Case Title: ALASKA INTERN. INDUSTRIES v. Musarra

Citation: 

Docket Number: 

State: alaska

Court: Alaska Supreme Court

Date: 1979-11-16T00:00:00Z

Document:
ALASKA INTERN. INDUSTRIES v. Musarra  602 P.2d 1240 (1979) ALASKA INTERNATIONAL INDUSTRIES, INC., an Alaska Corporation, and Weaver Brothers, Inc., a Foreign Corporation, Appellants/Cross-Appellees, v. Charles A. MUSARRA, Appellee/Cross-Appellant. Nos. 3652, 3676. Supreme Court of Alaska. November 16, 1979. *1242 Ronald D. Flansburg, Olympia, Charles E. Tulin, Anchorage, for appellants/cross-appellees. J.L. McCarrey, III, McCarrey & McCarrey, Anchorage, for appellee/cross-appellant. Before RABINOWITZ, C.J., and CONNOR, BOOCHEVER, BURKE and MATTHEWS, JJ. OPINION RABINOWITZ, Chief Justice. This matter involves an appeal from a jury verdict in an action brought pursuant to Alaska's Wage and Hour Act, AS 23.10.050-150. The jury found in favor of the employee, Charles Musarra, in the amount of $37,498.03 as overtime compensation due from Alaska International Industries (AII) and Weaver Brothers, Inc. and rejected AII and Weaver Brothers' claims of exemption from the overtime provisions of the Wage and Hour Act under established categories for bona fide executive, administrative, professional and supervisory employees. Charles Musarra was hired as a systems analyst by AII on January 29, 1975. A systems analyst is "a person that takes something that's usually being done manually, a function, be it accounting function, an inventory function, a payroll function, anything of this nature, and develops the methods, procedures, and general outlines or programs along with the necessary forms to convert that particular manual system into a computerized system." During the course of his employment, Musarra was responsible for the implementation of systems programs for the IBM computers at both AII and at appellant Weaver Brothers, a wholly owned subsidiary of AII which employed Musarra as its credit manager and subsequently also as its supervisor of accounts receivable until termination of Musarra's employment on February 13, 1976. There was apparently no discussion at the time Musarra was hired concerning the number of hours he would be required to work, and he was paid a monthly salary thereafter. No provision for overtime pay was made by AII in regard to Musarra's employment. Though he never requested overtime pay in writing during his employment, Musarra testified that on more than one occasion he made an oral demand for overtime compensation. After Musarra's employment with AII and Weaver Brothers was terminated, he instituted an action in superior court under the Alaska Wage and Hour Act for compensation for approximately 1920 hours of overtime for which he had not been paid by appellants. AII and Weaver Brothers defended on the ground that Musarra was excepted from the provisions of the Wage and Hour Act by AS 23.10.055(9), as an individual employed in a bona fide executive, administrative or professional capacity or alternatively, as a supervisory employee *1243 under AS 23.10.060. In its instructions to the jury, the superior court gave the following two instructions which are focal points of this appeal. Instruction No. 15 `Supervisory' means a person who directs the activities of other employees and who does not perform duties which are regularly performed by the employees supervised, except for brief periods of time not to exceed more than 8 hours in the supervisor's workweek. Instruction No. 19 Although plaintiff might not have been employed in a supervisory, administrative, executive or professional capacity a sufficient fraction of his working time to be exempt from the overtime pay requirement under one of these capacities alone, he may still be exempt if: (1) He performed work in more than one of the exempt capacities; and (2) He spent as large a part of his work time in two or more of the exempt capacities as would be necessary to be exempt under the more restrictive applicable exempt category alone. As mentioned at the outset, the jury returned a special verdict in Musarra's favor, awarding him $37,498.03 in additional compensation for overtime work. AII and Weaver Brothers subsequently moved for a new trial, and Musarra moved for additur or, alternatively, for judgment notwithstanding the verdict. The motions were denied, and this appeal and cross-appeal followed. Initially, we are presented with the question of whether appellants AII and Weaver Brothers sufficiently voiced their objections to the instructions to preserve the alleged errors on appeal.[1] Under the standards we have previously articulated, we conclude that counsel for appellants adequately objected to jury instruction number 15.[2] There was no objection by appellants to instruction number 19 in the superior court. Therefore, we are not presented with a question as to the sufficiency of the objection to this instruction in the superior court. However, as will be discussed subsequently,[3] this latter instruction is not critical to the resolution of this appeal. *1244 We now turn to the substantive question of whether the jury was improperly instructed by jury instruction number 15 that a supervisory employee may not perform duties which are regularly performed by the employees supervised, "except for brief periods of time not to exceed more than 8 hours in the supervisor's workweek."[4] The jury instruction given was taken verbatim from the Alaska Administrative Code definition of "supervisory" as used in AS 23.10.060.[5] Appellants do not challenge the validity of the regulation directly but, rather, maintain that the error in the instruction was due to the superior court's improper definition of a supervisor's work week as being limited to forty hours as a matter of law. At trial, appellants argued that the intent of the regulation is to exempt employees who do not work over twenty percent (eight hours out of forty) in a non-exempt category rather than those who do not work eight hours in non-exempt categories regardless of the number of hours worked in a week. Based on their interpretation of federal cases construing the Federal Labor Standards Act, appellants argue that notwithstanding the fact that a "regular work week" is forty hours under both federal and Alaska law,[6] an employee's work week is actually "a fixed and regularly accruing period of 168 hours (7 consecutive 24 hour periods)."