The opinion
In the United States Court of Federal Claims
No. 05-1043C
(Filed May 7, 2014)
*********************** *
* United States Postal Service (USPS);
JORGE A. DELPIN APONTE, et al.,* Fair Labor Standards Act (FLSA), 29
* U.S.C. § 207(a)(1) (overtime
Plaintiffs, * compensation); Territorial Cost of
* Living Adjustment (TCOLA); Regular
v. * Rate; RCFC 56.
*
THE UNITED STATES, *
*
Defendant. *
*
*********************** *
Santiago F. Lampón, Lampón & Associates, San Juan, Puerto Rico, for
plaintiffs.
Paul Davis Oliver, Commercial Litigation Branch, Civil Division, United
States Department of Justice, with whom were Stuart F. Delery, Assistant Attorney
General, Jeanne E. Davidson, Director, and Todd M. Hughes, Deputy Director, all of
Washington, D.C., for defendant. David B. Ellis, United States Postal Service,
Washington, D.C., of counsel.
MEMORANDUM OPINION AND ORDER
WOLSKI, Judge.
Plaintiffs in this case are 278 current and former employees of the United
States Postal Service (USPS), residing in the Commonwealth of Puerto Rico. They
allege that the USPS did not pay them sufficient overtime compensation under the
Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201–219. Pending before the Court
are plaintiffs’ motion for partial summary judgment and defendant’s cross-motion for
summary judgment, brought under Rule 56 of the Rules of the United States Court
of Federal Claims (RCFC).
The FLSA requires that when covered employees work more than forty hours
in a workweek, they must receive overtime compensation at a rate of at least one
and one-half times their regular rate of pay. 29 U.S.C. § 207(a)(1). Plaintiffs argue
that payroll records, which the parties agree are typical and representative, show
that the USPS fails to pay adequate overtime compensation. Plaintiffs base their
argument on the absence of specific line items stating that the employee was paid for
particular hours of overtime worked at a rate of one and one-half times the regular
rate, and on plaintiffs’ calculations of what the total compensation should have been
for each week. Plaintiffs’ case, in essence, rests on the failure of the USPS to
identify specific hours worked as the ones that exceeded forty in a workweek, and to
clearly show pay attributable to those particular hours as being one and one-half
times the employee’s regular rate of pay.
Defendant contends that the formula used by the USPS not only pays the
amount of overtime compensation due under the FLSA, but also adds an additional
amount reflecting the contribution of the Territorial Cost of Living Adjustment
(TCOLA) to the regular rate calculation, gratuitously following the Ninth Circuit’s
decision in Frank v. McQuigg, 950 F.2d 590, 594 (9th Cir. 1991). Defendant argues
that this formula conforms to the FLSA as interpreted by the Department of Labor
(DOL).
The payroll records identified as typical show that the USPS has followed its
stated formula in calculating overtime compensation as one and one-half times the
regular rate plus a TCOLA add-on. This formula is the most reasonable
interpretation of the FLSA. For these reasons, and as explained below, the Court
GRANTS defendant’s cross-motion for summary judgment and DENIES plaintiffs’
motion for partial summary judgment.
I. BACKGROUND
Plaintiffs in this class action lawsuit seek to establish that the USPS has
underpaid its employees in Puerto Rico for their overtime hours worked. As is
recounted below, the matter was transferred to our Court from a federal district
court, because the amount sought exceeded the Little Tucker Act ceiling. See Delpin
Aponte v. United States, 83 Fed. Cl. 80, 86 (2008).
A. Jurisdiction
The Court’s jurisdiction over the subject matter of this case is not disputed. 1
The FLSA is a money-mandating statute, see Zumerling v. Devine, 769 F.2d 745, 748
1 Defendant moved, without opposition, to dismiss any claims in the Amended
Complaint seeking interest or retirement pay, and these claims were accordingly
dismissed as beyond our jurisdiction. Order (June 12, 2007); see also Tr. (June 12,
2007) at 104–05.
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(Fed. Cir. 1985), and claims based on it may be brought in our Court due to the
Tucker Act’s waiver of sovereign immunity, 28 U.S.C. § 1491(a)(1). See Zumerling,
769 F.2d at 748 (citing United States v. Testan, 424 U.S. 392, 398 (1976)); Abbey v.
United States, No. 13-5009, 2014 WL 1099571, at *4–7 (Fed. Cir. Mar. 21, 2014).
B. Procedural History 2
This lawsuit was originally filed in the United States District Court for the
District of Puerto Rico on May 24, 2002. Complaint, Delpin Aponte v. Potter, No. 02-
1787 (D.P.R. filed May 24, 2002). The original complaint alleged that the USPS
improperly calculated overtime pay by multiplying the base or basic rate, rather
than the regular rate, by one and one-half for each overtime hour worked. Id. ¶ 18.
The plaintiffs also alleged that the TCOLA adjustment to overtime pay that the
USPS made for employees located in Alaska and Hawaii, presumably to comply with
McQuigg, was not made for employees located in Puerto Rico. See id. ¶ 19. As is
explained in more detail below, while the matter was pending in the district court,
several motions were granted to add additional plaintiffs, and written consent forms
were filed for nearly all of them. See also Delpin Aponte, 83 Fed. Cl. at 85. The
government ultimately moved to dismiss the case for lack of jurisdiction and the
plaintiffs apparently did not dispute that their case was within our exclusive
jurisdiction under the Tucker Act. See Order, Delpin Aponte v. Potter, No. 02-1787
(June 15, 2005) at 1. Accordingly, the district court transferred the case to our court.
Id. at 2–3.
After transfer, the plaintiffs filed an initial amended complaint identical in all
material respects to what remained of the original. 3 While specific allegations
focused on the interaction of the TCOLA with overtime compensation, see Am. Comp.
¶¶ 17, 28–30, 34, the plaintiffs also more broadly alleged that their overtime hours
were not compensated at one and one-half times their regular rates due to the use of
basic rates in the calculations, see id. ¶¶ 15–16, 18, 34. After conducting discovery
concerning the formula used by the USPS to calculate overtime and other pay, the
plaintiffs concluded that the USPS was underpaying employees for overtime
throughout the postal system and moved for leave to file a second amended
2 Only the aspects of the procedural history relevant to the motions under
consideration are discussed in this section. A more detailed discussion of the prior
history is contained in an earlier opinion. See Delpin Aponte, 83 Fed. Cl. at 85-88.
3 Conjugal partners and partnerships, initially included among the parties, had
been dismissed by the district court as unnecessary, and employment discrimination
and pension claims were voluntarily dismissed. See Delpin Aponte, 83 Fed. Cl. at 85
n.10.
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complaint. See Delpin Aponte, 83 Fed. Cl. at 86–88. The motion was partly granted
and partly denied. Id. at 81, 89–93. The Court granted the plaintiffs’ request to
include more general allegations of FLSA violations, id. at 89–91, and denied their
request to broaden the potential class of plaintiffs to include USPS employees
outside of Puerto Rico, id. at 91–93. 4
In the course of ruling on the motion for leave to further amend the complaint,
the Court explained at length the difference between using a marginal approach to
overtime hours as opposed to an aggregate approach. See id. at 82–85. Under the
former, the compensation earned for each specific hour worked beyond the fortieth
would be the basis for determining whether the “one and one-half times the regular
rate” requirement of the FLSA was met. See 29 U.S.C. § 207(a)(1) (2012). One
problem with such an approach is that when premium rates are earned for reasons
other than working overtime, two employees who work the same number of hours at
the same non-overtime rates could receive different amounts of overtime
compensation, depending on when in the week the premium hours were worked ---
as an employee whose premium pay was earned after the fortieth hour would have a
smaller gap in his hourly pay to be made up between what he otherwise earned for
those hours and the time-and-a-half standard, compared to an employee whose
premium hours were at the beginning of the week. See Delpin Aponte, 83 Fed. Cl. at
82. The Supreme Court long ago recognized that “[s]uch a variation in the amount of
statutory excess compensation would not be in accord with the statutory purpose.”
Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, 477 n.34 (1948). This problem is
avoided under the aggregate approach, adopted by the government, in which all
relevant compensation is added together and divided by hours worked to determine
the regular rate of pay for each and every hour, with only the “one-half times the
regular rate” left to be added, to the extent more than forty hours were worked. See
Delpin Aponte, 83 Fed. Cl. at 82–83. The plaintiffs were informed of the existence of
precedents upholding the aggregate approach, with which they would need to deal
were they to challenge the legality of that approach. Id. at 83, 91.
The plaintiffs have moved for partial summary judgment, contending that
they are entitled to a liability determination in their favor. Pls.’ Mot. for Partial
Summ. J. (Pls.’ Mot.) at 2, 24, ECF No. 117. Plaintiffs argue that official USPS
payroll records show that they are paid less than one and one-half times the regular
rate for overtime hours worked, id. at 11–23, and base this in part on what they
4 The plaintiffs never filed a second amended complaint, perhaps because
allegations in the current complaint were already general enough to include the
failure of the USPS to pay overtime at one and one-half times an employee’s regular
rate. See Am. Comp. ¶¶ 15–16, 18, 34.
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contend is a concession by the government’s RCFC 30(b)(6) deponent, id. at 14. The
plaintiffs also rely on a report by the person whose expert testimony they would offer
were there to be a trial, which purports to show that the formula used by the USPS
to calculate overtime pay undercompensates the plaintiffs due to its use of a basic
rate of pay connected with overtime hours. See Pls.’ Resp. to Def.’s Renewed Mot. for
Summ. J. (Pls.’ Reply) at 21–24, ECF No. 143; id. Ex. (report of J. del Valle), ECF
No. 143-1.
In the government’s cross-motion, it contends that the plaintiffs are
misrepresenting or misunderstanding the payroll records, and inaccurately
characterizing the deposition testimony. See Def.’s Renewed Mot. for Summ. J.
(Def.’s Mot.) at 1–4, 11–16, ECF No. 126. Defendant argues that the payroll records
show that the USPS not only pays the plaintiffs what the FLSA requires for their
overtime work, but exceeds this amount by adding to it the TCOLA portion of the
regular rate per McQuigg. Id. at 12–18; see also Def.’s Reply Br. in Supp. of
Renewed Mot. (Def.’s Reply) at 4–5, ECF No. 146.
After oral argument was held, the Court requested supplemental briefing on
the applicability of 29 C.F.R. § 778.207(a) and the level of deference to be given
interpretative rules, which the parties filed. See Def.’s Supp’l Br., ECF No. 158; Mot.
[sic] on Add’l Brf’g (Pls.’ Supp’l Br.), ECF No. 161. After the government brought
additional authority to the Court’s attention, see Notice of Supp’l Authority, ECF No.
180, the plaintiffs were provided the opportunity to respond, which was taken, see
Pls.’ Notice of Add’l Auths., ECF No. 186.
C. The Plaintiffs
The caption of the complaint filed in the district court contained twenty-one
plaintiffs, eight of whom were spouses. 5 Of the thirteen current or retired USPS
employees, only twelve were identified in the complaint (Alberto Ortiz Torres was
omitted). A motion filed January 29, 2003, sought to add 159 additional employees
to the suit. A second motion filed that same day sought to add another plaintiff.
Two motions filed on February 5, 2003, sought to add nineteen employees, plus
eleven spouses, to the suit (although one employee and his spouse were already
named plaintiffs). A fifth motion, filed February 7, 2003, listed four additional
employees (and one spouse), including one which appeared to be a corrected spelling
of the surname of an employee from the fourth motion (Edna Rijos, rather than
Rios). All told, 194 USPS employees were identified as parties in the district court,
5 For a more detailed discussion of the subject of this paragraph, including citations
to the relevant docket entries in the district court case, see Delpin Aponte, 83 Fed.
Cl. at 85.
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but written consents were apparently filed for only 192 of them (no form is found for
Amalia Lopez Santiago or Jesus E. Adorno).
The amended complaint filed in our Court on February 24, 2006 contains an
attached list of 173 plaintiffs, although one plaintiff seems to appear twice (number
12 is Jose L. Otero, and number 84 is Jose Luis Otero). See Am. Compl. Attach. at
1,4. Although there are discrepancies due to misspellings and the addition, deletion,
or reordering of family names for 24 of the plaintiffs, all but one seem to correspond
to already-submitted consent forms (that one being the aforementioned Amalia
Lopez Santiago). Twenty-one USPS workers who were already plaintiffs to the suit,
due to their consent forms having been filed in the district court, were omitted from
the amended complaint.
A motion for leave to file a second amended complaint was accompanied by a
proposed second amended complaint, which listed 199 plaintiffs in an attachment.
See Am. Mot. for Leave to File Ex. 1 at 13–17, ECF No. 105. All 172 plaintiffs from
the first amended complaint were included in this list, although there were
discrepancies for 21 of these (in many cases correcting names to correspond to the
consent forms). Of the 192 USPS employees whose consent forms were filed in the
district court, all but two were included in the proposed second amended complaint
(the omitted individuals were Nancy E. Rosa and Nancy M. Romero). Of the nine
listed plaintiffs for whom no consent form was on file, two were new names to the
proceedings (Carlos Ramos Salgado and Arshilla), and as many as five appeared to
represent duplicate listings of individuals with filed consent forms. 6
The plaintiffs were given leave to file a second amended complaint, which
could more generally allege that the proper amount of overtime compensation
required by the FLSA was not being paid by USPS to its employees in Puerto Rico,
but which would not broaden the potential class of current and former postal
workers beyond those located in the Commonwealth. Delpin Aponte, 83 Fed. Cl. at
91–93. No second amended complaint was filed. Plaintiffs instead filed five
separate motions -- accompanied by written consent forms -- to add additional
plaintiffs to the FLSA collective action. These were granted without opposition. The
first motion concerned a list of eighty-one postal employees. See Mot. to Join
Additional Pls., ECF No. 152. Of this list, two individuals were already parties to
the suit (Hydee Cintron and Joe Curet). The second motion concerned three
employees, including one who had been added to the case by the prior motion. See
Mot. to Join Additional Pls., ECF No. 156. The third motion involved just one
6 These five were Felix Santos Ortiz (form on file is for Santos Felix Ortiz), Gloria
W. Gonzalez (Gloria M. Gonzalez), Ivan Camacho (Juan Camacho), Jose Curet Lopez
(Joe Curet Lopez), and Edwin Berrios (Sol Edwin Berrios).
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individual, who was already added via the second motion. See Mot. to Join
Additional Pls. [sic], ECF No. 166. The fourth and fifth motions added one and four
additional employees, respectively. See Mot. to Join Additional Pl., ECF No. 171;
Mot. (Under Seal) to Join Four Additional Pls., ECF No. 172. Thus, these motions
added a total of eighty-six plaintiffs to this lawsuit.
In sum, following the requirement of 29 U.S.C. §§ 216(b) and 256(b) that
individual claimants do not join FLSA collective actions until written consent is filed
with the Court, there are a total of 278 plaintiffs currently before the Court: the 192
for whom written consent forms were filed in the district court, and the 86 additional
individuals whose written consent forms were filed in this Court. The Court
concludes that although plaintiffs’ counsel failed to file a second amended complaint,
and omitted the names of some employees who already joined the action in the
district court, these actions do not dismiss from the case individuals whose written
consent forms have already been filed. But to the extent that putative plaintiffs’
written consent forms have not been filed with either court, those individuals cannot
be considered parties.
