Court Opinion

ID: 4220613
Source: CourtListenerOpinion
Date Created: 2017-11-15 18:00:43.36419+00
Date Added: 2024-06-11T09:23:17.958669
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

KRISTY DOUGLAS; TYSHEKA                   No. 16-35425
RICHARD, individually and on behalf
of all others similarly situated,            D.C. No.
                 Plaintiffs-Appellants,   2:12-cv-01798-
                                               JCC
                  v.

XEROX BUSINESS SERVICES, LLC, a             OPINION
Delaware limited liability company;
LIVEBRIDGE, INC., an Oregon
corporation; AFFILIATED COMPUTER
SERVICES, INC., a Delaware
corporation; AFFILIATED COMPUTER
SERVICES, LLC, a Delaware limited
liability company,
               Defendants-Appellees.

      Appeal from the United States District Court
        for the Western District of Washington
  John C. Coughenour, Senior District Judge, Presiding

          Argued and Submitted July 12, 2017
                 Seattle, Washington

                Filed November 15, 2017
2          DOUGLAS V. XEROX BUSINESS SERVICES

    Before: Michael R. Murphy, * M. Margaret McKeown,
          and Jacqueline H. Nguyen, Circuit Judges.

                  Opinion by Judge McKeown

                          SUMMARY **

                            Labor Law

    The panel affirmed the district court’s summary
judgment in favor of the defendants in an action brought by
call center workers under the Fair Labor Standards Act.

    Joining other circuits, the panel held that the relevant unit
for determining minimum-wage compliance under the
FLSA is the workweek as a whole, rather than each
individual hour within the workweek. Under the workweek
standard, defendants complied with the minimum-wage
provision.

                            COUNSEL

Daniel Foster Johnson (argued), Breskin Johnson &
Townsend PLLC, Seattle, Washington; Toby J. Marshall
and Marc C. Cote, Terrell Marshall Law Group PLLC,

     *
      The Honorable Michael R. Murphy, United States Circuit Judge
for the U.S. Court of Appeals for the Tenth Circuit, sitting by
designation.
    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
          DOUGLAS V. XEROX BUSINESS SERVICES                3

Seattle, Washington; Jon W. MacLeod, MacLeod LLC,
Seattle, Washington; for Plaintiffs-Appellants.

Patrick Michael Madden (argued) and Todd L. Nunn, K&L
Gates LLP, Seattle, Washington, for Defendants-Appellees.

                         OPINION

McKEOWN, Circuit Judge:

    In this appeal, we address an issue of first impression in
our circuit regarding the minimum-wage provision of the
Fair Labor Standards Act (“FLSA”). Specifically, we
consider whether the relevant unit for determining
minimum-wage compliance is the workweek as a whole or
each individual hour within the workweek. Although the
statutory text and context do not conclusively answer this
question, we are persuaded by the powerful history of
administrative and judicial decisions that have adopted the
per-workweek approach since the passage of the FLSA in
1938. We join our sister circuits and embrace the per-
workweek measure.

                        Background

    Kristy Douglas and Tysheka Richard worked as
customer service representatives at call centers run by Xerox
Business Services, LLC (“Xerox”). Their main task was to
answer incoming calls from Verizon Wireless customers and
field questions, but they made outbound calls and also
performed call follow-up work. Like any office job, their
duties also entailed various administrative tasks, such as
attending trainings and meetings and monitoring work-
related announcements and email.
4         DOUGLAS V. XEROX BUSINESS SERVICES

    Under Xerox’s mind-numbingly complex payment plan,
employees earn different rates depending on the task and the
time spent on that task. For certain defined activities (such
as trainings and meetings), employees receive a flat rate of
$9.04 per hour. From there, things get complicated. Time
spent managing inbound calls is paid at a variable rate,
calculated based on a matrix of qualitative controls (e.g.,
customer satisfaction) and efficiency controls (e.g., length of
calls). The wage ranges anywhere from $0.15 to $0.25 per
minute (i.e., from $9.00 to $15.00 per hour). The parties
dispute whether tasks other than receiving incoming calls
also qualify for the variable rate, but fortunately we need not
resolve that dispute here.

