John T. DUNLOP, Secretary of Labor, United States Department of Labor v. The STATE OF NEW JERSEY et al.
No. 74-1289
United States Court of Appeals, Third Circuit
Argued Oct. 8, 1974. Final Submission May 5, 1975. Decided Aug. 4, 1975. As amended Sept. 3, 1975.
514 F.2d 542
Before BIGGS, ADAMS and GARTH, Circuit Judges.
As noted by Mr. Justice Rehnquist in his dissent in LaFleur, almost any law could be in some sense characterized as an irrebuttable presumption. In the normal case, well established standards of equal protection and due process should be applied to determine the validity of a Congressional enactment. It is only an unusual case where a statute will be declared invalid because of an improper irrebuttable presumption, and the same result would not be reached applying normal equal protection and due process standards.
D. Minimum Earnings Requirement
As was discussed earlier, the amended complaint asked for a declaration that the minimum earnings requirement for a certain number of quarters as such was unconstitutional. By applying the well established standards discussed above, the argument lacks substantiality.
III. Mandamus
Plaintiff‘s complaint seeks a writ mandating the Secretary of the Treasury and the Commissioner of Internal Revenue to require the reporting of all wages paid domestic servants regardless of whether they exceed the statutory minimums. According to plaintiff this would ensure greater compliance with the law and largely eliminate the problems of incomplete records such as she had. Plaintiff may or may not be correct in her analysis regarding the efficacy of these measures, but the Secretary has a large degree of discretion in determining the proper measures to take to enforce the tax laws. In addition, enforcing these reporting requirements would present many of the administrative difficulties which caused Congress to exclude employees of certain employers from coverage.
For the reasons hereinbefore set forth, the judgment of the district court is Affirmed.
William J. Kilberg, Solicitor of Labor, Carin Ann Clauss, Assoc. Sol., Donald S. Shire, Jacob I. Karro, Darryl J. Anderson, U.S. Dept. of Labor, Washington, D.C., for appellee.
OPINION OF THE COURT
BIGGS, Circuit Judge.
The basic issue presented on this appeal is whether the practice of certain New Jersey state institutions in implementing a New Jersey statute1 authoriz
I.
The Fair Labor Standards Act, enacted in 1938, required employees “engaged in commerce or in the production of goods for commerce” to be paid a minimum hourly wage,
“No provision of this chapter or of any order thereunder shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter or a maximum workweek lower than the maximum workweek established under this chapter, and no provision of this chapter relating to the employment of child labor shall justify noncompliance with any Federal or State law or municipal ordinance establishing a higher standard than
the standard established under this chapter. No provision of this chapter shall justify any employer in reducing a wage paid by him which is in excess of the applicable minimum wage under this chapter, or justify any employer in increasing hours of employment maintained by him which are shorter than the maximum hours applicable under this chapter.”
Originally, the FLSA exempted the federal and state governments and their political subdivisions from compliance with its provisions. § 3(d), 52 Stat. 1060. In 1966, however, Congress amended the FLSA to encompass certain activities of the states and their political subdivisions, including operations of hospitals, schools, and institutions. At that time, the following pertinent changes were engrafted upon
“(d) ‘Employer’ includes any person acting directly or indirectly in the interest of an employer in relation to an employee but shall not include the United States or any State or political subdivision of a State (except with respect to employees of a State, or a political subdivision thereof, employed (1) in a hospital, institution, or school referred to in the last sentence of subsection (r) of this section, or (2) in the operation of a railway or carrier referred to in such sentence), or any labor organization (other than when acting as an employer), or anyone acting in the capacity of officer or agent of such labor organization.” (now cited as Act of Sept. 23, 1966, Pub.L.No. 89-601, § 102(b), 80 Stat. 831).
“(s) ‘Enterprise engaged in commerce or in the production of goods for commerce’ means an enterprise which has employees engaged in commerce or in the production of goods for commerce, including employees handling, selling, or otherwise working on goods that have been moved in or produced for commerce by any person, and which—
. . .
