Townsend v. Mercy Hospital of Pittsburgh

COWEN, Circuit Judge,

dissenting.

I dissent from the majority’s opinion, which sanctions a practice that clearly conflicts with both the plain language of the applicable statute and regulation, and the policy objectives of the Fair Labor Standards Act of 1938, 52 Stat. 1060 (1938) (codified as amended at 29 U.S.C. §§ 201-19 (1982) (the “FLSA”).

Section 7(a)(1) of the FLSA requires that any employer who requires his workers to work more than forty hours a week pay each worker for his overtime work “at a rate not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1). The clear policy behind this provision of the FLSA is to require employers to compensate employees who work overtime at a premium rate, which is at least one and one-half times the rate normally paid for this type of work. The provision is intended to ensure that this minimum overtime wage standard be satisfied, whatever the relative bargaining power of the employer and employee.

The provision does allow for certain exceptions, one of which is at issue in this case. Section 207(g)(2) of the FLSA provides that

(2) in the case of an employee performing two or more kinds of work for which different hourly or piece rates have been established, [subsection (a) will not be violated if the overtime rate] is computed at rates not less than one and one-half such bona fide rates applicable to the same work when performed during non-overtime hours.

29 U.S.C. § 207(g)(2) (1982) (emphasis added).

The Wage and Hour Administrator of the Department of Labor has promulgated a regulation which further defines this exception. That regulation states:

(a) Under section 7(g)(2) an employee who performs two or more different kinds of work, for which different straight time hourly rates are established, may agree with his employer in advance of the performance of the work that he will be paid during overtime hours at a rate not less than one and one-half times the hourly non-overtime rate established for the type of work he is performing during such overtime hours. No additional overtime pay will *1014 be due under the act provided that the general requirements set forth in § 778.417 are met and;

(1) The hourly rate upon which the overtime rate is based in a bona fide rate;

(b) An hourly rate will be regarded as a bona fide rate for a particular kind of work [if] it is equal to or greater than the applicable minimum rate therefor and if it is the rate actually paid for such work when performed during nonover-time hours.

29 C.F.R. § 778.419 (1987) (emphasis added).

The clear and unmistakable import of the language of the statute and regulation is that if an employee performs two or more types of work, an employer will be permitted to pay the employee for overtime work at a rate which is one and one-half the rate the employer normally pays for that type of work. Employers, however, are kept honest by the requirement that the base rate be a “bona fide rate,” which is defined by the regulation to be a rate “actually paid for such work when performed during nonovertime hours.” 29 C.F.R. § 778.419(b) (1987).

It is settled doctrine that the FLSA is “remedial and humanitarian in purpose,” and should “not be interpreted or applied in a narrow, grudging manner.” Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 597, 64 S.Ct. 698, 703, 88 L.Ed. 949 (1944). Consistent with this mandate, an employer seeking the benefit of an exception under the Act should have to meet all of the requirements of the exception. Since the Mercy Hospital of Pittsburgh admits that the rate for “on call” work is never paid during nonover-time hours, the rate is not a “bona fide” rate under the clear language of the statute and regulation, and Mercy is not entitled to the benefit of the statutory exception.1

Even beyond the clear language of the regulation, however, there are sound policy reasons to prefer this interpretation of the statute. As I noted above, the FLSA is intended to ensure that certain minimum overtime wage standards be met, whatever the relative bargaining power of the employer and employee. The requirement that a rate be “actually paid” in order to be considered “bona fide” is clearly in line with that policy. The majority’s result would permit an employer to arbitrarily set a base rate for a particular type of work— as Mercy has set the minimum wage for “on call” work — and thus avoid paying a true time and one-half for the overtime work. Requiring that a rate, to be bona fide, be actually paid during the normal workweek increases the likelihood that the overtime rate will be a premium rate at least one and one-half times the normal rate for that type of work, as contemplated by the FLSA.

Because I prefer not to torture the language of a statute and regulation to reach a result that conflicts with the policy underlying the statute, I dissent from the majority’s opinion. I would reverse the order of the district court and remand for entry of an order in favor of the plaintiffs on the issue of liability.

. Rather than applying the clear language of the statute and regulation, the majority relies upon a district court opinion, Hodgson v. Penn Packing Co., 335 F.Supp. 1015 (E.D.Pa.1971), and an Opinion Letter of the Wage-Hour Administrator, Opinion Letter No. 1125 (WH-78), [2 Wages-Hours] Lab.L.Rep. (CCH) ¶30, 691 (Sept. 15, 1970). Neither analyzes the issue with reference to the applicable regulation, which is binding and has the force of law. See Chrysler Corp v. Brown, 441 U.S. 281, 304, 99 S.Ct. 1705, 1719, 60 L.Ed.2d 208 (1979) (substantive administrative regulation promulgated pursuant to delegated legislative authority has "force and effect of law”).

Additionally, even under the majority’s theory a rate should be considered "bona fide” only if it is the rate which would have been paid if this type of work were performed during nonover-time hours. Since Mercy has presented no evidence which demonstrates that it would (or could) employ nurses for nonovertime "on call” duty at a rate of $3.35 an hour, the rate should not, given the record in this case, be considered "bona fide” even under the majority’s rationale.