No. 89-082 IN THE SUPREME COURT OF THE STATE OF MONTANA

IN THE MATTER OF WAGE CLAIMS OF RANDALL P. STEWART,ALLEN W. COPELAND, LIONEL F. McKNIRE, GREG W. BRANTNER,ARTHUR BRISCOE, Petitioners and Respondents,-VSREGION I1 CHILD AND FAMILY SERVICES, Respondent and Appellant.

APPEAL FROM: District Co.urtof the First Judicial ~istrsct, In and for the County ~ev~is & Clark, The Honorable Jeffrey Sherlock, J.udqepresiding. COUNSEL OF RECORD: For Appellant: Richard Larson; waiter Schuster & Larson, Great Falls, Montana For Respondent: Timothy J. McKittrick; Mc~ittrick Law Firm, Great Falls, Montana For Amicus curiae: ~elanie A. Syrnons, Dept. of Labor & Industry, ~elena, Montana 

### an ice Van ~iper; Meloy Law ~irm, Montana ~esidential Child Care Assoc., Helena, Montana Nick ~otering, Dept. of Institutions, Helena, Montana Cary B. Lund, Dept. of S.R.S., Helena, Montana patrick M. Driscoll; ~hronister, ~riscoll & Moreen, Mt. Council of Mental Health Centers, Helena, Montana Joe R. Roberts, Mt. Assoc. of Independent

### isa abilities services, Helena, Montana

Filed: Submitted: December 12, 1989 Decided: March 15, 1990Chief Justice J. A. Turnage delivered the Opinion of the Court. Region 11, Child and Family Services, Inc., appeals the First Judicial District Court, Lewis and Clark County, review of administrative hearingsheld by theMontana Department of Labor and Industry. The District Court reversed the agency's determination that live-in employees were not entitled to compensation for time spent sleeping during supervision of residential care facilities and ordered the appellant to pay back wages, liquidated damages, costs, and attorney fees against the employer. We reverse. ISSUES Appellant Region 11, Child and Family Services, Inc., raises the following issues. (1) Did the District Court err in substituting its own findings of fact for those of the Montana Department of Labor and Industry? (2) Did the District Court err in holding that the respondents1wage claims were subject to the Montana Minimum Wage and Maximum Hour Act as well as the federal Fair Labor StandardsAct? (3) Did the District Court err in holding that the claimants' sleep time was compensable? (4) Did the District Court err in rejecting interpretative opinions of theAdministrator of the Wage and Hour Division of the United States Department of Labor?(5)Did the District Court err in holding that Region I1 was not entitled to use the good faith defense of the federal Portal to Portal Act? (6)Did the District Court err in holding that the claimants

were entitled to damages, penalties, costs and attorney fees? The claimants cross-appeal the issue of whether the District Court erred in failing to award attorney fees based on the claimantstcontingency agreement or in the alternative to apply a multiplier to the award. FACTS Region 11, Child and Family Services, Inc., is a private, nonprofit corporation which, under contract with the State of Montana, provides residential care facilities for the developmentally disabled and multiple handicapped. The wage claimants worked at Region 11's group homes between 1983 and 1985 as either full-time or weekend trainers and supervisors. Weekend trainers reported to the group home Friday afternoon and remained until Sunday evening. Full-time trainers covered from Sunday night through Friday morning. The full-time employeeswere onduty,and required toactively superviseclients, from about 7:00 a.m. until 10:OO a.m., when the clients left to attend training programs at the Great Falls Easter Seals Center. Typically, full-time trainers were off duty and free to leave the facilities until the clients returned from school. This four- to 

### nine-hour period 

### was the only 

### time they were free to leave the 3group home. As the Center provided no training on Saturday or Sunday, weekend employees were required to be on duty throughout each day. Region I1 required both types of employees to remain at the group homes overnight and provided sleeping facilities. The overnight period lasted from about 10:OO p.m. to 7:00 a.m. Employees who received five consecutive hours of uninterrupted sleep during this period were compensated only for the time they spent attending clients. If employees did not receive five consecutive hours of uninterrupted sleep, Region I1 paid for the entire overnight period. Region I1 established this overnight policy in compliance with two interpretative opinions,known as the White and Cohen letters, issued by the Wage and Hour Division of the United States Department of Labor. The claimants understood the overnight policy when they went to work for Region 11. The claimants filed individual wage claims with the Montana Department of Labor and Industry [hereinafterthe Department] for the uncompensated sleep time Region I1 required them to be present at the group homes. The Department consolidated the claims and held an administrative hearing. The hearing examiner rejected the claims after applying the federal Fair Labor Standards Act [hereinafter F.L.S.A.] (codified at 29 U.S.C. 55 201 through 219) and interpretative opinions of the Administrator of the Wage and Hour Division of the United States Department of Labor.The claimants appealed to the First Judicial District Court for judicial review of the Department's decision, claiming error in the Department's use of the F.L.S.A. as opposed to the Montana Minimum Wage and Maximum Hour Act [hereinafter M.W.M.H.A.]

