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COURT OF APPEALS DECISION DATED AND RELEASED February 25, 1997 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 96-1946-FT
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT I
State of Wisconsin,
Department
of Industry, Labor and
Human
Relations,
Plaintiff-Respondent,
v.
Bee Bus Line,
Defendant-Appellant.
APPEAL from a judgment
of the circuit court for Milwaukee County:
WILLIS J. ZICK, Reserve Judge. Affirmed.
SCHUDSON, J.[1] Bee Bus Lines (Bee) appeals from the trial
court order for judgment awarding $4,000 plus $100 costs and disbursements in
favor of the Wisconsin Department of Industry, Labor and Human Relations. The trial court concluded that Bee had not
complied with the overtime pay provisions of the Fair Labor Standards Act. Bee argues that the trial court erred in
concluding that it did not have a Belo agreement exempting it
from the FLSA overtime pay requirements.
This court rejects Bee's argument and, accordingly, affirms.
I. FACTUAL BACKGROUND
The factual background
is undisputed. According to the trial
evidence, during 1992-94, Bee provided bus services to Milwaukee Pubic
Schools. Bee transported students on
regular routes in the morning and afternoon and on other routes for
extracurricular activities. Bee
employed eighty to eighty-five bus drivers, most of whom were regular drivers
who were paid hourly for the time they worked.
Pursuant to the terms of
its contract with MPS, Bee also employed “stand-by” drivers for the A.M. and
P.M. routes. Stand-by drivers,
including Ira L. Harvey and Calvin McDade, filled in for any regular drivers
who did not report to work. Bee paid
stand-by drivers a guaranteed weekly salary for a regular forty-hour, five-day
workweek, irrespective of the number of routes they actually drove. Bee provided this guarantee to ensure that
its stand-by bus drivers would be available in order to comply with its MPS
contract, which required Bee to have stand-by drivers.
As stand-by drivers,
Harvey and McDade, frequently worked more than forty hours per week, but they
never were paid time and one-half for their overtime hours. When Harvey or McDade drove any
extracurricular activity routes, they were paid for all hours worked in
addition to their guaranteed forty hours, but at the regular hourly rate.
In September 1995, the
Wisconsin Department of Industry, Labor and Human Relations filed a small
claims action against Bee on behalf of Harvey and McDade seeking $4,709.16 for
hours worked in excess of 40 hours per week.
In its answer, Bee claimed it was exempt from the state and federal
overtime pay regulations because Harvey and McDade had entered into a contract
encompassed by Walling v. A.H. Belo Corp., 316 U.S. 624 (1942); see
also 29 U.S.C. § 207(f) (codifying the Belo
exception). The trial court concluded,
however, that Bee had failed to establish the affirmative defense of a Belo
agreement. The trial court was correct.
II. ANALYSIS
Where no material facts
are in dispute, the issue of whether Bee owed any overtime wages to its
stand-by drivers presents a question of law we review de novo. See State v. Williams, 104
Wis.2d 17, 21-22, 310 N.W.2d 601, 604-05 (1981). Under federal and state law, employers are required to pay their
non-exempt employees one and one-half times the employees' regular rate for all
hours worked in excess of a forty hour workweek. See 29 U.S.C § 207(a)(1); Wis. Adm. Code § ILHR 274.03. 29 U.S.C. § 7(a)(1) of the Fair Labor Standards Act provides:
Except
as otherwise provided in this section, no employer shall employ any of his
employees who in any workweek is engaged in commerce or in the production of goods
for commerce or is employed in an enterprise engaged in commerce or in the
production of goods for commerce, for a workweek longer than forty hours 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 the regular rate at
which he is employed.
Wis. Adm. Code § ILHR 274.03, provides:
Except
as provided in s. Ind 74.08, each employer subject to this chapter shall pay to
each employe time and one-half the regular rate of pay for all hours worked in
excess of 40 hours per week.
The general rule does
not apply, however, if employers and their employees have entered into an
agreement that meets the statutory requirements of 29 U.S.C. § 207(f) of the
FLSA. Contracts satisfying the § 207(f)
requirements are referred to as “Belo contracts.” Belo contracts are exceptions
to the overtime requirements of the Fair Labor Standards Act. See 29 U.S.C. § 207(a), and 29
U.S.C. § 207(f).
Under
... 29 U.S.C. §207(f), these plans qualify as an exception to the usual
overtime pay requirements only if they meet each of the conditions specified in
the statute. First, the duties of the
employee must “necessitate irregular hours of work.” Second, the employee must be employed pursuant to a bona fide
individual contract or collective bargaining agreement. Third, [the] contract must “specif[y] a
regular rate of pay” for hours up to forty and one and one-half times that rate
for hours over forty. Finally, the
contract must provide a weekly guarantee for not more than sixty hours, based
on the specified rates.