D. The Fair Labor Standards Act
The 278 plaintiffs allege that the USPS underpaid overtime benefits to postal
employees in the Commonwealth of Puerto Rico. Am. Compl. ¶ 1. The basis for
plaintiffs’ claim is that the “USPS has always calculated the Overtime Rate paying 1
½ times the Basic Rate instead of 1 ½ times the Regular Rate.” Id. ¶ 16. Although
the complaint contained allegations concerning defendant’s failure to add to
overtime payments the TCOLA premium resulting from McQuigg, id. ¶¶ 28–30, 34,
that claim is no longer pressed by the plaintiffs --- as their papers contain no
criticism of the USPS formula used to calculate this premium, and their own
calculations regarding overtime pay employ the same TCOLA premium amounts as
are produced by the USPS formula. See, e.g., Pls.’ Prop. Findings Ex. 5 (Pls.’ Ex. 5),
at 8, ECF No. 118-5 (plaintiffs’ economist using $12.99 and $10.07 as payments due
to TCOLA premiums). 7 In any event, as will be seen below, it is clear that the
formula used by the USPS to calculate the TCOLA premium mirrors the approach
mandated within the Ninth Circuit by McQuigg. Moreover, the plaintiffs have no
quarrel with the manner in which the USPS calculates the regular rates of their pay.
7 These amounts correspond exactly to the results of the formula employed by the
USPS. See Def.’s Mot. Attach. D at 10, ECF No. 126-4. For example, in the second
week of the pay period considered, the TCOLA for that week’s work was $77.94,
which when divided by the hours worked (48) results in a TCOLA contribution to the
regular rate of $1.624 per hour. This TCOLA contribution, multiplied by hours
worked in excess of forty (eight), comes to a $12.99 TCOLA premium.
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See Pls.’ Mot. at 8, ECF No. 117 (explaining “this case is not about the way the
Defendant computes the regular rate of pay”); Pls.’ Ex. 5 at 2, ECF No. 118-5
(economist not disputing regular rate calculation). The case turns entirely on how
the regular rate is used by the USPS to calculate overtime pay under the FLSA ---
and in particular, whether the plaintiffs are fully receiving the “one” part of the “one
and one-half times the regular rate” requirement.
In relevant part, the FLSA mandates that “no employer shall employ any of
his employees . . . 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.”
29 U.S.C. §207(a)(1) (2012). Before considering the merits of the respective parties’
positions, a brief review of the overtime pay provisions of the FLSA is in order.
1. Regular Rate and Overtime Pay Under the FLSA
When the FLSA was first enacted, it “contain[ed] no definition of regular rate
of pay and no rule for its determination.” Bay Ridge, 334 U.S. at 460. Did this mean
the rate of pay usually received for working a particular hour if it were not an
overtime one? Or was this an average rate of pay, considering all hours worked (or
all non-overtime hours worked)? And once the regular rate was determined, how
was it to be applied to the hours worked to ensure employees are paid their time-
and-a-half? Considering these questions, the Supreme Court concluded “that
Congress intended the regular rate of pay to be found by dividing the weekly
compensation by the hours worked unless the compensation paid to the employee
contains some amount that represents an overtime premium.” Id. at 464. The
Supreme Court held that an overtime premium, based on exceeding a certain
number of hours in a day or week, was not included in the regular rate to avoid “a
pyramiding,” but that higher rates paid for working disagreeable or Sunday shifts
were included. Id. at 464–71. The excluded overtime premium would instead “be
credited against any obligation to pay statutory excess compensation,” even if it was
earned “for work during the first forty hours of the workweek.” Id. at 464–65.
The argument was rejected that regular rates must be based on only the
compensation received in the first forty hours worked, as this “method of
computation would give an improperly weighted average for the rate of pay for the
entire week” when employees received non-overtime premiums for “work after 40
hours of work.” Id. at 471 n.29. And the Supreme Court found the interpretation of
the Administrator of the Wage and Hour Division of DOL to be reasonable, in which:
an employer may credit himself with an amount equal to the number of
hours worked in excess of forty multiplied by the regular rate of pay for
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the entire week rather than an amount equal to the number of hours
worked in excess of forty multiplied by the average rate of pay for those
excess hours. Under that formula each [employee] is entitled, as
statutory excess compensation, to an additional sum equal to the
number of hours worked for one employer in a workweek in excess of
forty, multiplied by one-half the regular rate of pay.
Id. at 476 (emphasis added).
In the decades since the Supreme Court issued its Bay Ridge opinion, the
overtime provisions of the FLSA have been amended numerous times, with Congress
adding additional details that reflect or at least are consistent with the Supreme
Court’s interpretation of the original version of the act (with some refinements). The
term “regular rate” is now defined based on what is included or excluded from its
calculation. The regular rate is “deemed to include all remuneration for employment
paid to, or on behalf of, the employee,” with several enumerated exceptions. 29
U.S.C. § 207(e) (2012). Not included are gifts, payments when no work is performed
(such as vacation or sick leave), and certain other fringe or discretionary benefits.
See 29 U.S.C. § 207(e)(1)–(4),(8). Following Bay Ridge, excluded from the regular
rate are the various forms of overtime premiums, which are described as “extra
compensation provided by a premium rate paid for certain hours worked” in excess of
daily or weekly limits. 29 U.S.C. § 207(e)(5). Also excluded are premiums for
working weekends or holidays, or shifts outside the normal workday or workweek,
when the premium is fifty percent or more of the rate that would otherwise apply.
29 U.S.C. § 207(e)(6)–(7). The “extra compensation” from the excluded premium
portions of these rates is treated as the overtime premiums were in Bay Ridge, 334
U.S. at 464–65, and credited toward the extra amounts due under the FLSA: “Extra
compensation paid as described in paragraphs (5), (6), and (7) of subsection (e) of this
section shall be creditable toward overtime compensation payable pursuant to this
section.” 29 U.S.C. § 207(h)(2) (2012). 8
Thus, the statute as now written clearly bases the regular rate on an average
of compensation that can include premium payments received for reasons other than
working overtime, and includes compensation received for overtime hours --- to the
extent the latter is stripped of the “extra compensation provided by a premium rate.”
29 U.S.C. § 207(e)(5) (2012). This tracks Bay Ridge, as being based on an average of
compensation for all hours worked, rather than just the first forty or just those
worked beyond forty. But the statute remains silent concerning the approach to
8 This is in contrast to the other excluded sums, which “shall not be creditable
toward . . . overtime compensation required under this section.” 29 U.S.C.
§ 207(h)(1) (2012).
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overtime compensation that the Supreme Court found reasonable in that case, in
which the regular rate of pay is assumed to have been received for each hour worked,
leaving the employer with but the obligation to add one-half times that rate in pay
for the number of hours worked above forty. See Bay Ridge, 334 U.S. at 476.
That approach, however, has been followed by the federal agencies
administering the FLSA. The Office of Personnel Management, responsible for
administering the act for most federal employees, 29 U.S.C. § 204(f), most explicitly
follows the approach discussed in Bay Ridge, calculating “[a]n employee’s overtime
entitlement” as including: “(1) The straight time rate of pay times all overtime hours
worked; plus (2) One-half times the employee’s hourly regular rate of pay times all
overtime hours worked.” 5 C.F.R. § 551.512(a) (2013). What the Court has
previously described as the “aggregate” approach, see Delpin Aponte, 83 Fed. Cl. at
82–83, appears to be employed, as an employee will receive an additional one-half
times the regular rate per hour worked above forty, regardless of any (non-overtime,
of course) premiums or differentials received above the basic pay amount for these
hours. See 5 C.F.R. § 551.512(b).
The DOL, which administers the FLSA for the private sector and some federal
employees, including those of the USPS, see 29 U.S.C. §§ 204(a),(f), 216(c), follows
this same approach, albeit in a less direct manner. In its interpretative rules, the
DOL reprints the FLSA subsections defining the regular rate and allowing excluded
premiums to be credited toward overtime payments. 29 C.F.R. § 778.200(a)–(b)
(quoting 29 U.S.C. § 207(e),(h)). Other rules explain the application of these
provisions, underscoring that the regular rate includes payments for overtime minus
any overtime premium (in other words, at the basic rate), and excludes certain other
premiums that are at least fifty percent of the basic rate --- and explaining that
these excluded premiums are credited toward the overtime compensation
requirements. See 29 C.F.R. §§ 778.201–.207. While no rule explicitly states that
employees generally are to receive for overtime hours the sum of the basic (or
straight time) rate of pay for those hours plus one-half times the regular rate for
each of them, a number of illustrations are provided showing that after calculating
the regular rate, adding the product of one-half of this rate and the number of hours
above forty satisfies the FLSA. See, e.g., 29 C.F.R. §§ 778.110(b), 778.111, 778.112,
778.118, 778.311, 778.313(b).
