judges i'm tom uren representing the plaintiff class i seated most of my time to the department of labor i do want to do a couple of points briefly and they're not surprising points first point i'd like to make is that going through all of the regulations and connecting the dots the deals that deal when an employer writes down i think are going to do something and then they do it and they get something in exchange for it that's that you know where was it written it was written in the policy shift relief guidelines and in the policy governing handbook or more than that this is the hymn book and more than that it's also in their behavior but the but the writing you say the deal is really the handbook that's the basis for the deal and then their conduct reinforces the deal but we have case law saying the handbook really isn't yes and what perhaps the larger point is someone reading this will be paid for lunch time as part of their schedule work understands are going to be paid for and the company benefits from that not just in the you know it can dribble way of you know they're here and they're working they get morale you have a better morale you have a better workforce you have a more productive workforce but surely you can see there's ambiguity in the in the policy in your adversary points for that very same language to say here is an explicit statement of our offset policy because it qualifies under what circumstances what category of of people will be entitled to th pay given that say we have to look to the regulations i'd like to understand from you and also the department of labor are you asking us to look to three twenty a and b as as binary options that is we have to a court has to make a decision implying in some cases simply from conduct that there either was an agreement to treat time as hours worked or was not in agreement or it was an agreement not to treat in my view there were there was an agreement so there are ideas there could be if there was no agreement over you're up against a finding of fact by the district court that there was no agreement isn't that doesn't that have to be overturned all that is iran iraq that is for a jury that is that is that is why the were challenging the ruling but are you are going as a matter of law that we are we are limited to read it binary universe that under the regulation either there is an agreement to treat it as hours worked or there's an agree to not treat it as hours worked and we're do you can see that the regulations allow for and don't provide the consequences if there is simply no agreement there could be conflict yes i think there could if there is no agreement on something there is no agreement on something that's that's that's a possibility in the universe of possibilities so if there is no agreement then then we move from that to twenty three which says where payments essentially made as compensation for such it is ours are not regarded as working fine they're included in the regular rate of pay less qualifies for exclusion but without an agreement you don't have three twenty well that's you back in the e two box art but but except that they're treating it as they're treating it as time to work time work well you concluding that from the policy and i understand from your brief your argument is the fact that well the intention to treat it as ours work is is and i'm i don't mean to be simplistic and i believe it's simple not simplistic to go back to the policy they're treating work that is otherwise not otherwise not work out exactly and they've decided treated for they've decided to treat it as work time and pay for it do you need an agreement to win no conduct to win well and agreement right where you need an agreement by written or by conduct in order to prevail maybe maybe that's better asked of the department of labor i try hadn't thought of it that way judge  that there was no agreement that's a bit of an uphill battle under a clearly erroneous and no i think in some regions that in the summary judgment standard that is it's been over i think that the standard is that indicate that payments for a bonafide meal breaks cannot are set on paid overtime competition and this is true regardless of whether the payments are included in the regular rate and regardless of whether that time is treated or not treated as hours worked so i think one of the questions judge who's asked is it is there a binary choice between either treating this hours worked or not is is a question that can be that i'm happy to address but ultimately i doesn't actually matter because the question here is whether the whether dupont can take an offset for this bonafide member payment and regardless of how they treated it including it in the regular rate we're not treating them as hours worked or not they cannot take a credit for that payment your position being that the statute needs to provide for the credit and it only does so in three limited instances exactly where i came in to is included in the regular rate i'm sorry where payment is excluded from the regular rate  provided for in section seventy of this statute the section seven h is very clear you can only get a credit for certain types of pain and section seventy five six and seven those types of things either payments that are executed from the regular rate are clearly by statute cannot be used as a credit now payments that are included in the regular rate they cannot be used as a credit and that's consistent with basic f l s a principles and basic fairness to the point of the getting telling us why the policy on the double counting tell us in practical terms how that thinking goes that well it's included in the regular rate so obviously so i think one think it's included in the regular rate and what that means when something is included in the regular rate that the regular rate essentially represents the base wages upon which overtime is calculated there's courts of recognize the regular rate is the key to overtime so all payments to the employee hourly wage wages attendance bonuses anything extra that's not excludable by statute is a base wage and that is and the point of the overtime precision is that the premium for over