Blaha v. United States

The Military Sea Transportation Service (now the Military Sealift Command) was established in 1949 as the single service manager for ocean transportation of the Department of Defense. M.S.C. provides logistic support to battle fleet elements and a system of seagoing transportation for personnel and cargo for all elements of the DOD. It also operates ships in support of scientific research projects and other programs of DOD components and other government agencies.

Almost coincidental with the formation of MSC (then MSTS) the Classification Act of 1949 (63 Stat. 955, October 28, 1949) was passed. Chapter 782, Section 202(8) provided in pertinent part:

This chapter * * * shall not apply to — (8) officers and members of crews of vessels, whose compensation shallPage 1172be fixed and adjusted from time to time as nearly as consistent with the public interest in accordance with prevailing rates and practices in the maritime industry;

This provision was the successor to the provision contained in the 1945 Federal Employees Pay Act which stated, in pertinent part:

Employees of the Transportation Corps of the Army of the United States on vessels operated by the United States, * * * may be compensated in accordance with the wage practices of the maritime industry.

In 1966 the provisions were restated in5 U.S.C. § 5342, and in 1972 in5 U.S.C. § 5348. Thus, for all of its existence MSC has beenmandatedby Congress to compensate its seagoing employees * * as nearly as consistent with the public interest in accordance with prevailing rates and practices in the maritime industry.

From the very beginning of its existence MSC had difficulty in determining the "prevailing rates and practices" of the maritime industry for the simple reason that there was, and still is, no single uniform rate or practice in the industry. In 1949 MSC ships sailed in every ocean and sea in the world. MSC ship operating commands were located in New York, Honolulu, New Orleans, San Francisco and Seattle as well as in foreign countries such as Japan and Panama.

Rates of pay and practices in the U.S. geographical areas were established by negotiation between ship owners and the labor organizations dominent in that area. After much study and review it was determined that MSC compliance with the congressional mandate could best be accomplished by establishing two basic sets of rates and practices, one for the Pacific Ocean area and one for the Atlantic Ocean area. Inasmuch as at the time there were at least five and as many as seven unions negotiating with ship owners on the several coasts, this required establishing 10-14 wage schedules. Within each schedule there were variations due to the size and power of the ship. Later, when MSC began operating tankers, additional classifications of pay were required. Now, in 1974, the situation has become somewhat less complex. Most of the large international officer unions have eliminated geographical differences so that, for example, Engineer Officers and Deck Officers have, geographically, uniform rates of pay. On the other hand, since the dominant union of unlicensed seamen on the West Coast is different from the East Coast union, MSC still maintains separate Pacific and Atlantic schedule of wages for unlicensed personnel. That this program generates much more administrative problems is evident; the decision to maintain the different schedules is based on SECNAV's policy to adhere as closely as possible to the Congressional mandate.

Apart from any consideration of MSC however, the differences in pay and practice between the East Coast and West Coast unions, although many and complex, in total result in approximately the same return for his labor to the seaman on each coast. That this is so is, of course, a fact of union life; no union leader can persevere for very long, if his membership can find greener pastures elsewhere.

The mechanics of complying with the statute are deceptively simple; i. e., every time there is a change in compensation or practice in the maritime industry, MSC reviews it, determines if it is in the public interest, and if so, recommends to the Secretary of the Navy that it be adopted. Unfortunately the process is more complicated. Changes in prevailing rates and practices require constant careful monitoring to assure timely reaction to changes in the industry. Not every change, however, is within the scope of the act. For example, a recent change in the agreement between the Marine Engineers Beneficial Association, representing the licensed engineers, and the ship owners, provided for extra compensationPage 1173to engineers on tankers during the period that cargo (oil) was being transferred to another ship at sea. In the past few years MSC has been engaged in underway fuel replenishment of combat ships. In this program MSC civilian marine employees have replaced military personnel on what were commissioned ships, and perform all the refueling duties heretofore performed by the military. Simultaneously, a test program was conducted with one or two commercial tankers, wherein these ships on opportune occasions would also refuel a combat ship. Since the Navy ships engaged in this program were more numerous, and were engaged in the refueling operation, day in and day out, in ships especially configured for underway fuel replenishment, it was felt that there was no practice prevailing in industry; rather, what prevailing practice there was was within [the] Navy. Similarly, because of the unique nature of many MSC operations, there is no counterpart operation in the private sector of the maritime industry. In such cases MSC has had to recommend to the Secretary of the Navy and to the Department of Defense Wage Fixing Authority rates, and sometimes practices, interpolated from industry rates and practices.

In the matter under scrutiny, MSC in 1968 determined that a pay practice which had been negotiated in the private sector by the engineer and deck officers was within the scope of5 U.S.C. § 5348(then § 5342) and recommended its adoption to the Secretary of the Navy. It was approved by the Department of Defense on 8 November 1968 retroactively to 16 June 1968. To understand the ramifications of this change, some preliminary information is necessary.

