Glоben A. DIAZ, for Himself and on Behalf of All Others Similarly Situated, Appellant, v. SILVER BAY LOGGING, INC., Appellee.
No. S-10023.
Supreme Court of Alaska.
Sept. 27, 2002.
55 P.3d 732
The father appealed, arguing that the superior court violated his due process rights by failing to notify him of its intention to modify custody.6 He contended that “he believed the sole purpose of the hearing was to establish a visitation schedule, and that he was therefore denied the opрortunity to call witnesses and present evidence on the issue of physical custody.”7 We rejected the father‘s argument, because the father had sufficient notice that the mother sought equal time with the children: In her proposed visitation schedule and reply to the father‘s opposition to the motion, she requested equal time with the children.8 Moreover, the father expressly acknowledged that the mother sought equal custody in his opposition. We concluded:
Although there may have been confusion about whether to characterize the time that [the mother] sought with the children as visitation or physical custody, the record discloses that [the father] had notice at the time of the hearing that she sought equal time. In light of these facts, we conclude that [the father‘s] right to due process was not violated.9
In January 2000 Brewster filed a motion to both modify visitation to reflect the parties’ de facto modification of the visitation schedule and modify the child support tо reflect that schedule modification. Brewster‘s purpose was to ensure that a motion to modify visitation was in place in case the trial court felt that formalization of the de facto visitation schedule was necessary to modify child support. Judge Neville‘s statements at both hearings, her preliminary decision, and Potter‘s comments demonstrate that he had sufficient notice that resolution of the child support issue rested upon the court‘s determination whether Brewster had exercised primary physical custody of Sunny in the past and whether continuation of such a custody arrangement and visitation schedule and modification of child support should occur in the future. I therefore respectfully dissent from the court‘s opinion.
Laurel K. Tatsuda, Law Office of Laurel K. Tatsuda, Anchorage, for Appellant.
Robert K. Reges, Jr., Ruddy, Bradley, Kolkhorst & Reges, Juneau, for Appellee.
Before: FABE, Chief Justice, MATTHEWS, EASTAUGH, and BRYNER, Justices.
MATTHEWS, Justice.
The main question in this case is whether a regulation prohibiting an employer from deducting the costs of food and lodging from an employee‘s pay applies to all such deductions or only those that reduce the employee‘s pay below the minimum wage. We conclude that the latter meaning applies because the language of the regulation will not reasonably support the former meaning.
Globen Diaz worked as a logger for Silver Bay Logging, Inc., during the logging seasons of 1994 through 1997. While so employed he stayed at Silver Bay‘s remote camps. Pursuant to a written agreement, Silver Bay deducted from his earnings $10 a day for board and lodging. This deduction did not reduce his wage rate below the statutory minimum wage. No alternative public board and lodging facilities were accessible to Diaz at any of the camps.
Diaz brought this action against Silver Bay on his own behalf and as a class representative for others similarly situated claiming, among other things, that the board and lodging deductions were unlawful under
Diaz‘s main contention was and is that
For the reasons that follow we conclude that subsection (d) does not bar deductions that are permitted under subsection (a). Instead, subsection (d) permits, under the limits it expresses, deductions that would otherwise be barred by subsection (a). We thus agree with the position taken by Silver Bay before the superior court that subsection (d) does not apply to deductions that do not reduce an employee‘s wage rate to below the minimum wage.3
The prefatory language of subsection (d)—“nothing in (a) of this section prohibits“—can only function to permit conduct that subsection (a) would otherwise prohibit, it cannot prohibit conduct that subsection (a) permits. Subsection (a) prohibits written deductions that “have the effect of reducing an employee‘s wage rate below the statutory minimum....” Thus subsection (d) can permit deductions that would take a wage rate below the minimum becausе those deductions are prohibited by subsection (a). But it cannot serve to prohibit deductions that do not reduce wages below the minimum, because such deductions are permitted by subsection (a).