(codified at 88 39-3-401 through -410, MCA). The District Court reversed the Department's decision. It agreed with the Department that the F.L.S.A. applied to the claims,but rejected theWhite and Cohen opinion letters as contrary to legislative intent and held that the F.L.S.A. regulations required that overtimebe paid in the claimants1 situation. The District Court remanded the claims to the Department directing it to determine damages. Region I1petitioned the court foranother review arguing that the good faith defense of the federal Portal to Portal Act [hereinafter P.P.A.] (codified at 29 U.S.C. 88 216, 251 through 262) barred the wage claimsunder federal law. The District Court denied second review reasoning that even if the P.P.A. barred the claims under federal law, the M.W.M.H.A. would apply and produce the same result. In compliancewith the District Court's order, the Department ordered Region I1 to pay the claimants a total of $99,393.50 in back wages and an equal amount in penalties as required by § 39- 3-206,MCA. The Department found that it had no authority to grant the claimants1request for attorney fees. The District Court also reviewed this agency ruling atRegion 11'srequest and approved the Department's decision. The District Court further ordered Region 5but did not then look to the regulations propagated under theAct. Instead, it went directly to the interpretative opinions of the Administrator of theUnited StatesDepartment of Labor found inthe White and Cohen letters. The District Court initially agreed that the F.L.S.A. controlled theclaims,but analyzed the caseunder the F.L.S.A. regulations. While the findingsof factnecessary to apply the interpretative opinions and those necessary to apply the regulations are substantially the same, the District Court came upon at least one discrepancy. The court refused to apply one regulation, 29 C.F.R. 785.22, because the Department did not make the requisite finding that the claimantsusually enjoyed an uninterrupted night s sleep. The Department apparently never considered the issue since the interpretative opinions relied upon by the Department required no such finding. TheDistrict Court,however, proceeded asthough the examiner had found that the claimants usually-didnot enjoy an uninterrupted night s sleep. Thecourtthereby interjected its own findings of fact into the proceedings. The reviewing court has the duty to determine whether the agency applied the appropriate lawandwhether its findingsof fact are sufficient to justify the agency's rulings. When the court determines that the agency's findings are insufficientor that the agency applied the wrong law, it may not use the opportunity to usurp the agency's role as the trier of fact. We hold that theI1 to pay the claimants $13,000in attorney fees to cover expenses incurred by the claimants while before the District Court. Region I1 now appeals the District Court's reversal of the Department's determination of no liability, denial of retrial, review of the Department'sdetermination of damages and penalties, and judgment on attorney fees. We note that Judge Gordon R. Bennett issued all the substantive orders and opinions that are now the subject of this appeal. The judge of record, Jeffrey 

### M. Sherlock, handled only the final procedural matters followingJudgeBennett's retirement in December of 1988. FINDINGS OF FACT A district court's review of an agency's findings of fact is strictly limited. The reviewing court may affirm the agency's findings. Section 2-4-704 (2)

### , MCA. It may clarify the agency's findings so long as it does not substitute its judgment for that of the agency. Montana State Highway Patrol Officers v. Board of Personnel Appeals (1984),208Mont. 33, 39, 676 P.2d 194, 198. The courtmay overrulean agency's findings of fact if they are clearly

erroneous. They are not clearly erroneous if the record contains substantial credible evidence supporting the findings. City of Billings 

### v. Billings Firefighters (1982), 200 Mont. 421, 430-31, 651 P.2d 627, 632. In no case may the district court substitute its own findings of fact for those of the agency. Section 2-4- 704(2),MCA. The rules of agency review rely on theprinciple that 6the agency, and not the district court, is the finder of fact. If

a factual question is essential to an agency's decision, and the agency's findingsof fact are so insufficient that they cannot be clarified or are entirely absent, the district court should remand the case to the agency for appropriate findings. In the present case, the District Court violated this principle by relying on its own findings of fact in at least two instances. The first instance centers on the Department'sFinding of Fact No. 11 which states: Allen Copelandwasviewed by the respondent - as working periods in excess of 24 hour duty. The other claimants wereviewed by - the respondent as residing on the premises for an extended period of time. (Emphasisadded.) TheDistrictCourt correctlynoted that this finding is littlemore than a recitationof the testimony. However,instead of clarifying the finding or remanding it to the Department, the court rejected the finding and proceeded as though the Department had come to the opposite conclusion. The court utilized 29 C.F.R. 785.21, a regulation which applied only if the claimants were not on duty in

excess of twenty-four hours and did not live on the employer's property foran extendedperiod. The court thereby substituted its own findings of fact for those of the Department in violation of section 2-4-704 (2)

### , MCA. The second instance resulted from a disagreementbetween the Department and the District Court as to what law controlled. The Department determined that the F.L.S.A.governed thewage claims,DistrictCourt committed reversible errorby failing toremand this

case to the Department for suitable findings of fact. DOES THE M.W.M.H.A. APPLY? The determinative issue in this case is whether employees, such as the present claimants,who are subject to the federal Fair Labor StandardsAct may also rely on the Montana Minimum Wage and Maximum Hour Act. The problem arises from the interaction of the federal Fair Labar Standards Act, the Montana Minimum Wage and Maximum Hour Act, and the federal Portal to Portal Act. In 1938, Congress passed the Fair Labor Standards Act to prevent the use of unfair trade practices in interstate commerce leading to "labor conditions detrimental to themaintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers 

# . . . 

# . 29 U.S.C. 5 202(a). To

ensure a minimum living standard, the F.L.S.A. establishes a minimum hourly wage, 29 U.S.C. 5 206, and a maximum workweek without overtime compensation, 29 U.S.C. 5 207. Part of theAct's enforcement mechanism allows employees to recover all unpaid wages plus an equal amount in liquidated damages foranyviolation of its wage and hour provisions. 29 U.S.C. 5 216(b)

# . Although nationwide in scope, the F.L.S.A. does not cover all employees. See 29 U.S.C. 5 203(e); 29 U.S.C. 5 213. In 1971, theMontana Legislature enacted theMinimum Wage and Maximum Hour Act. Like the federal Act, the M.W.M.H.A. ensuresworkers a minimum living standardby settingminimum hourly wages, § 39-3-404, MCA, and maximum allowable work hours per week, 39- 3-405, MCA. Also like the F.L.S.A., the M.W.M.H.A. allows employees to recover unpaid wages plus up to 100% in liquidated damages, 9 39-3-407, MCA; 5 39-3-206, MCA. In Plouffe v. Farm & Ranch Equipment Co. (1977), 174 Mont. 313, 570 P.2d 1106, this Court held that in passing the F.L.S.A., Congress declined to preempt the entire field of wage and hour regulation. Therefore, employeesnot covered by the F.L.S.A. gained analogous rights from the M.W.M.H.A. Plouffe, 174 Mont. at 319-20, 570 P.2d at 1109. The federal and Montana Acts differ, however, in one important aspect. Nine years after passing the F.L.S.A.

