MR. JUSTICE REED delivered the opinion of the Court.
The question presented by both these cases is whether a railroad company operating a terminal subject to the Railway Labor Act and the Fair Labor Standards Act of 1938 is required by those statutes, in the absence of a negotiated agreement respecting wages, to pay "redcaps" a fixed minimum hourly wage irrespective of the tips from passengers received by the redcaps, or whether an accounting and guarantee plan which leaves all tips with the redcaps and assures them that each will receive at least the minimum wage is valid.
The Fair Labor Standards Act is not intended to do away with tipping. Nor does it appear that Congress intended by the general minimum wage to give the tipping employments an earnings-preference over the non-service vocations. The petitioners do not dispute the railroad's contention that, during the entire period, each redcap received as earnings — cash pay plus tips — a sum equal to the required minimum wage. Nor is there denial of increased pay to the redcaps on account of the minimum wage guarantee of the challenged plan as compared with the former tipping system. The guarantee also betters the mischief of irregular income from tips and increases wage security. The desirability of considering tips in setting a minimum wage, that is, whether tips from the viewpoint of social welfare should be counted as part of
The cases have a common background. Prior to October 24, 1938, the effective date of the Fair Labor Standards Act, the redcaps at the terminals in question performed their familiar tasks without reward other than the tips of the passengers, and, although subject to considerable supervision by the terminals,
Subsequent to that ruling, the parallel series of events culminating in the two controversies now before us, while differing in details, followed the same general pattern. In No. 112, nothing further occurred until the Fair Labor Standards Act became effective. At that time, the Jacksonville Terminal, in supposed compliance with the Act, began paying its redcaps in cash the amount by which the statutory minimum wage exceeded each redcap's receipts in tips. This system, in some form, was used at the terminal until July 1, 1940.
Section 6 of the Act requires every employer to pay each employee engaged in interstate commerce wages at
The evidence, taken most favorably to the redcaps, discloses the following. About October 24, 1938, the effective
"In view of the requirements of the Fair Labor Standards Act, effective October 24, 1938, and in consideration of your hereafter engaging in the handling of hand baggage and traveling effects of passengers or otherwise assisting them at or about stations or destinations, it will be necessary that you report daily to the undersigned the amounts received by you as tips or remuneration for such services.
"The carrier hereby guarantees to each person continuing such service after October 24, 1938 compensation which, together with and including the sums of money received as above provided, which [sic] will not be less than the minimum wage provided by law.
"You are privileged to retain subject to their being credited on such guarantee all such tips or remuneration received by you except such portion thereof as may be required of you by the undersigned for taxes of any character imposed upon you by law and collectible by the undersigned.
"All the matters above referred to are subject to the right of the carrier to determine from time to time the number and identity of persons to be permitted to engage in said work and the hours to be devoted thereto, to establish rules and regulations relating to the manner, method and place of rendition of such service, and the accounting required.
Since the basic elements of Pickett's case are no longer in dispute, the crucial issue again is whether the minimum wages were paid. It was shown that, after the I.C.C. ruling that redcaps were employees, the redcaps notified the Dallas terminal on October 11, 1938, that the Board of Adjustment of the Brotherhood of Railway and Steamship Clerks was their authorized representative under the Railway Labor Act, and Pickett, as General Chairman of the Board, asked for a conference in order to negotiate an agreement. On October 22d, the terminal delivered to each redcap a letter, signed by Buckner, the terminal's vice-president and general manager, in the same terms as the notice used at the Jacksonville terminal.
Two days later, on October 24th, the effective date of the wage law, Pickett, on behalf of the redcaps and at
"This letter is formal notice to the carrier, made for and on behalf of each employee concerned as a protest against the method proposed by the carrier to meet its
No action was ever taken to recall or revoke the letter of protest and the individual redcaps never told the company that they accepted the terms of its letter of October 24th.
On December 26th, 1938, Pickett submitted to Buckner a proposed general agreement covering the hours of service and working conditions of the redcaps, but not their wages. After protracted consideration of the matter by both the terminal and the union, Buckner wrote Pickett on December 6, 1939, as follows:
"As I told you and as you know, this case as to whether or not the railroads will be allowed credit for tips received up to $2.40 per day, is in the Court and as soon as same is decided we will be glad to negotiate an agreement with the Clerks Union, of which you are the General Chairman for this Company."
