Case Name: DAVIS BROTHERS, INCORPORATED, a Georgia Corporation, Plaintiff-Appellant, v. Raymond J. DONOVAN, Secretary of Labor, et al., Defendants-Appellees
Court: United States Court of Appeals for the Eleventh Circuit
Jurisdiction: United States
Decision Date: 1983-03-21
Citations: 700 F.2d 1368
Docket Number: No. 81-7775
Parties: DAVIS BROTHERS, INCORPORATED, a Georgia Corporation, Plaintiff-Appellant, v. Raymond J. DONOVAN, Secretary of Labor, et al., Defendants-Appellees.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 700
Pages: 1368–1373

Head Matter:
DAVIS BROTHERS, INCORPORATED, a Georgia Corporation, Plaintiff-Appellant, v. Raymond J. DONOVAN, Secretary of Labor, et al., Defendants-Appellees.
No. 81-7775.
United States Court of Appeals, Eleventh Circuit.
March 21, 1983.
Rehearing and Rehearing En Banc Denied June 2, 1983.
Branch & Swann, John D. Marshall, Atlanta, Ga., for plaintiff-appellant.
Stephen A. Nauheim, Richard A. Hibey, Washington, D.C., for amicus curiae National Restaurant Assn.
Power & McDonald, Thomas W. Power, Robert D. McDonald, Washington, D.C., for amicus curiae Foodservice & Lodging Institute.
Mary Helen Mautner, Gregory O’Duden, U.S. Dept, of Labor, Washington, D.C., for defendants-appellees.
Before RONEY and CLARK, Circuit Judges, and TUTTLE, Senior Judge.

Opinion:
RONEY, Circuit Judge:
In meeting the requirements of the minimum wage prescribed by the Fair Labor Standards Act, the appellant restaurant and motel chain claims credit for meals furnished to its employees. Since the employees must take the meals, and are given no option to take cash, the Secretary of Labor disallowed the credit. The district court by declaratory judgment upheld the Secretary. We reverse on the ground that the Secretary has read into the statute a voluntary-choice-by-employee provision that Congress did not require.
The Fair Labor Standards Act (FLSA) guarantees employees covered by the statute a minimum wage. 29 U.S.C.A. § 206. Section 3(m) allows an employer a credit for "the reasonable cost . to the employer of furnishing [an] employee with board . if such board . . [is] customarily furnished by such employer to his employees." 29 U.S.C.A. § 203(m). This appeal presents a legal question: does this credit apply only if workers are continually given the option to take cash rather than the meal provided. The parties have stipulated to the facts. Appellant Davis Brothers operates restaurants, featuring primarily smorgasboard and cafeteria-style service, as well as motels. Up until a few years ago, Davis Brothers paid most hourly employees at least the full minimum wage in cash without deducting for food provided by the restaurants. Employees had the option to purchase meals from their employer at less than the retail price. In January 1980, however, Davis Brothers began requiring all non-managerial employees to take part of their compensation in the form of meals. Only workers who for medical reasons could not eat the food offered were paid the full minimum wage in cash. For all other hour ly employees, participation in the meal credit plan became a condition of employment which reduced the cash component of their wages 25-35 cents per hour.
In March 1980, the Department of Labor informed Davis Brothers that it was not entitled to credit because the meal plan was mandatory. Although the Department did not specify how frequently employees have to be afforded the choice of taking cash in lieu of meals, it indicated that an employee's acceptance of meals is not really voluntary if it is a prerequisite to employment. In reaching this position, the Department relied on 29 C.F.R. § 531.30 (1981), an interpretative rule promulgated by the agency in 1940. This rule, which construes the word "furnished" as used in the credit provision of the FLSA, 29 U.S.C.A. § 203(m), provides in pertinent part: "[n]ot only must the employee receive the benefits of the facility for which he is charged, but it is essential that his acceptance of the facility be voluntary and uncoerced."
