HUTCHESON, Circuit Judge.
Alleging that defendant was subject to the Fair Labor Standards Act of 1938, U.S.C.A. Title 29, § 201 et seq., appellant brought this suit to enjoin it from violating the provisions of Sections 15(a)(1) and (a)(2), of the act.
The claim was that in violation of Section 7(a),
On the jurisdictional point, the testimony was sufficient to support the finding that defendant, as to the employees in question, was subject to the act. On the merits, it all came down to this, that the defendant had made with each of its employees, an actual bona fide contract of employment, stipulating a basic hourly rate of pay, providing for payment, for overtime work performed, at a rate of not less than one and one-half times such basic rate of pay, with a guarantee that the aggregate pay for regular and overtime work performed, would amount each week to not less than a certain, definite sum fixed in the employment contract; that instead, for the purpose "of overtime payment, of taking as the regular rate at which he is employed", the rate contended for by plaintiff, a rate arrived at by dividing the weekly salaries of each employee, by the total number of hours worked each week, the defendant took as to each employee, the regular hourly rate stipulated in his contract of employment; that this rate in all cases, was above, and in most, far above, the minimum rate required by the statute; and that on the basis of this rate, defendant
The district judge, of the opinion;
Plaintiff is here urging upon us; that its Interpretative Bulletin, No. 4, Maximum Hours and Overtime Compensation on Salaried Employees,
Federal Rules of Civil Procedure, Rule 52, 28 U.S.C.A. following section 723c, provides that "findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given the opportunity of the trial court to judge of the credibility of the witnesses." Upon a full disclosure, and upon a record, which not only does not show them to be clearly erroneous but lends the support of undisputed testimony to the findings, the district judge found; that the contracts between employer and employee were actual bona fide contracts of employment; that they were intended to, and did, really fix the regular rates at which each employee was employed; and that as made and carried out, they compensated the employees at a regular rate considerably in excess of the minimum fixed by the statute, and for overtime at a rate not less than one and one-half times that regular rate. While then, the meaning of the statute must be drawn as a conclusion of law from its language as a whole, the question of its application to the facts in this case, must be examined by us from the standpoint of those findings, and not from the standpoint of appellant's assumptions, that the arrangements, made between employer and employee, were not real contracts for employment, but were fictitious and unreal, a mere sham and pretense behind which appellee masked, to stalk and defeat the statute and its purpose.
Examined in the light of the district judge's findings, we think it may not be doubted that the district judge was right in his conclusion, that what appellee and its employees did, was not a violation, but a carrying out, both of the letter, and the purpose of the statute, as that purpose is expressed in the language it employs.
Appellant recognizes; that the payments made to the employees are not, as absolutes, in question here, as substandard wages; that if appellee had changed the form of its employment contracts to conform to appellant's view, it could have paid its employees considerably less than it did, and still have been within the law; that the minimum wage provisions of the act are not involved; and that appellee's labor policies are not in issue. It has brought this case and has stood throughout, upon the bold proposition,
Appellant does not support this position by pointing to words in the act which purport to prohibit agreements, as here, between employer and employee fixing "the regular rate at which he is employed," and agreeing to pay, for overtime, at a rate more than one and one half times the regular rate fixed by the agreement. Nor does he support it, by pointing to provisions in the act, in any wise limiting the amount
We cannot agree with appellant that the statutory words under consideration, "regular rate at which he is employed", are at all ambiguous, or that for their construction they require resort to the declaration of policy and the legislative history of the act. We think it clear that their meaning is plain and simple and their application equally so. In cases where there is no express agreement as to the regular rate at which the employee is employed, but only an agreement for a weekly wage, appellant's method of arriving at the regular rate by assuming that the wage stipulated for is not intended to cover overtime worked, would, we think, be unexceptionable. But in cases where, as here, the contract of employment fixes the regular rate, that method will not do, for here within the very words of the statute, "the regular rate at which he is employed", is fixed as to each employee in his contract of employment.
But, if we could agree with appellant, that the words of the act are ambiguous and that for its construction, resort to the purpose clause and the legislative history of the act is necessary or proper, we can find nothing in either to support appellant's view. Section 2 deals with doing away with a substandard, and the establishment and maintenance of a minimum standard, of living. It says nothing about spreading the work or reducing hours of working. Section 2(b) declares it to be the policy of the act, through the exercise by Congress of its power to regulate commerce, "to correct and as rapidly as practicable to eliminate the conditions above referred to ["Labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well-being of workers."] in such industries without substantially curtailing employment or earning power." Section 5 provides for industry committees whose business shall be to make the recommendations provided for in Section 8. Section 6 provides for minimum hourly wages. Section 7, the section in question, does not at all fix maximum hours, it merely provides what shall be the maximum weekly hours, during which an employee may work at the regular rate at which he is employed, and that, except where as the result of collective bargaining, employer and employee otherwise agree, for every hour over, that he works, he shall be compensated at a rate, not less than one and one-half times the regular rate. Section 8, the section which implements the policy section of the act provides in subsec. (a), "with a view to carrying out the policy of this act [chapter] by reaching, as rapidly as is economically feasible without substantially curtailing employment, the objective of a universal minimum wage of 40 cents an hour in each industry engaged in commerce or in the production of goods for commerce the Administrator shall from time to time convene the industry committee for each * * * industry and the industry committee shall from time to time recommend the minimum rate or rates of wages to be paid under Section 6 [section 206]."