## , Congress determined that expansive judicial interpretation of the federal Act had placed llwhollyunexpected liabilities, immense in amount and retroactive in operation, upon employers 

# . . . . 29 U.S.C. § 251(a). To correct the situation,Congresspassed the Portal to Portal Act giving employers a good faith defense to wage claims.

In any action 

# . . . no employer shall be subject to any liability or punishment for or on account of the failure of the employer to pay minimum wages or overtime compensation under the Fair Labor Standards Act 

# .. . if he pleads and proves that the act or omission complained of was in good faith in conformity with and in reliance on any written 

# . . . interpretation of [the Administrator of theWage and Hour Division of the Department of Labor]. Such a defense, if established, shall be a bar to the action or proceeding, notwithstanding that after such act or omission, such

# . .

# . interpretation 

# . 

# . . ismodified or rescinded or isdeterminedby judicial authority to be invalid or of no legal effect. 29 U.S.C. 

### H 259. Similarly, if the employer satisfies the court that itbelieved in good faith that the act or omission complained of was not a violation of the F.L.S.A., the P.P.A. authorizes the court to reduce or eliminate liquidated damages. 29 U.S.C. 

### 5 260. In the present case, the parties do not dispute that the claimants are subject to the F.L.S.A. Enterprises covered by the F.L.S.A. include: [A]n institutionprimarily engaged in the care of the sick, the aged, the mentally ill or defective who reside on the premises of such institution 

# . . . 29 U.S.C. 

### 5 203(r)(i). There is also no doubt that the P.P.A.'s good faith defense protects Region 11. Although it did not apply the Portal to Portal Act, the Department did find as a conclusion of law that Region I1had relied on the written interpretations of the Administrator of the Wage and Hour Division of the Department of Labor found in the White and Cohen letters in formulating its overnight policies. This reliance satisfies the requirements of the good faith defense thereby barring the claims under the F.L.S.A. The issue now is whether the claimants can fall back onthe M.W.M.H.A. to recover wages and liquidated damages for their sleep time. The District Court relied on one F.L.S.A. provision to find that they could. The federal Act defers to state laws which provide greater benefits. No provision of this chapter or of any order thereundershall excuse noncompliance with any



# . 

# . . State law 

# . 

# . . establishing a minimum wage higher than the minimum wage established under this chapter or amaximum workweek lower than the maximum workweek established under this chapter 

# . . . . 29 U.S.C. 5 218(a)

# . The District Court reasoned that since the claims are barred by the P.P.A. good faith defense, the claimants

are entitled to nobenefits under the federal law. Montana lawhas

no provision comparable to the P.P.A. good faith defense and, therefore, provides the claimants with a higher minimum wage. According to F.L.S.A. section 218(a)

### , therefore, the M.W.M.H.A. should apply to the wage claims. The District Court, however, failed to consider the effect of a limitingprovision in theMontana Act; theM.W.M.H.A. explicitly excludes employees covered by the federalAct. Theprovisions of [theM.W.M.H.A. ] shallbe in addition to other provisions now provided by law for the payment and collection of wages and salaries but shall not apply to employees covered by the Fair Labor Standards Act. Section 39-3-408, MCA (1985)

# . (Emphasisadded.) The Montana law defers to the federal law while the federal law defers to theMontana law. Like two overly-polite gentlemen standing before a single door, the State and federal provisions are caught in a classic "you first" impasse. Both parties and five amici curiae have extensively briefed and argued this issue. Most of the authority offered, however, does not solve the current impasse and leaves this issue a question of first impression. In Glick 

### v. Department of Institutions (1973), 162 Mont. 82, 509 P.2d 1,cert. den. 414U.S. 856, 94 S.Ct. 158, 38 L.Ed.2d 106,

we relied on Montana law to determine the number of hours necessary to trigger overtime compensation, Glick, 162Mont. at 89, 509 P.2d at 5, but applied the F.L.S.A. in determining liquidated damages, Glick, 162 Mont. at 90-91, 509 P.2d at 6. This case provides no guidance on thepresent issue because we did not apply theM.W.M.H.A. We relied instead on theMontana constitutionaland statutory provisions guaranteeing an eight-hour work day. Glick, 162 Mont. at 86-87, 509 P.2d at 4. In Plouffe 

### v. Farm & Ranch Equipment Co., the F.L.S.A. exempted the employer from federal wage regulation. We held that by enacting I?. L.S.A. !j 218,Congress declined topreempt the entire field of wage and hour regulations and, therefore, the employee could still rely on the M.W.M.H.A. Plouffe, 174 Mont. at 319-20, 570 P.2d at 1109. Because the F.L.S.A. never applied to theemployee,we did not need to decide if the employeewas covered by both the federal and the Montana Acts. InStatev. HolmanAviation Co. (1978)

## , 176Mont. 31, 575 P.2d 923, the issuewas whetherM.W.M.H.A. 5 408 prevented the State as assignee from pursuing an F.L.S.A. employee'swage claim under the Montana Wage PaymentAct. Theparties asked thisCourt to consider the effect of M.W.M.H.A. § 408's limiting provision on F.L.S.A. claims, but we did not reach that issue. We held only that 5 408 does not apply to acts other than the M.W.M.H. A.

