STATEMENT OF THE ISSUE
Whether the Secretary supervised the
payment of overtime compensation to Niland within the meaning of section 16(c)
of the FLSA, 29 U.S.C. 216(c), such that Niland’s subsequent acceptance of the
check as payment in full, after being explicitly notified of the consequences
of such acceptance, waived his right to
bring a private action under section 16(b) of the Act, 29 U.S.C. 216(b).
STATEMENT OF THE CASE
A. Course Of Proceedings And Statement Of
The Facts
1.
Allied Waste Industries, Inc. acquired Delta Recycling Corporation
("Delta") on July 1, 2001, and contacted Wage-Hour after learning
that Delta may have failed to pay overtime to individuals who were employed as
tractor-trailer, front load, and roll-off drivers during the period of February
8, 2000 to February 8, 2002. (R43-2,
R53-4, R54-3-4). Following
negotiations, Wage-Hour entered into a Compliance Partnership Agreement with
Delta on March 1, 2002. Id. Under the agreement, Delta agreed to conduct
a self-audit and to pay
back wages to employees who had not been properly compensated; Wage-Hour agreed
to supervise Delta's payment of back wages to its employees. Id.
An outside accounting firm, mutually agreeable to Delta and Wage-Hour,
conducted the audit and Wage-Hour reviewed the computations. (R45-22, R53-4,
R54-5).
Under the compliance agreement with
Wage-Hour, Delta also agreed to use the Department of Labor's Form WH-58
("Receipt For Payment Of Back Wages") waiver language in its own
receipt forms. (R43-2, R53-5, R54-4-6). Wage-Hour also reviewed and approved the
language used by Delta in a letter sent to its employees with the payment. (R45, R53-5). Additionally, Wage-Hour approved the language printed on the back
of the checks issued by Delta to its employees. Id. On May 23,
2002, Delta sent a letter with a receipt form and a check for back wages to
approximately 100 employees, including Niland.
(R15, R43, R53-5). The letter,
the receipt, and the back of the check all contained language notifying Niland
that acceptance of the check constituted a waiver of his right to file a
complaint against Delta under section 16(b) of the FLSA. Id.
Niland did not cash the check, but signed
the receipt on September 27, 2002 and returned it to Delta. (R53-5, R43-2). Subsequently, Niland asked Delta to reissue the check (which had
expired). Id. Delta reissued the check and on October 25,
2002, Niland endorsed and cashed the check, in the amount of $526.12. Id.
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2. In April of 2003,
Wage-Hour conducted a full investigation of Delta to determine whether
compliance had been achieved as a result of the self-audit. (R53-6).
The investigation included a review of payroll records and employee
interviews. No violations were found as
a result of the investigation. Id.
3.
On April 3, 2003, Niland filed a complaint against Delta to recover
unpaid overtime compensation and liquidated damages under section 16(b) of the
FLSA, 29 U.S.C. 216(b). (R1). Delta filed a Motion to Dismiss, arguing
that Niland had waived his right to file an action under section 16(b) when he
endorsed and cashed a check, and signed a receipt, both of which contained
language waiving his right to sue Delta for unpaid overtime compensation. (R15).
On July 7, 2003, the district court entered summary judgment for Niland,
ruling that Niland could proceed with his section 16(b) lawsuit against the
employer. (R43). The court concluded that the Secretary had
failed to supervise Delta's self-audit and the payment of back wages to a
degree "sufficient" under section 16(c) of the FLSA to permit a
waiver of Niland's right to bring an action under section 16(b) of the
Act. (R43).
On July 21, 2003, Delta filed a Motion
for Reconsideration; Niland filed a Response asking the court to deny the
motion. (R45, R50). On August 5, 2003, the Secretary of Labor
filed an amicus curiae brief in support of Delta, arguing that
Wage-Hour had supervised the payment of back wages within the meaning of section
16(c) of the FLSA. (R53).
