Court Opinion

ID: 9491276
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:09:00.155816+00
Date Added: 2024-06-11T17:54:37.624842
License: Public Domain

KOELTL, District Judge
(Concurring in Part and Dissenting in Part):
The Court adopts an interpretation of the Fair Labor Standards Act (the “FLSA” or the “Act”) that justifies an employer’s late payment of wages to its employees if that late payment was due to the employer’s effort to change its pay schedule. That interpretation creates an exception to the FLSA’s prompt payment' requirement that includes criteria such as that the change is made for a “legitimate” purpose, does not result in an “unreasonable” delay in payment, is “intended” to be permanent, and does not have the “effect” of evading the FLSA’s minimum wage or overtime requirements.
I agree with the Court “that the FLSA does not prohibit an employer from changing the payday of its employees.” However, I do not agree that the Act allows an employer to implement such a change in a manner that violates the FLSA’s prompt payment requirement. I do not find the Court’s new exception to the prompt payment requirement justified by the prior cases, or by the regulations or administrative opinions that have interpreted the FLSA. Thus, I concur in the judgment reversing the dismissal of this action. I respectfully dissent because I believe the plaintiffs’ motion for partial summary judgment should be granted with respect to liability for the violation of the Act’s prompt payment requirement. I would remand the case for a determination of damages.
Although the FLSA is silent as to the day and period that an employer must pay its employees, the Court today agrees that the Act requires “prompt payment.” This prompt payment requirement should be measured, however, against the regular payday and not against the sliding scale of reasonableness which the Court appears to apply. As the Court of Appeals for the Ninth Circuit explained in Biggs v. Wilson, 1 F.3d 1537 (9th Cir.1993), cert. denied, 510 U.S. 1081, 114 S.Ct. 902, 127 L.Ed.2d 94 (1994), the Act “necessarily assume[s] that wages are due at some point, and thereafter become unpaid.” Id. at 1539-40 (noting that “[t]he only logical point that wages become ‘unpaid’ is when they are not paid at the time work has been done, the minimum wage is due, and wages are ordinarily paid — on payday.”). In recognizing that there is no principled way to distinguish under the statute between late payment of wages and non-payment of wages, the Court of Appeals for the Ninth Circuit expressly rejected the adoption of a balancing test that would “require[ ] payment which is reasonably prompt under the totality of the circumstances in the individual case.” Id. at 1540. The Court of Appeals explained:
Any kind of sliding scale we can think of, however, would be contrary to the statute’s direction that employers shall ‘pay’ the minimum wage and that employees are entitled to recover ‘unpaid’ • minimum wages. It also would force employees, employers, and courts alike to guess when ‘late payment’ becomes ‘nonpayment’ in order to determine whether the statute of limitations has begun to run, the amount of unpaid wages and liquidated damages to *61be awarded, and how much prejudgment interest has been, accrued. Id. at 1540.
The holding in Biggs appropriately considered the FLSA’s prompt payment requirement in light of the statutory scheme as a whole, and that statutory scheme necessarily assumes that wages are due at a definite point in time and thereafter become unpaid. Id. at 1539. Biggs is fully consistent with the Supreme Court’s decision in Brooklyn Savings Bank v. O’Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296 (1945), which referred to the employer’s obligation to pay the statutory minimum wage “on time,” the necessity for “prompt payment,” the availability of an action arising from “delay in payment,” and the employer’s obligation for “overdue wages.” Id. at 707, 707 n. 20, 709, 711, 65 S.Ct. 895. Biggs is also consistent with those decisions cited by the majority that interpret the Act’s prompt payment requirement. See, e.g., Calderon v. Witvoet, 999 F.2d 1101, 1107 (7th Cir.1993) (the FLSA requires an employer to pay “on time”); United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487, 491 (2d Cir.1960) (an employer is not relieved' of liability for FLSA. violations by making late payment after the original payment becomes due); see also Atlantic Co. v. Broughton, 146 F.2d 480, 482 (5th Cir.1944) (failure to pay the full amount of minimum wages and overtime on “any regular payment date” immediately creates the obligation to pay the difference between the wages paid and the wages due, plus an equal “amount as liquidated damages.... ’’j.1 Indeed, the District Court properly recognized in this case that “the failure of an employer to pay at least a minimum wage to an employee on the regular payday gives rise to a claim pursuant to the FLSA.” Rogers v. City of Troy, 949 F.Supp. 118, 123 (N.D.N.Y.1996) (emphasis added). Further, the City conceded that the “FLSA implicitly commands employers to pay wages promptly when due.” (Appellees’ Br. at 11, citing Brooklyn Savings Bank-, Biggs, Klinghoffer, and Calderon).
The requirement of payment on" a regular payday is also supported by the most authoritative regulatory interpretations of the statute. As the Wage-Hour Administrator concluded, “[T]he minimum wage due for a particular workweek must be paid on the regular payday for.the period in which such workweek ends.” Opinion Letter No. 63 (Nov. 20,1961), reported in CCH Labor Law Reports ¶ 30,581; see Opinion Letter No. 942- (Jan. 27, 1969) (“Compensation to employees under the Act for a particular workweek must be paid to the employee on the regular payday for the period in which such workweek ends, ____”), reported in CCH Labor Law Reports ¶ 30,954. Hence, the statutory scheme, prior cases, and administrative interpretations require not simply that wages be paid within a reasonable, period of time after they are earned, but rather that they be paid on the regular payday.