### , but noted in passing that the section by its plain meaning provides merely that the provisions of this act 

# . 

# . . shall be applicable to set minimum wages and maximum hours for certain Montana employees in occupations not covered by the F.L.S.A., and that the F.L.S.A. shall apply to those employees which the federal act specifies. Holman Aviation, 176 Mont. at 34, 575 P.2d at 925. (Quotations omitted.) Following Plouffe and Holman Aviation, the Montana Attorney General issued an opinion on whether state and local government employeesare coveredby both M.W.M.H.A. and F.L.S.A. 41Op. Mont. Att'y Gen. No. 58 at 240 (1986). In concluding that they are not, the Attorney General relied on the plain meaning of M.W.M.H.A. 5 408,the above quoted statement from Holman Aviation, and the 1973 Legislature's refusal toamend the limiting provision ofM.W.M.H.A. § 408 to read I1shallnot apply to employees covered by the FairLabor Standards Act,provided thatact requires ahisher standard." H.B. 279, 43rd Leg. (1973) (textavailable from the Archives of the Mont. Historical Society; emphasis indicates proposed addition). Interpretations of the law by the executive branch provide persuasive authoritywhen acquiesced in by the legislature. Cornwall

v. Department of Justice (Mont. 1988), 752 P.2d 135, 139, 45 St.Rep. 429, 435. In this case, however, the legislaturedid not acquiesce in the opinion,but, as is noted below, acted in 1987 to reverse its effect. LikeMontana authority,cases fromother jurisdictionsprovide little authority for resolving the present impasse, though two

cases deserve mention. InCosme Nievesv. Deshler (1stCir. 1986) 786 F.2d 445,cert. den. 479 U.S. 824, 107 S.Ct. 96, 93 L.Ed.2d 47, the federal court considered whether F.L.S.A. 5 218(a) allowed civilian employees of the federalgovernmentcoveredby the F.L.S.A. tobring wage claims under the more beneficial provisions of Puerto Rican law. The court held against the claimants because the commonwealth law specifically excluded federal employees. Cosme Nieves, 786 F.2d at 452 (citing P.R. Laws Ann. tit. 29 246e(a) (2)). While superficially similar to thepresent case, Cosme Nieves is distinguishable;the claimants in that case were notbarred from bringing their claims under the F.L.S.A. Cosme Nieves, 786 F.2d at 453.In Webster v. Bechtel, Inc. (Alaska 1980), 621 P.2d 890, the Alaska Supreme Court consideredwhether the F.L.S.A. preempted the Alaska Wage and Hour Act. In holding that it did not, the court found no conflictbetween the liquidateddamages provisions of the state and federal acts because the Alaska act contained no good faith defense similar to that in the Portal to Portal Act. The court noted that the provisions are complimentary; the Alaska statutewould provide greater benefits furthering the purposes of F.L.S.A 5 216(b). Webster, 621 P.2d at 904. The same analysis would apply to the present case if not for the limiting provision of M.W.M.H.A. 5 408. Webster is distinguishable from the present

case in that the Alaska act does not exclude employees covered by F.L.S.A. as does M.W.M.H.A. 5 408. See Alaska Stat. 88 23.10.050 through .150. Like case law, public policy considerations are insufficient to solve the issue. Policy considerations weigh heavily on both sides. The obvious intent of both the F.L.S.A. and the M.W.M.H.A. is to ensure the health, efficiency, and general welfare of employees through enhancement andprotection ofwages and reasonable work-hour requirements. 29 U.S.C. 5 202; 5 39-3-401, MCA. Allowing F.L.S.A. employees to fall back on theM.W.M.H.A. when the federal lawbars their claimswould increase the protection of the present claimants and similarly situated employees.On theotherhand, extendingM.W.M.H.A. protection toF.L.S. A. employeeswould have serious adverse consequences. Inpassing the good faith defenses of the Portal to Portal Act, Congress recognized that without amendment, F.L.S.A. claims would "bring about

[the] financial ruin of many employers

# . .. curtailing employment, and the earningpower of employees 

# . . .

# . 29 U.S.C. 9 251(a)(1)

## . A number of amici curiae argued that these same resultswill occur in Montana if group home operators are forced topay greaterwages for overnightperiods. The effect in this time of fiscal restraint is likely to be fewer employees and a curtailment in services to a deserving clientele. Although much of the authority presented by the parties and the amici curiae does not resolve the question, the language of the Montana statute is determinative. The judicial function in construing statutes is to give effect to the intention of the legislature. Legislative intent is determined by first looking to the plain meaning of the statute. Thiel v. Taurus Drilling Ltd. (1985), 218Mont. 201, 205, 710 P.2d 33, 35. Section 39-3-408,MCA (1985), clearly states that the M.W.M.H.A. I1shallnot apply to employees covered by the Fair Labor Standards Act." In passing F.L.S.A. 9 218(a)

## ,Congress gave the statesthe option ofproviding

more beneficial wage and hour protection than that availableunder the federal law. The Montana legislature explicitly declined toexercise that option for employees already protected by the F.L.S.A. To hold that the limiting provision of M.W.M.H.A. 5 408 does not prohibit the application of the M.W.M.H.A. to F.L.S.A. employees would be to hold that it is superfluous. In interpreting

a statute,we may not ignorewhat is found in it, 5 1-2-101, MCA, but must endeavor to give effect to each provision of the statute, Darby Spar, Ltd. v. Department of Revenue (1985), 217 Mont. 376, 379, 705 P.2d 111, 113. If the legislature intended to allow F.L.S.A. employees to also take advantage of the M.W.M.H.A., the limiting provision of M.W.M.H.A. 5 408 would not have been necessary; F.L.S.A. 5 218(a) already serves that function. When it acts, the legislature is presumed to have full knowledge of existing laws, Thiel, 218 Mont. at 207, 710 P.2d at 36, and is presumed to have intended to change those laws,Cantwellv. Geiger