    All remaining tasks have no specific designated rate. At
the end of a workweek, Xerox sums the amounts earned for
defined activities and for activities paid at the variable rate
and divides that total by the number of hours worked that
week. If the resulting hourly wage equals or exceeds
minimum wage, Xerox does not pay the employee anything
more. However, if the ratio falls below minimum wage,
Xerox gives the employee subsidy pay to bump the average
hourly wage up to minimum wage. In this way, subsidy pay
ensures that, from the perspective of each workweek,
employees always receive the appropriate hourly minimum
wage.

    Douglas and Richard brought an action on behalf of a
class of similarly situated employees (collectively, the
“Employees”), alleging that Xerox’s payment plan violates
the FLSA’s minimum-wage and overtime provisions. The
Employees claim that the FLSA measures compliance on an
hour-by-hour basis and does not allow averaging over a
longer period. In their view, because Xerox averages across
a workweek, it compensates above minimum wage for some
          DOUGLAS V. XEROX BUSINESS SERVICES                 5

hours and below minimum wage for others, thereby
violating the FLSA.

    The district court disagreed. Initially, the court rejected
Xerox’s per-workweek approach and accepted the
Employees’ per-hour approach but still ruled for Xerox on
summary judgment. On reconsideration, the court explained
that it was looking to Xerox’s payment plan to determine
FLSA compliance. Because that contract specified that
subsidy pay was calculated on a weekly basis, the court held
that workweek averaging was appropriate and that Xerox did
not violate the FLSA. The district court certified the
minimum-wage and overtime claims for interlocutory
appeal under 28 U.S.C. § 1292(b), and we granted
permission to appeal.

                          Analysis

    The issue presented is a pure question of statutory
interpretation—when gauging compliance with the FLSA’s
minimum-wage provision, is it permissible to use the
workweek as the unit of measure? Because of the statute’s
breadth, we are left with few answers after examining its
“text, structure, and purpose.” Chan Healthcare Grp., PS v.
Liberty Mut. Fire Ins. Co., 844 F.3d 1133, 1138 (9th Cir.
2017). Ultimately, the Department of Labor’s longstanding
per-workweek construction and the steady stream of circuit
cases that have adopted that understanding shape our
decision.

    Little can be gleaned from the statutory text. The
operative provision, 29 U.S.C. § 206(a)(1)(C), states that
“[e]very employer shall pay to each of his employees who in
any workweek is engaged in commerce . . . not less than . . .
$7.25 an hour.” Although the statute sets the minimum wage
that employees must be paid each hour, it does not
6          DOUGLAS V. XEROX BUSINESS SERVICES

definitively prescribe the computation period or say that the
only permissible measure is the hour. Rather, the statute is
open to an interpretation allowing for averaging over a
longer period of time, like a day or a week. By using the
phrase “in any workweek,” the text signals that something
other than an hour could be a relevant measure. 1 The
language alone does not answer the question before us.

    Nor do surrounding statutory provisions provide much
help. The Employees direct our attention to the overtime
provision, which in certain circumstances calculates an
overtime rate by multiplying the “employee’s average
hourly earnings for the workweek” by one and a half.
29 U.S.C. § 207(a)(1), (g). However, that provision’s
explicit reference to workweek averaging provides minimal
guidance because the considerations at issue cut both ways.
Congress’s use of the per-workweek measure in the overtime
provision but not the minimum-wage provision could be
read as exclusive. But it is equally logical to conclude that
inclusion of the per-workweek measure in the overtime
provision means that the workweek is an acceptable
compliance measure for FLSA provisions worded broadly
enough to embrace it. For the same reasons, we cannot
extract anything more from the multiple FLSA provisions
and regulations that employ various units of time. As a
textual and contextual matter, the minimum-wage provision
can bear both the per-hour and the per-workweek meaning.

    1
      We cannot infer anything stronger from the “in any workweek”
language because it appears as part of a prefatory clause that determines
applicability of the minimum-wage requirement, not compliance with
the minimum-wage requirement. See Biggs v. Wilson, 1 F.3d 1537, 1539
(9th Cir. 1993).
          DOUGLAS V. XEROX BUSINESS SERVICES                 7

    Even the FLSA’s purpose is unilluminating because
neither the per-hour nor the per-workweek measure offends
the underlying statutory goals. In the FLSA’s purpose
provision, Congress explained that it sought to remedy
“labor conditions detrimental to the maintenance of the
minimum standard of living necessary for health, efficiency,
and general well-being of workers.” 29 U.S.C. § 202(a).
The Supreme Court’s gloss indicates that the minimum-
wage provision “protect[s] certain groups of the population
from substandard wages” due to “unequal bargaining
power.” Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706
(1945); see also Overnight Motor Transp. Co. v. Missel,
316 U.S. 572, 578 (1942) (explaining that the FLSA ensures
that covered employees receive “[a] fair day’s pay for a fair
day’s work” and avoids “the evil of ‘overwork’ as well as
‘underpay’” (citation omitted)). Both measures accomplish
the stated goal: employees receive compensation for every
hour worked at a rate no less than the congressionally
prescribed minimum hourly wage to guarantee the bare
necessities of life.