The legality of the Secretary's choice requirement is a question of first impression for this Court. In addition to the district court whose judgment is reviewed here, two other district courts have upheld the Secretary's position: Morrison, Inc. v. Donovan, argued on appeal with this case and this day decided at 700 F.2d 1374 (11th Cir. 1983), and Marshall v. New Floridian Hotel, Inc., 24 Wage & Hour Cas. (BNA) 530 (S.D. Fla.1979), aff'd on other grounds sub nom., Donovan v. New Floridian Hotel, Inc., 676 F.2d 468, 473 & n. 8 (11th Cir.1982) (recognizing that substantial questions exist concerning the validity of the Secretary's position). Another district court has reached the opposite conclusion. Donovan v. Miller Properties, Inc., 547 F.Supp. 785 (M.D.La., 1982).
Section 3(m) of the statute provides that wages include the reasonable cost of meals "customarily furnished" to employees. Through its interpretative regulation, the Secretary of Labor has in effect construed "customarily furnished" by the employer to mean "voluntarily accepted" by the employees. We fail to discern any basis for this construction. Congress is presumed to use words in their ordinary sense unless it expressly indicates the contrary. Addison v. Holly Hill Fruit Products, 322 U.S. 607, 617-18, 64 S.Ct. 1215,1221-22, 88 L.Ed. 1488 (1944) (construing a different provision of the FLSA); Tennessee Coal, Iron and Railroad Co. v. Muscoda Local No. 123, 321 U.S. 590, 598, 64 S.Ct. 698, 703, 88 L.Ed. 949 (1944) (same). The FLSA does not define customarily furnished or otherwise indicate that the phrase is being used in an unusual way. Bound by the ordinary meaning of the terms, two courts seemingly have construed customarily furnished to mean regularly provided. Melton v. Round Table Restaurants, Inc., 20 Wage & Hour Cas. (BNA) 532, 534 (N.D.Ga.1971); Donovan v. Miller Properties, Inc., 547 F.Supp. at 788. We agree. The plain language of section 3(m) focuses on the actions of the employer, not of his employees.
Perhaps aware that the literal language of section 3(m) does not support his position, the Secretary relies on the legislative purpose behind the FLSA. Congress decided to guarantee workers a minimum wage to prevent exploitation through the superior bargaining position often held by employers. See Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 706-707 & n. 18, 65 S.Ct. 895, 902 & n. 18, 89 L.Ed. 1296 (1945). According to the Secretary, an employer exploits his superior economic power, and hence defeats the intent of the Act, when he forces an employee to accept part of his wages in a form not desired. This argument ignores the safeguard built into section 3(m) by Congress which prohibits an employer from profiting from his bargaining edge. An employer cannot deduct from the cash component of wages more than the "reasonable cost" of the meal as determined by the agency. 29 U.S.C.A. § 203(m). Cf. Walling v. Peavy-Wilson Lumber Co., 49 F.Supp. 846, 862 (W.D.La.1943) (Congress limited the credit to the reasonable cost of the meals to prevent employers from circumventing the minimum wage law and "profiteering" through excessive deductions from cash wages for facilities provided).
In a second argument based on legislative intent, the Secretary notes that Congress wanted the individual employee to enjoy "the freedom . to allocate his minimum wage among competing economic and personal interests." Brennan v. Heard, 491 F.2d 1, 4 (5th Cir.1974). According to the Secretary, the employee loses this freedom if his employer can force him to accept his compensation in a form other than cash. The Secretary's reliance on Heard and the general legislative intent behind the FLSA is misplaced. The FLSA normally requires employers to pay their workers in cash but, as the Heard court noted, section 3(m) is an express exception to this rule. Brennan v. Heard, 491 F.2d at 3 n. 2. See also Brennan v. Veterans Cleaning Service, Inc., 482 F.2d 1362, 1369 (5th Cir.1973). Congress apparently recognized and decided to preserve the custom in many industries, including the restaurant business, of compensating employees in part through food and lodging. See 112 Cong.Rec. 11,378 (1966) (comments of Congressman Gurney during debate prior to Congress' amending the FLSA to cover the restaurant industry); 83 Cong. Rec. 7408 (1938) (comments of Congressmen Crawford and O'Malley during debate prior to Congress' enacting the original FLSA). The Secretary has failed to cite any passage in the statute or legislative history that even suggests Congress intended to make the statutory exception to the payment of cash wages any different from the customary practice, by making employee choice a prerequisite.