If then, we are, as appellant contends, to find the meaning of the act, its prohibitions and commands, not in the language, of its implementing clauses, which the Congress has chosen to express that meaning, but in the general purpose, thought to animate it, the title of the act, "Fair Labor Standards Act", the complete absence from the act of any prohibition against or limitation upon working extra hours, any prohibition against or limitation upon the making of agreements by employers with their employees, the expressions in Section 2, and particularly the provisions
Because this is and always has been so, it can be usually said of our laws, that the general, not the partial or partisan will, speaks in them. It is because this is so, that canons of statutory interpretation and construction require that statutes must be construed and given effect, in accordance with the language chosen for the expression, of this compromise and adjustment of views, and not in accordance with the purposes or views, of either the proponents or the opponents of the legislation, which have not been given expression in the statute.
The issue presented here by the claim of the appellant that though the statute does not say so, it must be construed to give full effect to the purpose of placing him as administrator of the act in a tutelary position, the employer and employee
For us to agree that such interpretations are binding on us would require us to entertain the view, the contrary of that uniformly taken both by Congress and the courts, that law as well as fact, should be and has been delegated to the administrator. The authorities appellant cites
It is true, that as quoted in appellant's brief, the opinion did say at page 549, of 310 U.S., at page 1067 of 60 S.Ct. 84 L. Ed. 1345, that "contemporaneous construction of a statute by the men charged with the responsibility of setting its machinery in motion; of making the parts work efficiently and smoothly while they were yet untried and new", was entitled to great weight. But this was a quotation from the opinion of the Supreme Court in Norwegian Nitrogen Company v. United States, 288 U.S. 294, at 315, 53 S.Ct. 350, 77 L.Ed. 796, a reference to that case and the authorities it cites, makes it entirely clear that the court was not intending at all to depart from the established rule; that where a statute is ambiguous or uncertain, the practical interpretation by the Executive Department charged with its administration, is entitled to the highest respect and if acted upon for a number of years, will not be disturbed except for very cogent reasons. United States v. Moore, 95 U.S. 760,
The Darby case is not authority for, it is authority against appellant's contention that the purpose of the act was to spread the work by discouraging and penalizing overtime work and pay. In the Darby case [312 U.S. 100, 61 S.Ct. 457, 85 L.Ed. ___, 132 A.L.R. 1430], the Supreme Court said of the act that the motive and purpose was, "plainly to make effective the Congressional conception of public policy that interstate commerce should not be made the instrument of competition in the distribution of goods produced under substandard labor conditions", and again at page 122 of 312 U.S., at page 461 of 61 S.Ct. 85 L.Ed. ___, 132 A.L.R. 1430, "As we have said the evils aimed at by the Act are the spread of substandard labor conditions through the use of the facilities of interstate commerce for competition by the goods so produced with those produced under the prescribed or better labor conditions", and again on page 125 of 312 U.S., at page 462 of 61 S.Ct. 85 L.Ed. ___, 132 A.L.R. 1430, "Both provisions are minimum wage requirements compelling the payment of a minimum standard wage with a prescribed increased wage for overtime of `not less than one and one-half times the regular rate' at which the worker is employed." There is nothing here about spreading the work, nothing about penalizing overtime, nothing about abrogating the right of contract, nothing about requiring an employer to further raise wages already far above the substandard struck down and the minimum standard set up in the act.
Freedom of contract, within constitutionally valid limitations, is, in the United States of America, one of the fundamental freedoms and this is particularly so in regard to labor relations. When, then, it is contended as here, that a statute has cut off or limited this freedom, a litigant, must point to something more than his opinion that it ought to be cut off or limited, must point to language clearly and validly so providing. There is no more authoritative principle in the field of labor law than that, subject of course, to valid statutes designed to prohibit substandard conditions and unfair labor practices, wages, hours, and work conditions are the proper subject of contract between employer and employee and their agreements must be, and are, given full effect in the courts.
Here it is undisputed and found by the court, that, desiring to maintain and continue a system of fixed and regular weekly salaries in strict and full compliance with the Fair Labor Standards Act, employer and employees freely and voluntarily entered into agreements having that effect. These agreements; fixed the regular rate of pay at which each was employed, at a figure considerably above the minimum standard wage the statute fixes; provided for a weekly compensation large enough to pay at least one and one-half times that regular rate for any overtime which he might be required to work each week; and based upon experience over the years, guaranteed a weekly salary to each employee in an amount which would, in some weeks, be more, in none less than would be due them, at that rate, for the regular and the overtime hours worked in any week.