Although none of the examples provided involves non-overtime premium rates
that are included in the regular rate (such as night differentials, or Sunday
premiums that are less than fifty percent), the most elementary example of an
hourly rate and a production bonus demonstrates the DOL approach. See 29 C.F.R.
§ 778.110(b). If an employee works 46 hours in a week at a flat $12 hourly rate, and
also receives a production bonus of $46, his total compensation for regular rate
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purposes is $552 (based on the hourly rate) plus the $46 bonus, or $598. Dividing
total compensation by the 46 hours worked results in a regular rate of $13 per hour.
Under the DOL rule, an additional $39 is owed the employee for the six overtime
hours, based on one-half of the regular rate ($6.50 per hour). Id. This calculation is
expressed as assuming that the employee has been paid at the regular rate of $13 for
all 46 hours worked, although the actual rate of pay for each was the basic rate of
$12. See id. The DOL rule, thus, follows the aggregate approach.
2. The Inclusion of TCOLA in the Regular Rate
As we have just seen, both federal agencies which administer the FLSA follow
the same approach concerning the use of the regular rate in calculating overtime
pay. Much of this approach is dictated by the FLSA overtime provisions themselves.
Since the regular rate is a rate, to make it hourly one must take all of the
compensation collected for hours worked and divide by the number of those hours.
This compensation may include several different premiums, but not any overtime
premiums associated with any hours. 29 U.S.C. § 207(e)(5). Thus, to the extent part
of the pay earned for working a particular hour is an overtime premium dictated by
something other than the FLSA, that part is not included in the regular rate --- but
all other payments for that hour, namely the basic rate and any other premium
(except for certain premiums of at least fifty percent, see 29 U.S.C. § 207(e)(6)–(7),
which are immaterial for our purposes) are a part of the regular rate calculation.
Since all hours worked are the basis for the regular rate, see 29 U.S.C. § 207(e)(2)
(excluding compensation for hours not worked), it is composed of and influenced by
(non-overtime) premiums received for any hour of a week, regardless of whether it
was before or after the forty hour mark was reached. The regular rate is an average
rate, and thus whenever there are premiums, differentials, or bonuses and the like
received by an employee, this rate may well differ from the actual rate paid for any
hour worked. All of the above necessarily flows from the regular rate being based on
all remuneration received for work performed in a week (minus the exclusions), as
opposed to, say, based on what the rate of pay would otherwise be for working a
particular hour were it not an overtime one. The FLSA expressly rejects the
marginal approach in the determination of the regular rate.
Both OPM and DOL also reject the marginal approach in applying the regular
rate to determine overtime compensation owed. They do not require employers to
identify the particular hours worked after the fortieth and to add to an employee’s
compensation the difference between one and one-half times the regular rate and the
compensation otherwise received for those hours --- which would favor employees
who worked at premium rates at the beginning of the week over employees who
worked them at the end of the week. See Bay Ridge, 334 U.S. at 476 n.34 (criticizing
such a variation in overtime pay). The agencies’ approach is on its face reasonable,
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and has been found to be uncontroversial. It appears reasonable, since the FLSA
itself abandons the marginal approach in allowing certain premiums to be credited
toward the overtime payment without regard to whether the hours for which they
were earned were among the first forty worked or later. 29 U.S.C. § 207(h)(2). And
this approach has been upheld in all known court challenges. See, e.g., Zumerling,
769 F.2d at 752–53; Dufrene v. Browning-Ferris, Inc., 207 F.3d 264, 268 (5th Cir.
2000); Wisnewski v. Champion Healthcare Corp., No. Civ. A3-96-72, 2000 WL
1474414, at *7–8 (D.N.D. 2000), aff’d sub nom. Reimer v. Champion Healthcare
Corp., 258 F.3d 720, 726 (8th Cir. 2001); Brooks v. Weinberger, 730 F. Supp. 1132,
1138–41 (D.D.C. 1989). As the Court explained earlier, see Delpin Aponte, 83 Fed.
Cl. at 83, the aggregate approach rests on the tautology that since the regular rate is
the average compensation (except for overtime premiums) received for hours worked
in a week, its very calculation means that one times the regular rate has been paid
for each and every hour worked --- including the overtime ones.
It seems the one precedent which has not fully embraced the OPM/DOL
approach was the Ninth Circuit’s decision in Frank v. McQuigg, 950 F.2d 590 (9th
Cir. 1990), concerning the treatment of the TCOLA earned by USPS employees in
Alaska. The TCOLA is a living allowance granted to employees working in certain
geographic locations and is calculated as a percentage of an employee’s salary or
wages. 5 U.S.C. § 5941; 39 U.S.C. § 1005(b) (1988). In McQuigg, it was not disputed
that the TCOLA was part of the regular rate calculation, and thus increased the size
of the employees’ overtime premium. McQuigg, 950 F.2d at 593. What was at issue
was the USPS practice of adding to employees’ pay just one-half times the regular
rate for the number of overtime hours worked, which would satisfy the FLSA only if
it was proper to assume that employees were already paid once times the regular
rate for all hours worked. See id. at 595–96. While the Ninth Circuit found this
assumption proper for the overtime hours worked, id. at 595, it found the approach
underpaid the USPS Alaska employees for the first forty hours they worked, since
the TCOLA could be earned only during those hours, id. at 596–97. By reducing the
pay allocated to those particular hours below the sum of the base rate of pay and the
TCOLA --- by averaging it over a greater number of hours, where the overtime hours
contributed just the base rate of pay to the numerator --- the USPS was found to be
illegally prorating or diluting the TCOLA payments. Id. This approach was
rejected, because an employee who worked just forty hours would receive the entire
TCOLA for those hours, while an employee who worked more than that would have
some of the TCOLA spread out to pay for overtime compensation, and thus would get
less pay for the first forty hours. Id. at 597.
Whatever one thinks of McQuigg, a few important points must be kept in
mind. First, the opinion considered a simplified example of the regular rate, in
which no premium or differential pay other than the TCOLA was involved, and
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expressly disclaimed any judgment concerning those other premiums. McQuigg, 950
F.2d at 597 n.9. Of course, if an employee earns (non-overtime) premium pay at a
higher rate than the TCOLA during the hours worked after the fortieth, the regular
rate of pay multiplied by his first forty hours would actually exceed his entitled pay
for those first forty hours, if no premium but the TCOLA was associated with them.
Second, since the decision ignored other components of the regular rate, it did not
embrace a pure marginal approach. If anything, the opinion implicitly accepted the
aggregate approach by identifying the problem as not being that the regular rate
calculation assumed that the rate was paid once for hours worked after the fortieth,
but rather that it assumed a lower rate of pay for the first forty than the Ninth
Circuit believed employees were separately entitled. See id. at 596–97. As the
opinion turned on a peculiarity that uniquely concerned the first forty hours worked,
perhaps it is best thought of as employing a reverse-marginal approach.
Finally, and most importantly for our purposes, McQuigg found that the
USPS was improperly reducing the Alaskan employees’ TCOLA payments earned in
their first forty hours of work, to the extent that the payments were prorated over
more than forty hours. Id. at 597. Since no other premiums were taken into
consideration, this had the effect of lowering the regular rate below where it would
have been had the denominator been just forty hours worked. The amount the
Alaskan employees were shortchanged was the difference between forty hours at the
base rate plus the TCOLA and forty hours at the regular rate. This is the
mathematical equivalent of the TCOLA portion of the regular rate multiplied by the
hours worked in excess of forty. And the formula adopted and applied by the USPS
to the overtime payments of all employees who receive a TCOLA adds this exact
amount to the pay of those employees. See Def.’s Mot. Attach. D. at 10, ECF No.