On August 7, 2003, the district court
reconsidered its prior decision and granted Delta's motion for summary
judgment. (R54). In an unpublished order, the court vacated
its earlier ruling and held that Niland's section 16(b) back wage claim was
barred by section 16(c) of the FLSA. Id. Final judgment was entered on August 7,
2003. (R55). On September 3, 2003, Niland filed a timely notice of appeal to
this Court. (R59).
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C. District Court Decision
1.
In its decision on reconsideration, the district court observed that
neither this Court, nor any other appellate court, has addressed the level of
supervision required by section 16(c) of the FLSA. With regard to the "sufficiency" of the Department's
supervision, the court stated:
The question is not what type of supervision took place
but whether it occurred at all. The
position taken by the Department of Labor as well as the affidavit of Mr.
[Alfred H.] Perry [Wage-Hour Regional Director] both demonstrate that the
Department engaged in some level of supervision and, more importantly, that it
determined this supervision to be sufficient to satisfy the requirement of §
216(c). The Court does not find it
proper, as Plaintiff suggests, to now delve into that determination and
question whether it agrees with the Department. Once the Department has concluded that it not only agreed to
supervise the payment of back wages but also that it did in fact conduct such
supervision pursuant to § 216(c), the question of whether the waiver was valid
and bars further litigation by Plaintiff is answered conclusively.
(R54-7 n.4).
Accordingly, the district court concluded
that the Department of Labor "did supervise the determination and payment
of back wages" owed to Niland and other employees, and that Niland
accepted such back wages. (R54-5). The court specifically found that in the
instant case, Alfred Perry, the Regional Director of Wage-Hour,
"negotiated and entered into the Compliance Partnership Agreement"
with Delta and "[m]ost significantly, . . . engaged in the negotiation,
review, and approval of formulas and assumptions to be used by an independent
accounting firm to calculate back wages under [his] supervision." (R54-4) (internal quotation marks
omitted). The district court determined
that Perry also "spent time in negotiation of what data would be
considered in those calculations."
Id. (internal quotation marks omitted). In addition, the court determined that "Perry reviewed the
correspondence from, and reviewed and approved the report of the accounting
firm." (R54-5) (internal quotation
marks omitted). The district court
stated, "Not only did the Department enter into an agreement with
Defendant to supervise the payment of wages, but the Department also negotiated
the manner in which the calculation of back wages would be performed and who
would perform the calculation." Id.
2.
Additionally, the district court concluded that the Department
"negotiated the waiver language that would be included with payments to
employees," and authorized Delta's use of waiver language on the back of
the employees' checks. (R54-4-5,
6). The court concluded that
"given the permissibility of alternate receipt forms [see 29 C.F.R.
516.2(b)(2)], the legal
effect of the use of waiver language on the back of [Niland's] check was no
different than if a [Wage-Hour] Form WH-58 had been sent with the
payment." (R54-6). Therefore, the district court concluded that
"[t]here is no question that the waiver language used by Defendant was
authorized by the Department." Id.
3.
Thus, the district court determined that the Department fulfilled its
responsibility under section 16(c) "to protect employees from independent
and unsupervised negotiation and settlement with employers" by supervising
the payment of unpaid overtime compensation owed to Delta's employees. (R54-5) (citing Lynn's Food Stores v.
United States, 679 F.2d 1350, 1352 (11th Cir. 1982)). In this regard, the district court observed
that the Department's role is to supervise the payment of back wages
under section 16(c), not to perform the calculations and make the payments
itself. "To rule that the
Department's actions were insufficient would improperly alter that requirement." (R54-5-6).
SUMMARY OF THE ARGUMENT
This Court should affirm the decision of
the district court based on the plain language of section 16(c), 29 U.S.C.
216(c). The statute authorizes the
Secretary "to supervise the payment of unpaid minimum wages or the unpaid
overtime compensation" that an employer owes to its employees and provides
that "the agreement of any employee to accept such payment shall, upon
payment in full, constitute a waiver by such employee" of the right to
bring a private action under section 16(b), 29 U.S.C. 216(b).