A great deal of the record, and of the briefs of the parties is devoted to a showing on the part of appellee that by its system, it, from the beginning, paid each employee more than he would be paid under the system which appellant wishes it to adopt, and by raises given since, it has paid and is paying each still more, and on appellant's part, that by its system it pays them less than appellant's ruling would provide.
SIBLEY, Circuit Judge.
I concur in the philosophy and the conclusions of Judge HUTCHESON'S opinion. I wish only to emphasize that the wage agreements before us are actual, deliberate contracts intelligently made, and not mere bookkeeping or a scheme to evade the Fair Labor Standards Act. They are made mainly with the editors and reporters and those who assist them in producing a daily newspaper. The employees in the mechanical departments have union agreements not here involved. The time that editors and newsgatherers must work is necessarily very variable and unpredictable. When things are quiet, a few hours a day may suffice. In times of news activity a twelve hour day may be required. It is practically difficult to make a fair working agreement based on hours worked. The agreements here in question are similar in form and recite the requirements of the law as to minimum wages, maximum hours and overtime pay, and conclude thus: "In order to conform our employment arrangements to the scheme of the Act your basic rate of pay will be 75 cents per hour
I am authorized to say that Judges FOSTER and HUTCHESON concur in this additional statement.
"(1) for a workweek longer than forty-four hours during the first year from the effective date of this section,
"(2) for a workweek longer than forty-two hours during the second year from such date, or
"(3) for a workweek longer than forty hours after the expiration of the second year from such date, unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed."
"I. Salaried Employees. 19. It is clear that an employer will violate the Act if he simply pays no attention to its requirements next October 24 but continues to work his employees the same number of hours (in excess of 42) they now work for the same salary they now receive. In our opinion an employer who will continue to work his employees in excess of 42 hours after October 24 for the same salary they now receive but who takes the trouble to manipulate the rates of pay in order to adopt a rate upon which he may calculate the time and a half, without incurring any additional labor cost, stands in no better position than the employer who simply and frankly disregards the overtime requirements of the Act.
20. "Employers have proposed two principal methods of avoiding overtime payment to salaried employees. The employer, by one plan, will announce that henceforth the employee is employed either at the rate of 30 cents an hour or at an hourly rate in excess of the minimum. But each week the employer will pay the employee a `bonus' to make up the fixed salary. Obviously, the employee will not actually be paid at the rate adopted by the employer for overtime calculation. His regular rate of pay for overtime purposes must be based on the total weekly earnings including the bonus.
21. "The employer eliminates the `bonus' feature in the second method. If the employee works an irregular number of hours the employer proposes to adopt a different rate each week upon which to compute overtime. Each week the employee's earnings, on the basis of the adopted rate for 42 hours and time and a half such rate for the excess hours will equal or approximately equal the fixed salary. Thus, for example, if an employee, during the course of a month, works 43, 46, 52, and 48 hours respectively, the employer, to continue paying him $21 weekly, will adopt 48 cents, 44 cents, 37 cents and 41 cents as the respective rates of pay. Obviously, these rates are pure bookkeeping figures and the regular rate of pay on which overtime must be paid will be determined by dividing the $21 weekly salary by the hours worked each week.
22. "If the employee works a regular number of hours, the employer proposes to adopt a rate, which for 42 hours and at time and a half such rate, for the hours in excess of 42, will yield the present earnings. The fact that the computations on the adopted rate will produce a figure equal to the employee's present total compensation cannot obscure the real situation. This employer will be in no better position than the employer who proposes to adopt the minimum wage as the overtime rate with a `bonus' scheme, or to juggle the rates from week to week. This employer seeks to adopt one rate for overtime purposes, but will expressly or impliedly guarantee his employees another — based upon the weekly salary. The regular rate of pay on which overtime must be based will be determined by dividing the weekly salary by the regular number of hours worked."
"The regular rate is primarily the employee's rate of actual earnings, the money he actually received in relation to the amount of time he actually works. In a case such as the one at bar, where the employee is paid a fixed weekly salary without regard to the number of hours he works each week, the regular rate for each work week is the hourly equivalent of the fixed weekly salary * * *. On the facts of this case it cannot be said that the fixed weekly salary included overtime compensation because as a matter of fact, the full salary was earned by the employee when no overtime was worked."
And Senator Borah, Vol. 83, p. 9175, June 14, 1938:
"We are not dealing here with anything except minimum wages, and those in my opinion are fixed upon one genuine principle and that is the amount of wages necessary to maintain a family and build up and to maintain the citizenship of the country. That is all we are dealing with.
* * * * * * * * * *
"Congress has no authority to deal with other wages. All wage earners have a constitutional right to bargain for whatever wage they choose. The Federal Government only has authority to deal with minimum wages because minimum wages and hours of employment relate to the health and general welfare of the citizens and it legislates in this field solely because it can be justified on humanitarian grounds. Both federal and state constitutions forbid the fixing of any wage by law other than the minimum."