(1987), 228 Mont. 330, 333-34, 742 P.2d 468, 470. Therefore, we must assume that the legislaturewas aware that F.L.S.A. 5 218(a) would allow F.L.S.A. employees to fall back on theM.W.M.H.A. when it provided greaterbenefits. And we must assume thatby enacting the limiting provision of M.W.M.H.A. 5 408, the legislature acted to counter the effect of F.L.S.A. 5 218(a). The 1971 Legislature's intent to exclude F.L.S.A employees fromM.W.M.H.A. coverage is further evidenced by the recent amendment toM.W.M.H.A. § 408. The 1987 Legislature amended the sectionto provide that the minimum-wage provisions of the M.W.M.H.A. ''shallapply to an employee coveredby the Fair Labor StandardsAct if state law provides a minimum wage that is higher than the minimum wage established under the federal law." Act approved April 9, 1987, ch. 446,5 2, 1987Mont. Laws 1012. Again, presuming that the Legislature intended to change the law, the pre-1987 version of the Montana law under which the present wage claims arose must have excluded F.L.S.A. employees. CONCLUSION In passing the Portal to Portal Act, Congress noted that if it failed to amend the F.L.S.A., "employeeswould receivewindfall payments, including liquidated damages, of sums for activities performed by them without any expectation of reward beyond that included in their agreed rates of pay 

# . . 

# . .II 29 U.S.C. 5 251(a) (4). This seemsparticularly true in thepresent case; the claimants were aware of the overnight policy when they agreed to work forRegion 11. Imposingan unexpected penalty upon Region I1

seems particularly inappropriate when the group-home operator formulated its overnight policy to conform with the government's interpretation of the wage and hour laws. We hold that 5 39-3-408, MCA (1985), excludes the claimants from coverageunder theMontana Minimum Wage and Maximum HourAct. Any claim under the federal Fair Labor Standards Act is barred 

### by 29 U.S.C. 3 259 of the Portal to Portal Act because Region I1relied in good faithupon the interpretations of theAdministrator of the Wage and Hour Division of the United States Department of Labor in formulating its overnight policies. Because the claims

are barred, we need not reach any other issue presented by either party. The claimants are not entitled to back wages, liquidated damages, costs, or attorney fees. Reversed.

Chief Justice We concur:

JusticesJustice John C. Sheehy, dissenting:

A resident worker should be paid thoughhe is sleeping on the job, where demands of work may interrupt his sleep-time. It is because he is on call, that he may not sleep at all, and it is otherwise too onerous to keep time. At base this is a simple case,which gets lost in all of the rhetoric of the majority opinion. These employees are on the job most of the 24 hour day. The employer deducted from theirpay the hours in the ItovernightItt from 10:OO p.m. to 7:00 a.m. If the worker got at least five consecutiveuninterrupted hours of sleep, he was compensated only for the time he was interrupted by the bfl clients. If he did not enjoy five consecutive interrupted hours, 

# r\ he was compensated for the entire overnight. Themajority opinion holds that even though the employee, sleeping or not, is at the command of his employer, and his sleep-time is given over entirely tohis employer, it isnot necessary for the employer to compensate the employee fully for that time. Themajority opinion is akin to holding that a fireman need not be paid for the time he is at the fire station unless he is fighting fires. To reach their indefensible result,themajority have several hurdles to clear. The first is that the district judge made no findings in this case. The majority leaped this hurdle nicely by asserting that the district judge did make findings. The record, however,belies their position.

### The district judge in this case expressly relied on the findings of the hearing examiner. He relied not only on the findingsof the examiner, but noted particularly findings that the examiner did not make. The district judgebased his decision then upon the findings as the hearing examiner expressed them. When the district judge first issued his conclusion in a formal order, the employersmoved for a new trial before the District Court. In its orderdenying new trial, the District Court expressly rejected the implication that he had departed from the findings of the hearing examiner. The District Court stated: Respondentls brief impliesthis court found the findings ofthehearings examiner were either totally insufficient or clearly erroneous. Additionally, it argues that we made new findings of fact. While we did comment on the hearings examiner's failuretoaddress certainpertinent issues,we did not hold that any of his findings were in error nor did we determine that the findingswere wholly inadequate. We explicitly based our opinion on lt. 

# . 

# . the facts properly found by the examiner 

# . 

# . .11 

### Specifically,respondent claimswemade a factual finding that petitioners were not on duty five to eight hours a 

### day and that they were on overnight status for eight hours. To the contrary, these facts were found by the hearings examiner and made part of his findings of fact by reference. Finding of fact number 3 

### adopts a stipulationby theparties as to the duration and terms of the shifts worked by the petitioners. That stipulation clearly shows there was a period of time during the day where the petitioners were relieved of their duties and that they were generally on overnight status from 10 

### p.m. to 7 

### a.m. Respondent suggests additional findings of fact are necessary before a proper decision can be rendered in this case. We reiterate that our oriqinal opinion was based upon the findinqs of fact actually made by the hearinqsexaminer. Furthermore,

### 5 2-4-704, MCA, provides for remand for additional factual findings only if they are essential to the decision and if they were not made althoush requested. As we noted in the original decision,neitherparty raisedexceptionstothehearings examinerls findings of fact or questioned their

### sufficiency. (Emphasisadded.) Memorandum and Order remotion for a new trial, pages 4, 5. 

### The majority opinion makes no reference to this clear statement of the District Court as to the facts it based its opinion on, nor does the majority opinion attempt to state the purported new findings made by the District Court outside those made by the hearing examiner. truth, the District Court followedcarefully the rule that it is bound, as is this Court, by factual findings of the hearing examiner and stipulationsby theparties. Hutchinv. State (1984)