In this case, the Secretary, through the
Wage-Hour Administrator, supervised Delta's self-audit and payment of unpaid
overtime compensation -- by negotiating and entering into the Compliance
Partnership Agreement with Delta, and by negotiating, reviewing, and approving
the methodology of the independent accounting firm (which was itself approved
by Wage-Hour) in calculating the back wages.
The district court correctly concluded that the issue is not the
"sufficiency" of such supervision but, rather, whether such
supervision in fact occurred. Niland
agreed to and did accept payment in full when he signed a receipt form and
cashed a check after having been made aware (by waiver language approved by Wage-Hour)
of the consequences of doing so.
The Secretary's position is also
supported by the legislative history of section 16(c), which explains
Congress's purpose in amending the statute.
As noted in the Senate Report, the waiver provision in section 16(c) was
"essential to the equitable enforcement of the provisions of the
[A]ct," S. Rep. 81-640, reprinted in 1949 U.S.C.C.A.N. 2241, 2249,
in that it allows employers to make voluntary restitution (which had been on
the decline) without then being subject to a private action for back wages and
liquidated damages. In other words,
Congress intended to encourage voluntary restitution by employers by giving the
Secretary the authority to settle cases with finality.
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The leading case in this Circuit holds that
the necessary elements for a waiver in an FLSA case are the Secretary's
supervision of the amount due, the employee's agreement to accept it, and
payment in full. See Sneed v.
Sneed's Shipbuilding, Inc., 545 F.2d 537 (5th Cir. 1977). Each of the elements of a valid waiver is
present in this case. Therefore, this
Court should affirm the district court's conclusion that Niland has waived his
section 16(b) right to bring a private action.
THE DISTRICT COURT CORRECTLY HELD THAT THE SECRETARY
SUPERVISED THE PAYMENT OF UNPAID OVERTIME COMPENSATION WITHIN THE MEANING OF
SECTION 16(c) OF THE FLSA, AND THAT NILAND'S AGREEMENT TO ACCEPT SUCH PAYMENT
THUS WAIVED HIS RIGHT TO BRING A PRIVATE ACTION UNDER SECTION 16(b) OF THE ACT.
A. Statutory Language And Legislative
History
1. The FLSA provides, in
relevant part:
The
Secretary is authorized to supervise the payment of the unpaid minimum wages or
the unpaid overtime compensation owing to any employee or employees under
section 206 or section 207 of this title, and the agreement of any employee to
accept such payment shall upon payment in full constitute a waiver by such
employee of any right he may have under subsection (b) of this section to such
unpaid minimum wages or unpaid overtime compensation and an additional equal
amount as liquidated damages.
29 U.S.C.
216(c). The plain language of the statute empowers
the Secretary to supervise the payment of unpaid wages as part of the
enforcement authority committed to her discretion by Congress. Under section 16(c), all that is required
for a waiver of an employee's right to bring a private action under section
16(b) is the Secretary's supervision of the payment, the employee's agreement
to accept the payment, and payment in full.
2.
The legislative history is instructive.
In 1945, the Supreme Court held that it was against public policy for an
employee to waive his or her right to liquidated damages, as well as to unpaid
minimum wage and overtime compensation, under the FLSA. See Brooklyn Savings Bank v.
O’Neil, 324 U.S. 697 (1945) (a signed release does not waive an employee's
right to liquidated damages). In 1949,
Congress amended the FLSA to provide the Secretary with enhanced authority to
obtain back wages for employees by adding section 16(c), which states that an
employee's agreement to accept the payment of unpaid minimum wage and overtime
compensation supervised by the Secretary, upon payment in full, waives the
employee's right to bring a private action under section 16(b).