126-4 (formula showing the gross amount added for overtime, or “P,” as including the
TCOLA for the week divided by hours worked, then multiplied by hours worked in
excess of forty); see also Def.’s Part. Mot. to Dismiss Ex. 3 at 14–15, ECF No. 19-1
(Mitchell Aff. ¶¶ 12, 17–18). While it was not clear from the amended complaint
whether the plaintiffs were claiming that the USPS was not paying them the
TCOLA premium that resulted from McQuigg, see Delpin Aponte, 83 Fed. Cl. at 86
n.15, the USPS formula for calculating gross overtime payments does include this
amount. Although the payroll records can be maddeningly difficult to decipher,
diligent scrutiny of them has revealed that this formula has been followed by the
USPS for its employees in Puerto Rico. As a consequence, plaintiffs’ case rests solely
on whether the USPS is paying them one and one-half times the regular rate for
each overtime hour worked.
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II. DISCUSSION
Given this background, two issues require resolution: determining how
plaintiffs’ overtime pay was calculated by the USPS and determining whether this
method of calculating overtime complies with the FLSA. Based upon careful
analysis of all the submitted evidence, the Court finds that the USPS calculates
overtime by paying one and a one-half times the regular rate for each hour of
overtime worked, plus the TCOLA premium, and minus certain creditable premium
payments (mainly contractual overtime pay). This method accords with the
statutory requirements (as well as with McQuigg). Additionally, the DOL’s
interpretation of 29 U.S.C. § 207’s overtime pay requirements in 29 C.F.R. Part 778
is entitled substantial weight and is the most reasonable interpretation of the FLSA.
Based on the aforementioned as well as the following analysis, the court GRANTS
defendant’s cross-motion for summary judgment and DENIES plaintiffs’ motion for
partial summary judgment.
A. Applicable Legal Standard
Summary judgment shall be granted when “the movement shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.” RCFC 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322–23
(1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986); Sweats
Fashions, Inc. v. Pannill Knitting Co., 833 F.2d 1560, 1562–63 (Fed. Cir. 1987);
Tecom, Inc. v. United States, 66 Fed. Cl. 736, 743 (2005). The Court interprets the
facts and inferences “in the light most favorable to the party opposing the motion.”
United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).
Material facts are those “that might affect the outcome of the suit under the
governing law.” Liberty Lobby, 477 U.S. at 248. A dispute over facts is genuine “if
the evidence is such that a reasonable [factfinder] could return a verdict for the
nonmoving party.” Id. To demonstrate a genuine dispute over a material fact, the
nonmoving party need not “produce evidence in a form that would be admissible at
trial.” Celotex Corp., 477 U.S. at 324. The moving party, however, must either cite
to materials in the record which support the assertion that a fact cannot be
genuinely disputed, or the movant must show that the materials cited do not
establish the absence or presence of a fact. RCFC 56(c)(1); see Celotex, 477 U.S. at
325; see also Anchor Savings Bank, FSB v. United States, 59 Fed. Cl. 126, 140
(2003). In its motion for summary judgment defendant alleges, and needs therefore
to substantiate, that it is beyond dispute that plaintiffs cannot demonstrate that the
defendant’s overtime pay formula violates the FLSA and that defendant has
improperly applied their overtime formula. See RCFC 56(c)(1)(B).
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B. Analysis
The motions for summary judgment primarily concern the payroll records for
one of the plaintiffs, Mr. Jorge Rosario. See Pls.’ Prop. Findings Ex. 3 (Pls.’ Ex. 3),
ECF No. 118-3; Pls.’ Prop. Findings Ex. 4 (Pls.’ Ex. 4), ECF No. 118-4. The plaintiffs
argue that these records show that the USPS is not paying them for overtime hours
worked at one and one-half times the FLSA regular rate, while the government
maintains that is paying more than this amount to the plaintiffs.
1. There Is No Genuine Dispute as to Any Material Fact Concerning the
Manner in Which Overtime Pay is Calculated by the USPS
The parties agree that the plaintiffs are or have been employees of the USPS
in the Commonwealth of Puerto Rico and that they were entitled to TCOLA as a
percentage of their pay up to forty hours of work. Def.’s Prop. Findings of Fact ¶¶ 1–
3, ECF No. 20; Pls.’ Resp. to Def.’s Prop. Findings ¶¶ 1–3, ECF No. 39. And it cannot
be disputed that the FLSA applies to USPS employees in Puerto Rico or that
overtime is due to USPS employees who work more than forty hours in one
workweek. See 29 U.S.C. § 203(e)(2)(B) (2012) (providing that “any individual
employed by the United States Postal Service [is an employee under the FLSA]”).
Indeed, the material facts in this case are not disputed by the parties. See,
e.g., Def.’s Reply at 1–2, ECF No. 146 (“Plaintiffs agree that there are no genuine
issues of material fact with respect to Mr. Rosario’s pay in that week. Indeed, all of
the facts that are necessary to determine whether USPS complies with the FLSA for
this example are not in dispute.”). Both sides agree that Mr. Rosario was an
employee of the United States Postal Service in Puerto Rico during the relevant
period; that Mr. Rosario’s payroll journal entries accurately record his work and pay;
and that Mr. Rosario’s payroll journal is representative of all the plaintiffs in the
case. See Pls.’ Prop. Findings of Fact ¶¶ 1, 2, 7, 15, ECF No. 118; Def.’s Resp. to Pls.’
Prop. Findings of Fact ¶¶ 1, 2, 7, 15, ECF No. 125. Both sides rely upon Mr.
Rosario’s payroll journal entries in their respective motions for summary judgment
in arguing how FLSA overtime is and should be calculated. See Pls.’ Mot. at 10–23,
ECF No. 117; Def.’s Mot. at 8, 12–18, ECF No. 126. Although the payroll journal
was evidently not designed with the goal of being user-friendly, the Court agrees
with the parties that Mr. Rosario’s payroll journal entries are a suitable basis upon
which to determine how the USPS is paying overtime compensation to the plaintiffs
and whether this complies with the FLSA.
The plaintiffs initially focus on one particular payroll record for Mr. Rosario,
see Pls.’ Mot. at 10–14, ECF No. 117, as it was one that was discussed at an RCFC
30(b)(6) deposition as well as in reports prepared by each side’s purported experts
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before the case was transferred from the district court. See Pls.’ Prop. Findings Ex. 2
(Pls.’ Ex. 2) at 4–16, ECF No. 118-2; Pls.’ Ex. 5 at 2–3, ECF No. 118-5; Pls.’ Prop.
Findings Ex. 6 (Pls.’ Ex. 6) at 6–8, ECF No. 118-6. This payroll record depicts Mr.
Rosario’s pay for the sixth pay period of 2000. See Pls.’ Prop. Findings Ex. 3 (Pls.’
Ex. 3), ECF No. 118-3; Def.’s Mot. Attach. D at 6, ECF No. 126-4. For the second
week worked that pay period, Mr. Rosario’s regular rate of pay was calculated to be
$23.545 per hour, and he worked eight FLSA overtime hours. 9 The plaintiffs argue
that this record does not show that Mr. Rosario was paid one and one-half times the
regular rate, or $282.54, for the eight overtime hours worked, and that the
government’s RCFC 30(b)(6) deponent conceded that the only entries on the payroll
record showing pay for overtime add to just $263.04. Pls.’ Mot. at 13–14, ECF No.
117 (citing Pls.’ Ex. 2 at 13). The plaintiffs then discuss another seventeen of Mr.
Rosario’s payroll records, multiplying and adding the same entries that were the
topic of the above discussion. Id. at 15–23.
In its cross-motion, the government agrees that for the second week of the
sixth pay period of 2000, “Mr. Rosario should have received FLSA overtime pay of
not less than 1.5 times the regular rate ($23.545) times eight hours, which equals
$282.54 (subject to rounding).” Def.’s Mot. at 12, ECF No. 126. It explains that Mr.