### , 213 Mont. 15, 688 P.2d 1257. In Wage Appeal of Highway Patrol Officers 

### v. Board of Personnel Appeals (1984)

## , 208 Mont. 33, 676 P.2d 194, we upheld the District Court, stating that it had acted correctly when it merely translated the hearing examiner's findings of fact without substituting its judgment for that of the agency the weight of the evidence on questions of fact. That is precisely what the district judge did at bar. These then are the facts on which the District Court acted, which were found by the hearing examiner or stipulated to by 

### counsel andwhichbound not onlytheDistrict Courtbut this Court: Petitioners worked as trainers or supervisors of developmentallydisabled clientsat groups homesbetween 1983 and 1985. Their work schedules varied somewhat, but generally they were required to be present at the homes 24 hours a day except for a period (anywhere from 4 to 9%hours) during which the clients were at a day school, and during which time the trainers were free to leave the homes and do what they chose. They were Ifon duty" (el required to be actively supervising the clients) from 6:30 

### or 7:00 in the morning before the

### clients left for day school, and from the time when the clients returned until 10:OO p.m. Uniformly it seems, the trainer's workday was suspended from 10:OO p.m. to 7:00 a.m., even though he was sometimes scheduled to begin supervising at 6:30 

### a.m:, and even though he was generally the only trainer In the home during this period. This period was called the llovernight.llIf during the I1overnight1' the trainer enjoyed at least five consecutive uninterrupted hours,hewas compensated only for the time he was interrupted by the clients. If he did not enjoy at least five consecutive uninterrupted hours, he was compensated for the entire glovernight. 

## " Thepetitionershere, however,claim entitlement to full payment (usuallyattime-and-half overtimerates) forall of the "overnight" time, 10:OO 

### p.m. to 7:00 a.m. regardlessof interruptions,most of whichwas in excess 

### of 8

### hours per day, 40hours per week, and 80hours per 14-day period. Opinion and Order on Petition forJudicial Review, District Court, page 2. In this dissent, I 

### rely on those facts and none other in determining what the legal results should be. Thenext hurdle overwhich themajority stumble is the effect and applicability of the Federal Fair Labor Standards Act to the facts of this case. Themajority eithermissed the applicationby the District Court of the Federal Acts, or they fail in their own interpretation. The Fair Labor StandardsAct, 29 U.S.C. 

### 5 207 is clear. It provides: 

### (a)(l) Except as otherwiseprovided in this section,no employer shall employ any of his employees

# . . . for a workweek longer than forty hours unless such employee receivescompensation forhisemployment inexcessof the hours above specified at a rate not less than one and one-half times the regular rate atwhich he is employed.

(j) No employer engaged in the operation of a hospital or 

# . 

# . . the care of the sick,the aged, or thementally

### ill or defective who reside on the premises shall be deemed to have violated subsection (a) of this section if,pursuant to an agreement or understanding arrived at between the employer and the employee before performance of the work, a work period of fourteen consecutive days isaccepted in lieu of theworkweek of seven consecutive days forpurposes ofovertime computationand if, forhis employment in excess of eight hours in any workday and in excess of eighty hours in such fourteen-dayperiod, the employee receives compensation at a rate not less than one and one-half times the regular rate atwhich he is employed. The Department of Labor has issued implementing regulations which provide (29 

### Code of Federal Regulations 1 

### 785): § 

### 785.20 General Under certain conditions an employee is considered to be working even though some of his time is spent in sleeping or in certain other activities. 

### S 785.21 Less than 24-hour duty. An employee who is required to be on duty for less than 24 hours isworking even thoughhe ispermitted to sleep or engage in other personal activities when not busy. A telephoneoperator, for example,who is required tobe on duty for specified hours is working even though she ispermitted to sleepwhen not busy answering calls. It makes no difference that she is furnished facilities for sleeping. Her time is given to her employer. She is required tobe onduty and the time isworktime. (Citing cases.) 

### With respect to the Federal Act itself, the District Court pointed out that the applicable portion was subsection (j) 

### of 29 

### U.S.C. 207(a)

# . The District Court concluded, correctly, that that subsection simply allows agreement where overtime compensation would be computed on thebasis of an 8-hourday in a 14-dayperiod rather than an 8-hour day in a 7-day period. The District Court furtherstatedthat the subsectiondidnot applyherebecause there

wasno agreement beforehandbetween theemployerand theemployees.Instead, the only overtime evidence of agreement was in the ltemployment agreementftt exhibit 38 which provided: Overnight Agreement: In addition to your 40 hours per week you will also be providing overnight supervision 5 nights aweek. You will bepaid forany documented hours you have to be awake attending client needs. There is no other evidence of any agreement with respecting pay than the foregoing phrase. In making that finding, the court relied expressly on the record and itmade no independent findings of its own. Turning now to regulation 

### 5 785.21, which is quoted above, it is obvious that that regulation requires sleeptime be compensated by the employer, and since his time is given to the employer, he is working even though he is permitted to sleep. Another regulation of possible application here is 5 785.22 which states: 

### 5 785.22 Duty of 24 Hours or More. (a) General. When an employee is required tobe on duty for 24 hours or more, the employer and the employee may agree to exclude bona fide meal periods and bona fide regularly scheduled sleeping period of not more than 8 hours from hours worked, provided adequate sleeping facilities are furnishedby the employerand theemployee can usually enjoy an uninterrupted night's sleep. If sleeping period is of more than 8 hours, only 8 hours will be credited. Where no expressed or implied agreement to the contrary is present, the 8 hours of sleeping time and lunch periods constitute hours worked. (Citing cases.) (b) Interruptionsof Sleep. If the sleeping period is interruptedby a call to duty, the interruption must be counted as hours worked. If the period is interrupted to such an extent that the employee cannot get a reasonable nights sleep, the entire period must be counted. For enforcement purposes, the Divisions have adopted the rule that if the employee cannot get at least 5 hourst sleep during the scheduled period, the entiretime is working time. (citing a case.) In examining the application of 5 785.22, the ~istrict Court determined that therewas no finding of factby the examiner as to

an agreement to exclude the sleepingperiod nor a finding that the employee usuallyenjoyed an uninterruptednight's sleep. Moreover, the application of the regulation is conditioned upon a prior findingthat theemployee ttusually enjoyed anuninterrupted nightIs sleep." Without that, the District Court found that 5 785.22 did not apply. Finally, the regulation applies only if the employee is on duty more than twenty-four hours. The District Court then turned its attention to the third regulation, 29 CFR 5 785.23 which follows: 

