Court Opinion

ID: 6903041
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:56:55.453851+00
Date Added: 2024-06-11T16:06:14.330173
License: Public Domain

SWAN, Circuit Judge
(dissenting).
Section 7 of the Fair Labor Standards Act requires an employer to compensate overtime work at 50% more than the regular rate of pay. The Act itself is silent as to bonus payments. The only significance under the Act of a bonus arrangement is its bearing upon the regular rate in fact payable to an employee during the work week in which he performs his services. Where the bonus is based upon a percentage of the total compensation for both straight time and overtime received for a given work week, the bonus does not involve any violation of § 7 as the opinion of the Chief Judge clearly demonstrates with respect to employees whose employment by the defendant did not antedate 1940. I am unable to follow the distinction made with respect to employees whose employment does antedate that year. The plan as I interpret it, is retroactive as to them and provides a bonus for services performed in such earlier yean, e. g. 1939, based upon a percentage of the employee’s total earnings in that year, provided he continues to work for the defendant throughout 1940. In so far as the bonus is based on his earnings in 1939, it is a pure gratuity since he had no expectation of receiving it when he performed those services. That part of the bonus cannot reasonably be considered as an incentive payment for 1940 services because, regardless of his 1940 earnings, the component based on 1939 earnings will remain unchanged. To hold that such component must be deemed to increase the employee’s regular rate of pay for straight time services in 1940 produces, in my opinion, an unjust result not required by any previous decision under the Act. I would affirm the judgment of dismissal.