Meaning, of course, can be conveyed by a negative implication. But the negative implication that might otherwise be drawn by a failure to satisfy one of the three conditions of subsection (d) is limited by the “nothing in (a) of this section prohibits” prefatory language of subsection (d). The failure to meet one of the (d) conditions implies only that conduct prohibited by subsection (a) is indeed prohibited.4
If the prefatory language to subsection (d) were “Notwithstanding (a), deductions are prohibited unless, (1) ... (2) ... (3)” the interpretation Diaz offers would be correct. But those are not the words used, and the words that are used will not, in our view, reasonably bear Diaz‘s offered meaning.5
The Alaska Department of Law has interpreted subsection .160(d) as we do. The attorney general, in a memorandum to the Depаrtment of Labor dated April 23, 1986, concerning the meaning of subsection .160(d), stated:
Thus, if the conditions in paragraphs (1)—(3) [of .160(d)] are met (i.e., for our purposes, the employee is not at a remote site) nothing in (a) prohibits a deduction for room and board. Although one inference that might be drawn from this is that if (1)—(3) are not met, (a) would prohibit such a deduction, a reading of (a) does not support this conclusion.... When (d) is read together with subsection (a), it seems to provide that if the conditions in paragraphs (d)(1)—(3) are met, a written agreement for deductions is valid even though it would reduce the employee‘s wage rate below the minimum. There is nothing else in subsection (a) that would appear to limit the employer‘s ability to deduct the cost of room and board from an employee‘s wages. Nowhere in subsections (a) or (d) is the situation explicitly addressed regarding deductions when the conditions listed in (d)(1)—(3) are not pres
ent (for example, when alternative facilities are not accessiblе), and therefore, the general prohibition in (a) against agreements for deductions that reduce the employee‘s wage rate below the statutory minimum is the only limitation on deductions in that situation. Stated simply, if there are alternative facilities available, and the employee declines to use them, then deductions for the cost of facilities furnished by the employer are allowed, even though they have the effect of reducing the employee‘s wage rate below a minimum wage; if alternative facilities are not available, then the exception in subsection (d) to the limitations of (a) does not apply, and deductions for facilities furnished by the employer may not reduce the employee‘s wages below the statutory minimum. In short, nothing in 8 AAC 15.160 prohibits deductions for room and board in a remote-site situation if the deductions do not take the wages below the statutory minimum.... (Footnote omitted.)
Diaz argues that his interpretation of
It appears that the Department of Labor interprets subsection .160(d) in accordance with Diaz‘s position. Counsel for Diaz wrote the department in 1998, asking about the meaning of subsection .160(d). J.R. Carr, Chief of Labor Standards, responded that subsection (d) applies regardless of whether a “deduction reduces the wages below the statutory minimum wage....” And there are internal memoranda and correspondence dating back to 1986, which suggest that this was the position of the department. In addition, Diaz has gathered affidavits and deposition testimony of officials of the Department of Labor indicating that subsection (d) was, from the outset, meant to apply to deductions that did not reduce wages below the minimum wage. On the other hand the testimonial evidence as to the department‘s original interpretation of subsection .160(d) is in conflict. Donald Wilson, who as Deputy Director of Labor Standards in the Department of Labor drafted subsection .160(d), testified that it did not bar a deduction that “does not reduce the employee‘s wage below the statutory minimum.”
Given the 1986 opinion of the attorney general and the conflicting testimonial evidence of labor department officials, the deference due the Department of Labor‘s current interpretation of subsection (d) is debatable, but, in context, the point is unimportant. Our rule is that an agency‘s interpretation of its own regulation “is normally given effect unless plainly erroneous or inconsistent with the regulation.”7 Here the department‘s interpretation does not satisfy the conditions of this rule because, as we have explained above, it is inconsistent with the language of the regulation and, as such, it is unreasonable.
