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.urt of the First Judicial ~istrsct, 

In and for the County ~ev~is & Clark, 

The Honorable Jeffrey Sherlock, J.udqe presiding. 

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, 1990 
Chief 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 hearings held by the Montana 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 respondents1 wage claims were subject to the Montana Minimum Wage and 

Maximum Hour Act as well as the federal Fair Labor Standards Act? 

(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 the Administrator 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 

claimantst contingency 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 

employees were on duty, and required to actively supervise clients, 

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 

3 
group 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 [hereinafter the 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 the White and 

Cohen opinion letters as contrary to legislative intent and held 

that the F.L.S.A. regulations required that overtime be paid in the 

claimants1 situation. The District Court remanded the claims to 

the Department directing it to determine damages. 

Region I1 petitioned the court for another 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 claims under 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 compliance with 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 claimants1 request for attorney fees. The District Court also 

reviewed this agency ruling at Region 11's request and approved the 

Department's decision. The District Court further ordered Region 

5 
but did not then look to the regulations propagated under the Act. 

Instead, it went directly to the interpretative opinions of the 

Administrator of the United States Department of Labor found in the 

White and Cohen letters. The District Court initially agreed that 

the F. L. S .A. controlled the claims, but analyzed the case under the 

F.L.S.A. regulations. 

While the findings of fact necessary 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 claimants usually 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. The District Court, however, proceeded as though the 

examiner had found that the claimants usually -did not enjoy an 

uninterrupted night s sleep. The court thereby interjected its own 

findings of fact into the proceedings. 

The reviewing court has the duty to determine whether the 

agency applied the appropriate law and whether its findings of fact 

are sufficient to justify the agency's rulings. When the court 

determines that the agency's findings are insufficient or 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 the 
I1 to pay the claimants $13,000 in 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's determination 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 following Judge Bennett'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), 208 Mont. 33, 39, 676 P.2d 194, 198. The 

court may overrule an 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 the principle that 

6 
the 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 findings of 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's Finding 

of Fact No. 11 which states: 

Allen Copeland was viewed by the respondent - as 

working periods in excess of 24 hour duty. 

The other claimants were viewed by - the respondent as residing on the premises for an extended period of time. (Emphasis added.) 

The District Court correctly noted that this finding is little more 

than a recitation of 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 for an extended period. 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 disagreement between the 

Department and the District Court as to what law controlled. The 

Department determined that the F. L. S .A. governed the wage claims, 
District Court committed reversible error by failing to remand 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 Standards Act 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 the maintenance 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 the Act's 

enforcement mechanism allows employees to recover all unpaid wages 

plus an equal amount in liquidated damages for any violation 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, the Montana Legislature enacted the Minimum Wage and 

Maximum Hour Act. Like the federal Act, the M.W.M.H.A. ensures 
workers a minimum living standard by setting minimum 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, 

employees not 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 llwholly unexpected liabilities, immense in amount and 

retroactive in operation, upon employers . . . . 29 U.S.C. 

§ 251(a). To correct the situation, Congress passed 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 the 
Wage 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 . . . is modified or 

rescinded or is determined by judicial authority to be invalid or of no legal effect. 

29 U.S.C. H 259. Similarly, if the employer satisfies the court 

that it believed 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 institution primarily 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 I1 had 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 on 
the 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 

thereunder shall excuse noncompliance with any . . . State law . . . establishing a minimum 

wage higher than the minimum wage established 

under this chapter or a maximum 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 no benefits under the federal law. Montana law has 

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 limiting provision in the Montana Act; the M.W.M.H.A. explicitly 

excludes employees covered by the federal Act. 

The provisions of [the M.W.M.H.A. ] shall be 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) . (Emphasis added. ) The Montana law 

defers to the federal law while the federal law defers to the 
Montana 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. 414 U.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, 162 Mont. 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 the present issue because we did not apply 

the M.W.M.H.A. We relied instead on the Montana constitutional and 

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 to preempt 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 the 
employee, we did not need to decide if the employee was covered by 

both the federal and the Montana Acts. 

In State v. Holman Aviation Co. (1978) , 176 Mont. 31, 575 P. 2d 

923, the issue was whether M.W.M.H.A. 5 408 prevented the State as 

assignee from pursuing an F.L.S.A. employee's wage claim under the 

Montana Wage Payment Act. The parties asked this Court 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 

employees are covered by both M.W.M.H.A. and F.L.S.A. 41 Op. 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 to amend the limiting provision of M.W.M.H.A. 

§ 408 to read I1shall not apply to employees covered by the Fair 
Labor Standards Act, provided that act requires a hisher standard." 

H.B. 279, 43rd Leg. (1973) (text available from the Archives of the 

Mont. Historical Society; emphasis indicates proposed addition). 

Interpretations of the law by the executive branch provide persuasive authority when 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 legislature did not 

acquiesce in the opinion, but, as is noted below, acted in 1987 to 

reverse its effect. 

