Townsend v. Mercy Hospital of Pittsburgh

OPINION OF THE COURT SLOVITER, Circuit Judge. The plaintiff/appellant, Irene Townsend, brought suit against The Mercy Hospital of Pittsburgh (Mercy) on her own behalf and on behalf of others similarly situated to recover unpaid overtime compensation pursuant to the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. § 216(b) (1982). Townsend alleged that Mercy had violated the basic overtime provision of the Act, 29 U.S.C. § 207(a)(1), by failing to pay its operating room technicians and nurses overtime at a rate one and one-half times their regular hourly wage. After the completion of discovery, Townsend filed a motion for partial summary judgment on the issue of liability, and Mercy filed a cross motion for summary judgment. The district court, adopting the Magistrate’s recommendation, concluded that Mercy had not violated the FLSA. It therefore granted Mercy’s motion for summary judgment and denied Townsend’s motion for partial summary judgment. 689 F.Supp. 503. Townsend appeals. Our review of a grant of summary judgment is plenary. Factual Background Townsend states that the “single, narrow issue” on this appeal poses a question of first impression involving what constitutes a “bona fide rate” under the statutory exception to the overtime provisions of the Fair Labor Standards Act. Appellants’ Brief at 10. In order to address this legal issue, it is necessary to review the terms and conditions of Townsend’s employment at Mercy. Surgery at Mercy is normally scheduled between 7 a.m. and 5:30 p.m. Monday through Friday, and the operating rooms are covered during that period by two reg [1011] ular weekday shifts. In addition, the hospital set up overtime shifts known as “on-premises-on-call” shifts to provide guaranteed staffing for off-hours emergency surgery. During the regular shifts, the operating room personnel perform tasks such as preparing and maintaining operating rooms and assisting in medical procedures, for which they are compensated at their regular rate. On the other hand, when they are assigned to the on-premises-on-call shifts, they are required to stay on hospital premises, but are not on active duty until called. The on-premises-on-call shifts are thus divided between waiting periods and active periods which vary according to the need for off-hours surgical procedures. Townsend was hired with the understanding that her work week would consist of five regular eight hour shifts and one overtime shift. During her active periods on her overtime shift, Townsend performed the same tasks for which she was responsible during her regular shifts and was paid one and one-half times her regular shift rate for all work performed. During waiting periods on that shift, Townsend had no assigned duties and was free to eat, sleep, smoke, read, watch television or otherwise occupy herself, provided she remained on premises in readiness for active duty. She was paid one and one-half times the federal minimum wage for these waiting periods.1 The basis for this lawsuit is Townsend’s contention that utilization of the federal minimum wage rate as the base rate for overtime waiting periods violates the overtime pay provisions of the FLSA. The Legal Issue The parties do not raise any factual issues on this appeal. Section 7(a)(1) of the FLSA requires that an employee who works more than forty hours a week shall receive compensation for the additional hours “at a rate not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1) (1982). Patently, the payment to appellants for the waiting periods during their on-premises-on-call shift was at a rate less than one and one-half times their regular rate. Section 7(g)(2) of the FLSA, however, provides an exception to the requirements of section 7(a)(1) where the employee performs two or more different kinds of work and has agreed with the employer that different rates will apply to the different kinds of work. Under that section: No employer shall be deemed to have violated subsection (a) of this section by employing any employee for a workweek in excess of the maximum workweek applicable to such employee under such subsection, if pursuant to an agreement or understanding arrived at between the employer and the employee before performance of the work, the amount paid to the employee for the number of hours worked by him in such workweek in excess of the maximum workweek applicable to such employee under such subsection— (2) in the case of an employee performing two or more kinds of work for which different hourly or piece rates have been established, is computed at rates not less than one and one-half times such bona fide rates applicable to the same work when performed during nonovertime hours. 29 U.S.C. § 207(g)(2) (1982). Townsend has conceded that the requisite agreement exists between Mercy and the operating room employees. Each employee was notified of and implicitly agreed to this arrangement as part of the terms and conditions of employment. Further, Townsend concedes “that working and waiting time, from a strictly academic perspective, constitute two different kinds of work.” Appellants’ Brief at 11. She argues, however, that because the minimum wage paid for waiting time was only applied during the overtime shift, it was not a “bona fide rate applicable to the same work [1012] when performed during nonovertime hours” within the statutory exception of section 7(g)(2). The essence of Townsend’s argument is that because there was some waiting time which occurred routinely during regular shifts for which the hospital personnel were compensated at their regular rate, Mercy cannot, consistent with the statute, establish the minimum wage rate