to working overtime hours the employer has to pay in addition to that base wage they have to pay a fifty percent premium for extra hours in addition to that base wage and so any payment that has to be included in the regular  rate it's part of that base wage cannot then be counted as actually having paid that overtime premium that would defeat the purpose of the overtime premium which is to require extra payment on it do it in addition to that if you included in the regular rate does that to add that into the total method so that increases the numerator the denominator is the total hours worked stays the same at forty eight so essentially you're increasing the regular rate by having to that's a bonus so  payment that here dupont chose to include it in the regular rate it didn't have to but it did that increases that numerator however it also happened to have treated it as hours work as shown on the p so actually in a fact it doesn't have the effect of increasing the regular rate because rate both increase it has it in a toy monitor so it doesn't really matter it doesn't matter in terms of the doubt the actual regular rate it equating three twenty with that portion of two twenty three deals with hours that are regarded as working hours with with those consequences that is it doesn't have an effect on  a mathematical calculation but it's still treated as creating tort over time i hadn't thought of the family but actually i think yes i think they are essentially consistent with each other and that if the employers is deciding to treat non compatible time as hours worked then venue rates essentially have to treat it just as you would understand two twenty three which is and he's trying to has to be included in the regular rate is included in the regular rate is there girls between it being regarded under the act as hours worked and being treated as hours worked in those two regulations not ultimately in that i mean regarded as hours work i think just indicates that the employer had a choice at the outset how it was going to treat the out there bonafide male break time could have excluded it from the regular rate and not included in our total hours worked but once it has chosen to include then essentially no i think the the result is the same does your argument turn on the regulations themselves and if we look at the plain language of the statute does your position still hold up our position is still the same with the plai language of the statute the regulations are interpretive regulations and they're meant as a guy through all the myriad different ways that employee employers choose to compensate employees so no statute is unambiguous on its face that's where we would leave our analysis i think certainly the court could i mean i think the regulations help help illustrate how this actually works but the statute itself does answer the question is we're sorry if we by subsection age that there is not a prohibition on offset well in that if they're not covered by the e two exclusion that means they have to be included in the regular rate because any payment to employees it is not excludable under that anything that is included in the regular rate because it's the part of the base wage cannot be then used to ask that extra overtime premiums that are due can you address how we can reconcile seven seventy eight three twenty  which says that to a seventy two exclusion may apply to regular lunch breaks which seems to conflict with seven seventy eight to eighteen b which says regular breaks do not fall into that ins and and section and the regulation at two one eight seven seventy two when it really is about that first provision occasional periods for vacation sickness except for a very so you say the tagline  meal breaks from the regular which you haven't mentioned we all are i think we are is actually very helpful in this case in that it's similar to this case we were the employer chose to include payments for holidays vacations within the regular rate didn't have to it could have excluded it but it chose to include it and the court said once the employer has chosen to include it it cannot then strip out those arguments or take a credit for it then it still would not affect it they would not be entitled to an offset correct excludable it but they would have had nights they went it wouldn't pay it they wouldn't pay if they had excluded and yeah i mean well if they had excluded it they w seem to have the perverse result of creating a disincentive for employers to effectively overcompensate just for ease of of processing and i break and just count the whole twelve hours and and that's going to more than cover the overtime that would be involved isn't your position one that really turns the purposes of the statute on its head well i think there's a couple ways to look at it and i don't think it alternately does that because an employer that for whatever reason wants to compensate for bonafide meal breaks they think it helps morale they want the flexibility to be able to call people back to work should the need arise whatever the reason an employer that wants to provide that benefit or that has to because of that and go she asians can still provide that benefit it's just that the l s a just requires them to pay for all their actual hours of work they're not being they're not being punished certainly here because they provided that that's not what got them into trouble with government in trouble is if they fail to actually pay for all the hours of so that the employer has to actually pay for all actual hours worked because lots of there are lots of schemes that employers have come up with over the years that regulations  to address where they've tried to shift money around that has the ultimate effect of lowering the regular rate so that they do have to pay less overtime and so most of these provisions are designed  are are set out to explain how an employer is really not allowed to do that because of many instances if an employer wants to shift and say we're just going to give you a lump sum for all the extra overtime you're going to do it's really a a  way to skirt the actual regular rate requirements do we need to i know we're