Like Montana authority, cases from other jurisdictions provide 

little authority for resolving the present impasse, though two 

cases deserve mention. 

In Cosme Nieves v. Deshler (1st Cir. 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 federal government covered by the F. L. S .A. to bring 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 the present case, Cosme Nieves is distinguishable; the claimants in that case were not barred 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 considered whether the F.L.S.A. preempted the 

Alaska Wage and Hour Act. In holding that it did not, the court 

found no conflict between the liquidated damages 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 

statute would 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 and protection of wages 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 the M.W.M.H.A. when the 

federal law bars their claims would increase the protection of the 

present claimants and similarly situated employees. 
On the other hand, extending M. W.M.H.A. protection to F. L. S. A. 

employees would have serious adverse consequences. In passing 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 earning power of employees . . . . 29 U. S. C. 9 251 (a) (1) . 

A number of amici curiae argued that these same results will occur 

in Montana if group home operators are forced to pay greater wages 

for overnight periods. 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), 218 Mont. 201, 205, 710 P.2d 33, 35. Section 39-3-408, MCA 

(1985), clearly states that the M.W.M.H.A. I1shall not apply to 

employees covered by the Fair Labor Standards Act." In passing 

F. L. S .A. 9 218 (a) , Congress gave the states the option of providing 

more beneficial wage and hour protection than that available under 

the federal law. The Montana legislature explicitly declined to 
exercise 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 ignore what 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, Cantwell v. Geiger 

(1987), 228 Mont. 330, 333-34, 742 P.2d 468, 470. Therefore, we 

must assume that the legislature was aware that F.L.S.A. 5 218(a) 

would allow F.L.S.A. employees to fall back on the M.W.M.H.A. when 

it provided greater benefits. And we must assume that by 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 

from M.W.M.H.A. coverage is further evidenced by the recent amendment to M.W.M.H.A. § 408. The 1987 Legislature amended the section 
to provide that the minimum-wage provisions of the M.W.M.H.A. 

''shall apply to an employee covered by the Fair Labor Standards Act 

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, 1987 Mont. 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., "employees would receive windfall 

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 seems particularly true in the present case; the 

claimants were aware of the overnight policy when they agreed to 

work for Region 11. Imposing an 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 coverage under the Montana Minimum Wage and Maximum Hour Act. 

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 I1 
relied in good faith upon the interpretations of the Administrator 

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: 

Justices 
Justice John C. Sheehy, dissenting: 

A resident worker should be paid though he 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 their pay the 

hours in the ItovernightItt from 10:OO p.m. to 7:00 a.m. If the 

worker got at least five consecutive uninterrupted 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. The majority 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 

to his employer, it is not necessary for the employer to compensate 

the employee fully for that time. The majority 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, the majority 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 

findings of the examiner, but noted particularly findings that the 

examiner did not make. The district judge based 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 employers moved for a new trial before the District Court. In 

its order denying 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 implies this court found the findings 

ofthe hearings 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 failure to address certain pertinent 

issues, we did not hold that any of his findings were in 

error nor did we determine that the findings were wholly 

inadequate. We explicitly based our opinion on lt. . . the facts properly found by the examiner . . . 11 

Specifically, respondent claims we made 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 

stipulation by the parties 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 

hearinqs examiner. 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, neither party raised exceptions to the hearings 

examinerls findings of fact or questioned their 
sufficiency. (Emphasis added.) 

Memorandum and Order re motion 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 followed carefully the rule that 

it is bound, as is this Court, by factual findings of the hearing 

examiner and stipulations by the parties. Hutchin v. 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 j udgment 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 and which bound not only the District Court but this Court: 

Petitioners worked as trainers or supervisors of 

developmentally disabled clients at groups homes between 

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.ll If 

during the I1overnight1' the trainer enjoyed at least five 

consecutive uninterrupted hours, he was 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. " 

The petitioners here, however, claim entitlement to full 

payment (usually at time-and-half overtime rates) for all 

of the "overnight" time, 10:OO p.m. to 7:00 a.m. 

regardless of interruptions, most of which was in excess 

of 8 hours per day, 40 hours per week, and 80 hours per 

14-day period. 

Opinion and Order on Petition for Judicial Review, District Court, 

page 2. 

In this dissent, I rely on those facts and none other in 

determining what the legal results should be. 

The next hurdle over which the majority stumble is the effect 

and applicability of the Federal Fair Labor Standards Act to the 

facts of this case. The majority either missed the application by 

the District Court of the Federal Acts, or they fail in their own 

interpretation. 

The Fair Labor Standards Act, 29 U.S.C. 5 207 is clear. It 

provides : 

(a)(l) Except as otherwise provided in this section, no 

employer shall employ any of his employees . . . for a 

workweek longer than forty hours unless such employee 

receives compensation for his employment in excess of the 

hours above specified at a rate not less than one and 

one-half times the regular rate at which he is employed. 