Rosario was actually paid $12.97 more than this amount for those overtime hours,
because of the addition of the TCOLA premium and assuming that Mr. Rosario
received the regular rate of pay once for each hour worked by definition. See id. at
17–18. The government maintains that the plaintiffs misunderstood the various
codes and entries of the payroll records, and that as a consequence the RCFC
30(b)(6) deponent was merely asked to add two numbers from the records which do
not reflect all of the pay associated with the FLSA overtime hours. Id. at 13. The
deponent actually testified that part of the overtime pay comes from the contribution
of differentials and premium rates to the regular rate. Id.; Def.’s Mot. Attach. F at
11–12, ECF No. 126-6. Defendant provides as an exhibit excerpts from the postal
service’s “Handbook F-18,” a “Payroll Journal Guide” dated October 2005, which
explain the payroll entries and contain the formula used for calculating overtime
pay. Def.’s Mot. Attach. D, ECF No. 126-4. The government explains how this
formula is used, and corrects a number of mistakes it contends the plaintiffs have
made in their analysis of these records. Def.’s Mot. at 2–3, 8, 11–18, ECF No. 126;
Def.’s Mot. Attachs. A–C, ECF Nos. 126-1 to -3.
9 Somewhat counterintuitively, the first week of the two-week pay period is listed
below the second week in the payroll journal. See Def.’s Mot. Attach. D at 6, ECF
No. 126-4 (exhibit showing that the “week of pay period” is denoted by a 1 or 2 and
week two is above week one); Id. Attach. F at 2, ECF No. 126-6 (RCFC 30(b)(6)
deponent agreeing that “Week No. 2” is “the top one”).
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Although, as we will see shortly, the payroll records take a considerable
amount of effort to understand, once this effort is made it is evident that the USPS
has been paying its employees for FLSA overtime following the formula provided in
the Payroll Journal Guide. That is, after calculating the regular rate of
compensation for hours worked in a week --- a process which is not challenged, see
Pls.’ Mot. at 8, ECF No. 117 --- the USPS ensures that an employee receives one-half
of the regular rate for each hour worked above forty (taking into consideration postal
overtime premiums paid for that week), and adds to this the TCOLA premium
resulting from McQuigg. See Def.’s Mot. Attach. D at 10, ECF No. 126-4. The only
issue that must be decided is whether this satisfies the government’s obligation
under the FLSA.
2. Payroll Records Show Plaintiffs Are Paid FLSA Overtime at One and One-
Half Times the Regular Rate Plus a TCOLA Premium
The payroll records consist of two discrete portions. The right side of each
contains columns showing, for the year and the two-week pay period, the gross pay
and payroll deductions for the employee, as well as leave balances. See Pls.’ Ex. 3,
ECF No. 118-3 (Mr. Rosario’s payroll record for sixth pay period of 2000). For our
purposes, the only information that matters from this half of the payroll journals is
the TCOLA amount for the pay period. On the left side of each payroll record are
found three columns containing payroll codes, the hours associated for each week of
the pay period, and corresponding compensation amounts. Id. There are also (when
applicable) two rows containing some of the results of the FLSA overtime formulas,
ending with the number of hours worked and the net amount added to the pay for
that week’s FLSA overtime (including the TCOLA premium). Id. The left side is the
relevant portion of the journals.
In addition to the use of the payroll codes, several aspects of the left-hand
side of the payroll journals can be confusing. For one thing, there is no break in the
columns between the second and the first week of the pay period, so the total hours
worked and net FLSA amount for the former is immediately followed by the first
payroll code and associated information for the latter. Another odd feature is that
the hours identified for some types of premium pay and differentials (such as the
night differential and Sunday premium) are duplicative of hours already listed at the
basic rate or at the postal overtime rate. The payroll codes for working hours most
commonly featured in Mr. Rosario’s records are 52, 53, 54, and 72. See id. 10 The
Payroll Journal Guide explains that these categories mean: 52, work hours; 53,
10Some codes correspond to leave time, such as annual leave (55), sick leave (56),
and union official leave (84). These are not relevant for our purposes.
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overtime hours (at 150% of the basic rate); 54, night work premium; and 72, Sunday
premium. Def.’s Mot. Attach. D at 9–10, ECF No. 126-4.
The use of a code for “overtime” has proved confusing to plaintiffs and, at
times, the Court. The hours associated with this code are not necessarily equivalent
to the number of hours worked above forty, for FLSA purposes. Code 53, for “postal
overtime” under USPS policy, in addition to referring to some hours worked over
forty in a week, also encompasses hours worked in excess of eight in one day and
hours worked by union members on a nonscheduled day. See USPS Employee and
Labor Relations Manual (ELM) § 434.131. 11 Some hours worked in excess of forty
might fall in another category, “penalty overtime” (code 43), at twice the basic rate
for certain “hours described in applicable labor agreements.” ELM § 434.133. Thus,
the code 53 hours might be greater or lesser than the number of hours in excess of
forty worked in a week. See, e.g., Pls.’ Ex. 4 at 95, ECF No. 118-4 (pay period 15 of
2004, week one, showing 10.01 hours of postal overtime and only 0.01 hours of FLSA
overtime); id. at 60 (pay period 23 of 2005, week two, showing 8 hours of postal
overtime, 2 hours of penalty overtime, and 10 hours of FLSA overtime).
When more than forty hours are worked in a week, a row of figures on the
payroll journal depicts six numbers resulting from the various equations used to
calculate the net amount added to meet the FLSA requirements. See Def.’s Mot.
Attach. D at 8, ECF No. 126-4. The Payroll Journal Guide explains these figures.
Starting on the left, next to the letter “B” is the total remuneration in the week that
is relevant for calculating the regular rate. For our purposes, this sum is made up
of the compensation paid for working all hours other than postal overtime, at the
basic rate of pay (code 52); one-half of the compensation for penalty overtime (code
43) and two-thirds of the compensation for postal overtime (code 53), which reduces
those hours down to the basic rate of pay; the night differential (code 54) and Sunday
premium (code 72) amounts earned that week, since each premium is below fifty
percent and thus not excludible under 29 U.S.C. § 207(e)(6)–(7); and the portion of
the TCOLA attributable to hours worked that week. See Def.’s Mot. Attach. D at 10,
ECF No. 126-4. To the right of that figure, following the letter “R,” is the regular
rate for the week, which is the FLSA remuneration divided by the total number of
hours worked. Id. at 8, 10.
Next in the row is the FLSA premium amount, following the letter “P.” This
number is the result of taking one-half of the regular rate multiplied by the number
11 Because the premium is fifty percent for these hours, the premiums associated
with working nonscheduled days are still excluded from the regular pay calculation
and creditable toward the FLSA overtime payments, under 29 U.S.C. § 207(e)(7) and
(h)(2).
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of hours worked in excess of forty, and adding to it the following: the weekly TCOLA
amount divided by hours worked and then multiplied by the number of hours worked
in excess of forty (i.e., the McQuigg FLSA premium). Id. To the right of the letter
“C” is the amount of compensation that was excluded from the regular rate
calculation and creditable toward FLSA overtime, mainly the fifty percent premium
for postal overtime (code 53) and the one hundred percent premium for penalty
overtime (code 43). Id. 12 When the FLSA premium amount (“P”) is greater than the
credited amount (“C”), the difference is added to the column of compensation for the
week. Id. To the left of this figure, in the hours column, is the total hours worked
for that week. Id.
Armed with this knowledge, we can now profitably scrutinize the payroll
records that are the subject of the pending motions, beginning with pay period six of
the year 2000. See Pls.’ Ex. 3, ECF No. 118-3. Looking at week two, total FLSA
remuneration is portrayed as $1,130.17. This is exactly equal to the sum of the
compensation received for code 52 hours ($779.36), two-thirds of the compensation
for code 53 postal overtime hours (2/3 x $233.81 = $155.87), the code 54 night
differential ($78.03), the code 72 Sunday premium ($38.97), and the TCOLA received
for working that week (this is the total pay period TCOLA of $155.88, divided by the
pay period code 52 hours and paid leave hours (up to forty per week), multiplied by
the code 52 hours for the week, see Def.’s Mot. Attach. D at 10, ECF No. 126-4, or
$155.88 ÷ 80 x 40 = $77.94). The regular rate is depicted as $23.54, which is
$1,130.17 divided by total hours worked (code 52 hours plus code 53 hours, or 48).