Diaz also argues that thе board and lodging deduction violated the second sentence of
The terms of
8 AAC 15.160(a) apply only where the employer/employee relationship has commenced. Prior to accepting and commencing employment with [Silver Bay], Diaz was not “entitled” to any remuneration because he was not yet an employee of [Silver Bay] and had not performed any services for them.
This rationale is correct. The concept of entitlement must refer to an employee‘s contractual or statutory and regulatory rights.
Diaz also argues that the superior court should not have granted summary judgment concerning claims he asserted for unpaid overtime compensation and under-reporting of his wages to the Internal Revenue Service and the Social Security Administration. His argument concerning these claims is that Silver Bay should have added the $10 (divided by 8 for an 8-hour day) to his stipulated hourly pay rate for purposes of calculating his overtime rate of pay and reported it as income for purposes of tax withholding. The superior court determined that these claims lacked merit because the furnishing of board and lodging was not a benefit furnished by Silver Bay as part of Diaz‘s compensation package: “Because the court finds that the deduction for room and board does not constitute a wage, Diaz‘s claims for underreporting of income, failure to withhold income and failure to pay taxes on the unreported income are all precluded as a matter of law.” This conclusion is also correct. Diaz was not paid $10 or its equivalent in food and lodging, he was charged $10.8 To the extent that the charge reflected the value of what he received, this was not an employee benefit. He does not contend that the value of the board and lodging exceeded $10 per day.9
Diaz also argues that the court‘s award of $3500 in attorney‘s fees was error. Silver Bay‘s actual attorney‘s fees were $142,542. The norm under
The trial court adhered to this rule. But two of Diaz‘s claims were not covered by the AWHA. These were claims for breach of cоntract and for violation of
For these reasons the judgment of the superior court is AFFIRMED.
FABE, Chief Justice, with whom BRYNER, Justice, joins, dissenting.
CARPENETI, Justice, not participating.
FABE, Chief Justice, with whom BRYNER, Justice, joins, dissenting.
I. INTRODUCTION
Due to the remoteness of Silver Bay‘s logging operations and the fact that it frequent
The plurality‘s interpretation of
II. THE ALASKA DEPARTMENT OF LABOR HAS ADOPTED FEDERAL REGULATORY DEFINITIONS THAT PREVENT DEDUCTION OF SILVER BAY‘S LODGING AND BOARD FROM DIAZ‘S PAY.
The Alaska Legislature has granted the Alaska Department of Labor broad discretionary power to formulate policy consistent with the Alaska Wage and Hours Act.4 Alaska Statute 23.10.145 requires us to apply federal regulatory definitions where terms have not been defined by the Alaska Department of Labor.5 The legislature has left it to the Department‘s discretion whether federal definitions can be applied consistently with the Alaska Wage and Hours Act.6 The De
The relevant state regulation,
Nothing in (a) of this section prohibits deductions from earnings, based on a written agreement, to reimburse an employer for the reasonable cost of furnishing board and lodging, if
....
(3) the cost to the employee for the use of the employer‘s board and lodging facilities, is reasonable and without profit to the employer
(Emphasis added.) The regulations expressly provide that the director of the Wage and Hour Division will make a determination of “reasonable cost” based on standards set forth under the FLSA, adopting by reference the FLSA‘s regulations pertaining to the determination of “reasonable cost.”10 The language of
The cost of furnishing “facilities” found by the Administrator to be primarily for the benefit or convenience of the employer will not be recognized as reasonable and may not therefore be included in computing wages.
