Opinion ID: 200756
Heading Depth: 2
Heading Rank: 1

Heading: The District Court's Grounds for Summary Judgment

Text: 14 The district court held that the officers' FLSA claims are barred from federal court because they are essentially contract claims for unpaid overtime, and contract claims are subject to the CBA's mandatory grievance and arbitration procedures. On appeal, the officers argue that their statutory and contractual rights are distinct, and that nothing in the CBAs waives their statutory right to a judicial forum for their FLSA claims. They also contend that even if such a waiver were present, it would be unenforceable under the Supreme Court's decision in Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 737-46, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981) (holding that a collective bargaining agreement cannot prospectively bind employees to arbitrate FLSA claims). 15 The officers' first contention suffices to resolve this issue. Rights conferred by Congress are conceptually distinct from those created by private agreement, and there is no authority for the proposition that rights under the FLSA merge into contractual ones whenever the two overlap. 12 The distinctly separate nature of these contractual and statutory rights is not vitiated merely because both were violated as a result of the same factual occurrence. Alexander v. Gardner-Denver Co., 415 U.S. 36, 50, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974) (involving rights under Title VII); see Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 34-35, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (reiterating that statutory rights are independent of rights created under CBAs); Morales-Vallellanes v. Potter, 339 F.3d 9, 17 (1st Cir.2003) (remedies under Title VII and CBAs are independent); LaChance v. Northeast Publ'g, Inc., 965 F.Supp. 177, 184 (D.Mass.1997). 16 This leaves the question whether the officers were required to submit their FLSA claims to arbitration under either of the collective bargaining agreements. They were not. Neither CBA contained a clear and unmistakable waiver of the officers' right to a judicial forum for FLSA claims. Wright v. Universal Mar. Serv. Corp., 525 U.S. 70, 79-80, 119 S.Ct. 391, 142 L.Ed.2d 361 (1998). In Wright, the Supreme Court noted the obvious[] ... tension in its arbitration jurisprudence between older cases holding that CBAs can never prospectively bind employees to arbitrate federal statutory claims, see Barrentine, 450 U.S. at 745-46, 101 S.Ct. 1437 (FLSA claims); Gardner-Denver, 415 U.S. at 51-52, 94 S.Ct. 1011 (Title VII claims), and more recent cases holding that employees can be compelled to submit some federal statutory claims to arbitration pursuant to a valid arbitration clause in a bilateral employment contract, see, e.g., Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 122-24, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001); Gilmer, 500 U.S. at 27-29, 111 S.Ct. 1647. See 525 U.S. at 76, 119 S.Ct. 391. The Wright Court declined to resolve this tension, holding that even assuming a CBA can waive an employee's right to a federal forum, any such waiver must at a minimum be clear and unmistakable. Id. at 79-81, 119 S.Ct. 391; see also id. at 80, 119 S.Ct. 391 ([W]hether or not Gardner-Denver's seemingly absolute prohibition of union waiver of employees' federal forum rights survives Gilmer, Gardner-Denver at least stands for the proposition that the right to a federal judicial forum is of sufficient importance to be protected against less-than-explicit union waiver in a CBA.). 17 No such clear and unmistakable waiver appears in the CBAs in this case. The arbitration provision in each agreement applies only to grievances, which in turn are defined as allegations that the Town violated the CBA. Not a single reference appears to arbitration of statutory claims, let alone a clear and unmistakable waiver of a judicial forum for such claims. Indeed, the patrol officers' CBA affirmatively suggests that union members can bring statutory claims in a judicial forum. In contrast to the arbitration section of the agreement, which makes no reference to statutory claims, the paragraph governing workplace discrimination bars the Town from discharging or discriminating against any officer because he or she filed or processed any grievance under this agreement or instituted any proceeding under the State or Federal statutes relating to wages, hours, or conditions of employment  (emphasis added). The CBA juxtaposes grievances, which are subject to arbitration, with claims under [f]ederal statutes relating to wages, hours, or conditions of employment, of which the FLSA is among the most prominent. This is a far cry from a clear and unmistakable waiver of the officers' right under the FLSA to a judicial forum. See Wright, 525 U.S. at 81, 119 S.Ct. 391 (finding no clear and unmistakable waiver of a federal forum in language in the CBA purporting to cover all matters affecting wages, hours, and other terms and conditions of employment); Quint v. A.E. Staley Mfg. Co., 172 F.3d 1, 8-9 (1st Cir.1999) (CBA lacking any express reference to federal anti-discrimination statutes did not include a clear and unmistakable waiver of an employee's right to bring a statutory discrimination claim in federal court). 