(4) is engaged in the operation of a hospital, an institution primarily engaged in the care of the sick, the aged, the mentally ill or defective who reside on the premises of such institution, a school for mentally or physically handicapped or gifted children, a preschool, elementary or secondary school, or an institution of higher education (regardless of whether or not such hospital, institution, or school is public or private or operated for profit or not for profit).”6
These amendments had an undeniable impact on the financial responsibilities of those states involved in such operations. In response to this and other fiscal pressures exerted by its own laws relating to compensation of state employees, the state of New Jersey amended
Pursuant to his authority under
II.
The FLSA‘s overtime compensation provision is contained in
“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 times the regular rate at which he is employed.” (emphasis added).
Neither this section nor the statutory definitions contained in the FLSA,
The Wage-Hour Administrator has considered the question of compensatory time off as a form of overtime compensation. In Opinion Letter No. 913 (December 27, 1968), he explained:
“An employer may not credit an employee with compensatory time (even at a time and one-half rate) for overtime earned which is to be taken at some mutually agreed upon later date subsequent to the end of the pay period in which the overtime was earned, rather than pay cash for the overtime as it is earned. However, it is permissible for the employer employing one at a fixed salary for a fixed workweek to lay off the employee a sufficient
number of hours during some other week or weeks of the pay period to offset the amount of overtime worked (i.e. at the time and one-half rate) so that the desired wage or salary for the pay period covers the total amount of compensation, including overtime.” (emphasis added).9
We conceive this restrictive endorsement of compensatory time off to be perfectly consistent with the language and goals of the FLSA as well as the regulations surrounding it. The restriction that time off for overtime be granted within the same pay period as earned mirrors the stricture placed upon monetary payments for overtime.10 In fact, this restriction ensures that compensatory time off achieves the main objective of the FLSA‘s overtime compensation provision: the broadening of employment. That goal could be easily defeated if the employer were allowed discretion to manipulate the scheduled time off so as to coincide with off-season or slack work periods. Moreover, a program of compensatory time off also at
Nor does this restricted compensatory time off program offend the Wage and Hour Division‘s interpretation of the mode of payment for overtime.
For these reasons, we hold that a program of compensatory time off, subject to the restriction that the time off be afforded during the same pay period, is permissible under the Fair Labor Standards Act. Accord, Hodgson v. A. W. Crossley, Inc., 365 F.Supp. 1131, 1134 (S.D.N.Y.1973). See United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487, 491-492 (2d Cir. 1960).
III.
Applying these precepts to the New Jersey statute challenged in the case at bar, we must conclude that the manner in which this statute is administered fails to meet the exacting standards of the FLSA. While the statute itself, like the FLSA, does not prescribe a definite period within which overtime compensation must be made,12 appellants have conceded that their employees are often not afforded compensatory time off within the same pay period as earned.13
Our analysis, however, does not end with that concession. We turn, instead, to a consideration of appellants’ contentions that: (1) their compensatory time off program is exempted from the FLSA under
Appellants urge that the New Jersey compensatory time off program is salvaged by
The New Jersey statute, however, does not fall within the purview of
Alternatively, appellants suggest that the nature of their businesses provides an exception to the FLSA‘s immediacy of payments requirement. They suggest that, since their operations are not subject to slack work or seasonal periods, they cannot possibly manipulate the scheduling of time off so as to defeat the broadening-of-employment objective of the FLSA. Therefore, the requirement of payment of overtime compensation within the same pay period serves no useful purpose. While this argument is both ingenious and appealing, we cannot accept it. Appellants produced no evidence in the district court to demonstrate either the non-seasonal nature of their operations or the increased employment which has resulted from delayed compensatory time off. Moreover, even if we were to take judicial notice of the nature of their operations, we are powerless to legislate such exceptions by judicial fiat. In fact, explicit Congressional exemptions from the FLSA are narrowly construed. Mitchell v. Kentucky Finance Co., 359 U.S. 290, 295, 79 S.Ct. 756, 3 L.Ed.2d 815 (1959). Where, as in the case at bar, there is no exemption and the regulations interpreting the FLSA are reasonably designed to fulfill its purposes, judicial intervention is unwarranted. The proper forum for consideration of this argument is the legislature, not the judiciary.16
Finally, appellants submit that, even if the New Jersey program is invalid, the district court‘s order that appellants pay retroactive overtime compensation is either invalid or inappropriate. They premise this contention on two arguments: (1) that the Eleventh Amendment bars retroactive relief in damages against the state and (2) that such relief, even if within the powers of the district court, should not have been granted in this particular case. We will examine these arguments seriatim.