In addition, “reasonable costs” may not exceed the employer‘s actual cost,11 may not include a profit to the employer,12 and may not exceed the “fair rental value” or “fair price” of the employer-provided lodging.13
Thus, to determine “reasonable costs” in accordance with these provisions of the Code of Federal Regulations, a threshold determination must be made as to whether the housing and meals at issue are being furnished primarily for the benefit or convenience of the employer or the employee. Only when the lodging and board are found to be provided primarily for the convenience of the employee does one move to the second step of evaluating whether the amount to be deducted from the employee‘s wages is the reasonable value of the furnished board and lodging. In this case, it is clear from the record that the lodging and board that Silver Bay furnished to Diaz were primarily for Silver Bay‘s benefit, and thus could not be deducted from Diaz‘s wages as “reasonable costs.”14
In addition to adopting by reference the federal “convenience to the employer” doctrine, the Department also codified this doctrine. Indeed, the language оf
Alaska Administrative Code regulation
In 1998 Randy Carr, the Department‘s Chief of Labor Standards and Safety, issued an opinion letter to Diaz based on the specific facts of Diaz‘s employment with Silver Bay and concluded that employers may only deduct room and board from wages where alternative facilities are accessible to the worksite and employees voluntarily choose to reside in employer-provided facilities, regardless of whether they reduce the employee‘s pay below the minimum wage.15 Carr confirmed that ”
Carr later confirmed that this opinion letter accurately reflects both the Department‘s current interpretation of the regulation and its interpretation аt the time of the regulation‘s adoption in 1985. An earlier opinion letter issued by Carr in 1985, at the time the regulation was being drafted, confirms the longstanding consistency of this interpretation.16 When asked if charges for room and board could be withheld from an employee‘s wages, Carr, then statewide Supervisor of the Labor Standards and Safety Division, responded:
Yes, if alternative facilities are available and the employee has declined the use of such alternate facilities.... Deductions for the cost of room & board are not permitted on floating processors or shore based operations where alternate facilities are not available.
We uphold an agency‘s interpretation of its own regulations unless it is “plainly errone
The plurality opinion today affords no deference to the Alaska Department of Labor‘s interpretation of
Moreover, the Department‘s interpretation is longstanding and, contrary to the plurality‘s suggestion, consistent. The Department has always maintained that
The Alaska Legislature enacted
AS 23.10.085 as a permissive statute, leaving the board and lodging deductions at the discretion of the director. By doing so, it is apparent that the legislature intended that no board and lodging deductions be made unless and until the director so provides by regulation.
(Emphasis added.)
In 1982 a team from the Department began to redraft what is now
Cominco/Alaska, “The Alliance” and Colorado Mining, Inc. also took exception to
8 AAC 15.160 . We do not intend to make any changes to this section since the law is quite clear with regard to employers causing their employees to shoulder the cost of the employer doing business.
The Department‘s regulations were adopted in 198522 and have remained unaltered.23
In accordance with its purpose of preventing employers from shifting their costs to employees, the Department has from the regulation‘s inception interpreted it to prevent employers from deducting the cost of room and board from employee wages where
Governor Sheffield has provided me with a copy of your letter ... concerning employer campsite requirements for remote work. Having reviewed your comments, I would like to offer an explanation of the Department of Labor‘s interpretation of these regulations.
....
Employers operating in remote areas where there is no public housing available which is immediately accessible or in close proximity to the work site are prohibited from charging employees for the use of any employee facilities....
An affidavit submitted by Robison in this case confirms that the letter to Gore accurately reflected the Department‘s interpretation of
These interpretations by current and former Department officials are also consistent with the Department‘s administrative decisions on this issue. For example, in Rhule v. Gildersleeve, the Department determined that an employer‘s deductions from an employee‘s wages to pay for room and board were unlawful because there were no alternative board and lodging facilities accessible to the remote worksite.24 Rhule was an employee at a remote logging camp who was required to authorize, before beginning emplоyment, a deduction from his wages of $12 per day to cover the cost of room and board.
After quoting in full
The key factor is that there are no alternative facilities accessible to the worksite. This alone, renders all other arguments moot. The fact that this arrangement is also a condition of employment reinforces our determination that deductions for room & board under these conditions do not meet the requirements of [
8 AAC 15.160(d) ].
(Emphasis added.) This Wage and Hour investigator emphasized to Gildersleeve that “the fact that there are no alternative public board and lodging facilities accessible to the worksite renders any deduction from wages unlawful.”