On January 1, 1940, although the wage dispute was not yet settled, a working agreement of the limited type Pickett had proposed was signed. On March 6, 1940, the accounting and guarantee system was abandoned by the terminal, presumably for the ten cents per parcel charge, and the following day this action was commenced. Throughout the entire preceding period the redcaps had performed their usual duties, had filed slips showing the hours worked and, except for a brief period, the tips received, had kept the tips, and had accepted the money paid by the terminal pursuant to its guarantee. Never, however, was the demand for additional pay abandoned, and no redcaps were discharged for refusing to expressly consent to the terminal's action.
With the effective date of the Act the employers became bound to pay a minimum wage to their employees, the redcaps. Accordingly, the latter were notified that future earnings from tips must be accounted for and considered as wages. Although continuously protesting the authority of the railroads to take over the tips, the redcaps remained at work subject to the requirement. Such protests were unavailing against the employers. Although the new plan was not satisfactory to the redcaps, the notice transferred to the railroads' credit so much of the tips as it affected. By continuing to work, a new contract was created. This result follows because the employer, after notice, may keep all earnings arising from the business. Labatt, Master & Servant, (2d ed.) Vol. 5, § 2037; Restatement, Agency, § 388. If the redcap did not accept the terms offered, he would be a volunteer and not an employee. As a volunteer he could probably keep his tips, but would not be entitled to a contractual wage. Restatement, Contracts, § 55. No such gift of services to the terminals is here claimed.
Railway Labor Act. Petitioners assert that, whatever may be the authority to issue orders for the accounting and guarantee plan, these railroads could not validly exercise the power because of the Railway Labor Act. 48 Stat. 1185. The applicable provisions are quoted in the note below.
In No. 112, the Jacksonville case, petitioners find such an agreement in the contract of February 1, 1937, the "Revised Agreement Between the Jacksonville Terminal Company and Employees Herein Named Represented by the Brotherhood of Railway and Steamship Clerks, Freight Handlers, Express and Station Employees." The scope of that agreement is limited to the hours of service and working conditions of certain groups of employees, in none of which do redcaps appear.
A different approach to this particular problem is made by petitioner in No. 1023, the Union Terminal case. The
The Brotherhood and the terminal did negotiate and finally concluded, effective January 1, 1940, their first collective working agreement covering the redcaps. Because the carrier was, by the Act, placed under the duty to exert every effort to make collective agreements, it does not follow that, pending those negotiations, where no collective bargaining agreements are or have been in effect, the carrier cannot exercise its authority to arrange its business relations with its employees in the manner shown in this record. As we have stated in discussing the Jacksonville case, the Railway Labor Act dealt with collective bargaining agreements only, and not with the employment of individuals. This conclusion is pertinent in considering the effect of the Dallas request for collective bargaining.
The institution of negotiations for collective bargaining does not change the authority of the carrier. The prohibitions
Minimum Wages. We stated in the discussion of the notice given by the terminals to their employees that its effect was to transfer the tips covered by the notice to the credit of the terminals. But this terminal credit in the hands of the redcaps, assert petitioners in both cases, cannot be utilized as cash paid to the employee by the employer.
Section 6 prescribed that "Every employer shall pay to each of his employees . . . wages at the following rates. . . ." Wages are defined only by the direction to include
The diverse interests of employers and employees have variously influenced legislators to include, exclude, or ignore tips in the specification of wage items in enactments where the wage base was important. For example, the Longshoremen's and Harbor Workers' Compensation Act,
To interpret "pay wages" as limited to money passing from the terminal to the redcap would let construction of an important statute turn on a narrow technicality. It, of course, can make no practical difference whether the redcaps first turn in their tips and then receive their minimum wage or are charged with the tips received up to the minimum wage per hour.
The other arguments of petitioner have been considered, but we find only two that require mention.
First. It is said that if the carriers take credit for the tips as compensation for redcap service, it would be in effect a charge by the terminals for a transportation service, and therefore, since the terminals have filed no covering tariff, a violation of § 6 (7) of the Interstate Commerce Act, 34 Stat. 587, 49 U.S.C. § 6 (7).
Second. It is urged in the Dallas case that the terminal from March 1, 1939, to October 15, 1939, voluntarily abandoned the accounting and guarantee system in favor of the old system of non-accountability for tips. We find nothing in the modified accounting practice during that period to support such a conclusion. Rather the terminal seems only to have simplified its bookkeeping and partially relieved the redcaps of clerical duties. Prior to March 1, 1939, and after October 15th, the redcaps had to make a daily report of both hours worked and tips received regardless of amount, on a printed time slip furnished by the terminal for the purpose. Between March 1st and October 15th, the time slips furnished by the company contained no provision for reporting tips, but only for reporting hours.
