Opinion ID: 1493191
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Heading Rank: 2

Heading: Meaning of Regular Rate as Used in Section 7(a).

Text: As we have already indicated, the court below adopted a minimum wage theory of Section 7(a) and consequently concluded that the overtime provisions of the Act are satisfied by the payment of one and one-half time the statutory minimum rate for each overtime hour  regular rate and minimum rate becoming synonymous. This interpretation makes the overtime provisions of the Act effective only as to employees in the lowest wage brackets. Since we have adopted a maximum hour interpretation of Section 7(a), it follows as the night the day that we must reach a different conclusion. We think it is clear that regular rate of pay means the actual rate of pay which the employee is receiving no matter how high, and not the minimum rate set forth in the statute. [25] In no other way could the coercive effect of the provision for one and one-half times the regular rate for overtime be brought into operation as clearly intended by Congress. Floyd v. DuBois Soap Co., Ohio App., 38 N.E.2d 919. Congress must have had in mind the fact that many employees who were within the policy of the Act would receive wages in excess of the minimum and hence it is difficult to see how the objective of discouraging excessive overtime can be accomplished if regular rate is to be construed as meaning minimum rate. Such a construction would wholly defeat this policy, for if an employee was getting a fairly high wage, one and one-half times the minimum would in such a case be less than the actual wage the employee was receiving per week in the normal course of his employment. This would encourage rather than discourage overtime, and the plain purpose of Congress  viz. to deter employers from working their employees overtime  would be frustrated. Such a mischievous fallacy we cannot permit. As was said by the Court in Fleming v. Carleton Screw Products Co., D.C., 37 F.Supp. 754, at page 757: It seems    that the construction contended for by defendant to the effect that employer and employee may agree on a regular rate of pay regardless of what compensation the employee actually receives, will permit employers to avoid the obligations imposed by Section 7 and will completely nullify the overtime provisions therein contained. It seems clear that the benefits of the Act were intended to apply to a wider group than those employed at the statutory minimum and therefore the Act ought not to be construed to exclude them from its principal benefits. Numerous other factors seem to support the conclusion which we have here reached. First, the words of Section 7(a)  to-wit:  regular rate at which he is employed   tend to indicate that it is the actual wage of the particular employee involved rather than the general minimum; otherwise the underscored words would be superfluous if not meaningless. We do not believe the words can be interpreted to mean the minimum required by the Act because the plain language, we think, is not subject to that interpretation when read in its ordinary meaning. Normally the best evidence of congressional purpose is the language of the law itself. [26] In Haddad v. Bedkerman Shoe Corp., 4 Wage Hour Rept. 329: (C. P. Berks Co., Pa.), the Court said: Nor can it successfully be maintained that by regular rate is intended `minimum rate'. If Congress had intended the overtime to be paid at one and one-half times the `minimum' legal rate, it could have said so very aptly by using the word `minimum' instead of the word `regular'. The fact that it did not do so is a plain indication that it did not so intend. Similarly, in Thornberg v. Eastern T. & W. N. C. Motor Transportation Co., Tenn., 157 S.W.2d 823, the Court said: By the language of the statute, therefore, the one and one-half pay for overtime is one and one-half times the rate at which the particular employee is employed, whatever that may be. Secondly, Section 18 of the Act, 52 Stat. 1069 (1938), 29 U.S.C.A. § 218, reinforces the opinions just expressed as to what Congress intended by the words regular rate of pay as used in Section 7(a). Section 18 of the Act provides that: No provision of this Act [sections 201-219 of this title] shall justify any employer in reducing a wage paid by him which is in excess of the applicable minimum wage under this Act [sections 201-219 of this title]   . (Italics supplied.) By enacting Section 18, Congress intended primarily to discourage the possible tendency that the minimum wage fixed in the Act would become the maximum wage paid by employers. In declaring that no provision of the Act shall justify a reduction of wages, one of the aims of the Act is to prevent lowering of existing rates when they exceed the minimum. Thus, if overtime is to be computed at the minimum rate instead of the wage paid by him, this obviously tends to reduce the existing wage within the meaning of this Section. If the rate is variable at the whim of the employer, the hour provisions of the Act have no effective sanctions. Section 7(a) and Section 18 must be read together, and a comparison of these two sections points to the conclusion which we have reached. Thirdly, both the interpretative bulletins [27] issued by the Wage and Hour Division and regulations [28] have interpreted regular rate at which he is employed to mean the actual rate the employee is receiving and not the statutory minimum. Although such interpretations are by no means binding on the courts, we consider them highly significant. See United States v. American Trucking Ass'n, 310 U.S. 534, 549, 60 S.Ct. 1059, 1067, 84 L.Ed. 1345; [29] Jacobs v. Peavy-Wilson Lumber Co., D.C., 33 F.Supp. 206, 212; Haddad v. Bedkerman Shoe Corp., 4 Wage Hour Rept. 329 (C. P. Berks Co., Pa.); Wood v. Central Sand & Gravel Co., D.C., 33 F.Supp. 40. Fourthly, the vast majority of the courts have construed regular rate of pay to mean the actual pay which the employee is receiving, expressly denying that regular rate is synonymous with minimum rate. Fleming v. Carleton Screw Products Co., D.C., 37 F.Supp. 754; Fleming v. Pearson Hardwood Flooring Co., D.C., 39 F.Supp. 300; Williams v. General Mills, D.C., 39 F. Supp. 849; Sunshine Mining Co. v. Carver, D.C., Idaho, 41 F.Supp. 60; St. John v. Brown, D.C., 38 F.Supp. 385; Drake v. Hirsch, D.C., 40 F.Supp. 290; Haddad v. Bedkerman Shoe Corp., 4 Wage Hour Rept. 329 (C. P. Berks Co., Pa.); Wilkenson v. Swift & Co., 4 Wage Hour Rept. 305 (N.D.Tex.); McLendon v. Bewley Mills, 4 Wage Hour Rept. 30 (N.D.Tex.); Floyd v. DuBois Soap Co., 4 Wage Hour Rept. 541, Ohio App., 38 N.E.2d 919, affirming Floyd v. DuBois Soap Co., Com.Pl. Hamilton Co., 6 Ohio Supp. 76; Thornberg v. Eastern T. & W. N. C. Motor Transportation Co., Tenn., 157 S.W.2d 823; Angel v. Dayton Veneer & Lumber Mills, 4 Wage Hour Rept. 471 (N.D.Ga.); Muldowney v. Seaberg Elevator Co., D. C., 39 F.Supp. 275; McMillan v. Wilson & Co., 4 Wage Hour Rept. 409 (D.Minn. Ramsey Co.); Moss v. Postal Telegraph Cable Co., 4 Wage Hour Rept. 221 (D.C. M.D.Ga.) 42 F.Supp. 807; Boylan v. Linden Mfg. Co., 4 Wage Hour Rept. 158 (C.C. Mich.Ingham Co.); Graves v. Armstrong Creamery Co., 154 Kan. 365, 118 P.2d 613. In St. John v. Brown, D.C., 38 F.Supp. 385, at page 389, the Court said: The key to the right answer is the true per hour wage of the employee. That must be determined, of course, by reference to the actual employment contract. That amount, whatever it is, represents the true regular rate of pay for each of the hours worked in a week. The Court also made this significant statement at page 389 of 38 F.Supp: It is not enough that the salaries here, independent of the working contract, may be allocated or spread so as to cover the minimum and one and a half for overtime. It may even exceed the 30¢ minimum and the 45¢ for overtime and yet be a violation of the law. As we have indicated, those courts which adopt a minimum wage theory of Section 7(a) almost inevitably must reach a conclusion different from the conclusion that we have here reached. See Fleming v. A. H. Belo Corp., 5 Cir. 1941, 121 F.2d 207, certiorari granted, 62 S.Ct. 137, 86 L. Ed. ___; Reeves v. Howard County Refining Co., D.C., 33 F.Supp. 90; Bumpus v. Continental Baking Co., No. 211, W.D. Tenn., April 29, 1941, supra; Gurtov v. Volk, Mun.Ct.N.Y.1939, 170 Misc. 322, 11 N.Y.S.2d 604. Yet surprisingly enough, the Court in the Belo case, supra, used language which would indicate that the position we have taken is unassailable: In cases where there is no express agreement as to the regular rate at which the employee is employed, but only an agreement for a weekly wage, appellant's method of arriving at the regular rate by assuming that the wage stipulated for is not intended to cover overtime worked, would, we think, be unexceptional. Fleming v. A. H. Belo Corp., 5 Cir., 121 F.2d 207, 211. To be sure, the facts in the Belo case are distinguishable from the case at bar. In that case, the plan of the Dallas News was to make individual contracts with its reporters guaranteeing them a weekly salary above the statutory minimum. The contract called for a basic hourly rate exceeding the minimum wage prescribed by the Act, with overtime at the rate of one and one-half times this basic hourly rate, and guaranteed to each employee a predetermined weekly wage. Thus, the formula called for one hourly rate up to forty hours and a higher rate beyond that; but provided that the employees got the full amount whether or not they worked more than forty hours in any week. Salaries were not reduced, but neither was extra pay given for overtime. The Wage-Hour Division contended that overtime should be calculated on the actual weekly wage. The Court rejected this contention and upheld the wage-payment plan. The case differs from the case at bar because there was a contract for a weekly wage, and also for an hourly regular rate not less than the minimum on which overtime should be computed. We find no such written contract in the instant case, and there is no evidence in the record, nor any contention by the defendant, that the parties had agreed upon a rate of pay per hour. That there are important grounds of distinction is admitted by the Court in the Belo case in the very language we have quoted. Furthermore, that same Court in a very recent decision, Warren-Bradshaw Drilling Co. v. Hall, 5 Cir., 124 F.2d 42 decided Dec. 9, 1941, expressly stated that the written agreement in the Belo case was determinative of the issue.