taking over time but i think we do that what basis do we need to decide whether there was an agreement or not and how well the finale i don't think that is is this case does not hinge on that because as i've said that whether there was an agreement to treat it as hours worked or to include it in the regular rate is ultimately irrelevant here i think and i think that the evidence ind don't think the court needs to even reach that far can be decided what's your position on that the regulations the questionnaire i was asking your colleague earlier do we think of it three twenty and b as our binary options that is do we conflate there is no agreement with there's an agreement not treated as hours worked or is there a third category that is simply not addressed by the regulations where the imply that one of those is the case that there is an there is an agreement and then the consequences are are spelled out were is there are a third category that simply not address that is no agreement theory there is a third category but in practice i don't see how there is because an employer has to treat the much treat the hour they either do include the hours in the total hours worked or they don't but then doesn't mean that there is a mutual understanding between the conduct in this particular type of scenario the employer is either going to include that time in the regular rate and treated as hours worked or not so i think there are certainly other payments that don't have to be included they are included in the regular rate that are not treated as hours worked and the employer could in fact do that here and that if him if two part wanted to for whatever reason include the bonafide mil rate payments in the regular rate but not treated as hours worked i suppose it could have that is not what it did here because if it had it the total hours worked would have reflected that it would have been less each work week and in fact the regular rate would have been higher because the numerator would have been higher so ultimately i think i think the conduct of the parties particularly the manner in which the employer compensates the employee shows how they're treating it it's there's no requirement that it be a written out agreement tonight and if you think you think the language of the flags or the regulation deals with the parties agreed to treat the ti contract exact wrong about how have they treated this right i think that's a yes that's a very useful distinction well in the lead and a three twenty says in some cases an agreement so maybe it's acknowledging that there's not always going to be an agreement i mean in the absence of a c p a frankly i doubt there would be a written agreement about that level of detail we're going to treat this as hours worked or not i mean here we have this hymn book policy which i think lens in favor of finding room but it your honors at the outset i think it's would be helpful to just kind of rewind and reiterate a few undisputed facts that are helpful to frame when i see as two issues before this receive eight hours of overtime each week sure for because they're working forty hours well we first have to figure out the actual hours that they work and that does not include the meal breaks and we have  presuming that everybody's worked at least twelve hours and we've more than covered it by providing these three bonafide but one of those one of those forty eight hours is compensated time and i have as it is they didn't w governs how we calculate overtime compensation and a key provision we've been focusing on is two zero seven two zero seven the which tells us how we determine the regular rate and this is where  wheeler that it was a choice with respect to amounts that did fall within one of those it exclusions that was the holiday the vacation sick value and that if an employer wants to include it in there they can but they don't have to but with just of regulation put you right back into the two as as qualifying for that exclusion well with all due respect the department of labor i have an issue with three twenty b that i believe is contrary to all seven because two hundred seventy three twenty b says that where appear from all the pertinent facts that the parties have agreed to exclude such activities from hours works payment for such time would be regarded as qualifying for exclusion qualify under two two or seventy two then they must be excluded and so how is it that they say in three twenty b that well we can have this side agreement the psyche of it if we're treating bona fide meal breaks which have the appropriate regular rate because we've included those meal great payments in there and it's simply a matter of applying that calculation and that's why there isn't a specific provision that says you can credit in this instance there's no need for it because it's simply a matter now of applying the formula they gave the department of labor and congress knew how to deal with an author when they needed to  there hasn't been any mention here of the regulations seventy five eighteen and seventy five ninety seven eighty five eighteen talks about rest breaks which under the law because they're only twenty minutes or less it's been determined our compensable as a matter of law and so the department of labor now we have you know on its face hours work we don't need any agreement they're telling us those  matter of law seventy five nineteen deals with millbrae it says going to five male periods or not work time and it didn't say anything about that you can offset doesn't that is kind of apples and oranges to the computation of the regular  transparency issue here judge i believe it is transparent and in fact it starts crassus when we're doing the employees of think we're here we're actually compensating them at a greater rate because we're including those dollars per hour for twelve hour shifts forty eight hours you do the ten times of forty let's assume thirty minutes appreciate if compensable time and then the three thirty minute non compatible work because that would increase you have to put all of the ration right it was right you if you took out hours work that you say are nine hours work if you took them