13 18 We conclude that the grievance and arbitration procedures in the CBAs did not bar the officers from filing their FLSA claims directly in federal court. 14 19
20 As an alternative basis for summary judgment, the district court held that the Town properly calculates police overtime in accordance with the fluctuating workweek method set forth in 29 C.F.R. § 778.114. Where that interpretative regulation applies, the minimum overtime rate required by the FLSA is only half-time (i.e., 50% of the regular rate), rather than time-and-a-half (150%). Relying on § 778.114, the district court concluded that the Town paid the officers more generously than the FLSA requires. See Valerio v. Putnam Assocs., 173 F.3d 35, 40 (1st Cir.1999) (summary judgment is appropriate if the employee ultimately received more compensation than the FLSA overtime rules require). On appeal, the officers contend that the compensation scheme embodied in the CBAs is inconsistent with the requirements of § 778.114. 15 21 The fluctuating workweek method is one of two approved methods in the Department of Labor's FLSA regulations for calculating the regular rate at which [an employee] is employed for overtime purposes. 29 U.S.C. § 207(a); see Valerio, 173 F.3d at 39. The first is the fixed weekly salary method, which governs employees who receive a fixed salary that is intended to compensate a specific number of hours of labor (e.g., $400 for 40 hours). 29 C.F.R. § 778.113(a). The other is the fluctuating workweek method, which applies when an employee is paid a fixed weekly salary regardless of how many hours the employee may work in a given week. Valerio, 173 F.3d at 39. This method is intended to cover cases in which a salaried employee whose hours of work fluctuate from week to week [reaches] a mutual understanding with his employer that he will receive a fixed amount as straight-time pay for whatever hours he is called upon to work in a workweek, whether few or many.... Condo v. Sysco Corp., 1 F.3d 599, 601 (7th Cir.1993). 22 When the fluctuating workweek method applies, the employee's regular rate for FLSA purposes is calculated anew each week by dividing the actual number of hours worked that week into the fixed salary amount. This calculation produces a straight-time hourly rate, which is then multiplied by 50% to produce the overtime rate that must be paid for every hour worked beyond 40 that week. 16 The interpretative regulations explain why the overtime rate is only half-time, rather than the usual time-and-a-half: Payment for overtime hours at one-half [the regular] rate in addition to the salary satisfies the overtime pay requirement because such hours have already been compensated at the straight time regular rate, under the salary arrangement. § 778.114(a). In other words, the fixed sum represents the employee's entire straight-time pay for the week, no matter how many hours the employee worked; the employer need only pay the 50% overtime premium required by the FLSA for hours after 40. 23 For obvious reasons, an employer may not simply elect to pay the lower overtime rate under § 778.114. The regulation requires that four conditions be satisfied before an employer may do so: 24
25 (2) the employee must receive a fixed salary that does not vary with the number of hours worked during the week (excluding overtime premiums); 26 (3) the fixed amount must be sufficient to provide compensation every week at a regular rate that is at least equal to the minimum wage; and 27 (4) the employer and employee must share a clear mutual understanding that the employer will pay that fixed salary regardless of the number of hours worked. 28 § 778.114(a), (c); see also Flood v. New Hanover County, 125 F.3d 249, 252 (4th Cir.1997). 17 In this case, the officers dispute the second and fourth conditions: they contend that their compensation does vary under the CBAs with the number of hours worked, and that no clear mutual understanding existed that they would be paid according to the fluctuating workweek method. In considering these contentions, we follow the district court's example in relying on the CBAs, as neither party disputes that the Town in fact paid the officers according to the terms of those agreements. 