     Because the traditional tools of statutory construction do
not conclusively resolve the per-hour versus per-workweek
question, we turn to other considerations. Immediately we
are confronted with the interpretation of the Department of
Labor—the agency charged with administering the FLSA—
which “established the workweek as the measuring rod for
compliance at a very early date.” Dove v. Coupe, 759 F.2d
167, 171 (D.C. Cir. 1985) (Ginsburg, J.). As the Supreme
Court has recognized, such a “longstanding administrative
construction” counsels in favor of interpreting a statute to
support the construction, at least when reliance interests are
at stake. Zenith Radio Corp. v. United States, 437 U.S. 443,
457–58 (1978); see McLaren v. Fleischer, 256 U.S. 477, 481
(1921). And the Court has singled out contractual matters as
8        DOUGLAS V. XEROX BUSINESS SERVICES

an area where reliance interests are implicated. See Payne v.
Tennessee, 501 U.S. 808, 828 (1991).

    The Department of Labor adopted the per-workweek
measure just over a year and a half after the statute was
passed in 1938. The General Counsel of the Wage and Hour
Division issued a policy statement providing that “[f]or
enforcement purposes, the Wage and Hour Division is at
present adopting the workweek as the standard period of
time over which wages may be averaged to determine
whether the employer has paid the equivalent of [the
minimum wage].” Wage & Hour Release No. R–609 (Feb.
5, 1940), reprinted in 1942 Wage Hour Manual (BNA) 185.
The General Counsel acknowledged that the statute could be
read to support a per-hour measure but concluded that “until
directed otherwise by an authoritative ruling of the courts,
the Division will take the workweek as the standard for
determining whether there has been compliance with the
law.” Id.

     Although the per-workweek measure has never been
promulgated as a regulation, counsel for the Employees
admitted at oral argument in this appeal that he could not
identify any decision where the Wage and Hour Division has
deviated from this understanding. Oral Arg. at 5:22–6:32,
Douglas v. Xerox Bus. Servs., LLC, No. 16-35425 (9th Cir.
July 12, 2017), http://www.ca9.uscourts.gov/media/
view_video.php?pk_vid=0000011913; see also Dove,
759 F.2d at 172 (“[T]he Wage and Hour Division continues
to adhere to [the per-workweek measure.]”).          Other
Department of Labor sources confirm the agency’s
adherence to the per-workweek measure. The Field
Operations Handbook is explicit that “an employee subject
to section 6 of FLSA is considered to be paid in compliance
if the overall earnings for the [workweek] equal or exceed
         DOUGLAS V. XEROX BUSINESS SERVICES                9

the amount due at the applicable [minimum wage].” And the
Department of Labor’s website states in no uncertain terms
that “[t]he workweek is the basis on which determinations of
. . . compliance with the wage payment requirements of the
FLSA are made.” eLaws – FLSA Overtime Calculator
Advisor, U.S. Dep’t of Labor, http://webapps.dol.gov/
elaws/whd/flsa/otcalc/glossary.asp?p=workweek (last visited
Sept. 6, 2017).

    Courts have overwhelmingly followed the agency’s
guidance. On the heels of the agency’s 1940 policy
statement, the Western District of Kentucky accepted the
Department of Labor’s construction. Travis v. Ray, 41 F.
Supp. 6, 9 (W.D. Ky. 1941). The court recognized that “[t]he
statute does not expressly provide for any unit of time over
which the amount of compensation received can be averaged
against the number of hours worked, in order to determine
whether or not the average compensation per hour equals the
minimum wage provided” but held that the agency’s choice
of the workweek was permissible and appropriate. Id.