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Prior to 1949, Wage-Hour had followed a
policy "in cases which it did not believe justified litigation, of
requesting employers to make voluntary restitution to employees affected [by]
unpaid minimum wages or overtime compensation due under the [A]ct." S. Rep. 81-640, reprinted in 1949
U.S.C.C.A.N. 2241, 2248. Instances of
voluntary restitution by employers, however, had declined during the three
years preceding the 1949 FLSA amendments.
In explaining the reasons for the decline, the Senate Committee on Labor
and Public Welfare recognized that it was difficult, if not impossible, for the
Department to collect back wages short of litigation, unless employers knew
that the payment to an employee under a settlement with the Department of Labor
would satisfy its liability. As stated
in the Committee report:
Undoubtedly one
of the most important of these [reasons for the decline of voluntary
restitution] is the fact that an employer who pays back wages which he withheld
in violation of the [A]ct has no assurance that he will not be sued for an
equivalent amount plus attorney's fees under the provisions of section 16(b) of
the [A]ct. One of the principal effects
of the committee proposal will be to assure employers who pay back wages in
full under the supervision of the Wage and Hour Division that they need not
worry about the possibility of suits for liquidated damages and attorney's
fees.
S. Rep.
81-640, reprinted in 1949 U.S.C.C.A.N. 2241, 2249. The Senate Committee agreed with the Report
of the House Committee on Education and Labor that the amendment "is
essential to the equitable enforcement of the provisions of the [A]ct and that
it should be welcomed by fair-minded employers who wish to make restitution for
perhaps unwitting violations of the [A]ct by encouraging them to do so in such
a manner to insure that their liability will be limited to the amount of wages
due." Id.
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3. Thus, the purpose of the amendment was
to provide the Secretary with the necessary tools to resolve cases, short of
litigation, for the recovery of back wages.
The essential tool the legislation provided was the leverage to assure
employers that the payment of back wages, when supervised by the Secretary and
agreed to by the employee, would settle the matter.
B. The Secretary Supervised The Payment Of
Unpaid Overtime Compensation
To Niland Within The Meaning Of Section 16(c), Thereby Effectuating A
Waiver Of Niland's Right To Bring A Section 16(b) Private Action Upon
His Acceptance And Receipt
Of The
Back Wages.
1.
In the more than 50 years since the 1949 amendment, the courts have
given force to the statutory language and the legislative history by confining
their analysis to two questions: (1) did the Secretary utilize her authority to
supervise the payment of unpaid compensation; and (2) did the employee agree to
accept the payment. The courts will not
approve a settlement in an FLSA case unless it is supervised by the Department
of Labor under section 16(c) or sanctioned by judicial process as part of a
settlement agreement in litigation. See
Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1352-53 (11th
Cir. 1982). In Lynn's Food Stores,
this Court disapproved a private settlement of an FLSA claim where the
Secretary of Labor did not negotiate the settlement or supervise back wage
payments, and where the agreement was not entered as a stipulated judgment in a
suit brought against Lynn's by the employees.
Id. at 1353.
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The Fifth Circuit has concluded that the
Secretary's determination of the amount due, the employee's agreement to accept
it, and payment in full are the necessary elements for the waiver of a section
16(b) claim under section 16(c) of the FLSA.
See Sneed v. Sneed's Shipbuilding, Inc., 545 F.2d 537 (5th
Cir. 1977). In Sneed, the employee signed a
waiver form provided to him by a Wage-Hour compliance specialist, and took a
check for the payment of back wages; he later returned the check to his
employer and brought a private action after consulting with an attorney. Id. at 538. The district court had ruled that the employee’s waiver was void
for lack of consideration. In reversing
the district court’s decision, the Fifth Circuit ruled that the appropriate
question was not whether there was consideration, but whether there was a
waiver within the meaning of section 16(c) of the FLSA. "For there to be a valid waiver section
216(c) simply requires (a) that the employee agree to accept the payment which
the Secretary determines to be due and (b) that there be 'payment in
full.'" Id. at 539. The Fifth Circuit held that the employee
waived his right to sue when he signed the waiver and took the employer’s
check. Id. at 539-40.