### 5 785.23 Employees residing on employer's premises or working at home. An employee who resides on his employer's premises on a permanent basis or for extended periods of time is not consideredasworking all the timehe is on thepremises. ordinarily,hemay engage innormal private pursuits and thushave enoughtime foreating, sleeping,entertaining, and other periods of complete freedom from all duties when he may leave the premises for purposes of his own. It is,of course,difficult to determine the exact hours worked under these circumstances and any reasonable agreement of the parties which takes into consideration all the pertinent facts will be accepted. This rule would apply, for example, to the pumper of a stripper well who resideson thepremises ofhis employer and also to a telephone operator who has the switchboard in her own home. (Citingcases.) The District Court was critical of the foregoing regulation, and properly so. Through the regulation, the United States Department of Labor is taking a position that "any reasonable agreement" between the employer and the employee which "takes into consideration all the pertinent factst1 will overturn the basiccommand of theWages and HoursAct. The District Court said "This regulation, on its face, reduces the clear command of the statute to a plea to be reasonable." The hearing examiner failed to make any findingsof any kind thatwould show that theagreementbetween the employer and the employees here was reasonable, or that the agreement took into consideration all the pertinent facts. The District Court was correct in determining that this regulation should be cautiously applied, and only after a well-reasoned analysis by the hearing examiner that it did apply. Nothing of that sort appears in this case. Of thethreeregulations which might apply, therefore,theone which directly applies, and which the District Court utilized,was 29 CFR 5 785.21. The majority criticizes the District Court for utilizing this regulation although on the undisputed facts of this

case it is the only regulation which is applicable. In so deciding, the District Court was making a conclusion of law; the majority state instead thathewasmaking findingsof fact;how and in what way the application by the District Court of 5 785.21 is making a finding of fact isnot explained in themajority opinion. We come now to the administrative letters, the basis of the I1goodfaith1!defense. The first is a 1981 letter from Henry T. White, Jr., deputy administrator of the Wage and Hour Division of the United States Department of Labor, to representatives of privately-operated community residences for thementally retarded. 

### In that letter, White answered three posed questions. The questions relate (1) to employees who maintain separate

### residences, (2)toa clarification of the fiveday,eight-hour rule contained in 

### 5 785.23, and (3) 

### to the application of 

### 5 785.21 to relief employees who come in for two or three days. The letter candidly stated thatwith respect to relief employees, a departure from the general rule of 

### 5 785.21 would be tolerated by the Department "becauseof thehome-like environment afforded to these employees in community residences, with private quarters and other amenities.Ir 

### The second letter was written in 1985 by Herbert J. 

### Cohen, a 

### deputy administrator of the same federal agency. Again the letter

concerns itself with relief employees in community residences for the mentally retarded. It again stated a "special rulev1for employees of community residenceswhere they are offered by their employer "a home-like environment." As a Court,we should give absolutely no heed to the letters of theseadministrators. The conclusions in the letters fly in the face of the regulations of the Department, and the basic command of the statute relating to compensable time. If the Congress intended that a "home-like environmentgf could be substituted for wages in the form of money, the Congress did not say so. I 

### agree with the District Court that administrative rulings and opinions may be used to explainand clarifyregulations,andmay not be used to nullify them. Teamsters v. Daniel (1979), 439 U.S. 

### 551, 58 L.Ed.2d 808, 99 S.Ct. 790. Based on the foregoing considerations,the District Court, in its order of January 14, 1988, held that under the Federal Act as

### properly interpreted,the employeesworked andwere entitled to be compensated for tnovernightll time. The employers moved the court for a new trial and brought to the attention of the District Court for the first time,theprovisions of the federal ''Portalto Portal Act1'(PPA) and especially theprovisions of 29 USC § 

### 259(a) of the Act: 

### Inany action orproceeding based on any act or omission on or after May 14, 1947, no employer shall be subject to any liability or punishment for or on account of the failure of the employer topayminimum wages or overtime compensationunder the Fair Labor Standards Act of 1938, as amended 

# .. ., if he pleads and proves that the act or omission complained ofwas ingood faith in conformity with and in reliance on any written administrative regulation, order, ruling, approval, or interpretation, of the agency of the United States specified in subsection (b) of this section, or any administrative practice or enforcement policy of such agency with respect to the class of employers to which he belonged. Such a defense, if established, shall be a bar to the actionorproceeding, notwithstandingthat aftersuchact or omission, such administrative regulation 

# . . . is modified or rescinded 

# . .. As the District Court stated, Montana does not have a state counterpart to the federal PPA. The federal law, however, does provide that if a state law would provide greater benefits to an employee respecting either minimum wages or maximum work weeks, state lawapplies. 29 USC 5 

### 218(a). Therefore, if under PPA,the employees were barred from any relief against their employer, the provisions of the Montana Act would apply: § 

### 39-3-406(2). Theprovisions of 39-3-405 do not apply to:



# ... (q) 

### An employee of an hospital or other establishment primarily engaged inthecare of the sick, disabled,aged ormentally ill or defectivewho isworking under a work period not exceeding 80 hours in a 14-day period