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

or . . . the care of the sick, the aged, or the mentally 
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 

is accepted in lieu of the workweek of seven consecutive 

days for purposes of overtime computation and if, for his 

employment in excess of eight hours in any workday and 

in excess of eighty hours in such fourteen-day period, 

the employee receives compensation at a rate not less 

than one and one-half times the regular rate at which 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 is working even though he is permitted to sleep 

or engage in other personal activities when not busy. 

A telephone operator, for example, who is required to be 

on duty for specified hours is working even though she 

is permitted to sleep when 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 to be on duty and the time is worktime. (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 the basis of an 8-hour day in a 14-day period 

rather than an 8-hour day in a 7-day period. The District Court 

further stated that the subsection did not apply here because there 

was no agreement beforehand between the employer and the employees. 
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 a week. You will be paid for any 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 it made 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 to be 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 furnished by the employer and the employee 

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) Interruptions of Sleep. If the sleeping period is 

interrupted by 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 entire 
time is working time. (citing a case.) 

In examining the application of 5 785.22, the ~istrict Court 

determined that there was no finding of fact by the examiner as to 

an agreement to exclude the sleeping period nor a finding that the 

employee usually enjoyed an uninterrupted night's sleep. Moreover, 

the application of the regulation is conditioned upon a prior 

finding that the employee ttusually enjoyed an uninterrupted night Is 

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 

considered as working all the time he is on the premises. 

ordinarily, he may engage in normal private pursuits and 

thus have enough time for eating, 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 resides on the premises of his employer and also 

to a telephone operator who has the switchboard in her 

own home. (Citing cases.) 

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 basic 
command of the Wages and Hours Act. 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 findings of any kind that would show that the agreement between 

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 the three regulations which might apply, therefore, the one 

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 that he was making findings of fact; how and 

in what way the application by the District Court of 5 785.21 is 

making a finding of fact is not explained in the majority opinion. 

We come now to the administrative letters, the basis of the 

I1good faith1! 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 the mentally retarded. 

In that letter, White answered three posed questions. The 

questions relate (1) to employees who maintain separate 
residences, (2) to a clarification of the five day, 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 that with respect to relief employees, a departure 

from the general rule of 5 785.21 would be tolerated by the 

Department "because of the home-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 rulev1 for 

employees of community residences where they are offered by their 

employer "a home-like environment." 

As a Court, we should give absolutely no heed to the letters 

of these administrators. 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 explain and clarify regulations, and may 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 employees worked and were 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, the provisions of the federal ''Portal to Portal 

Act1' (PPA) and especially the provisions of 29 USC § 259(a) of the 

Act : 

In any action or proceeding 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 to pay minimum wages or overtime 

compensation under the Fair Labor Standards Act of 1938, 

as amended . . . , 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 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 

action or proceeding, notwithstanding that after such act 

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 law applies. 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). The provisions of 39-3-405 do not apply 

to: 

... 

(q) An employee of an hospital or other establishment 

primarily engaged in the care of the sick, disabled, aged 

or mentally ill or defective who is working 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-day period must be compensated for at a rate of not 

less than 1% times the hourly wage rate for the employee. 

The foregoing statute creates an issue which is another hurdle 

which the majority opinion clears in the exercise of legerdemain. 

The majority point to 8 39-3-408, MCA, which states that Montana's 

law shall not apply to employees who are covered by 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 

greater benefits. 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 hours per day per 

14-day period. The majority have concluded that Montana's superior 

benefits may not be recovered because of (1) the majority' 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 to pay lawful wages will curtail their 

services and discharge employees. 

There is, however, a clear legislative intent here to which 

the majority 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 trade but with the rights of those who toil, of those 

who sacrifice a full measure of their freedom and talents 

to the use and profits of others. Those are the rights 

that Congress has specially legislated to protect. Such 

a statute must not be interpreted or applied in a narrow, 

grudging manner. 

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 allow any inroads that delimit this great social policy. 

Moreover, under the interpretation by the majority of the 

effect of 5 39-3-408, MCA, the intention of Congress that greater 

benefits under state law should apply would never come into effect. 

The decision of the majority 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 

recovery under the Act, the majority eliminate any possibility for 

an employee whose job is part of commerce to have any benefit from 

5 39-3-408. The duty of courts, especially an appellate court, is 

to give effect to statutes, not to nullify them by interpreting 

them out of existence. The majority remind one of the Walrus and 

the Carpenter, who ate the oysters they were supposed to protect. 

I dissent and would affirm the decision of the District Court. 

I join in the foregoing dissent Ju6Yice Sheehy. 

/ 

. Justice 
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 Court of the First Judicial District, 

In and for the County ~ewis & Clark, 

The Honorable Jeffrey Sherlock, Judge presiding. 

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: 

should be paid though he 

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 the majority opinion. These employees are on the job 

most of the 24 hour day. The employer deducted from their pay the 

hours in the ttovernight,lt from 10:OO p.m. to 7:00 a.m. If the 

worker got at 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 for the entire overnight. The majority 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 

to his employer, it is not necessary for the employer to compensate 

the employee fully for that time. The majority 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, the majority 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. 

21