    Since then, the Second, Fourth, Eighth, and D.C. Circuits
have embraced the per-workweek construction. See United
States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487, 490
(2d Cir. 1960); Blankenship v. Thurston Motor Lines, Inc.,
415 F.2d 1193, 1198 (4th Cir. 1969); Hensley v. MacMillan
Bloedel Containers, Inc., 786 F.2d 353, 357 (8th Cir. 1986);
Dove, 759 F.2d at 171. As the Second Circuit explained
early on, “the [c]ongressional purpose is accomplished so
long as the total weekly wage paid by an employer meets the
minimum weekly requirements of the statute.” Klinghoffer,
285 F.2d at 490. The other circuits have followed the
Second Circuit’s lead, agreeing “that the workweek standard
generally represents an entirely reasonable reading of the
10          DOUGLAS V. XEROX BUSINESS SERVICES

statute.” Dove, 759 F.2d at 172. No circuit has taken a
contrary position. 2

    Recognizing that “uniformity among the circuits in
matters having general application to the various states is
preferable as long as individual justice is not sacrificed,”
Maniar v. FDIC, 979 F.2d 782, 785 (9th Cir. 1992), we see
no reason to depart from the sound reasoning of the other
circuits. In this case, we favor consistency because
businesses subject to the FLSA, like Xerox, often operate in
multiple jurisdictions and could reasonably rely on
administrative and judicial guidance in structuring their
payment schemes. To upset those practices by imposing
different requirements in different jurisdictions would be
burdensome and impractical, and the Employees have not
identified any counterbalancing equitable concerns or
statutory directives to tip the scales to the per-hour measure.

    Adoption of the per-workweek approach is also
reinforced by the fact that Congress has done nothing to
overturn or disapprove of this clearly articulated position,
though it has amended the minimum-wage provision since
the agency proclamation and court rulings. The original
version of the minimum-wage provision read: “Every
employer shall pay to each of his employees who is engaged
in commerce or in the production of goods for commerce
wages . . . not less than 25 cents an hour.” Fair Labor

     2
      Nor does it seem that the legal tide is turning in the lower courts.
Apart from the district court in this case, we have identified only two
other district courts that have rejected the per-workweek measure, and
those courts selected conflicting units of measure. Compare D’Arezzo
v. Providence Ctr., Inc., 142 F. Supp. 3d 224, 228 (D.R.I. 2015)
(adopting a contract-based approach), with Norceide v. Cambridge
Health All., 814 F. Supp. 2d 17, 25 (D. Mass. 2011) (adopting a per-hour
approach).
          DOUGLAS V. XEROX BUSINESS SERVICES                11

Standards Act of 1938, Pub. L. No. 75-718, § 6(a)(1),
52 Stat. 1060, 1062. In the ensuing decades, Congress has
tinkered with that language, including by modifying the
introductory phrase to add a reference to the workweek in
1961 and by periodically upping the hourly minimum-wage
amount. See An Act to Amend the Fair Labor Standards Act
of 1938, Pub. L. No. 87-30, § 5(a)(1)–(2), 75 Stat. 65, 67
(1961) (inserting the “in any workweek” language);
compare, e.g., 29 U.S.C. § 206(a)(1)(A) (2007) (“$5.85 an
hour”), with id. § 206(a)(1) (1996) (“$4.25 an hour”), with
id. § 206(a)(1) (1989) (“$3.35 an hour”).

    That Congress has made changes to the minimum-wage
provision without disturbing the explicit agency and judicial
decisions is not without significance. “[W]hen Congress
revisits a statute giving rise to a longstanding administrative
interpretation without pertinent change, the congressional
failure to revise or repeal the agency’s interpretation is
persuasive evidence that the interpretation is the one
intended by Congress.” Commodity Futures Trading
Comm’n v. Schor, 478 U.S. 833, 846 (1986) (internal
quotation marks and citation omitted); see also Sebelius v.
Auburn Reg’l Med. Ctr., 568 U.S. 145, 159 (2013) (finding
significant that Congress amended the relevant statutory
provision six times while “leaving untouched” and not
“express[ing] disapproval of” the agency interpretation).
The legislative action provides an even stronger foundation
to read the minimum-wage provision to preserve, not upset,
the entrenched per-workweek measure.

