(a) Under the provisions of sections 9 and 10 of the Portal Act, an
employer has a defense against liability or punishment in any action or
proceeding brought against him for failure to comply with the minimum
wage and overtime provisions of the Fair Labor Standards Act, where the
employer pleads and proves that ``the act or omission complained of was
in good faith in conformity with and in reliance on any administrative
regulation, order, ruling, approval, or interpretation'' or ``any
administrative practice or enforcement policy * * * with respect to the
class of employers to which he belonged.'' In order to provide a defense
with respect to acts or omissions occurring on or after May 14, 1947
(the effective date of the Portal Act), the regulation, order, ruling,
approval, interpretation, administrative practice or enforcement policy
relied upon and conformed with must be that of the ``Administrator of
the Wage and Hour Division of the Department of Labor,'' and a
regulation, order, ruling, approval, or interpretation of the
Administrator may be relied on only if it is in
writing.88 But where the acts or omissions complained of
occurred before May 14, 1947, the employer may show that they were in
good faith in conformity with and in reliance on ``any'' (written or
nonwritten) administrative regulation, order, ruling, or interpretation
of ``any agency of the United States,'' or any administrative practice
or enforcement policy of ``any such agency'' with respect to the class
of employers to which he belonged.89 In all cases, however,
the act or omission complained of must be both ``in conformity with''
90 and ``in reliance on'' 91 the administrative
regulation, order, ruling, approval, interpretation, practice, or
enforcement policy, as the case may be, and such conformance and
reliance and such act or omission must be ``in good faith.'' 92
The relief from liability or punishment provided by sections 9 and 10 of
the Portal Act is limited by the statute to employers who both plead and
prove all the requirements of the defence.93
---------------------------------------------------------------------------
88 Portal Act, sec. 10; Conference Report, p. 16; statements
of Senator Wiley, explaining the conference agreement to the Senate, 93
Cong. Rec. 4270; statements of Representatives Gwynne and Walter,
explaining the conference agreement to the House of Representatives, 93
Cong. Rec. 4388, 4389. See also Secs. 790.17 and 790.19.
89 Portal Act, sec. 10; Conference Report, p. 16;
statement of Senator Wiley, explaining the conference agreement to the
Senate, 93 Cong. Rec. 4270; statements of Representatives Gwynne and
Walter, 93 Cong. Rec. 4388, 4389. See also Sec. 790.19.
90 See Sec. 790.14.
91 See Sec. 790.16.
92 See Sec. 790.15.
93 Conference Report, pp. 15, 16; statements of
Representatives Gwynne and Walter, explaining the conference agreement
to the House of Representatives, 93 Cong. Rec. 4388, 4389; statements of
Senators Cooper and Donnell, 93 Cong. Rec. 4372, 4451, 4452. See also
the President's message of May 14, 1947, to the Congress on approval of
the Act (93 Cong. Rec. 5281).
The requirements of the statute as to pleading and proof emphasize
the continuing recognition by Congress of the remedial nature of the
Fair Labor Standards Act and of the need for safeguarding the protection
which Congress intended it to afford employees. See Sec. 790.2; of.
statements of Senator Wiley, 93 Cong. Rec. 4270; Senator Donnell, 93
Cong. Rec. 4452, and Representative Walter, 93 Cong. Rec. 4388, 4389.
---------------------------------------------------------------------------
(b) The distinctions mentioned in paragraph (a) of this section,
depending on whether the acts or omissions complained of occurred before
or after May 14, 1947, may be illustrated as follows: Assume that an
employer, on commencing performance of a contract with X Federal Agency
extending from January 1, 1947 to January 1, 1948, received an opinion
from the agency that employees working under the contract were not
covered by the Fair Labor Standards Act. Assume further that the
employer may be said to have relied in good faith upon this opinion and
therefore did not compensate such employees during the period of the
contract in accordance with the provisions of the Act. After completion
of the contract on January 1, 1948, the employees, who have learned that
they are probably covered by the Act, bring suit against their employer
for unpaid overtime compensation which they claim is due them. If the
court finds that the employees were performing work subject to the Act,
they can recover for the period commencing May 14, 1947, even though the
employer pleads and proves that his failure to pay overtime was in good
faith in conformity with and in reliance on the opinion of X Agency,
because for that period the defense would, under section 10 of the
Portal Act, have to be based upon written administrative regulation,
order, ruling, approval, or interpretation, or an administrative
practice or enforcement policy of the Administrator of the Wage and Hour
Division. The defense would, however, be good for the period from
January 1, 1947 to May 14, 1947, and the employer would be freed from
liability for that period under the provisions of section 9 of the
statute.
