Court Opinion

ID: 5451010
Source: CourtListenerOpinion
Date Created: 2022-01-08 18:39:32.683633+00
Date Added: 2024-06-11T08:32:23.047345
License: Public Domain

TRAYNOR, J.
I dissent.
Until July 16, 1944, defendant paid his employees 92% cents per hour. Thereafter he paid 70 cents per hour for the first eight hours of any day or 40 hours of any week, $1.05 per hour for all additional hours in the first six consecutive days, and $1.40 per hour for any hours on the seventh consecutive work day. Both before and after the date of the change defendant was subject to the provisions of the Fair Labor Standards Act (29 U.S.C.A. §§ 201-219), which re*450quired him to pay his employees one and one-half times the regular wage rate for any hours exceeding 40 in any week. It is undisputed that defendant was violating the Fair Labor Standards Act by failing to pay overtime before July 16th and that the subsequent change in the rate of wages was not approved by the National War Labor Board. After plaintiffs learned that defendant had not secured the approval of the War Labor Board for the reduction in the rate of wages, they brought this action to recover the difference between the amount they had received and the amount to which they were entitled under the old rate together with liquidated damages and attorney’s fees as provided in the Fair Labor Standards Act.
Section 5(a) of the Stabilization Act of 1942 provided: “No employer shall pay, and no employee shall receive, wages or salaries in contravention of the regulations promulgated by the President under this Act.” (50 TJ.S.C.A. App. § 965.) Executive Order No. 9250, issued pursuant to the authority of the act, provided in part: “1. No increases in wage rates . . . and no decreases in wage rates, shall be authorized unless notice of such increases or decreases shall have been filed with the National War Labor Board, and unless the National War Labor Board has approved such increases or decreases.” (50 TJ.S.C.A. App., p. 315.) Plaintiffs contend that under these provisions the revision of the wage rate without the approval of the board was ineffective and void, so that the old rate remained in full force and effect.
Defendant states that this view is contrary to that expressed in Pearson Candy Co. v. Waits, 27 Cal.2d 615, 619 [165 P.2d 674], that “the board’s orders . . . rest simply on an appeal to the moral obligation of the parties and are neither enforceable nor reviewable. [Citations.]” Defendant contends that since he would be under no duty to comply if the board ordered him to change his rates, his failure to secure approval of a change in rates would not render them invalid. This contention, however, overlooks the dual function of the War Labor Board. The Pearson case and other cases enunciating the same rule were concerned with directive orders of the board issued pursuant to its authority under the War Labor Disputes Act of 1943 (50 U.S.C.A. App. §§ 1501-1511) to issue orders designed to settle labor disputes brought before it. This power of the board to issue directive orders in eases of labor disputes was distinct from its power to approve or reject changes in wage rates under Executive Order No. 9250. In exercising the latter power the board did not order any*451thing; it merely approved or failed to approve suggested wage rate changes that were filed with it. It was the statute and the executive order, not a. directive of the board, that prohibited wage rate changes if approval was not granted. Any change in wage rates without such approval was ineffective and void. (Wernhardt v. Koenig, 60 F.Supp. 709; Kells v. Boutross, 184 Misc. 206 [53 N.Y.S.2d 734]; Claude S. Bennett, Inc., v. Bollinger, 72 Ga.App. 531 [34 S.E.2d 563].)
The majority opinion nevertheless takes the position that the rate adjustment was designed merely to comply with the Fair Labor Standards Act and did not in fact constitute such a change in the take-home pay as to require approval of the War Labor Board. This position is untenable.
The take-home pay actually received under the two wage rates was not substantially the same unless a full 84-hour seven-day week was worked, and the evidence shows that frequently the full week was not worked. Defendant’s witness Potts testified that he and many others did not work full weeks after the rate change; neither did plaintiffs, as is clear from the records of their time and overtime. The following table illustrates the wages that were actually paid under the two systems for various work weeks.

92Y¡ cents per hr. with no overtime

70 cents per hr. with overtime and doubletime

Forty hours, five days
$37.00
$28.00
Forty-eight hours, six days
44.40
36.40
Seventy-two hours, six days
66.60
61.60
Eighty-four hours, seven days
77.70
78.40
Since the take-home pay varied with the number of hours worked, this case is not similar to Walling v. A. H. Belo Corp., 316 U.S. 624 [62 S.Ct. 1223, 86 L.Ed. 1716]. In that case the employment contract provided for a regular hourly rate to be paid with time and one-half for overtime and also for a weekly minimum wage that was to be paid regardless of the hours actually worked. The relation between the hourly rate and the weekly minimum was such that in practice the employees seldom if ever received other than the weekly minimum. The court there held that the parties could fix the regular hourly rate fór the purposes of the Fair Labor Standards Act by contract and rejected the contention that for each week the regular rate should be determined by dividing the weekly minimum by the number of hours actually worked. If defendant had a weekly minimum that in fact governed *452the take-home pay regardless of what was earned on the basis of either the 92% or 70-cent hourly rate, there might be some merit in the position that the attempted change in the hourly rate did not violate the Stabilization Act. Defendant had no such minimum, however, and the wages actually paid were based solely on the hourly rates and the time actually worked. Furthermore, the working of the 84-hour seven-day week was not such an invariable practice that the wages actually paid before and after the attempted change in the hourly rate remained substantially the same.
Even if it be assumed that the wages actually paid remained the same after the change in the wage rate, the wages to which plaintiffs were entitled were sharply reduced by the change. Although plaintiffs received only $77.70 for working an 84-hour week before the attempted wage rate change, they were entitled by virtue of the Fair Labor Standards Act to receive $98.05. Under the changed rate they were entitled to only $78.40 for the same number of hours. To hold that the rate in fact remained the same is to hold that plaintiffs had no right to overtime pay under the old rate before the adjustment. This holding would be valid, however, only if the Stabilization Act and Executive Order No. 9250 had the effect of freezing wages at the amounts actually being paid rather than at the amounts to which employees were entitled by virtue of the Fair Labor Standards Act in eases where that act was being violated. The Stabilization Act, however, specifically provided that it was not to have this effect: “No action shall be taken under the authority of this Act with respect to wages or salaries, (1) which is inconsistent with the provisions of the Fair Labor Standards Act of 1938 ...” (50 U.S.C.A. App. § 964.) Before the rate adjustment plaintiffs had a right to greater wages than they were receiving. That right could have been enforced by an action under the Fair Labor Standards Act. Under the adjustment, they would no longer be entitled to more wages than they actually received. It is clear, therefore, that even if the wages paid for an 84-hour week remained substantially the same, the result of the adjustment was to reduce the wages to which plaintiffs were entitled.
Since defendant’s change in his hourly wage rate resulted not only in a change in the wages actually paid in many cases, but in substantial changes in the wages to which his employees were entitled in all cases, the wage change required the approval of the War Labor Board.