### established through either a collective bargaining agreement when a collective bargaining unit represents the employee or by mutual agreement of the employer and the employee where no bargaining unit is recognized. Employment in excess of 8 hours per day or 80 hours in a 14-dayperiod must be compensated for at a rate of not lessthan 1%timesthehourlywage rate forthe employee. The foregoingstatutecreatesan issue which is anotherhurdle which themajority opinion clears in the exercise of legerdemain. Themajority point to 8 

### 39-3-408, MCA, which states thatMontana's law shall not apply to employeeswho are coveredby the Fair Labor Standards Act. The majority also take note of 29 USC § 

### 218(a) under which the federal act defers to state laws which provide greaterbenefits. It is obvious that 88 

### 39-3-405 and 39-3-406(2), MCA, provide employees of the type involved here with greater benefits since their employment is in excess of 8

### hoursper dayper 14-day period. Themajority have concluded thatMontana's superior benefits may notbe recovered because of (1) themajority's

### dubious interpretation of nonaction by the legislature (deriving legislative intent from nonaction), and (2) by engaging in some spurious fact finding of their own, not based on the record, that group home operators forced topay lawfulwageswill curtail their services and discharge employees. There is, however, a clear legislative intent here to which themajority close their eyes. It is the intent of the Congress, that when state law provides greater benefits to a worker, the state law should apply. That beneficent purpose should override any other consideration and should motivate this Court, as it motivated the District Court, to cite Tennessee C, 

### I, & R 

### Company

### v. Muscoda Local 123 (1944), 321 U.S. 

### 590, 597, 88 L.Ed 949, 956,

We are not here dealing with mere chattels or articles of tradebut with the rights of thosewho toil, of those who sacrificea fullmeasure of their freedomand talents to the use and profits of others. Those are the rights that Congresshas specially legislatedtoprotect. Such a statutemust notbe interpreted orapplied in a narrow, grudgingmanner. One of the great social advances of this century was the adoption by Congress of laws to protect employees so as to guarantee reasonable wages and hours in their working conditions. In the long run, it would be more advantageous to society that we refuse to allowany inroads thatdelimit thisgreat socialpolicy. Moreover, under the interpretation by the majority of the effect of 5 

### 39-3-408, MCA, the intention of Congress that greater benefitsunder state lawshouldapply would never come into effect. The decision of themajority has the effect of repealing entirely 5 

### 39-3-408 and vitiating any application of 21 USC 5 

### 218(a) to a 

### Montana case. In holding that the employees are covered by the Fair Labor Standards Act, even though the employees can make no recoveryunder theAct, themajority eliminate anypossibility for an employee whose job ispart of commerce tohave any benefit from 5 

### 39-3-408. The duty of courts,especiallyan appellate court, is to give effect to statutes, not to nullify them by interpreting them out of existence. Themajority remind one of the Walrus and the Carpenter,who ate the oysters they were supposed to protect. Idissentandwould affirmthedecisionof theDistrict Court.

I 

### join in the foregoing dissent Ju6Yice Sheehy. /



## . Justice

### No. 89-082 IN THE SUPREME COURT OF THE STATE OF MONTANA

IN THEMATTER OF WAGE CLAIMS OF RANDALL 

### P. STEWART,ALLEN W. COPELAND, LIONEL F. McKNIRE, GREG W. 

### BRANTNER,ARTHUR BRISCOE, petitioners and Respondents,-vsREGION I1 CHILD AND FAMILY SERVICES, Respondent and Appellant.

APPEAL FROM: District Court 

### of the First Judicial District, In and for the County ~ewis & 

### Clark, The Honorable Jeffrey Sherlock, Judgepresiding. COUNSEL OF RECORD: For Appellant: Richard Larson;~aite, Schuster & 

### Larson, Great Falls, Montana For Respondent: Timothy J. McKittrick;Mc~ittrick Law Firm,Great Falls, Montana For Amicus Curiae: ~elanie A. Symons, Dept. of Labor & 

### Industry, Helena, Montana 

### ani ice Van Riper; Meloy Law ~irm, Montana ~esidential child Care Assoc., Helena, Montana Nick Rotering, Dept. of Institutions, Helena, Montana Cary 

### B. Lund, Dept. of S.R.S., Helena,Montana patrick 

### M. ~riscoll; Chronister, ~riscoll & 

### Moreen, Mt. 

### council of Mental Health Centers, Helena,Montana Joe R. Roberts, Mt. Assoc. of Independent

### isa abilities services, Helena,Montana

Filed: 

### Submitted: December 12, 1989 Decided: March 15, 1990

### Sheehy

worker 

## r job, where demands of

## ,dissenting:

shouldbepaid thoughhe work may interrupt his is sleeping sleep-time. the is because he 

### is on call, that he may not sleep at all, and it is 

### otherwise too onerous to keep time. At base this is a simple case,which gets lost in all of the rhetoric of themajority opinion. These employees are on 

### the job most of the 24 

### hour day. The employerdeducted from theirpay the hours 

### in the ttovernight,lt from 10:OO 

### p.m. to 7:00 

### a.m. If 

### the workergotat least five consecutive uninterrupted hours of sleep, he was compensated only for the time he was interrupted by the M 

### clients. If 

### he did not enjoy five consecutive interrupted hours, A 

### he was compensated fortheentireovernight. Themajority opinion holds that even though the employee, sleeping or not, is at the command 

### of his employer, andhis sleep-time isgivenover entirely tohisemployer, it isnotnecessary for the employer tocompensate the employee fully for that time. Themajority opinion is akin to holding that a 

### fireman need not be paid for the time he is at the fire stationunless he 

### is fighting fires. TO 

### reachtheir indefensibleresult,themajorityhave several hurdles to clear. The first is that the district judge made no findings in this case. Themajority leaped thishurdle nicely by 

### asserting that the district judge did make findings. The record, however, belies their position.

21