And Silver Bay itself was the subject of a similar wage complaint in 1993. In Chapman v. Silver Bay Logging, the Department informed Silver Bay that it was not permissible to deduct the cost of room and board when alternate facilities were not available:25
Please note that there are three criteria which must be met in order for deductions for room and board to be considered permissible. In order for board and lodging deductions to be valid, alternative public board and lodging facilities must be accessible to the worksite and the employee must have declined to use such facilities.... Unless you can prove that alternative public board and lodging facilities were accessible to the work site and that Mr. Chapman and other workers declined to use such facilities, the deductions for board and lodging are not permissible.
Thus, the record reveals that the Department of Labor has maintained a single, consistent interpretation of
The plurality has accepted Silver Bay‘s argument that there was not a single, consistent interpretation of the regulation and that the plurality therefore owes little deference to the Department‘s interpretation. Silver Bay relies on the testimony during the course of this litigation of Donald Wilson, who served as Deputy Director of Labor Standards from 1983 to May 1987. Wilson is now retired. Wilson was part of the original team that drafted the regulation. He was deposed for this case and provided his own interpretation of the regulation. Wilson testified that he did not intend to prohibit deductions for room and board where there was no alternative to employer-owned lodging. He characterizes the employee choice of lodging this way: “He can turn down the job and go somewhere else. That is the choice.... It is the interpretation of the law as I live it.”
However, the рlurality overlooks the fact that while Wilson was at the Department, his interpretation was identical to that of Diaz and the other Department witnesses in this case. In a September 19, 1986 memorandum, Wilson explained to then Commissioner Robison that
Because [of the company‘s provision of free, daily, round-trip transportation from Nome to the worksite] and the ready availability of public board and lodging facilities in Nome it is my opinion that [the company] can legally apply the terms of
8 AAC 15.160(d) and charge the reasonable cost of board and lodging at the camp site to those employees who elect to use it rather than return to Nome each day.Of course if [the company] should stop providing transportation and the road condition were to remain hazardous, or if it were rendered оtherwise impassable by acts of God, [the company] would then have to bear the cost of providing board and lodging to its employees and subcontractors[‘] employees.
(Emphasis added.) Wilson also sent a memorandum to Bob Bacolas, Director of Labor Standards in July 1984, stating that
[r]egardless of whether an employer operates or sub-leases his camp site in a remote area, the employer [is] going to have to bear the burden of providing board and lodging. As long as the employee is essentially institutionalized and cannot commute to his true domicile and the work site except on an infrequent basis, and then only by commercial carrier, the cost of providing room and board must be borne by the employer. The regulations were heard at public hearing[s] in the three major population centers of the state.... There may be some employers who think they can circumvent the law and make a profit. Every time a law is enacted, someone triеs to take advantage of it for the reason of financial gain. It is up to the enforcement agency to ensure that such events do not occur.
(Emphasis added.) These two documents authored by Wilson at the time of the regulation‘s adoption contradict his deposition testimony, given twelve years after his retirement from the Department.
The plurality further relies on a single opinion contained in a letter from the attorney general in 1986. However, such opinions are not binding authority on this court, nor do they have any precedential value.26 Furthermore, this particular opinion letter has been challenged by the Department of Labor and therefore is not entitled to great weight.27
In conclusion, when the agency has received such a broad delegation of power to make policy consistent with the Alaska Wage and Hours Act, has drafted a regulation that reflects a policy choice, and has then clearly and consistently implemented that regulation over a period of fifteen years, this court must
