Such extra
payments "tied to work schedules that employees
dislike"  are, as the court of appeals determined, most
similar to "premium wages for working weekends, or
the night shift, or in noisy plants." Pet. App. 8a. 6.  AS

___________________(footnotes)

ments specifically described in section 7(e)(2)."  29 C.F.R.
778.224(a). As examples, it  lists:
  (1) Sums paid to an employee for the rental of his truck
or car.
  (2) Loans or advances made by the employer to-the
employee.
  (3) The cost to the employer of conveniences furnished
to the employee such as parking space, restrooms, lockers,
on-the-job medical care and recreational facilities.
29 C.F.R. 778.224(b). Obviously, the earned work credits in
this case are not at all similar in character to these exemplary
payments.
6.  Petitioner takes issue with this characterization on the
ground that, unlike a "Sunday rate" or a "nighttime rate," the
earned work credit "is indifferent to what hours of the day or
days of the week the work is done." Pet. 24. However, the
extra payment for working a week without having two con-
secutive days off is comparable to the other forms of premiums,
which likewise compensate for intrusions on the employee's
leisure time. Moreover, petitioner is mistaken in asserting that
the characterization of the earned work credit system as "an
incentive to employers" (ibid.), or "a penalty on the employer
for * * * lowering the quality of their employees' time off"
(Pet. 25), somehow precludes the payments from being incor-
porated in the regular rate. Other forms of premium pay, such
as for working nights or Sundays, may also function as an "in-
centive" for employers to minimize such work and a "penalty"

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         12

the court of appeals pointed out, premium wages of
this sort may be excluded from the regular rate upon
which overtime is calculated only if specified statu-
tory conditions are met. Such wages are excludable
if, for instance, they are paid entirely at the discre-
tion of the employer, 29 U.S.C. 207(e)(3), or if they are
one and one-half times the rate that is normally paid,
29 U.S.C. 207(e)(6) and (7). 7.  Otherwise, they are in-
cluded in the regular rate. See 29 C.F.R. 778.207(a)
("extra compensation provided by premium rates
other than those described cannot be treated as over-
time premiums"), (b) ("The Act requires the inclusion
in the regular rate of such extra premiums as night-
shirt differentials * * * and premiums paid for
hazardous, arduous or dirty work.").
The court of appeals was correct not to read
Section 7(e)(2) "in isolation," and to reject a reading,
offered by petitioner, that would exclude "every pay-

___________________(footnotes)

for employers when they do not, yet those attributes do not
altogether remove such payments from the regular rate. Ac-
cordingly, the court of appeals was correct in holding that
"[t]he $12 credit, whether or not designed as a 'penalty' is
`remuneration for employment' and counts unless it comes
within one of  7(e)'s many exemptions." pet. App. 4a.
7. Petitioner mischaracterizes Section 7(e)(6) and (7), stating
(Pet. 25) that those exceptions were designed solely "to prevent
requiring `overtime to be paid on overtime.'" The exceptions
for premium payments (e.g., for Sunday work or irregular off-
hours work) that are at least one and one-half times the normal
rate apply whether or not the premiums are paid to employees
who have already worked at least 40 hours in the week. In
other words, the extra payments are for working on Sunday or
outside normal working hours, not for working overtime.
Compare 29 U.S.C. 207(e)(5); 29 C.F.R. 778.202 (premium pay
for hours in excess of daily or weekly standard).

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13

ment that is not measured by the number of hours"
worked. Pet. App. 7a (declining to read Section 7(e)(2)
"as a catch-all, one that obliterates the qualifications
and limitations on the other subsections and estab-
lishes a principle that all lump-sum payments fall
outside the `regular crate'"). The court's holding (id.
at 9a) that "[t]he word `similar' [in Section 7(e)(2)]
refers to other payments that do not depend at all on
when or how much work is performed" is consistent
with the Act's scheme of exceptions and does not, as
petitioner asserts (Pet. 18), "rewrit[e] the FLSA."
2. The court of appeals' decision does not conflict
with the Third Circuit's decision in Minizza v. Stone
Container Corp., 842 F.2d 1456, cert. denied, 488 U.S.
909 (1988). In Minizza, the Third Circuit held that
two lump-sum payments made to induce employees
to ratify a collective bargaining agreement were
exempted from the definition of "regular rate" under
Section 7(e)(2). The court determined that those
lump-sum payments "share[d] the essential char-
acteristic with the other types of compensation
specifically included in [Section 7(e)(2)] of not being
compensation for hours worked or services ren-
dered." 842 F.2d at 1462 (emphasis added). Minizza's
holding is thus substantially similar to that of the
Seventh Circuit in this case, which stated that pay-
ments not tied to "when or how much work is
performed" are excluded from the regular rate. Pet.
App. 9a. Under either court's formulation, earned
work credits must be included in the regular rate
because they are paid for "services rendered" or
"work performed" during weeks in which an employee
did not receive two consecutive days off. See 29
C.F.R. 778.224(a) (the "other similar payments" lan-
guage in Section 7(e)(2) "was not intended to permit

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14

the exclusion * * * of payments such as bonuses
* * * which, though not directly attributable to any
particular hours of work are, nevertheless, clearly
understood to be compensation for services"). The
lump-sum payments that were excluded in Minizza
are distinguishable because they were not tied to
work performed or services rendered their purpose
was to encourage employees to ratify a collective
bargaining agreement; each employee received the
same amount of money regardless of how much work
he or she had done; and the payments were one-time
distributions. 842 F.2d at 1458.
Contrary to petitioner's contention (Pet. 21), the
court below did not "overlook[] the fact that the
earned work credit system was * * * an inducement
to contract ratification" or that the payments were
intended to operate as penalties for employers who
impose unfavorable work schedules.  Rather, the
court determined that, irrespective of how the parties
describe the earned work credits or their motives for
incorporating them in collective bargaining agree-
ments, the credits function as "remuneration for em-
ployment" that is not subject to any of the enumer-
ated exceptions. Pet. App. 4a;  see also id. at 8a ("That
there was a strike in 1972 cannot detract from the
fact that the baking industry's accommodation in-
volves long-term, planned distributions of a kind
dissimilar to the one-time distribution in Minizza.").
Thus, the court below, like the Third Circuit in
Minizza, properly focused on the substantive charac-
ter of the payments and the manner in which they
were made in order to determine whether the pay-
ments were tied to work performed or services
rendered. See Minizza, 842 F.2d at 1462 n.9 ("What is
important is the substantive characterization of the

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         15

payments," as opposed to "what the payments are
termed."). The conclusion by the court below that
earned work credits are, in fact, payments for
working an undesirable schedule is thus consistent
with the holding of Minizza.
     
 CONCLUSION

The petition for a writ of certiorari should be
denied.

Respectfully submitted.

          DREW S. DAYS, III
          Solicitor General

THOMAS S. WILLIAMSON, JR.
Solicitor of Labor              

ALLEN H. FELDMAN
Associate Solicitor

NATHANIEL I. SPILLER
Counsel for Appellate Litigation

ELIZABETH HOPKINS
Attorney
Department of Labor

DECEMBER 1995

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