[7] We note that, in deciding this question, we are simultaneously engaged in determining the validity of the regulation which defines "supervisory" for purposes of AS 23.10.060, since the regulation and the *1245 instruction are worded identically.[8] Appellants' claim is that the eight-hour limitation on non-exempt work performed by employees otherwise classified as "supervisory" was erroneous in this case. Since the limitation was required by 8 AAC 15.070(h), the instruction can only be improper if the regulation is also invalid. Thus, it is appropriate to review the definition of "supervisory" based on the standards articulated in Kelly v. Zamarello, 486 P.2d 906 , 911 (Alaska 1971),[9] namely, whether the agency acted within its "scope of authority" and in a "reasonable and not arbitrary" manner.[10] That the promulgating agency acted within the scope of its authority is clear from the terms of the authorizing statute, AS 23.10.085(b): The regulations may, without limiting the generality of (a) of this section, define terms used in §§ 50-150 of this chapter... .[11] The further question of whether the regulation is "reasonable and not arbitrary" must be resolved by examining the Wage and Hour Act and regulations promulgated thereunder and by drawing inferences as to the purposes of the particular regulation at issue in this case. Preliminarily, it should be noted that supervisory employees are treated differently under the Wage and Hour Act from individuals employed in "bona fide executive, administrative, or professional"[12] capacities. Executive, administrative and professional employees are exempted from all of the provisions of the Wage and Hour Act.[13] In contrast, supervisory employees are specifically exempted from payment for overtime,[14] but retain the protections of all of the other requirements of the Act, including the minimum wage provision,[15] the requirement that employers keep records of the hours worked, the rate of pay, etc. for each employee,[16] and the availability of certain civil remedies in case of violations of the Act by employers.[17] This separate, more limited exemption of supervisory employees is not paralleled in the federal Fair Labor Standards Act.[18] However, the federal *1246 regulations expressly recognized that local or state law on payment of overtime may differ from the standards set forth in the federal statute. The applicable regulation, 29 C.F.R. § 778.5, provides, in part: Where such legislation is applicable and does not contravene the requirements of the Fair Labor Standards Act, nothing in the act, the regulations or the interpretations announced by the Administrator should be taken to override or nullify the provisions of these laws. Nevertheless, it should be noted that "[c]ompliance with other applicable legislation does not excuse noncompliance with the Fair Labor Standards Act."[19] Thus, it is only where state law is more restrictive or more favorable to the employee that it governs in lieu of the federal act.[20] Administrative regulations promulgated pursuant to the Alaska Wage and Hour Act distinguish between administrative, executive, and professional employees who uniformly are allowed to spend a percentage of the hours in the employee's total work week performing non-exempt activities, and supervisory employees,[21] whose limitation on non-exempt work is clearly stated in terms of "brief periods of time not to exceed more than 8 hours in the supervisor's work week."[22] This differential treatment of supervisory employees on the one hand and administrative, executive, and professional employees on the other hand follows the distinction drawn by the statute itself, in exempting the latter classes of employees from the Wage and Hour Act totally, while exempting the former class only from the overtime provisions. The eight-hour restriction on non-exempt work performed by supervisory employees included in the administrative code embodies a relatively protective attitude toward such employees in comparison to the arguably higher managerial categories of administrative, executive, and professional employees. This attitude, of course, also is reflected in the statute which provides supervisory employees with the additional protections noted above. The flat eight-hour limitation on the amount of time a supervisory employee may perform non-supervisory functions during the work week reasonably may be intended to prevent employers from taking advantage of their supervisors by requiring them to work an excessive number of hours, most of which are spent doing non-supervisory tasks. As the superior court recognized, "it is reasonable to assume that if the necessities of the job operation are such that the supervisor must spend many hours doing the same work as the employees he or she supervises, whether it be in a small office or otherwise, you've got to pay your managerial employees overtime."[23] *1247 Given the foregoing rationale for the express eight-hour limitation in the regulation, we hold that the regulation is "reasonable and not arbitrary" under the review standards espoused in Kelly v. Zamarello, 486 P.2d 906 , 911 (Alaska 1971). Consequently, we conclude that instruction number 15 embodies a correct statement of the law and that the superior court did not err in giving the instruction. Cross-appellant Musarra contends that the jury failed to double the award of overtime compensation as it was required to do by the terms of the governing statute, AS 23.10.110(a), which provides for an additional award of an amount equal to the amount of unpaid overtime as liquidated damages.