MR. JUSTICE ROBERTS took no part in the consideration or decision of this case.
MR. JUSTICE BLACK, dissenting, with whom MR. JUSTICE DOUGLAS and MR. JUSTICE MURPHY concur.
I think the judgments should be reversed. It appears to me that the question in these cases is: Upon whom does the statute impose the duty of paying a minimum wage, the employer or someone else? There is no ambiguity in the congressional mandate that "Every employer shall pay to each of his employees . . . wages .. . not less than 30 cents an hour." I am unable to agree that tips given to redcaps by travellers are "wages" paid to the redcaps by the railroad.
The employers here could have openly charged a fee for the services performed by redcaps. It appears that they have now adopted such a system. It is said that there is no practical difference between a system under which the railroads openly impose a charge on the public and one under which the redcaps accept from travellers so-called tips, treated by the railroad as a part of the redcaps' wages. Generally, the traveller who pays a railroad charge knows he is paying it to the railroad. One who gives a redcap a tip does not necessarily know that he is thereby helping the railroad to discharge its statutory duty
"(1) during the first year from the effective date of this section, not less than 25 cents an hour,
"(2) during the next six years from such date, not less than 30 cents an hour,
"(b) This section shall take effect upon the expiration of one hundred and twenty days from the date of enactment of this Act." June 25, 1938, c. 676, § 6, 52 Stat. 1062, 29 U.S.C. § 206.
"As used in this Act . . . (b) `Commerce' means trade, commerce, transportation, transmission, or communication among the several States or from any State to any place outside thereof.
"(e) `Employee' includes any individual employed by an employer.
"(m) `Wage' paid to any employee includes the reasonable cost, as determined by the Administrator, to the employer of furnishing such employee with board, lodging, or other facilities, if such board, lodging, or other facilities are customarily furnished by such employer to his employees." June 25, 1938, c. 676, § 3, 52 Stat. 1060, 29 U.S.C. § 203.
"It is my understanding that by signing this receipt I do not forfeit or release my right to sue for such additional amount as may be due under Section 16 (b) of the Act."
"I have a copy of a circular issued by your Company dated at Dallas, Texas, on October 22, 1938, and which was handed to each employee to whom it was addressed: i.e., redcaps, the general tenor of which is to require the individual employee to report to the carrier the amount that he receives in tips from the public and which information the carrier intends to employ, in compiling its records to indicate that it has complied with Section 6 of the Fair Labor Standards Act:
"In other words, the carrier contemplates crediting tips and other moneys paid to its employees by persons other than itself to relieve itself of the obligations imposed by the following quoted section of the law:
"`Fair Labor Standards Act:
"`Section 6-(a). Every employer shall pay to each of his employees who is engaged in commerce or in the production of goods for commerce wages at the following rates —
"`(1) during the first year from the effective date of this section, not less than 25 cents an hour.'
"The above section of the law which is quoted in part for the purpose of this notice, clearly sets forth that every employer who engages in commerce shall pay to each his employees during the first year after the effective date of the law 25 cents per hour.
"An examination of the law in its entirety does not authorize the carrier to depend upon others to discharge its obligation with respect to the law, in payment of wages imposed thereby.
"This letter is formal notice to the carrier, made for and on behalf of each employee concerned as a protest against the method proposed by the carrier to meet its obligation under the said law, and since it appears that the carrier has acted in the premise without authority of law or upon order of the Administrator, we are accordingly filing this notice of protest, for the reasons set forth herein."
"Second. All disputes between a carrier or carriers and its or their employees shall be considered, and, if possible, decided, with all expedition, in conference between representatives designated and authorized so to confer, respectively, by the carrier or carriers and by the employees thereof interested in the dispute."
"Seventh. No carrier, its officers or agents shall change the rates of pay, rules, or working conditions of its employees, as a class as embodied in agreements except in the manner prescribed in such agreements or in section 6 of this Act." 45 U.S.C. § 152.