The Court today adopts an explicit and very detailed exception to the Act’s prompt payment requirement that allows an employer’s late payment of wages if the late payment is made, pursuant to a change in the pay schedule that is intended to be permanent, for a legitimate business reason, and which 1 does not result in an unreasonable delay in payment, and does not have the effect of violating the “substantive” minimum wage or overtime requirement of the FLSA. However, that exception is not found in the statute or regulations or prior interpretations of the statute and it is inconsistent with the Act’s requirement of prompt payment on a regular payday. The two specific bases-that the Court relies on in creating the new-exception are an analogy to the Act’s overtime regulations and an informal letter written in the course of this litigation by a district director of the Department of Labor’s Wage and Hour Division. Neither-of these bases provides- sufficient support for the creation of such an exception to the Act’s prompt payment requirement.
The overtime regulations on which the Court draws its analogy, 29 C.F.R. §§ 553.224 and 778.105, are inapposite because they do not relate to the determination of the regular payday for the payment of minimum wages. Those regulations apply to the Act’s overtime provisions and do not by their terms apply outside the context of overtime. Moreover, those regulations expressly *62refer to changes in the work period, not-the pay period.2 See generally 29' C.F.R. §§ 778.100-778.104 (emphasis added).- In-deed, § 778.106 expressly requires that the payment of overtime be made on the employees’ regular payday regardless of a change in the work period on which the overtime calculation is based. Further, that section does not include a provision which allows a change in the regular payday once the conditions for changing the work period have been met. Thus, there is no regulation that permits an employer to pay its employees later than the regular payday simply because-it was in the process of changing that payday. The Department of Labor could have drafted such a regulation, as it did in connection with determining the work period for overtime, but it has failed to do so.
The majority views an informal letter by a Department of Labor Wage and Hour Division district director as instructive in presenting the Department’s views with respect to the exception to the Act’s prompt payment requirement. (Joint App. at 162.) However, as the Court recognizes, that letter- does not have the same force as an agency-regulation - or a formal opinion letter from the Wage-Hour Administrator. Indeed, there is -no regulation or formal opinion letter which permits an employer’s late payment of wages if that late payment is part of an effort to change the employees’ . regular payday. Rather, the most authoritative regulatory interpretations of the FLSA stress the requirement of paying compensation on the “regular payday.” Moreover, the district director’s opinion is entitled to somewhat less weight because it did not address the requirement of payment on a regular payday or the issue of late payment.
In sum, the FLSA requires prompt payment of the minimum wage. Timeliness of payment under the Act is determined with respect to the regular payday on which an employer pays its employees. The parties do not dispute the arbitrator’s finding that the City’s weekly payment to the officers of un-lagged paychecks every Friday over an 18-year period constituted a past practice that rose to the status of a contractual right. Thus, the arbitrator effectively found that in this case, Friday was the officei's’ regular payday under the collective bargaining agreement.
Allowing the parties to contract for a regular payday in their collective bargaining agreement is consistent with the Supreme Court’s decision in Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981). It is plain that employees should not be permitted to waive an employer’s liabilities under the Act. However, this rule should be interpreted consistently with the language and purpose of the FLSA which as the Court explains, is to protect workers by ensuring that they are paid a fair day’-s pay for a fair day’s work. As the Court of Appeals for the Third Circuit explained in Vadino v. A. Valey Engineers, 903 F.2d 253 (3d Cir.1990), neither the language nor the purpose of the FLSA is violated when parties contract for specific items that . are " not specifically covered by the FLSA — such as the regular payday in this case — provided that them contract does not undercut the protections of the Act. Id., 903 F.2d at 266 (noting that under these circumstances, the resolution of an employee’s FLSA claim “would be dependent upon the resolution in the ... contract interpretation issue”). Since applying the contractually agreed-upon regular payday in this case would not lessen the plaintiffs’ protection under the FLSA, the Act’s language and purpose would not be violated by requiring payment on that regular payday, and there is no basis to create an exception to the statute.
The City could have changed the regular payday in this case without paying its employees later than the regular payday and violating the FLSA’s prompt payment requirement. It could, for example, have paid in advance of the change so that there was no late payment. Instead, the City chose to pay *63later than the regular payday established under the collective bargaining agreement while it implemented the change to a new regular payday. The effect of that decision was to pay the officers only 51 weeks of pay for the 52 weeks of work they performed in 1994 in violation of the Act’s prompt payment requirement.
Because I would reverse the dismissal of the complaint and remand solely on the issue of damages, I concur in the judgment and respectfully dissent with respect to the Court’s adoption of a new exception to the FLSA’s prompt payment requirement.

. The payment of liquidated damages is no longer compulsory. See 29 U.S.C. § 260.

. The overtime regulations prevent an employer from expanding its employees’ work period in order to allocate the total hours worked over a longer period for purposes of reducing the amount of overtime pay earned. See §§ 778.104 & 778.105. The overtime regulations remedy a policy concern that is unrelated to the prompt payment requirement for minimum wages imposed by 29 U.S.C. § 206(b).