[24] Musarra further contends that the superior court failed to double the jury's award upon cross-appellant's motions as it was required to do by law and that, therefore, this court should order the award of damages to be doubled in cross-appellant's favor. Cross-appellees AII and Weaver Brothers argue to the contrary that the determination of damages is within the province of the jury and that we should not disturb the jury's verdict for this reason. Review of the jury instruction given and the form of the special verdict shows that the jury was ambiguously instructed regarding liquidated damages. Jury instruction number 14 stated, in part: An employer who violates this provision is liable to an employee affected in the amount of his unpaid overtime compensation, and in an equal additional amount as liquidated damages. The special verdict form was divided into two interrogatories to the jury: 1. Was plaintiff employed by defendant in a supervisory, executive, administrative, or professional capacity, or such a combination of those capacities as to be exempt from the requirement that he be paid one and one-half his regular rate of pay for overtime work? 2. If the answer to question number one is no, then what is the amount of additional compensation to which plaintiff is entitled for overtime work? State a dollar amount. The jury answered the first interrogatory in the negative and set the dollar amount of damages at $37,498.03, which was the exact amount Musarra claimed he was entitled to for overtime compensation. We need not decide the cross-appellees' contention that Musarra failed to object adequately to instruction number 14 or to special verdict number 2 because we conclude that, in any event, ambiguities in instruction number 14 and the special verdict form constituted plain error.[25] There was no clear instruction in this case which *1248 would render merely speculative our consideration of whether the jury may have disregarded the instruction regarding the award of liquidated damages.[26] In our view, under the instructions given it is likely that the jury became confused concerning whether they were to double the amount found to equal Musarra's damages. A number of factors have persuaded us that the jury erred in failing to award liquidated damages. At the close of the trial, the jury granted Musarra the exact amount of overtime compensation he had requested, based on the hours of overtime that he stated he had worked. Further, no evidence was produced at trial by AII or Weaver Brothers which contradicted Musarra's statement of the number of hours he had worked overtime.[27] Thus, there is no amount between $0 and the full amount to which Musarra claims he is entitled that could have been awarded. Also, we note that the figure awarded, $37,498.03, is an odd number, which indicates that it could not have been a multiple of two of any other whole number. Thus, we conclude that the jury's award was equal to the amount of overtime compensation due Musarra, before adding an equal amount of liquidated damages to it as the statute requires.[28] The foregoing brings us to the final question presented in this appeal, namely, whether the damages should be increased as a matter of law by the superior court, or whether the jury should be given proper instructions on the award of liquidated damages following a new trial. The starting point of our inquiry is the statutory provision which grants liquidated damages to an employee improperly excluded from overtime compensation under the Alaska Wage and Hour Act. AS 23.10.110(a) provides: (a) An employer who violates a provision of §§ 60 or 65 of the chapter is liable to an employee affected in the amount of his unpaid minimum wages, or unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. A similar federal statute which allows for liquidated damages[29] has been interpreted extensively by the federal courts, and we *1249 think these cases are useful in construing the corresponding Alaska statute. Older federal decisions found that the assessment of liquidated damages under 29 U.S.C. § 216(b) could not be waived or compromised by agreement between the employer and the employee;[30] nor could liquidated damages be avoided by the good faith of the employer.[31] In fact, the seeming inflexibility of the provision's effect on employers and its mandatory character were the specific objects of relief legislation in the form of a 1947 amendment to the federal Act. 29 U.S.C. § 260[32] now provides that the good faith of an employer and "reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act" renders the award of liquidated damages discretionary with the trial court.[33] The federal cases interpreting this provision make it clear that the decision on liquidated damages it mandatory except where the employer is able to show that he is within the "good faith" exception to the requirement[34] and that, in any case, the decision to award liquidated damages is to be made by the trial judge and not by the jury.[35] The Alaska Wage and Hour Act contains no "good faith" exception to the mandatory award of liquidated damages in cases brought pursuant to AS 23.10.110. Therefore, since the Alaska statute encompasses essentially the same purposes as the federal Act, we think it is logical to conclude that liquidated damages under the Alaska Wage and Hour Act must be granted as a matter of law in the same manner as they were granted by the federal courts as a matter of course prior to the enactment of the "good faith" amendment to the federal liquidated damages provision.[36] Given our conclusion that the award of liquidated damages is mandatory in this case, we conclude that there was no reason to submit the issue to the jury in the first trial, and that the award for liquidated damages should be made by the superior court upon remand. Affirmed in part, Modified in part.