Donovan
v. Brown Equip. & Serv. Tools, Inc., 666 F.2d 148, 153
(5th Cir. 1982)(citations omitted).
As an exemption from
federal and state overtime wage mandates, terms of Belo contracts
are construed against the employer asserting them. Martin v. Saunders Constr. Co., 813 F. Supp. 893,
897-98 (Mass. 1992). Accordingly, Bee
had the burden of establishing that its contract with the stand-by drivers
satisfied all the Belo criteria.
See Brown Equip. Serv. Tools, Inc., 666 F.2d 153. Clearly, Bee's contract satisfies none.
First, Belo
contracts may only be used when the duties of the employee “necessitate
irregular hours of work.” Donovan
v. Tierra Vista, Inc., 796 F.2d 1259, 1260 (10th Cir. 1986); see
also 29 U.S.C. § 207(f). “Irregular
work” is defined as significant variations in weekly hours of work both below
and above the statutory weekly limit on nonovertime hours. See id.; see also
29 C.F.R. § 778.405. In addition,
“[f]or fluctuations [above] the statutory forty hours to be considered irregular
within the meaning of the Belo exception, the employees must be
required to work [more] than forty hours because of an unpredictable
irregularity inherent in the nature of their duties.” Donovan v. Welex, 550 F. Supp. 855, 857 (Tex. 1982)
(emphasis added). This irregularity
must also be beyond the control of both the employer and employee. Id. at 858.
Bee
argues that “it is undisputed that the stand-by drivers worked irregular hours,
since they only worked if a regular driver did not show up for his or her
route.” This argument fails, however,
because it does not comport with the statutory meaning of “work.” The federal regulation interpreting 29
U.S.C. § 207, specifically defines “work” as:
“All time during which an employee is required to be on duty or to be on
the employer's premises or at a prescribed work place and ... all time during
which an employee is suffered or permitted to work whether or not he is
required to do so.” 29 C.F.R. §
778.223.
Trial testimony
established that Bee's stand-by drivers were required to be on the premises for
eight hours each day. Although the
drivers may not have had to drive any bus routes, they were “on duty” and thus
were working within the statutory definition of “work” requiring regular rate
of pay.
Testimony also
established that Bee's stand-by drivers never had to work more than forty
hours; rather, they could volunteer to work more than forty hours. Bee's president and the drivers testified
that when extra routes were offered to Harvey and McDade, they were free to
accept or decline the additional hours.
Neither Harvey nor McDade was required to drive any extracurricular
routes. These facts fail to meet the Belo
requirement that the cause of the fluctuation in hours be “beyond the control
of both the employer and the employee.”
Tierra Vista, Inc., 796 F.2d at 1260. Hence, the Bee/standby-driver agreement did
not meet the first prong of the Belo exception to the FLSA. See, e.g., Brown Equip.
& Serv. Tools, Inc., 666 F.2d.
Second, to comply with Belo,
Bee had to establish that its employees were employed pursuant to a bona fide
individual contract or collective bargaining agreement. See 29 U.S.C. § 207(f). Testimony established that Bee and its
stand-by drivers had no written agreement, but Bee's president stated that they
had an oral agreement. The trial court
concluded, however, that while Bee and its stand-by drivers had an oral
agreement concerning the guarantee of forty hours and the wages, they did not
have an agreement or understanding concerning the Belo contract
limit of sixty hours. Thus Bee failed
to establish that, under Belo, there was a bona fide agreement.
Third, the alleged oral
contract never set forth a “regular rate of pay” and “compensation of not less
than one and one-half time such rate” for all hours worked in excess of such
maximum workweek. See Saunders Constr. Co., 813 F. Supp.
at 897. Bee's president testified that
he told the stand-by drivers that should they accept any additional driving
hours beyond the regular forty-hour guarantee, they would be compensated at
their regular rate, not at time and one-half.
Thus Bee failed to meet the requirement that the contract specify a
regular rate of pay with time and one-half calculations for any hours in excess
of the forty-hour workweek.
Finally, Bee failed to
establish that the employees' hours would never exceed sixty in any
workweek. Because the stand-by drivers
were free to accept or reject any additional routes, they, in theory, could
have exceeded the statutory limit of sixty hours. See 29 U.S.C. § 207(f). Thus the trial court correctly concluded that no contractual
understanding limited the stand-by drivers to sixty hours and, therefore, no Belo
agreement existed.
By the Court.—Judgment
affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)4, Stats.