The FLSA premium number is shown to be $107.15. This is equal to one-half of the
regular rate times the hours worked in excess of forty (.5 x $23.54 x 8 = $94.16) plus
the McQuigg TCOLA premium (the TCOLA for the week, $77.94, divided by 48
hours worked and multiplied by the 8 hours of FLSA overtime, or $77.94 ÷ 48 x 8 =
$12.99). The creditable amount for that week, the one-third of the postal overtime
pay excluded from the regular rate calculation, was correctly identified as $77.94 (as
1/3 x $233.81 = $77.94). The difference between the FLSA premium calculation
($107.15) and the creditable amount ($77.94) is $29.21, which is exactly the amount
added to Mr. Rosario’s pay. See Pls.’ Ex. 3, ECF No. 118-3. The USPS paid him just
as it claimed, following the formula in the Payroll Journal Guide. See Def.’s Mot.
Attach. D at 10, ECF No. 126-4.
A review of the other payroll journals confirms that this formula has been
consistently and accurately followed by the USPS. To take one random example of
12 Other premiums, such as holiday scheduling and Christmas work, are also
excluded from the regular rate (because they were at least fifty percent of the base
rate) and creditable towards FLSA overtime payments. See Def.’s Mot. Attach. D at
10, ECF No. 126-4.
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the payroll records highlighted by the plaintiffs, in week one of pay period 26 from
the year 2005, Mr. Rosario worked 5.97 hours of FLSA overtime. See Pls.’ Ex. 4 at
57, ECF No. 118-4. The FLSA remuneration of $1362.57 is precisely the sum of code
52 pay ($951.58), two-thirds of code 53 pay (2/3 x $213.03 = $142.02), the code 54
night differential ($64.38), the code 72 Sunday premium ($95.16), and the TCOLA
allocated to that workweek ($218.86 ÷ 80 x 40 = $109.43). The remuneration divided
by hours worked (45.97) yields the regular rate of $29.64. One-half of the regular
rate multiplied by the hours worked in excess of forty is $88.48 (.5 x $29.64 x 5.97),
and for that week, the TCOLA premium was $14.21 ($109.43 ÷ 45.97 x 5.97); adding
these two numbers results in the FLSA premium of $102.69. The creditable amount
for the week, one-third of the code 53 postal overtime, was $71.01 (1/3 x $213.03).
The difference between the FLSA premium calculation ($102.69) and the creditable
amount ($71.01) is $31.68, which is exactly the amount added to Mr. Rosario’s pay.
Id.
By following the formula, the USPS compensated Mr. Rosario in the manner
that OPM and DOL prescribes for FLSA overtime payments, and added the McQuigg
amount for good measure. Leaving aside the McQuigg TCOLA premium (which is
clearly added to plaintiffs’ pay and is no longer at issue in this case), the plaintiffs
argue that this method of determining FLSA overtime compensation violates the
plain language of the FLSA overtime provision, which states that compensation
must be received “at a rate not less than one and one-half times the regular rate” for
the number of hours worked in excess of forty in a week. 29 U.S.C. § 207(a)(1)
(2012); see Pls.’ Mot. at 6–7, ECF No. 117. Despite the extended discussion the
aggregate approach in the Court’s earlier opinion, see Delpin Aponte, 83 Fed. Cl. at
82–85, 91, and the government’s discussion of the precedents approving of this
approach, including the Supreme Court’s Bay Ridge opinion, see Def.’s Mot. at 9–11,
ECF No. 126, the plaintiffs refuse to discuss the precedents or even acknowledge the
aggregate approach’s existence. See Pls.’ Mot. at 1–24, ECF No. 117; Pls.’ Reply at
1–25, ECF No. 143. Instead, the plaintiffs insist this is just a simple question of
mathematics. Their case rests on three things: the absence of any entry on the
payroll journal stating that the regular rate of pay was received for each hour
worked above forty, see Pls.’ Mot. at 11–2, ECF No. 117; their contention that a
formula which assumes that overtime hours were worked at the basic rate of pay
cannot meet the FLSA mandate, see Pls.’ Reply at 21–24, ECF No. 143; and the
claim that the government’s RCFC 30(b)(6) witness conceded that Mr. Rosario was
not paid the proper amount, see Pls.’ Mot. at 14, ECF No. 117.
Taking the first and third points together, as they are related, the Court fails
to see how the absence of a line item on the payroll journal showing the product of
the regular rate of pay and the FLSA overtime hours has any bearing on this case.
To be sure, the payroll journals are quite difficult to understand at first glance, but
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the plaintiffs do not quarrel with the regular rate of pay calculation, see Pls.’ Mot. at
8, ECF No. 117, and the purpose of calculating this figure is to determine the
average rate of pay received for every hour worked. By deriving the regular rate, the
USPS is calculating the effective rate of pay for every hour worked, including the
ones in excess of forty. And each source or category of compensation that was
included among total remuneration for purposes of the regular rate can be said to
have contributed to the pay received for each hour worked, as this total amount is
divided by the total number of hours worked. Far from conceding that the USPS did
not pay Mr. Rosario the proper amount for FLSA overtime, the government’s RCFC
30(b)(6) witness explained that the payroll journal did not directly show how he
received the regular rate of pay for each hour of FLSA overtime, as plaintiffs’ counsel
was “neglecting to take into consideration the fact that we’ve already paid the
Sunday premium, the TCOLA, and the night differential in the normal rate.” Def.’s
Mot. Attach. F at 12, ECF No. 126-6; see also id. at 6 (explaining that adding postal
overtime to the net FLSA premium amount does not result in total compensation
paid for FLSA overtime because of the absence of the contribution of “[n]ight
differential, Sunday premium, [and] TCOLA”).
The plaintiffs’ case is thus reduced to the contention that the USPS cannot
have paid them the “one” part of the “one and one-half times the regular rate” by
calculating the regular rate as defendant did. To this the Court now turns.
3. The USPS is Following the Most Reasonable Interpretation of the FLSA in
Adding One-Half Times the Regular Rate of Pay to Compensation Included in
the Regular Rate Calculation
The plaintiffs argue that the USPS approach to calculating overtime
compensation owed them does not comply with the FLSA. They focus on the fact
that, in calculating the regular rate, the USPS starts with a category of
compensation for postal overtime that is paid at one and one-half times their basic
rates of pay, and then excludes the premium part, leaving just the basic rate for each
of these hours. See Pls.’ Reply at 4, 17–24, ECF No. 143. They do not dispute the
way the regular rate is calculated, or that the excluded amount is topped up (by P –
C) to satisfy the one-half times the regular rate portion of overtime pay (as well as
the TCOLA premium). See Pls. Supp’l Br. at 3, ECF No. 161; see also Pls.’ Mot. at 4,
8, ECF No. 117.
Of course, removing the premium rate portion of any overtime (daily or
weekly) when an employer calculates the regular rate is explicitly required by the
FLSA. See 29 U.S.C. § 207(e)(5). As was explained above, by basing overtime
compensation on an average rate of pay for all hours worked, and allowing certain
premiums to count toward satisfying overtime compensation without regard for
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whether the premiums were associated with hours worked after the fortieth, the
FLSA adopts an aggregate approach toward overtime compensation. See 29 U.S.C.
§ 207(a)(1), (e), (h)(2). The plaintiffs, by trying to link the one-times the regular rate
portion with the pay earned for particular hours worked, seem to be attempting to
mix in a sort of marginal approach.
But this approach to FLSA overtime compensation does not make sense, for it
assumes something that is plainly not true --- that employees always receive only
one and one-half times the basic rate of pay (or two times if penalty overtime was
involved) for hours worked after the fortieth in a week. This error can be clearly
seen by looking at Mr. Rosario’s payroll journal for the sixth pay period of year 2000.