29 After carefully reviewing the CBAs, we are persuaded that the officers are correct. This case does not fit the § 778.114 mold. It is true, as the district court emphasized, that each week the officers receive 1/52 of their annual base salary, irrespective of the number of shifts worked that week. But under the CBAs, that sum does not constitute all of the straight-time compensation that the officers may receive for the week. This is significant because by the plain text of § 778.114, it is not enough that the officers receive a fixed minimum sum each week; rather, to comply with the regulation, the Town must pay each officer a fixed amount as straight time pay for whatever hours he is called upon to work in a workweek, whether few or many.  (emphasis added). 30 The undisputed evidence indicates that the Town does not satisfy this requirement. The officers' compensation varies from week to week even without reference to the number of hours worked. Any officer required to work a nighttime shift receives money — expressly termed additional compensation under the CBA — in the form of a $10 shift-differential payment added to his check for the week. The Supreme Court has specifically held that such shift differentials, when paid, are part of the worker's regular rate of pay. Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, 468-69, 68 S.Ct. 1186, 92 L.Ed. 1502 (1948). So while the shift differential itself may be small, it requires the larger conclusion that most officers do not receive a fixed amount for their straight-time labor each week. 31 The officers' weekly straight-time compensation also varies under the CBAs depending on the number of hours worked. This is because the officers receive extra pay for every hour worked beyond eight hours in a day, and for every hour worked on otherwise off-duty time, regardless whether their total number of hours worked for the week exceeds forty. The CBAs label such extra pay overtime, but that does not control. For purposes of the FLSA, all hours worked under the statutory maximum are non-overtime labor. See 29 C.F.R. § 778.101 ([A] workweek no longer than the prescribed maximum is a nonovertime workweek under the Act....); Reich v. John Alden Life Ins. Co., 126 F.3d 1, 7 (1st Cir.1997) (under FLSA, overtime means employment in excess of 40 hours in a single workweek). That the parties have by contract designated certain compensation for labor under the forty-hour threshold overtime does not affect the characterization of those payments under the FLSA. Cf. Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424-25, 65 S.Ct. 1242, 89 L.Ed. 1705 (1945) (Once the parties have decided upon the amount of wages and the mode of payment the determination of the regular rate becomes a matter of mathematical computation, the result of which is unaffected by any designation of a contrary `regular rate' in the wage contracts.). The regulations specifically explain how to treat such mid-workweek contractual overtime payments under the Act: only the premium portion of the contractual overtime rate (that is, the amount in excess of the employee's regular rate) is deemed overtime pay and may be offset against any statutory overtime liability in the same week. 18 See 29 C.F.R. §§ 778.201(a), 202(a); see also 29 U.S.C. § 207(e)(5) (excluding from the definition of regular rate all extra compensation provided by a premium rate paid for certain hours worked ... in excess of eight in a day); id. § 207(h) (permitting employers to offset such extra compensation against FLSA overtime liability). The remainder is simply considered straight-time compensation under the Act. 32 For this reason, the officers in this case do not receive a fixed amount as straight time pay for whatever hours [they are] called upon to work in a workweek, whether few or many. On the contrary, the officers receive more or less straight-time pay depending on how many contractual overtime hours they work each week. The CBAs require the Town to track each officer's hours for each day during the work-week and compensate him accordingly. This belies the Town's claim that it uses the fluctuating workweek method. The Seventh Circuit recently considered a similar arrangement and held that it did not comport with § 778.114: Every extra hour is calculated and paid for. That is incompatible with treating the base wage as covering any number of hours at straight time. Heder v. City of Two Rivers, 295 F.3d 777, 780 (7th Cir.2002). 19 We agree. 33 The Town contends that it is simply paying the officers more generously than the FLSA requires. We are unpersuaded. Section 778.114 applies only if there is a clear mutual understanding that the employee's fixed salary is compensation for however many hours the employee works during the week. Admittedly, this does not require that the employee understand or give actual consent to the employer's method of calculating overtime. Valerio, 173 F.3d at 40. In this case, however, the Town's method of calculating overtime is premised on assumptions inconsistent with § 778.114. Neither the CBAs nor the Town's methods of calculating pay rates indicate that the parties reached a clear mutual understanding that the officers would work varying numbers of hours each week in exchange for a fixed sum. 34 We hold that the compensation scheme embodied in the CBAs does not comply with § 778.114. 35