from the forty eight hours the six hours are basically would go up that's right and they get paid more i get back to the statute where is it in the statute that you are permitted to credit these payments against over time where is it in to us and i argue that it's right into a seventy by mandating that it's included in the regular rate but isn't is where wheeler goes directly the other way because it says we're a credit is allowed the statute says so and point specifically five six and seven i would respectfully disagree with that statement that was on some very specific facts at that time we are holding in put on a very different type of credit situation and if we look at the facts and wheeler we had two different types of payments one which will likely be a great pains here that's the incentive which doesn't fall in any of those category exceptions and that the employer and the union by agreement said well you know what we're not going to include that and judge with the third circuit in that case said no you must include and then there were these payments holiday sick they clearly did fall within ea to that by agreement the party said well we'll include those and so essentially it was kind of no harm no foul it all worked out in the wash we're being creative in our collective bargaining and they got judge ambrose to agree that at the end of the day the employees allegedly made out better and what the third circuit said wheeler was you know you can't attract around the n f l or say with respect to those incentive pay they must be included in the regular re this credit issue was simply trying to take credit for the fact that well we didn't include we in we included certain things that we didn't have to so that takes care of the ones we executed that we did as it was very close to what we have today yeah and the case really talks about the fact that you know there's a there are a few exceptions here where this is premium an extra compensation but it's rather conscious it's a credit for allegedly including non work pay presumably at a non premium three or to be unless we're going to hold this regulation ultra various points s right back to his bonafide no brakes accepting dupont's position that it there was an agreement not to include them or that we can from the kind doctor involve we should include that they were not going to be treated as as hours worked doesn't that point us right back to eat too and we're back in in two wheelers directed there's absolutely no basis to put these payments in easy to no break according to the department of labor itself would we have to hold the regulation or trigger is to to reach that result well i do but as i believe i stated earlier i believe three twenty being conflicts look through all seventy and so far as it says that if there's some agreement to  not treat these as hours of work which is by definition a bona fide we'll break that somehow they now can be excluded from the regular rate and i maintain that's contrary to what he tells us and in fact the department of labor's other decides to be more generous than it needs to be by overcompensating for the amount of overtime worked by paying for things that are not required to pay for treating those hours as i as paid finally an unconditional we're free and clear the approach that you're taking which would sort of allow a post hoc office act and what in fact occurred here yet and you know piers trip come as a surprise to you the employee plaintiffs it's seems contrary to the meaning of wages that is that they were free and clear they they were with believe that the payment of these wages here is entirely consistent with the statute and that's all the statute requires that you pay for all hours worth we follow this act with respect to including these payments in the regular rate as we've discussed at length i maintain that by including them in the regular rate then there is no reason that then we simply don't apply the formula of the rate times the hours worked and if over forty time and a half and the employees are getting all the way just to which they are entitled and that's what the statute requires create the ambiguity is around whether this was i was worse and its consequences for overtime i don't see anything preventing that but i don't i also don't see the ambiguity here with respect to the arguments about an agreement here  i believe this policy is turning to simply reflecting an intent of all the statute and intent to do exactly what dupont's doing particularly when you read it in the context of those employees who are not working in the twenty four seven operations where there is this handoff pre and post appreciate here where they're engaged in this i'm sure and also know that every corps who have review they they don't engage in the analysis of the regulations that has been the subject of our discussion today i absolutely agree and i would maintain that there is not a great deal of analysis because i think it's pretty straightfor this is when you can't do it but hey once is included in the regular rate it's simply a matter of pining the formula of the rate on the hours worked because we now have it's mandated that must be included if that were true how would you distinguish hours actually worked that are also included in the hourly rate and appear on a piece of it as an hourly rate and doesn't that all if you take that to its logical conclusion does not  first have what is the regular rate but then you need to determine what the hours worked are when you apply that for you would treat you you would distinguish hours that are treated as actually work thanks i now have a problem with when i said it's all about semi colons i don't necessarily agree when you get to eat to talk about occasional periods no work is performed vacation holiday illness or other similar after the first semi colon recent pains for traveling expenses or other expenses incurred semi colon and other similar payments to an employee which are not made as compensation for his hours of employment how is this a payment similar to an occasional vacation illness travelling expense well your honor it's similar in that it is not made for it is not made as