See Pls.’ Ex. 3, ECF No. 118-3. In week two, he worked 48 hours --- and 47.87 of
them earned him a night differential of about 8.4% on top of the basic rate of pay.
See id. Thus, at least 7.87 of the 8 hours worked after the fortieth were compensated
at above the postal overtime rate. In addition, 8 hours of work earned the Sunday
premium, which is 25% on top of the basic rate. Id. Although one cannot tell from
the payroll journal if Mr. Rosario’s workweek ended on a Sunday, if it did, this
premium would have been earned during the 8 hours worked after the fortieth, as
well. Thus, even after removing the postal overtime premium from the pay
associated with hours forty-one through forty-eight, it may well be the case that Mr.
Rosario was paid more than 33% above the basic rate of pay for each of those hours,
much higher than his regular rate for the week ($25.98 as opposed to $23.54). The
same was true for his first week of the pay period, in which all 46.25 hours worked
earned a night differential, and 8 hours were worked on a Sunday. Id. But plaintiffs
ignore these other premiums in their analysis of this pay period. See Pls.’ Mot. at
12–13, ECF No. 117; Pls.’ Reply at 19–20, ECF No. 143.
The plaintiffs’ approach, then, is not based on the compensation associated
with particular hours worked after the fortieth, and is not designed to determine
whether the pay received for those hours was at least equal to the regular rate of
compensation for the week. The plaintiffs want to rewrite the FLSA overtime
provision to require compensation for their employment in excess of forty hours “at a
rate not less than one and one-half times the regular rate, in addition to all other
premiums or differentials earned for working those hours that are not based on the
hours being overtime ones.” Such a revision is rather ambitious, and no support for
such an interpretation was initially offered by the plaintiffs. One supposes that a
complicated textual argument could be crafted around section 207(h), which states
that “sums excluded from the regular rate pursuant to subsection (e) shall not be
creditable toward . . . overtime compensation” except for the “[e]xtra compensation
paid as described in paragraphs (5), (6), and (7) of subsection (e) of this section.” 29
U.S.C. § 207(h)(1)–(2) (2012). But one cannot confidently base the treatment of sums
included in the regular rate on what is said about those sums excluded from it. In
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any event, under the plaintiffs’ approach it cannot be the case that any compensation
that was included in the regular rate could not satisfy any portion of overtime
compensation owed under the FLSA, as they would include the part of the postal
overtime that is left over after being stripped of the overtime premium, which is
included in the regular rate under 29 U.S.C. § 207(e)(5).
But no legal argument was initially offered by the plaintiffs in support of their
position --- not even an attempt to extend the holding of McQuigg, which is not at all
mentioned in their papers. Of course, since McQuigg rested on the notion that the
TCOLA could not be earned for hours worked above forty, see McQuigg, 950 F.2d at
596–97, the reasoning could hardly be employed to premiums such as the night
differential which, as we have seen, clearly is earned during those hours. See Pls.’
Ex. 3, ECF No. 118-3. It was not until the Court asked about the applicability of 29
C.F.R. § 778.207(a) that plaintiffs made any sort of legal justification for their
position. See Pls.’ Supp’l Br. at 3, ECF No. 161. 13 But a close review of the DOL
rules shows that the Court was mistaken in focusing the parties on this provision,
which says of premiums included in the regular rate: “Wherever such other
premiums are paid, they must be included in the employee’s regular rate before
statutory overtime compensation is computed; no part of such premiums may be
credited toward statutory overtime pay.” 29 C.F.R. § 778.207(a) (2013) (emphasis
added). While it is somewhat obscured by the DOL’s failure to include any premium
rates in their examples, it is evident that the phrase “credited toward statutory
overtime pay” is a reference to satisfying the additional one-half times the regular
rate of pay portion of FLSA overtime pay. See 29 C.F.R. § 778.311(a)–(b). 14
The approach to calculating FLSA overtime payments employed by the USPS
follows the rules issued by DOL which, as we have seen, merely require adding one-
half times the regular rate of pay for the number of overtime hours worked in a
13 The plaintiffs’ argument, such as it is, consists of merely quoting from 29 C.F.R.
§ 778.207(a), see Pls.’ Supp’l Br. at 3, ECF No. 161, and this unexplained statement
included in an exhibit: “If the USPS is in fact using any portion of the Night and/or
Sunday premiums to ‘credit’ towards OT pay, it is doing so in clear violation of
FLSA.” Pls.’ Supp’l Br. Ex. (Pls.’ Ex. 10), ECF No. 161-1.
14 In this rule, after it was explained that “no part of” a certain “amount may be
credited toward statutory overtime compensation due,” 29 C.F.R. § 778.311(a), the
illustrative example shows that this amount is counted in the regular rate to satisfy
the “one” part of one and one-half times the regular rate, 29 C.F.R. § 778.311(b)(3).
The example makes clear that when DOL speaks of crediting amounts toward FLSA
overtime, this is a reference to the additional one-half times the regular rate, which
it calls the “statutory overtime premiums.” Id.
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week, once the regular rate has been accurately calculated. See, e.g., 29 C.F.R.
§§ 778.110(b), 778.111, 778.112, 778.118, 778.311, 778.313(b). This is consistent
with the aggregate approach followed in the FLSA, which bases overtime pay not on
the rate at which an hour would otherwise have been paid were it not overtime, but
instead employs an average rate for purposes of this pay, and allows compensation
associated with non-overtime hours to satisfy overtime pay requirements. See 29
U.S.C. § 207(a), (e), (h). And while the government recognizes that the DOL’s
interpretative rules may not be entitled to the deference under Chevron U.S.A. Inc.
v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), see Def.’s Supp’l Br.
at 9–13, ECF No. 158, the Court gives them considerable weight according to the
factors identified in Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944). See United
States v. Mead, 533 U.S. 218, 234–38 (2001). The Department of Labor without
question possesses considerable expertise in the area of labor law. See Aluminum
Co. of Am. v. Cent. Lincoln Peoples' Util. Dist., 467 U.S. 380, 390 (1984) (considering
“expertise in the area” to be a significant factor in evaluating deference due). Not
only has DOL apparently been consistent in its interpretation of the FLSA overtime
pay requirements, see Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 417 (1993)
(explaining that “the consistency of an agency’s position is a factor in assessing the
weight that position is due”), but this interpretation has been longstanding, see
Alaska Dept. of Evn’t. Cons. v. E.P.A., 540 U.S. 461, 487 (2004) (giving deference to
the EPA’s “longstanding, consistently maintained interpretation”), as it was
discussed (with approval) by the Supreme Court as far back as in 1948. See Bay
Ridge, 334 U.S. at 476–77. Moreover, as was noted above, the amendments to the
FLSA overtime provisions enacted by Congress in the years following Bay Ridge
have been consistent with the aggregate approach reflected in that decision, and we
must presume that Congress was aware of that interpretation. See Doe v. United
States, 100 F.3d 1576, 1581 (Fed. Cir. 1996).
The Court concludes that the approach followed by the USPS, and prescribed
by DOL --- adding compensation equal to one-half of the regular rate of pay for each
hour worked above forty, to the compensation used to calculate the regular rate --- is
the most reasonable interpretation of the requirements of 29 U.S.C. § 207(a)(1). As
it is beyond dispute, based on the payroll records submitted by the parties, that this
approach was in fact followed by the USPS in calculating the plaintiffs’ overtime
pay, the Court GRANTS defendant’s motion for summary judgment and DENIES
the plaintiffs’ motion for partial summary judgment.
III. CONCLUSION
For the foregoing reasons, the plaintiffs’ motion for partial summary judgment
is DENIED, and defendant’s motion for summary judgment is GRANTED. The
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plaintiffs’ pending motion for class certification is DENIED-AS-MOOT. The Clerk
shall enter judgment accordingly.
IT IS SO ORDERED.
s/ Victor J. Wolski________________
VICTOR J. WOLSKI
Judge
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