a. Duty hours of deck or engineer officers in a ship at sea are eight in a spread of 24; usually worked 4 hours on duty, then 8 hours off. For example, an engineer on watch will work from midnight until 0400 (4 a. m.) and then be relieved. He returns to duty at 1200 (noon) and works until 1600 (4 p. m.). This pattern is repeated for all watchstanding officers and non-officers seven days a week, because obviously a ship at sea does not come to rest on weekends. Regardless of the time of the watch worked the weekday watches are on "regular" or "straight" time. That is, the first 40 hours which are served Monday through Friday are at the level of pay authorized for the position. The 16 hours worked on weekdays [weekends] are overtime hours and are so compensated. Thus, every watchstanding officer is, for all intent and purposes, guaranteed 16 hours of overtime a week while at sea. There are, however, some deck and engineers [engineer] officers who do not stand watches, and who therefore do not receive this weekend salary. These are usually the senior officers; the Master, First Officer, Chief Engineer and First Assistant Engineer. So that there would be a financial incentive to aspire to and to remain in these positions, the unions and the maritime industry, through negotiation over the years have compensated the incumbents of these non-watchstanding positions by includingintheir base paya sum known in the industry as "non-watchstanding compensation". The choice of this name is, perhaps, unfortunate. It does not represent payment for work not performed; it is an industry pay practice established in recognition of a need to insure that supervisors are paid at least as much as their subordinates, and in recognition, insofar as the Master and Chief Engineer are concerned, of the fact that they are on duty 24 hours a day. Another point which must be remembered is that the non-watchstanding compensation received by the officers described above doesnotrepresent their overtime rate multiplied by 16 hours a week. For example, the overtime rate of a Chief Engineer, Class A3, is $20.07 per hour. If he were to [be] paid this rate for 69 1/3 hours a month, his non-watchstanding compensation would be $1,391.50. Instead it is less than half this figure, $649.19.Page 1174

Prior to the 1968 changes in the industry practice, the differences in wages paid aboard ship and the wages paid during vacation periods were either negligible for those who received non-watchstanding compensation or exceedingly large for those who were accustomed to receive 16 hours of overtime a week. The first group, whose rate of pay for the position included the non-watchstanding compensation gave up only that additional premium pay that was forthcoming because of some unusual work performed; the other group were paid leave only at their regular Monday to Friday rate. This represented, over a month, a loss of approximately 40% of their regular earnings on ship. In the 1968 negotiations, therefore, the unions sought to equalize, to some extent, the "take home" pay of this group. It can also be assumed that the unions desired to make the vacation periods more desirable, as a mechanism to induce shipboard officers to go on leave and thus make work for their unemployed brethren. In any event, effective 16 June 1968, those officers who were accustomed to working weekend watches aboard ship were granted 2 benefits, among others. The first was an additional 15 days a year vacation; the second was an increase in their vacation rate of pay. This increase, although called non-watchstanding compensation, is not equivalent to their normal overtime earnings; again, it represents less than 50% of that amount.

In the case of the unlicensed personnel on the East Coast a somewhat similar set of facts obtained before June 1972. The unlicensed deck or engine seamen in a commercial ship are either watchstanders or day workers. The watchstanders are guaranteed 16 hours [a] week overtime; the day workers are not. Traditionally, therefore a day worker's rate of pay is higher than that of watchstander. For example, the monthly rate of pay in 1972 of a Watchstanding Able Seaman was $544.88; the rate of pay of a dayworking Able Seaman (Maintenance) (a rating which has the identical requirements and whose incumbents are interchangeable with ABs) was $619.77. In the real world of a ship at sea, however, practically every unlicensed crew member works some overtime, whether he is a day worker or not. Obviously, cooks and stewards must perform their duties every day of the week; the ship's maintenance is rarely, if ever, up-to-date, etc. Thus, review of a ship's payroll will show a considerable amount of earnings over and above the established rate for every officer and crew member. As in the case of the watch officers before 1968, these additional overtime wages were lost when the employee went on vacation.

So that this overview can be seen in the right perspective it is necessary to depart briefly from the narrative to discuss two pertinent aspects of the marine wage system. First, every maritime union in the American maritime picture has consistently and successfully sought to expand vacation benefits for its membership. At this time, for example a merchant seaman sailing in a commercial ship for 6 consecutive months will earn paid time off, depending upon his rating, as little as 8 weeks and 4 days, up to 19 weeks and 2 days! (Parenthetically, MSC crew members who earn leave based on years of service will accumulate annual, sick, and shore leave for the same period of between 5 weeks and 6 weeks 1 1/2 days!). The pressure on the unions to seek additional vacation benefits stems from a desire to spread work among unemployed seamen and to make seagoing a more acceptable occupation. The old days of long in-port visits to glamorous cities in faraway places is fast disappearing. Ships earn profits only at sea. The tendency for modern ships is unload/load in the shortest time possible and then get back to sea. Some large tankers never actually dock in a port. They are loaded and unloaded by fuel lines stretching into an anchorage area. As a result, crewmembers are lucky to get a few hours if any, ashore during a long voyage.

The other aspect of the pay picture is the compensation practice on the WestPage 1175Coast. In that area, unions of unlicensed seamen and management have negotiated a wage rate based on a 56 hour week. This rate recognizes that shipboard employees usually work every day at sea; the important aspect of this pay rate, for the purpose of this discussion is that it is paid for all vacation time.

To return to the narrative, then, we see in the unlicensed crewmember situation, before 1972, on the East Coast, a picture of longer (and it must be said, mandatory) vacations at a rate of pay far below the individual's customary earnings. His counterpart on the West Coast, on the other hand enjoys a fairly constant rate of take home pay. Small wonder that in 1972, the dominant East Coast union negotiated what is called in their agreement with East Coast ship owners a "monthly base wage for vacation only". This vacation base rate is calculated by adding an agreed upon sum, which in 1973 varied between $30 and $70 and in 1974 between $45 and $105, to the regular shipboard rate. In the case of the unlicensed unions as well as in the case of the officer unions, the negotiations with ship operators typically treat the matter of days of vacation apart and separately from rates of pay for vacation.

In 1968 MSC was given approval by SECNAV/DOD to increase the rate of leave pay of licensed deck and engineer officers by an amount reached by applying the industry non-watchstanding formula. In 1972, MSC was given approval to match the monthly base wage for vacations only, agreed upon between the shipping interests and the dominant East Coast unlicensed union. The approval related only to MSC ships operated by COMSCLANT. [Legal argument omitted.]