2. All of the elements for a
valid waiver are present in this case.
The Department of Labor, through the Wage-Hour Division, supervised
Delta's self-audit and the payment of back wages as authorized by section
16(c). The district court correctly
refused to consider the "adequacy" or "sufficiency" of the
Department's supervision, stating that "[t]he question is not what type of
supervision took place but whether it occurred at all. . . . Once the Department has concluded that it
not only agreed to supervise the payment of back wages but also that it did in
fact conduct such supervision pursuant to § 216(c), the question of whether the
waiver was valid and bars further litigation by [Niland] is answered
conclusively." (R54-7 n.4). As the Seventh Circuit stated in Walton
v. United Consumers Club, Inc., 786 F.3d 303, 306-07 (7th Cir. 1986):
The
Department's decision [as to the appropriateness of the settlement] is the kind
of supervision that § 16(c) contemplates.
The idea is that federal supervision replaces private bargaining, and
that the right to receive full statutory wages and overtime is not to be
extinguished without the assent of both employee and Secretary. If the Secretary withholds assent, he
declines to send out the form soliciting agreement. Unless we were to hold that a compromise between United and its
employees is enough to bar other litigation, we must let the Secretary decide
when employees are entitled to sign an 'agreement' under § 16(c).
Thus,
courts are reluctant to interfere with the Secretary's authority to supervise
the payment of unpaid compensation under section 16(c) of the FLSA.
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That the Secretary exercised supervision over the self-audit and the
payment of overtime compensation in this case in accordance with section 16(c)
is clear. The Wage-Hour Regional
Director negotiated and entered into the Compliance Partnership agreement with
Delta. The Regional Director
negotiated, reviewed, and approved the formulas, assumptions, and data to be
utilized by the independent accounting firm in calculating back wages; that
accounting firm was approved by the Regional Director, as was its final report. As the district court concluded, "Not
only did the Department enter into an agreement with Defendant to supervise the
payment of wages, but the Department also negotiated the manner in which the
calculation of back wages would be performed and who would perform that
calculation." (R54-5). The Wage-Hour Regional Director also
negotiated the waiver language that was used when payment was made to the
employees. Thus, "the conclusion
is inescapable that the Department of Labor did supervise the determination and
payment of back wages owed employees such as [Niland]." Id.
Therefore, the district court correctly concluded that the Secretary
supervised the payment of overtime compensation to the employees, including
Niland, in accordance with section 16(c) of the FLSA.
3.
Under the Department's supervision pursuant to section 16(c), Niland
agreed to accept the payment of unpaid overtime compensation, waiving his right
to file a private action. Niland's
waiver was effected when he signed a receipt form waiving his right to file an
FLSA claim upon payment, and when he explicitly agreed to accept the employer's
check by cashing it. The receipt form
was based on Wage-Hour's Form WH-58 -- "Receipt For Payment Of Back
Wages" -- and, as noted above, was reviewed and approved by the Wage-Hour
Division. The waiver language was similar to that
utilized by the employer in Sneed, which the Fifth Circuit found
adequate. The back of the check
contained waiver language that was approved by the Department indicating that
the check was for "payment in full."
Finally, the letter accompanying the check contained waiver language
approved by the Wage and Hour Division.
Like the employee in Sneed, Niland has thus waived his right to
sue under section 16(b) of the FLSA.
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4.
Niland contends that he did not receive all of the overtime compensation
that he was due. Appellant's brief at
pp. 10-11. However, as the Seventh
Circuit emphasized in Walton, 786 F.2d at 305, the FLSA "is
concerned with settlements, and a settlement is a compromise -- the employee
surrenders his opportunity to get 100 cents on the dollar, in exchange for a
smaller payment with certainty." See
also Rose v. Consolidated Electrical Distributors, Inc., 816 F.
Supp. 489, 490 (N.D. Ill. 1993) (employees have choice of taking the money
immediately or pursuing additional damages).