IV.
Appellants raised an Eleventh Amendment18 defense to this suit in their answer to the Secretary‘s complaint. This defense was rejected by the district court. Acting sua sponte, we requested and received supplemental briefs from the parties on the Eleventh Amendment issue as affected by the Supreme Court‘s ruling in Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974). We now hold that the Eleventh Amendment and the extension of sovereign immunity in Hans v. Louisiana, 134 U.S. 1, 10 S.Ct. 504, 33 L.Ed. 842 (1890), do not bar the district court‘s order of retroactive relief in damages in this case.
In Employees v. Missouri Public Health Dept., 411 U.S. 279, 93 S.Ct. 1614, 36 L.Ed.2d 251 (1973), the petitioners were employees of state health facilities who brought suit for overtime pay due them under § 16(b) of the Fair Labor Standards Act (
Mr. Justice Douglas, writing for the majority, concluded that the petitioners came within the scope of the FLSA under the 1966 Amendments to that statute. 411 U.S. at 283, 93 S.Ct. 1614. Their inclusion within the FLSA, however, did not amount to a license of state employees to sue the States in federal courts on claims arising under the FLSA:
“But we have found not a word in the history of the 1966 amendments to indicate a purpose of Congress to make it possible for a citizen of that State or another State to sue the State in the federal courts. The Parden opinion19 did state that it would be ‘surprising’ to learn that Congress made state railroads liable to employees under the FELA, yet provided ‘no means by which that liability may be enforced.’ 377 U.S., at 197 [84 S.Ct., at 1215]. It would also be surprising in the present case to infer that Congress deprived Missouri of her constitutional immunity without changing the old § 16(b) under which she could not be sued or indicating in some way by clear language that the constitutional immunity was swept away. It is not easy to infer that Congress in legislating pursuant to the Commerce Clause, which has grown to vast proportions in its applications, desired silently to deprive the States of an immunity they have long enjoyed under another part of the Constitution. Thus, we cannot conclude that Congress conditioned the operation of these facilities on the forfeiture of immunity from suit in a federal forum.
“By holding that Congress did not lift the sovereign immunity of the States under the FLSA, we do not make the extension of coverage to state employees meaningless. Cf. Parden . . . supra, at 190 [84 S.Ct., at 1211]. Section 16(c) gives the Secretary of Labor authority to bring suit for unpaid minimum wages or unpaid overtime compensation under the FLSA. Once the Secretary acts under § 16(c), the right of any employee or employees to sue under § 16(b) terminates. Section 17 gives the Secretary power to seek to enjoin violations of the Act and to obtain restitution in behalf of employees. Sections 16 and 17 suggest that since private enforcement of the Act was not a paramount objective, disallowance of suits by state employees and remitting them to relief through the Secretary of Labor may explain why Congress was silent as to waiver of sovereign immunity of the States. For suits by the United States against a State are not barred by the Constitution. See United States v. Mississippi, 380 U.S. 128, 140-141, [85 S.Ct. 808, 814-815, 13 L.Ed.2d 717]. In this connection, it is not amiss to note that § 16(b) allows recovery by employees, not only of the amount of unpaid wages, but of an equal amount as liquidated damages and attorneys’ fees. It is one thing, as in Parden, to make a state employee whole; it is quite another to let him recover double against a State. Recalcitrant private employers may be whipped into line in that manner. But we are reluctant to believe that Congress in pursuit of a harmonious federalism desired to treat the States so harshly. The policy of the Act so far as the States are concerned is wholly served by allowing the delicate federal-state relationship to be managed through the Secretary of Labor.” (notes omitted; bracketed material added). 411 U.S. at 285-286, 93 S.Ct. at 1618.