compensation for our well then  could have said another payments which are not made as compensation but it says other similar similar has to relate to something well it relates to both of the two clauses arrive i mean but but who knows one of five meal times are not a regular bonafide  like these sporadic you know a travel expense or vacation or well the second because the reasonable payments are travelling expenses there's no requirement that that be occasional those no nobody is occasional well but it know it could be incurred very regularly well but it doesn't it's not you know every monday every monday every monday where meal break is three times a day which is totally regular i'm a troll has to be occasional i can envision work situations where travel is similarity is truly in that the compensation is not made for hours of employment and i think that's reflected in the regulation seven seventy three twenty  permits payments for bonneville rigs to be excluded what's interesting is that frankly that regulation that permits an employer to exclude payments from their regular rate which polaris recognize disincentive to providing a payment for a minute because the employer can actually just exclude it from the regular rate excluded from the hours worked it doesn't reach that forty hour threshold sooner it doesn't inflate the regular rate you can still pay this  ll break time and but then of course cannot take an asset the other thing i'd like to point out is that interesting about apart from whether it's excluded whether it could be excluded from the regular rate or not has not pointed to anywhere in the statute that affirmatively says an employer can take a credit for a payment that is included in the regular rate even if you accept the premise that they had to include it in the regular rate even if that is true there's nothing in section seven either or a credit or anything other than five six or seven exactly and there's a reason why there's a credit for only those three types of payments those are essentially overtime premiums so it makes sense that there's a credit for th this court recognizing wheeler that anything other than those cannot be used as a credit and in that case it was a payment that had been included in the regular rate to do make the distinction between the statute talks about s too that's what it that's what i think the is contemplating that the time was actually excluded from the regular rate because it was not treated as hours worked and in fact you're right in that the regular rate is always the actual fact  could have excluded so you suggesting three twenty b doesn't apply if the hours have it although qualifying for exclusion have not been excluded i thought you were you were arguing the opposite that because it talks about qualifying for exclusion and then the payments for such hours cannot of course qualify as overtime premiums that whether they're actually excluded or not they qualify for exclusion and under the terms of the regulation and pointing right back to the two with their four to age it can't be used offset i'm sorry might be i might have misspoke or i might be misunderstanding your question my understanding  qualifies overtime premiums credible to overtime conversation well if they didn't actually exclude it then you're back in a because they actually included in hours worked you know i think it was some i said seems to me it is soon because they've agreed to exclude the activists from our sport but they actually have yeah i and that the payment will be regarded as qualifying for exclusion under seventy two yeah that's how i've always read it it's saying that you can exclude it and in fact automatically gives rise to an agreement to treat it as hours worked not necessarily including in the regular rate does not just as pick just as paying it does not automatically convert worked it's the fact that they didn't treat it as hours worked on the pay stubs is that's why shows that they treated it as hours worked is their conduct in doing so include you can include an impairment theoretically du pont could do what it did here it could include payments in the regular rate and not treated as hours worked but that's what they say they did but they didn't actually do that because otherwise their regular rate should have been higher because the total hours were sort of the last but either way if they included in the regular rate and treated as i was worker not treated as hours worked it's included in the regular rate and cannot be used as an offset that violates fundamental f l s a principles of double counting and that is what i do point to simply has not shown why they get a credit for having when they include a payment in the regular rate if an employer can get a credit for anything that includes in the regular if it didn't have to pay that it wasn't obligated under the f s a to pay the tenants bonuses production bonuses efficiency those types of guns as well what's to stop an employee from taking credit for that and obviously the f o c is not intended to permit that because the f s a is intended to perth provide an overtime premium in addition to anything that's included in that base wage that regular rate what if an employer says explicitly in its policy or an agreement with the employees that   pay the full ninety minutes well that's a bit of a fiction because if they're saying it's it's paying for the dining and often a shift really time then it is paying for hour's work but it's actually the problem there is that i paying a lump sum for a very in our set of hours worked in f l a say specifically does not allow that i would point to the regulation at three ten which contemplates that exact scenario and specifically says an employer cannot pay a lump sum for varying hours of overtime because in fact what that payment is needs to be include the regular rate and cannot be taken as an offset because what the f l is say requires is overtime payment for actual hours of overtime measurably in understanding the issues in this case by the end of the labor i do want to commend counsel on both sides for excellent arguments in what is very important and a very post thank you thank you very much