WALLING, ADMINISTRATOR OF THE WAGE AND HOUR DIVISION, U. S. DEPARTMENT OF LABOR, v. HARNISCHFEGER CORPORATION.
No. 956
Supreme Court of the United States
Argued May 1, 1945. Decided June 4, 1945.
325 U.S. 427
Mr. Leo Mann, with whom Messrs. Louis Quarles and Maxwell H. Herriott were on the brief, for respondent.
MR. JUSTICE MURPHY delivered the opinion of the Court.
Here, as in Walling v. Youngerman-Reynolds Hardwood Co., ante, p. 419, we are concerned with the problem of whether a particular type of wage agreement meets the requirements of
Respondent is a Wisconsin corporation engaged in producing electrical products for interstate commerce. About one-half of respondent‘s production employees, called incentivе or piece workers, are involved in this case.
As a result of collective bargaining by their union, these employees entered into a collective agreement with respondent whereby they are each paid a basic hourly rate plus an “incentive bonus” or “piecework earnings.” The various jobs performed by these incentive workers are “time studied” by the management. The time which the job is shown to consume is multiplied by a “standard earning rate”2 per unit of time. The amount so obtained is known as the “price” placed on that job. When an employee is given work on a job that has been so priced, he receives a job card bearing the price.
The worker is paid his agreed base or hourly rate (ranging from 55 cents to $1.05 per hour) for the time which
On many jobs which have not been “time studied” the respondent has agreed to pay, and does pay, each incentive worker an hourly rate at least 20% higher than his basic hourly rate. And when an incentive worker is temporarily assigned to “non-incentive” work he is paid at least 20% more than his basic hourly rate. Moreover, vacation pay is based on an employee‘s average hourly straight time earnings over a three-mоnth period and not on his base rate.
These incentive workers frequently work in excess of the statutory maximum workweek. For these extra hours they receive a premium of 50% of the basic hourly rate, which does not reflect the incentive bonuses received. Likewise, when incentive workers are working on jobs that have not been “time studied” or are temporarily doing “non-incentive” work they receive overtime pay on the basis of their basic hourly rates rather than on the 20% higher hourly rates actually paid them during the non-overtime hours.
The Administrator of the Wage and Hour Division of the Department of Labor brought this action to compel
Our attention here is focused upon a determination of the regular rate of compensation at which the incentive workers are employed. To discover that rate, as in the Youngerman-Reynolds case, we look not to contract nomenclature but to the actual payments, exclusive of those paid for overtime, which the parties have agreed shall be paid during each workweek.
It is evident that all the incentive workers receive a guaranteed basic hourly pay as a minimum. As to those who receive no regular additional payments during their non-overtime hours the respondent complies fully with
(1) Those who receive hourly rates at least 20% higher than their guaranteed base ratеs clearly are paid a regular rate identical with the higher rate and the failure of respondent to pay them for overtime labor on the basis of such a rate is a plain violation of the terms and spirit of
(2) Those who receive incentive bonuses in addition to their guaranteed base pay clearly receive a greater regular rate than the minimum base rate.3 If they received only piece work wages it is indisputable that the regular rate would be the equivalent of the translation of those wages into an hourly rate. United States v. Rosenwasser, 323 U. S. 360. It follows that piece work wages forming only a part of the normal weekly income must also be an ingredient of the statutory regular rate. Piece work wages do not escape the force of
In this instance 98.5% of the incentive employees receive incentive bonuses in addition to their guaranteed hourly wages, demonstrating that such bonuses are a normal and regular part of their income. Once the parties agree that these employees should receive such piece work wages, those wages automatically enter into the computation of the regular rate for purposes of
It matters not how significant the basic hourly rates may be in determining the compensation in situations where incentive bonuses are not paid. When employees do earn more than the basic hourly rates because of the operation of the incentive bonus plan the basic rates lose their significance in determining the actual rate of compensation. Nor is it оf controlling importance that the respondent now pays a premium for overtime employment so as to make the overtime rate somewhat above the piece work earnings per hour.5 Until that premium is 50% of the actual hourly rate received from all regular sources,
Respondent also points to the fact that the incentive bonuses are often not determined or paid until weeks or even months after the semi-monthly pay-days, due to the nature of the “priced” jobs. But
The judgment of the court below is reversed and that of the District Court is affirmed.