36 The district court's third alternative ground for summary judgment was that the officers have received all of the overtime payments due to them because they are covered by the FLSA's partial exemption for law enforcement personnel. Under 29 U.S.C. § 207(k), as interpreted by the Secretary of Labor, no overtime compensation is required for law enforcement personnel until the number of hours worked exceeds 171 hours in a 28-day work period, or a proportional number of hours in a shorter work period — in the case of a 7-day work period, that proportion works out to 43 hours. 20 See id.; 29 C.F.R. §§ 553.230(b), (c). The effect of the § 207(k) partial exemption is to soften the impact of the FLSA's overtime provisions on public employers in two ways: it raises the average number of hours the employer can require law enforcement and fire protection personnel to work without triggering the overtime requirement, and it accommodates the inherently unpredictable nature of firefighting and police work by permitting public employers to adopt work periods longer than one week. See Wethington v. City of Montgomery, 935 F.2d 222, 224 (11th Cir.1991); Maldonado v. Administracion de Correccion, 1993 WL 269650, at  (D.P.R. Jul.1, 1993). The longer the work period, the more likely it is that days of calm will offset the inevitable emergencies, resulting in decreased overtime liability. 37 The § 207(k) exemption applies, however, only if the employees are engaged in fire protection ... [or] law enforcement activities within the meaning of § 207(k), and only if the employer has adopted a qualifying work period. The employer bears the burden of proving that these conditions are satisfied. Barefield v. Village of Winnetka, 81 F.3d 704, 710 (7th Cir.1996); Birdwell v. City of Gadsden, 970 F.2d 802, 805 (11th Cir.1992). Once the factual criteria are established, the employer can simply start paying its employees under § 207(k); the employees' approval is not required. Barefield, 81 F.3d at 710. In this case, the parties agree that the officers are engaged in law enforcement activities as defined by 29 C.F.R. § 553.211. The sole question is whether the Town has adopted a qualifying work period, which is any established and regularly recurring period of work which, under the terms of the Act and the legislative history, cannot be less than 7 consecutive days nor more than 28 consecutive days. § 553.224(a). 38 On this record, the Town has not established a qualifying work period under § 207(k). 21 All of the evidence in the record indicates that the Town employed the officers on repeating six-day cycles of four days on-duty followed by two days off-duty. The CBAs state this schedule explicitly. And while the Town could in theory employ a work period for purposes of § 207(k) that differs from the terms of the CBAs, see Franklin v. City of Kettering, 246 F.3d 531, 536 (6th Cir.2001), nothing in the record shows that it has done so. The Town does not point to a single statement or document indicating that it adopted a work period longer than six days. Instead, it offers only the argument that the officers' work period is longer than seven days because it is a repeated cycle of six days, and that the work period is inevitably shorter than 28 days because the officers disrupt their own schedules with sick days, vacation days, and holidays. This argument fails as a matter of logic. It is also inconsistent with § 553.224(a), which requires that the work period must be established and regularly recurring (emphasis added). 22 39 We hold that the Town is not entitled to the § 207(k) exemption. But we add a caveat: The officers acknowledge in their brief that notwithstanding the CBAs, a few officers worked repeating cycles of five days on-duty followed by two-days off-duty. We cannot determine from the record whether the Town in fact adopted a seven-day work period as to these individual officers. Cf. 29 C.F.R. § 553.224(b) (employer may have different work periods applicable to different employees). This issue remains open to the Town on remand.