    These robust considerations overcome the notion that
“[t]he FLSA is [to be] construed liberally in favor of
employees,” Cleveland v. City of Los Angeles, 420 F.3d 981,
988 (9th Cir. 2005), even assuming that the liberal-
construction policy applies with full force in cases related to
12         DOUGLAS V. XEROX BUSINESS SERVICES

compliance rather than applicability, see Arnold v. Ben
Kanowsky, Inc., 361 U.S. 388, 392 (1960) (providing that
“exemptions [from FLSA coverage] are to be narrowly
construed against the employers”). We also note that the
Employees cite no empirical evidence that broad application
of the workweek standard disadvantages employees so long
as they ultimately receive the stipulated hourly rate.

    The preference for national uniformity also suffices to
reject the district court’s resort to Xerox’s contract to
determine compliance with the FLSA. On appeal, no party
wholeheartedly defends the district court’s “contract
measuring rod” approach, and for good reason. Not only
does the minimum-wage provision nowhere mention the
underlying employment contracts, but such an approach
would wreak havoc by tying compliance to the whims of
employers and obligating courts to parse through
complicated payment schemes.            Xerox’s convoluted
payment plan showcases why the “contract measuring rod”
approach is difficult to administer: Xerox alternates between
per-hour and per-minute pay, and the parties hotly dispute
whether the plan is properly characterized as hourly,
piecework, or commission-based. 3 Rather than subjecting
district courts to this morass of individualistic
determinations, we think the proper course is to join our
sister circuits, which have adopted the per-workweek

     3
       We note that a different panel of our court certified a contract-
related question to the Washington State Supreme Court. This issue does
not affect the FLSA analysis. See Hill v. Xerox Bus. Servs., LLC,
868 F.3d 758, 762–63 (9th Cir. 2017) (certifying the question whether
Xerox’s plan is properly classified as “an hourly plan” or “a piecework
plan” under Washington law).
           DOUGLAS V. XEROX BUSINESS SERVICES                      13

measure as a feasible and permissible interpretation of the
statute. 4

    The pertinent discussion from our circuit’s cases fortifies
the workweek conclusion we reach here. We have gestured
favorably to the per-workweek measure in dicta where we
stated that “the employees are still being paid a minimum
wage when their salaries are averaged across their actual
time worked,” citing the per-workweek rulings of the
Second and Eighth Circuits. Adair v. City of Kirkland,
185 F.3d 1055, 1062 n.6 (9th Cir. 1999). Although Adair’s
statement may not be binding, it supports choosing the per-
workweek measure.

     Our later decision in Ballaris v. Wacker Siltronic Corp.,
370 F.3d 901 (9th Cir. 2004), is not to the contrary. The
employer there contended as a matter of “litigation strategy”
that its payment for a half-hour lunch period could cancel
out its unlawful failure to pay for time spent donning and
doffing plant uniforms. Id. at 912 & n.15. We rejected that
litigation offset approach, emphasizing that employees must
be paid for all hours worked and concluding that the FLSA
does not permit “[c]rediting money already due an employee
for some other reason against the wage he is owed.” Id. at
914. In our case, Xerox is not asserting that it can take
money already due and apply it against unpaid hours to avoid

     4
       Supreme Court precedent countenances converting between
disparate units of measure. In United States v. Rosenwasser, 323 U.S.
360 (1945), the Court explained that although Congress had to “create
practical and simple measuring rods to test compliance” and did so “by
setting the standards in terms of hours and hourly rates,” non-hourly
“measures of work and compensation are not thereby voided or placed
outside the reach of the [FLSA].” Id. at 364. Instead, they “must be
translated or reduced by computation to an hourly basis for the sole
purpose of determining” FLSA compliance. Id.
14       DOUGLAS V. XEROX BUSINESS SERVICES

an FLSA violation.      Instead, Xerox’s payment plan
compensates employees for all hours worked by using a
workweek average to arrive at the appropriate wage.

     Under the workweek standard, Xerox complied with the
minimum-wage provision, and the Employees concede that
their overtime claims rise or fall with their minimum-wage
claims. See Oral Arg. at 16:50–17:23. We acknowledge the
Employees’ concern that by contract they expected to be
paid at a rate different from the one they actually received.
Whether they may have a contract claim is beyond the scope
of this appeal. But the minimum-wage provision was not
principally designed to address the implementation of
individual, and sometimes obscure, payment schemes. Even
if the Employees were confused by Xerox’s payment plan,
they still received the floor guaranteed by the
congressionally established minimum wage.

     AFFIRMED.