Reversed.
MR. JUSTICE FRANKFURTER, concurring.
The Fair Labor Standards Act,
But a properly apportioned overtime function for piece work should be clearly indicated as such in the employment contract. No doubt a law which, while covering piece rates, speaks in terms of hourly rates presents difficulties both fоr those charged with the law‘s enforcement and for those under duty to obey it. But if a wage agreement is to escape the obvious arithmetic way of calculating hourly rates based on piece-work rates, by dividing
MR. CHIEF JUSTICE STONE, dissenting.
I think the judgment in both these cases should be affirmed as to all piece work employees and in No. 956 the judgment should be reversed only as to employees working exclusively on the hourly wage basis.
The respondent in each of these cases has entered into a wage contract with its employees, which places in their pay envelopes a weekly wаge in excess of the minimum hourly wage rate which the Fair Labor Standards Act prescribes for the work week of forty hours and the additional overtime hours which they work in each week. There is no contention that the contracts were not entered into fairly and in a good faith effort to satisfy all the requirements of the law and to provide the employees with a wage higher than the prevailing rate of pay for like hours of work, with time and a half for overtime. The contract involved in No. 956 was the result of collective bargaining between the respondent employer and the C. I. O. Union of its employees. Both employers and employees desire to continue the contracts, the employers because the employees are satisfied and labor disputes will consequently be avoided, the employees because they receive a larger wage than if they worked at prevailing hourly rates of pay with time and a half for overtime as the statute prescribes.
Under each contract the employees receive for the first forty hours of thе work week a guaranteed minimum
The Government concedes that the statute does not require respondents to put their piece workers on hourly wage rates and that they may continue to pay piece work rates and comply with
The method of translation urged by the Government and adopted by the Court is to ascertain the average hourly rate of pay by dividing the total weekly piece work wage by the number of hours worked. The hourly rate thus obtained, multiplied by the total number of hours worked per week, plus one-half of the hourly rate multiplied by the number of work hours in excess of forty will, it is said, give the weekly wage which the Fair Labor Standards Act requires respondеnts to pay to their piece work employees. The adoption of this method in the present cases requires the payment of an additional amount as overtime compensation which, according to the Court‘s theory, is not compensated by the weekly piece work wage, however high it may be.
To ascertain whether the piece work rate can be lawful compensation for time and overtime for which it is paid, the Court, like the Government, starts with the assumption that it is unlawful, not because it is inadequate in amount but because the bonus was either not intended to be or cannot be taken to be an appropriate increase in the guaranteed overtime compensation, as well as an increase in the guaranteed, regular hourly rate of pay. By assuming that a wage, ample to satisfy minimum demands of the statute for time and overtime, is nevertheless intended to violate the statute by adding all of the bonus to the average hourly wage alone, the conclusion is reached that no increase in overtime compensation has been рaid from the bonus. The wage must therefore be correspondingly increased in order to give added compensation for overtime.
The purpose of the Fair Labor Standards Act was to insure to every worker to whom it applies a minimum hourly wage and a fifty percent higher wage for his overtime hours. It was not to force increases in wages paid for time and overtime which are already above the statutory minimum. One may search the statute and its legislative history in vain for any hint that employers who, like respondents, are paying in excess of the statutory minimum wage for time and overtime, are compelled to increase the wage merely because they have failed to label the pay envelope as containing the wage for both time and overtime.
Thе fallacy of the position now taken becomes apparent at once upon comparison of the following examples, in each of which the employee works fifty hours a week, ten of which being overtime must under the statute be compensated at an hourly wage rate of one and a half times that paid for the first forty hours.