As the Seventh Circuit recognized explicitly in Walton,
"[s]ection 16(c) requires 'payment in full' of the agreed amount, not of
the underlying claim." 786 F.2d at
305. See also Bullington
v. Fayette County School District, 246 Ga. App. 463, 465, 540 S.E. 2d 664,
666 (Ga. Ct. of App. 2000) ("The crucial element for waiver is a
demonstration that the settlement [in a case arising under the FLSA], although
not payment in full, was supervised by and approved by the Department of
Labor."). If Niland did not want
to accept the employer's check, he did not have to do so. Similarly, Niland was not required to sign a
waiver of his right to bring a private action against Delta. Having done so, however, Niland cannot now
avail himself of section 16(b) to sue his employer under the FLSA.
5.
A ruling permitting an employee like Niland to proceed with a section
16(b) action would be contrary to the plain language of, the congressional
purpose behind, and the case law under section 16(c). It would have a chilling effect on the Secretary's ability to
settle cases short of litigation. As
the Fifth Circuit has recognized, "The addition of the waiver provision
[of section 16(c)] was intended to . . . create an incentive for employers
voluntarily to accept settlements supervised by the Wage and Hour
Division." Sneed, 545 F.2d
at 539. Moreover, the employee is not
left unprotected because the employee waiver provides an inherent check on the
Secretary's authority to supervise the payment of unpaid compensation. Thus, an employee does not waive his right
under section 16(c) to bring a section 16(b) action unless he or she agrees to
do so after being fully informed of the consequences. Here, Niland was provided adequate notice,
signed a waiver of his rights, and received the supervised payment in full upon
his cashing of the check.
6.
In sum, the district court correctly determined that the necessary
elements for the waiver of a claim -- the Secretary's supervision of the
payment, the employee's agreement to accept such payment, and the actual
receipt of overtime compensation -- are present here. The Court should, therefore, affirm the district court's decision
granting summary judgment to Delta.
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CONCLUSION
For the foregoing reasons, the Secretary
respectfully requests that the decision of the district court be affirmed.
|
Respectfully submitted, |
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HOWARD M. RADZELY |
|
Solicitor of Labor |
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STEVEN J. MANDEL |
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Associate Solicitor |
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PAUL L. FRIEDEN |
|
Counsel
for Appellate Litigation |
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______________________________ |
|
MARY J. RIESER |
|
Attorney |
|
U.S. Department of Labor |
|
200 Constitution Ave., N.W. |
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Room N-2716 |
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Washington, D.C. 20210 |
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CERTIFICATE OF COMPLIANCE
Pursuant to Federal Rules of Appellate
Procedure 29(c)(5) and 32(a)(7)(C), I certify that this brief has been prepared
using the following monospaced typeface -- Microsoft Word, Courier New, 12
point. Exclusive of the table of contents,
table of authorities, certificate of interested persons, and any addenda, this
brief contains 5602 words.
________ |
___________________________ |
CERTIFICATE OF SERVICE
I hereby certify that a copy of the
foregoing Brief for the Secretary of Labor As Amicus Curiae has
been sent via regular mail on this ___ day of January 2004 to the following:
Joseph Bilotta |
Brett C. Bartlett |
Vassallo & Bilotta |
Paul C. Munger |
1630 S. Congress Ave. |
Jackson Lewis |
Suite 201 |
245 Peachtree Center Ave., NE |
Palm Springs, FL 33461 |
1900 Marquis One Tower |
|
Atlanta, GA 30303-1226 |
Aaron Jarett Reed |
|
Jackson Lewis, LLP |
|
2 S Biscayne Boulevard |
|
Suite 3500 One Biscayne Tower |
|
|
|
|
______________________________________ |
|
MARY J. RIESER |
|
Attorney |
|
|
|
U.S. Department of Labor |
|
200 Constitution Ave., N.W. |
|
Room N-2716 |
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Washington, D.C. 20210 |
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(202) 693-5555 |
|
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