Thus, the Supreme Court has recognized, albeit in dictum, the right of the Secretary of Labor to sue the States on behalf of state employees in federal courts on claims involving the FLSA.20
Appellants contend with some force that the practical consequences of an award of damages in the instant suit are identical to those which were barred in Edelman—i.e., the state fisc is diminished for the benefit of private citizens. They argue that the rationale of the Edelman decision is that the status of the nominal parties does not control with respect to the validity of a money judgment under the Eleventh Amendment. They urge, instead, that the determinative element is the question of whose pocketbooks are affected.
Though there is much logic to the appellants’ position, we cannot accept it. Careful consideration of questions of sovereign immunity involves numerous factors, including the identities of the parties to the suit, whether the State has consented to suit, the purposes effectuated by the suit (particularly those permitted by legislative fiat), the nature of the activities involved, the type of relief sought, and the source and destination of money damages flowing from the action. Some factors may, by themselves, be determinative. The question of consent is an example. Others, such as the nominal status of the parties, must be considered in arriving at a decision as to the applicability of sovereign immunity, though they do not per se require a certain result.
We should remember that “[t]he life of the law,” as Mr. Justice Holmes stated, “has not been logic: it has been experience.” Holmes, The Common Law (33d ed. 1938), p. 1. For over eighty years the courts have held without question that the States’ immunity to suit in the federal courts whether in the light of the Eleventh Amendment or under the doctrine of Hans v. Louisiana, supra, decided in 1890, does not reach suits brought by the United States. Department of Employment v. United States, 385 U.S. 355, 358, 87 S.Ct. 464, 17 L.Ed.2d 414 (1966); United States v. Mississippi, 380 U.S. 128, 140-141, 85 S.Ct. 808, 13 L.Ed.2d 717 (1965);
It is apparent that the United States has a substantial interest under the Commerce Clause in making certain that employees of the States are properly
We conclude that the allowance of retroactive monetary damages against the State in this case was constitutionally permissible. Suits by the Secretary of Labor against the States under the FLSA seeking money damages on behalf of state employees are a legally proper method of ensuring the effectiveness of a constitutional exercise of Congressional power pursuant to the Commerce Clause. See generally Comment, “The Elusive Eleventh Amendment and the Perimeters of Federal Power“, 46 U. of Col. L.Rev. 211 (1974); Comment, “The Eleventh Amendment and Retroactive Welfare Benefits“, 36 U. of Pitt. L.Rev. 78 (1974).
We turn now to appellants’ contention that retroactive relief in damages was inappropriate within the context of this particular case. There can be no doubt that, under
Despite these rulings which affirm the essence of the district court‘s opinion, we are required to vacate that portion of the district court‘s order mandating computation of overtime pay from February 1, 1969. While the Secretary raised the issue of the statute of limitations in his answer, neither party addressed this point in the appeal before us. We emphasize that, under the statute of limitations in effect at the time this suit was filed, any action for unpaid overtime compensation under FLSA must have been commenced within two years after the cause of action accrued or, in the event the violation be deemed “willful“, within three years of the accrual of the cause of action.
In framing an appropriate order, the district court should remain cognizant of the fact that appellant Vineland State School (“Vineland“) was added as a defendant by consent order of May 7, 1973. The order specifically provided that the amendment will not relate back to the filing of the original complaint. Thus, any order directing Vineland to make back payments may extend only to May 7, 1971, if the violation was not willful.