Example 1: The employee works upon an hourly basis at the rate of $1.00 per hour. His wage, as the statute
Example 2: The employment contract, as in the present cases, provides that the employer guarantee the payment of a fixed minimum hourly rate of pay equal to or greater than the statutory minimum plus one and a half times that rate for overtime, plus such additional amount as the employee may earn on a piece work rate. If the guaranteed hourly rate were $1.00 an hour, and the employee‘s earnings at the piece work rate were $66.00, his wage would be the weekly guaranteed minimum of $55.00 plus the $11.00 piece work bonus at the piece work rate, or $66.00 in all. His weekly wage on the hourly basis would be calculated as follows:
| Minimum $1.00 per hour for forty hours | $40.00 |
| Bonus addition 20¢ per hour for forty hours | 8.00 |
| Guaranteed minimum overtime $1.50, ten hours | 15.00 |
| Bonus addition for overtime 30¢ an hour for ten hours | 3.00 |
| Total | $66.001 |
It will be noted from Example 2 that the weekly piece work wage is sufficient in amount when “translated or reduced by computation” to pay an hourly rate of $1.20 an hour for the first forty hours of work and $1.80 an hour for the remaining ten hours of overtime. The statute, see
In Example 2, the guaranteed rate of $1.00 per hour аnd $1.50 per hour for overtime would satisfy every statu-
No basis is suggested for saying that the employer in satisfying the overtime requirements of the statute must distribute a lump sum weekly piece work wage between the wage payable for the first forty hours and that paid for overtime in such proportions as to render the wage contract illegal rather than in proportions which express the required statutory time and overtime wage rеlationship of one to one and one-half. There is nothing in the statute requiring the wage contract, the pay envelope, or the pay roll to designate separately the part of the weekly wage which is for the forty hours regular time and that portion which is paid for the additional hours of overtime. It is enough that the weekly wage is that mutually agreed upon in good faith, that it is intended to pay for time and overtime, and that it is sufficient in amount to pay for the first forty hours at a rate above the minimum wage prescribed by the statute and to pay for the overtime at one and one-half times that rate.
When, as here, the wage contract guarantees an hourly wage with one and a half times that rate for overtime, it is obviously just and reasonable and in conformity to the statute to divide the piece work bonus between the regular hours of work and the overtime hours in the same pro-
All this is in flat contradiction to Walling v. Belo Corporation, 316 U. S. 624, in which we held that nothing in the Fair Labor Standards Act bars an employer from contracting to pay his employees minimum hourly rates for time plus one and a half times those rates for overtime in excess of thе minimum statutory rates, with a lump sum weekly guaranty which in some weeks exceeds the wage at the stipulated hourly rate. There we held that the guaranteed weekly wage was compensation for overtime as well as for regular time. We decided that the contract contemplated that the excess of the guaranteed weekly wage over the stipulated minimum at the hourly rate was to be so distributed as to recognize the wage differential for overtime, in such a way as to satisfy the statutory requirements, even though the wage contract did not explicitly so declare. 316 U. S. at 632. That case is controlling here. In the present case the “regular rate,” within the meaning of
Neither Overnight Motor Co. v. Missel, 316 U. S. 572, nor Walling v. Helmerich & Payne, 323 U. S. 37, is applicable here. In the Missel case “there was no contractual limit upon the hours” which the employer could require the employee to work for the agreed weekly wage, and “no provision for additional pay in the event the hours worked required minimum compensation greater than the fixed wage,” 316 U. S. at 581. Hence the court was unable to say that the fixed weekly wage was intended by the parties to cover both base pay and fifty percent additional for the hours actually worked over the statutory maximum. In the Helmerich case, supra, no attempt was made by the employer to apply the asserted regular hourly rate to the first forty hours of the work week, the actual wage paid being greater. In consequence the overtime wage was less than one and one-half times the hourly wage in fact paid during the first forty hours of the work week. This was an obvious failure to comply with the overtime pay requirements of the statute.
Even though Congress could have compelled an increase in wages above the statutory minimum for time and overtime in the case of all employers who pay wages on the piece work basis, Congress has not done so by the Fair Labor Standards Act or adopted any policy penalizing employers who are so misguided as to add a bonus to a guaranteed lawful minimum hourly wage for time and overtime. It is not our function to prescribe wage standards or policies which Congress has not adopted.
MR. JUSTICE ROBERTS joins in this opinion.
Notes
40a+(1 1/2a x 10)=$66.00
55a= 66.00
a=$1.20, the hourly rate for forty hours.
1 1/2a=$1.80, the hourly rate for overtime hours.