IV. THE DEPARTMENT‘S INTERPRETATION OF THE REGULATION IS REASONABLE.
Finally, the plurality concludes that even if the Department‘s interpretation is longstanding and consistent, it is unreasonable and thus accorded no deference. The plurality maintains that when an employee is required to live in employer-provided housing because this arrangement suits the convenience of the employer, the employer may deduct the cost of that lodging from the employee‘s wages as long as the deduction does not reduce the wages below the statutory minimum. Yet, the plurality‘s strained interpretation of
First, as discussed above, the Department has expressly incorporated the federal FLSA definitions of “reasonable cost” and “customarily furnished,” which exclude the cost of furnishing meals and lodging that arе primarily for the benefit or convenience of the employer or that do not permit the employee to choose voluntarily to live in the employer-furnished facilities. The Department‘s interpretation of its regulation to preclude deductions for employer-provided lodging when the lodging is provided for the employer‘s convenience is thus consistent with the FLSA definitions adopted by the Department under its legislative grant of authority and is therefore reasonable.
Second, the plurality concludes that subsection (d)‘s limitations on reimbursement for board and lodging facilities of the employer apply only if the reimbursement would reduce wages below the statutory minimum. The plurality maintains that subsection (d) “cannot serve to prohibit deductions that do not reduce wages below the minimum, because such deductions are permitted by subsection (a).”28 But subsection (d) contains three conditions that must be met before a deduction from earnings can be made for employеr-provided housing: (1) alternative public board and lodging facilities must be accessible to the worksite and the employee must have declined to use these available facilities; (2) the employer-provided board and lodging facilities must be customarily furnished by the employer and used by the employees; and (3) the cost to the employee for use of the employer‘s board and lodging facilities must be reasonable and without profit to the employer. If, as the plurality reasons, these limitations of subsection (d)(1), (2), and (3) do not apply unless wages are reduced below statutory minimums, then employers could require employees to live in their facilities and charge unreasonable or profit-making rates, deducting these charges from wages, as long as the deductions did not reduce the employee‘s wages below the statutory minimum. It is the plurality‘s interpretation of this regulation that is unreasonable, particularly in light of its purpose to prevent employers from shifting to its emрloyees the cost of doing business.
Finally, the Department‘s analysis of the interplay between the various subsections of
However, the subject of minimum wages is not reflected in subsection (d), which allows deductions from earnings where the employ
Bradley Kent LAYBOURN, Appellant, v. Roberta Yvonne POWELL, Appellee.
No. S-10074.
Supreme Court of Alaska.
Sept. 27, 2002.
V. CONCLUSION
When the Alaska Department of Labor promulgated
Notes
(a)
(1) customer checks returned due to insufficient funds or any other reason;
(2) non-payment for goods or services as a result of theft or credit default;
(3) cash or cash register shortages unless the employee admits, willingly and in writing, to having personally taken the specific amount of cash that is alleged to be missing;
(4) lost, missing, or stolen property, unless the employee admits willingly and in writing, to having personally taken the specific property alleged to be lost, missing, or stolen; or
(5) damage or breakage costs unless clearly due to willful conduct of the employee and the employee has acknowledged responsibility in writing.
....
(d) Nothing in (a) of this section prohibits deductions from earnings, based on a written agreement, to reimburse an employer for the reasonable cost of furnishing board and lodging, if
(1) alternative public board and lodging facilities are accessible to the worksite and the employee has declined to use such facilities;
(2) the board and lodging facilities of the employer are customarily furnished by the employer and used by the employees; and
(3) the cost to the employee for the use of the employer‘s board and lodging facilities, is reasonable and without profit to the employer.
Webster v. Bechtel, Inc., 621 P.2d 890, 901 (Alaska 1980).(a) The director may adopt, amend, or rescind administrative regulations not inconsistent with the purposes and provisions of
(b) The regulations may, without limiting the generality of (a) of this section, define terms used in
(c) The regulations may permit deductions by an employer from the minimum wage applicable under
(a) The director may adopt, amend, or rescind administrative regulations not inconsistent with the purposes and provisions of
(b) The regulations may, without limiting the generality of (a) of this section, define terms used in
(c) The regulations may permit deductions by an employer from the minimum wage applicable under