VI.
We are not insensitive to the plight of the States and their institutions when Congressional actions, however valid, increase their fiscal burdens in substantial, even dramatic, fashion. In such instances, though, resort lies in the legislature, not the judiciary. We believe, as we noted, that Congress is not oblivious to this situation. See note 16, supra. If appellants believe that a Congressional exemption will permit enactment of programs which meet the purposes of FLSA without causing drastic financial consequences, they should apply for relief in the halls of Congress.
By our holding, we simply reiterate what the Supreme Court emphasized in Employees, 411 U.S. at 284-285, 93 S.Ct. at 1618.
“And when Congress does act, it may place new or even enormous fiscal burdens on the States. . . . We deal here with problems that may well implicate elevator operators, janitors, charwomen, security guards, secretaries and the like in every office building in a State‘s governmental hierarchy. Those who follow the teachings of Kirschbaum v. Walling, supra, and see its manifold applications will appreciate how pervasive such a new federal scheme of regulation would be.” (emphasis added).
The judgment of the district court will be affirmed with respect to its determinations that FLSA was violated and that restitution damages should be awarded. We will vacate that portion of the order requiring back payments from February 1, 1969 and remand for a modification of the judgment not inconsistent with this opinion and for a determination of the damage award. See note 23, supra.
I join the comprehensive opinion of Judge Biggs with respect to all the issues presented here except the question of the effect of the Eleventh Amendment upon the Secretary of Labor‘s quest for a retrospective award of unpaid overtime compensation. Regarding that aspect of the case, a separate statement appears appropriate because my conception of the troublesome and important sovereign immunity issue diverges somewhat from the ideas expounded in the majority opinion.
The Eleventh Amendment1 was adopted, at least in part, in order to enhance the public weal by providing the states with constitutional protection against interference with the efficacious discharge of their governmental functions by the dissipation of the state treasury.2 Although some commentators have disputed the contemporary utility of retaining such a palisade around the state sovereign,3 the Eleventh Amendment remains an integral part of the Constitution. Notwithstanding the precise wording of the amendment, the Supreme Court has long held that, in the absence of consent, suits against a state by citizens of that state are barred as well as suits by citizens of other states.4
The immunity of the states is not all-encompassing, however. Neither the Eleventh Amendment nor notions of state sovereignty have been held to proscribe suits against a state by the United States5 or by an official acting on behalf of the federal government.6 Also, the Supreme Court has declared that Congress in the exercise of its interstate commerce power has the constitutional authority to subject the states to suits by their citizens.7
After Congress extended the Fair Labor Standards Act so as to cover state employees who work in schools, hospitals and mental institutions, the Supreme Court was presented in Employees v. Missouri Public Health Dept. with the question whether sovereign immunity forestalled such state employees from initiating suit in the federal courts to recover unpaid overtime compensation plus an equal amount in liquidated damages. In an opinion holding that the Court would not presume a congressional intent to enable an individual citizen to sue a state in federal court when such actions are not indispensable to the effective implementation of the legislative scheme, Justice Douglas averred, in a statement not indispensable to the conclusion reached in the case:
By holding that Congress did not lift the sovereign immunity of the States under the FLSA, we do not make the
extension of coverage to state employees meaningless. . . . Section 16(c) gives the Secretary of Labor authority to bring suit for unpaid minimum wages or unpaid overtime compensation under the FLSA. . . . Section 17 gives the Secretary power to seek to enjoin violations of the Act and to obtain restitution in behalf of employees. Sections 16 and 17 suggest that since private enforcement of the Act was not a paramount objective, disallowance of suits by state employees and remitting them to relief through the Secretary of Labor may explain why Congress was silent as to waiver of sovereign immunity of the States. For suits by the United States against a State are not barred by the Constitution.9
As an indicium of legislative intent with respect to the imposition of liability upon the states, Justice Douglas looked to the need to award damages against the states in order to enforce the Act. In the present case the congressional intent embodied in the FLSA seems unclear, since there appears to be some doubt regarding the necessity of the award of retrospective overtime compensation in addition to injunctive relief in order to effectuate compliance by the states with the FLSA. Therefore, I continue to be concerned whether Congress, at the time of the 1966 amendments,10 intended to inflict financial burdens of this kind upon the states.