The Secretary notes that a few courts have relied on the voluntary and uncoerced standard promulgated in 29 C.F.R. § 531.30 (1981) in denying employers credit for facilities they provided their workers. See Marshall v. Intraworld Commodities Corp., 24 Wage & Hour Cas. (BNA) 860, 864 (E.D.N. Y.1980); Hodgson v. Frisch Dixie, Inc., 20 Wage & Hour Cas. (BNA) 167, 171 (W.D. Ky.1971), aff'd, 469 F.2d 82 (6th Cir.1972). These cases are readily distinguishable from the present action. Frisch Dixie and Intraworld concerned grossly inadequate facilities for which employers sought excessive credit. In Frisch Dixie, for example, the employers deducted more than the cost of the meals furnished and did not pay employees at all for the meal period even though they often were required to work while eating. The employers required the employees to accept the meal apparently to ensure their availability for uncompensated labor-during their meal period. Frisch Dixie, 20 Wage & Hour Cas. at 170-71. In Intraworld, the employer took advantage of an uneducated alien, requiring him to work 13V2 hours per day, six or seven days a week while paying him little more than room and board. Intraworld, 24 Wage & Hour Cas. at 863-64. Similarly, in the case that evidently prompted the agency to promulgate the voluntary and uncoerced standard, Williams v. Atlantic Coast Line Railroad Co., 1 Wage & Hour Cas. (BNA) 289 (E.D.N.C. 1940), the employer required workers to live in substandard accommodations including boxcars, never informed them that the "housing" was part of their wages, and deducted a highly inflated amount from cash wages. As one might expect, the court denied the employer any credit. Id. at 291, 293-95.
The record does not reveal any comparable incidents of employee exploitation by Davis Brothers. Workers have been informed of the meal credit plan from the very beginning. The Secretary has not established or even argued that the company has deducted more than the actual cost of the food, has provided unpalatable or non-nutritious meals, or has in any other way denied its employees the full value of their minimum wage. The credit is not for the retail value of the meals, but is limited to the reasonable cost to the employer of providing the meals. 29 U.S.C.A. § 203(m).
A number of courts have awarded credit for facilities provided even though the em ployers did not grant their workers a continuing choice between cash and the facilities. In Lopez v. Rodriguez, 668 F.2d 1376 (D.C.Cir.1981), the D.C. Circuit avoided holding the voluntary and uncoerced standard illegal by narrowly interpreting it in the context of a job, such as a live-in domestic, that cannot be performed without the employee's partaking in the facility. In this situation, the D.C. Circuit construed the agency regulation as merely requiring that the employee voluntarily accept the job knowing the facility will be part of his compensation. Id. at 1380. See also Tippie v. Affordable Inns, 24 Wage & Hour Cas. (BNA) 975, 981 (W.D.Okla.1980); Melton v. Round Table Restaurants, Inc., 20 Wage & Hour Cas. at 534.
The parties have proffered a number of policy arguments. The Secretary notes that employees who elect for one reason or another not to eat the meal are disadvantaged by the mandatory meal credit plan. He brings up the unappetizing spectre of a limited menu, fast food operator requiring his employees to consume the same fare day in and day out. Amicus The National Restaurant Association, on the other hand, argues that a voluntary plan will increase administrative and accounting costs. Amicus also stresses that the value of meals, which is not taxable to employees if provided for the employer's convenience, I.R.C. § 119(b)(3)(A) (1981), will become taxable if workers are given the choice to take cash instead. I.R.C. § 119(b)(3)(B)(ii); Treas.Reg. § 119-l(a)(3)(i) (1981). While both sides raise interesting points, the arguments are directed to the wrong forum. Donovan v. Miller Properties, Inc., 547 F.Supp. at 789. Congress, not the judiciary, is empowered to determine this country's minimum wage policy. We hold merely that, as the FLSA currently stands, whether for good or bad, Congress has allowed employers to take a credit on the cash component of their minimum wage obligation for meals regularly provided even if the employees are not given the continuing option to take cash instead.
REVERSED.