Id., 1197. "SEC. 6. Carriers and representatives of the employees shall give at least thirty days' written notice of an intended change in agreements affecting rates of pay, rules, or working conditions, and the time and place for the beginning of conference between the representatives of the parties interested in such intended changes shall be agreed upon within ten days after the receipt of said notice, and said time shall be within the thirty days provided in the notice. In every case where such notice of intended change has been given, or conferences are being held with reference thereto, or the services of the Mediation Board have been requested by either party, or said Board has proffered its services, rates of pay, rules, or working conditions shall not be altered by the carrier until the controversy has been finally acted upon as required by section 5 of this Act, by the Mediation Board, unless a period of ten days has elapsed after termination of conferences without request for or proffer of the services of the Mediation Board." 45 U.S.C. § 156.
"Group (2) Other office and station employees — such as office boys, messengers, chore boys, train announcers, gatemen, baggage and parcel room employees, train and engine crew callers, telephone switch-board operators, elevator operators, office, station and warehouse watchmen and janitors.
"Group (3) Laborers employed in and around stations, storehouse, and warehouses."
"Q. Does that organization have the authority, or were they appointed by the redcaps, or the plaintiffs in this case, the redcaps employed by the Jacksonville Terminal Company, to negotiate contracts and wage agreements for them with a Jacksonville Terminal Company?
"A. It was.
"Q. At or about what time?
"A. About November 3rd, was when the official authorizations were turned over to me.
"Q. What year?
In No. 1023, petitioners say: "We, of course, do not want to be understood as contending that 25 cents received in tips will not purchase as much as 25 cents received in wages, but we do say that Congress had the right to say what means should be employed to carry out the purposes of the act, and that Congress has said, and for very good reasons, that the purposes of the act can best be accomplished by a direct wage payment from the employer to the employee."
E.g., New York State Dept. of Labor, Minimum Wage Standards, Directory Order No. 5, Restaurant Industry, effective June 3, 1940, provides: "SERVICE EMPLOYEES Basic Rate. The basic minimum wage for service employees in New York City shall be at the rate of 20 cents per hour. . . . NON-SERVICE EMPLOYEES Basic Rate. The basic minimum wage for non-service employees in New York City shall be at the rate of 29 cents per hour . . . from June 3, 1940 through March 2, 1941 and 30 cents thereafter. . . . GRATUITIES. In no event shall gratuities from patrons or others be counted as part of the minimum wage. SERVICE EMPLOYEE. `Service employee' means any employee whose duties relate solely to the serving of food to patrons seated at tables and to the performance of duties incidental thereto, and who customarily receive gratuities from such patrons." See also, New York State Dept. of Labor, Minimum Wage Standards, Directory Order No. 6, Hotel Industry, effective Nov. 25, 1940; New Hampshire Bureau of Labor, Minimum Wage Division, Mandatory Order No. 3, Restaurant Occupation, effective Nov. 1, 1938; District of Columbia Minimum Wage Board, Order No. 4, Public Housekeeping Occupation, effective May 8, 1938, and reprinted in the Annual Report of the Board for 1939, pp. 27 ff.
"1. Red Caps will be paid the hourly wage established by the Hours and the Wage Law, or orders of the Administrator, at the minimum set in such orders or law.
"3. Daily records of each Red Cap's hours, tags sold, and money re-remitted, will be kept by the Company; at the end of each 15 day period or pay roll period, all money received from sale of checks, etc., by Red Caps will be totaled, wages paid to Red Caps, deducted, after one (1) cent per parcel or tag has been set aside for Company expenses, the remaining nine (9) cents used to pay wages of Red Caps, and Captains, other than the ten (10) cents per hour for Captains covered in Item 2.
"If the sum total of nine (9) cents per parcel handled and or tags sold is greater than the wages paid to Red Caps for that period, the remaining funds will be divided among all Red Caps on the basis of hours worked during the pay roll period, so that all Red Caps will share alike for each hours service, from this fund. If the nine (9) cents per parcel handled is not sufficient to pay wages outlined in item (1) of this agreement, the Terminal Co. agrees to pay the wages as outlined in item 1."
"We next offer in evidence PLAINTIFF'S EXHIBIT `C', which is also a time slip but a little different from the one just read, and it reads:
"`The Union Terminal Company. Date ______________________ Hours on duty from _______ M. to _______ M., showing four of those lines.'
"And then says: `Total hours worked' __________, and then a blank line to be signed by the Red Cap and right under it the words, `Red Cap.'
"I call attention to the fact that on this slip there is no provision for reporting the tips."