The Supreme Court, however, has declared, albeit only in dictum, that the sovereign character of the states does not foreclose the Secretary of Labor from obtaining for the benefit of state employees a money judgment for unpaid overtime compensation, thereby achieving indirectly what the state employees could not accomplish for themselves. It seems inappropriate for this Court, as distinguished from the Supreme Court, to enter a ruling which would be in derogation of the import of such language.
Accordingly, I concur in the judgment of the Court affirming the decision of the district court.
Notes
The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or Citizens or Subjects of any Foreign State.
“(d) ‘Employer’ includes any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency, but does not include any labor organization (other than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization.”
Similarly, the 1974 amendments added subsection s(5) to
“There is no requirement in the Act that overtime compensation be paid weekly. The general rule is that overtime compensation earned in a particular workweek must be paid on the regular pay day for the period in which such workweek ends. When the correct amount of overtime compensation cannot be determined until some time after the regular pay period, however, the requirements of the Act will be satisfied if the employer pays the excess overtime compensation as soon after the regular pay period as is practicable. Payment may not be delayed for a period longer than is reasonably necessary for the employer to compute and arrange for payment of the amount due and in no event may payment be delayed beyond the next pay day after such computation can be made . . . .”
“For example, given a pay period of two weeks, with a fixed salary of $200.00 per week and a fixed workweek of forty hours, an employee works for fifty hours during the first week of the pay period. Under the above Opinion Letter, the employee may then work only twenty-five hours in the second week of the pay period (forty hours less time and one-half for the ten hours accrued overtime) while receiving his full gross pay of $400.00 at the end of the two-week pay period. This would comply with § 7 of the Act and the accompanying regulations and interpretations, since such wages are paid both promptly and in cash.” 364 F.Supp. 156 at 158.
“No employer engaged in the operation of a hospital or an establishment which is an institution primarily engaged in the care of the sick, the aged, or the mentally ill or defective who reside on the premises shall be deemed to have violated subsection (a) of this section if, pursuant to an agreement or understanding arrived at between the employer and the employee before performance of the work, a work period of fourteen consecutive days is accepted in lieu of the work week of seven consecutive days for purposes of overtime computation and if, for his employment in excess of eight hours and (sic) any workday and in excess of eighty hours in such fourteen-day period, the employee receives compensation at a rate not less than one and one-half times the regular rate at which he is employed.”
The impact of this subsection on a compensatory time off program may be demonstrated by the following example:
Assume a pay period of two weeks with a fixed salary of $200.00 per week and a fixed workweek of forty hours in which an employee works eight hours per day for the first seven days of the pay period. If the hospital does not have an agreement under § 207(j), the employee may work only sixteen hours (forty hours less time and one-half for the sixteen hours accrued overtime) during the next seven days, assuming he does not work more than eight hours on any day. He would, of course, receive his full gross pay of $400.00 at the end of the pay period. If the hospital has an agreement under § 207(j), the employee may work as much as twenty-four hours (eighty hours less fifty-six hours) during the ensuing seven days, assuming no more than eight hours of work per day. Again, his gross pay would be $400.00 at the end of the two week pay period.
“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
“The judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or Citizens or Subjects of any Foreign State.”
Hans v. Louisiana, 134 U.S. 1, 10 S.Ct. 504, 33 L.Ed. 842 (1890) extended the states’ immunity to suit to actions brought by a state‘s own citizens against the state in federal court without the consent of the state.