as the base rate for waiting time during the on-premises-on-call shift. In the report accepted by the district court, the magistrate concluded that the duties performed during the “non-productive” periods on the on-call shift are substantially different from the duties performed by the operating room personnel during the regular shifts. The record shows that appellants produced no evidence to create a genuine issue of material fact on this point. There was unrebutted testimony that during the regular shift the employees “are assigned duties and they are usually kept busy the forty hours” and that it’s “a rare occurrence” for personnel to be drinking coffee and chatting during regular shifts. App. at 73. There was also testimony that “[t]here is always something to do in the OR” and that any time to chat or drink coffee is minimal. App. at 106. Even appellants’ brief concedes that unoccupied time is “pronouncedly greater” and “undoubtedly higher” during the on-premises-on-call shifts. Appellants’ Brief at 6, 12. The fact that appellants were not free to sleep or watch television during their regular shifts underscores the qualitative difference between the idle time, which is inherent in any job, and the separately compensable waiting time which occurred during the on-call shifts. It is of no consequence that some idle time occurred during regular shift hours since that time was de minimus and was simply a function of the reality that nobody works every minute of every day. We conclude that the rare opportunity for an operating nurse or technician to have a cup of coffee during the day does not render that brief period a “kind of work” that is equivalent to the waiting time during the on-premises-on-call shift within the meaning of section 7(g)(2) of the FLSA. We turn then to the legal issue whether a rate that applies solely to a type of work performed only during overtime hours can be a “bona fide” rate for purposes of the FLSA. There is no appellate decision expressly on point. A comparable situation arose in Hodgson v. Penn Packing Co., 335 F.Supp. 1015, 1022-23 (E.D.Pa.1971), where a bookkeeper, some butchers, and some maintenance men performed cleanup and gardening chores at their employer’s plant on weekends for which they were paid at a base rate less than their regular weekly rate. The court concluded that this rate could be a “bona fide rate” within the terms of section 7(g)(2) even though it was not applicable to any work done during nonovertime hours. The court reasoned that this arrangement did not violate the spirit of the statute’s requirement “that an employer cannot pay one rate during straight time hours and a lower rate for the same work during overtime hours.” Id. at 1023. This reading of the statute has been adopted by the Wage-Hour Administrator in charge of applying the FLSA on a daily basis. In an opinion letter addressing a situation involving on-call compensation for a laboratory technician in a hospital, the Wage-Hour Administrator stated that: It is our opinion that the standby or on-call time may be compensated at any rate which is not less than the applicable minimum wage, but the actual productive laboratory work must be paid for at the same rate applicable to the normal day shift. Opinion Letter No. 1125 (WH-78), [2 Wages-Hours] Lab.L.Rep. (CCH) 1130, 691 (Sept. 15, 1970). In this case, Mercy has done precisely that, using the regular daytime rate as the base for the productive time during the on-call shifts. Although we are not bound by opinions of the Wage-Hour Administrator, the Administrator’s expertise acquired through day-to-day application of the statute makes us hesitant to contravene such opinions un [1013] less the statute plainly requires otherwise. Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 164, 89 L.Ed. 124 (1944). Here, the statutory language is clearly susceptible to the interpretation given it in Opinion Letter 1125 and in Hodgson v. Penn Packing. We agree that section 7(g)(2) permits an employer and an employee to agree to a “bona fide rate” for work which is performed only during overtime hours. Finally, Townsend argues that an administrative regulation promulgated by the Wage and Hour Division of the Department of Labor interpreting section 7(g)(2) establishes that a rate which is only applicable to work performed during overtime hours cannot be bona fide. The regulation provides that, “[a]n hourly rate will be regarded as bona fide for a particular kind of work [if] it is equal to or greater than the applicable minimum rate therefor and if it is the rate actually paid for such work when performed during nonovertime hours.” 29 C.F.R. § 778.419(b) (1987). This regulation cannot bear the weight which Townsend places on it. The regulation provides a safe harbor for rates on work which is performed during both overtime and nonovertime hours. The regulation does not, however, establish its obverse: that a rate cannot be bona fide unless it is established for work performed during nonovertime hours. In a situation such as this, where the rate in question applies only to work performed during overtime hours, the regulation is silent. Significantly, this regulation was in effect when the Wage-Hour Administrator ruled that overtime payments under an arrangement similar to that agreed to here did not violate the statute. Conclusion For the reasons set forth above, we will affirm the district court’s judgment granting Mercy’s motion for summary judgment. Footnotes [1] All appellants earned a regular shift rate of between approximately $8.00 and $12.00 per hour. Appellants’ Brief at 5 & n. 2. At all points relevant to this litigation, the federal minimum wage was $3.35 per hour.