Opposition Brief — Pierce v. Reich

WILLIAM G. PIERCE, PETITIONER

v. 3

ROBERT B. REICH,

SECRETARY OF LABOR

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

Drew S. Days, III

Department of Justice

Washington, D.C. 20530

(202) 514-2217

THOMAS S. WILLIAMSON, JR.

Solicitor of Labor

ALLEN H. FELDMAN

STEVEN J. MANDEL

MARK 8S. FLYNN

Senior Appellate Attorney

Department of Labor

Washington, D.C. 20210

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QUESTIONS PRESENTED

1. Whether petitioner’s employees were properly

held to be non-“professionals” and hence subject to the

overtime-compensation requirements of Section 7(a)(1)

of the Fair Labor Standards Act of 1938 (FLSA), 29

U.S.C. 207(a)(1).

2. Whether regulations of the Department of Labor

that employ different tests for determining whether

an employee is a “professional” exempted from the

FLSA’s overtime-compensation requirements, depend-

ing on whether the employer is a public or private

entity, comport with the equal protection component of

the Due Process Clause of the Fifth Amendment.

3. Whether the Portal-to-Portal Act of 1947, 29

U.S.C. 251 et seq., provided a defense to petitioner

against liability under the FLSA for not paying over-

time compensation.

(1)

A...

TABLE OF CONTENTS

Opinions below

Jurisdiction

TABLE OF AUTHORITIES

Cases:

Abshire v. County of Kern, 908 F.2d 483 (9th Cir.

1990), cert. denied, 498 U.S. 1068 (1991)

Atlanta Professional Firefighters Union v. City of

Atlanta, 920 F.2d 800 (11th Cir. 1991)

Batterton v. Francis, 432 U.S. 416 (1977)

Donovan vy. Carls Drug Co., 703 F.2d 650

(2d Cir. 1983)

Garcia v. San Antonio Metropolitan Transit

Authority, 469 U.S. 528 (1985)

Kinney v. District of Columbia, 994 F.2d 6

(D.C. Cir. 1993)

Klein v. Rush-Presbyterian-St. Luke’s Medical Ctr.,

990 F.2d 279 (7th Cir. 1993)

McGowan v. Maryland, 366 U.S. 420 (1961)

Michigan Ass’n of Governmental Employees v. Michigan

Dep't of Corrections, 992 F.2d 82 (6th Cir. 1993)

Mueller v. Reich, Nos. 94-3262 & 94-3263

(7th Cir. May 15, 1995)

National League of Cities v. Usery, 426 U.S. 833

Sisson v. Ruby, 497 U.S. 358 (1990)

Tony & Susan Alamo Found. v. Secretary of Labor,

471 U.S. 290 (1985)

Sonstitution, statutes, regulations and rules:

U.S. Const. Amend. V (Due Process Clause)

IV

Statutes, regulations and rules—Continued: Page

Fair Labor Standards Act of 1938, 29 U.S.C. 201 et seq.:

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57 Fed. Reg. (1992):

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Miscellaneous—Continued: Page

AES RR a eee OEE TE = _ j-cowadth walters

In the Supreme Court of the Gnited States

OCTOBER TERM, 1995

No. 94-1823

WILLIAM G. PIERCE, PETITIONER

v.

ROBERT B. REICH,

SECRETARY OF LABOR

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. A1-A8)

is unpublished, but the decision is noted at 45 F.3d 431

(Table). The opinions of the district court (Pet. App.

B1-B3, C1-C9) are unreported.

JURISDICTION

The judgment of the court of appeals was filed on

December 20, 1994. A petition for rehearing was

(1)

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Dee Mth. cen Mmnchads Oh 0 a i certs a eae we ee

ne ee eee ee ee

2

denied on February 7, 1995.' The petition for a writ of

certiorari was filed on May 5, 1995. The jurisdiction of

this Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

1. Section 7(a)(1) of the Fair Labor Standards Act of

1938 (FLSA), 29 U.S.C. 207(a)(1), requires an employer

to pay each of its employees “at a rate not less than

one and one-half times the regular rate at which he is

employed” for all hours worked in excess of 40 hours a

week. Section 13(a)(1) of the Act, 29 U.S.C. 213(a)(1),

provides an exemption from the requirement of

overtime pay for “any employee employed in a bona fide

executive, administrative, or professional capacity

* * * (as such terms are defined and delimited from

time to time by regulations of the Secretary [of

Labor]).”

Regulations promulgated by the Secretary provide

that, in order to be a “bona fide * * * professional,” an

employee must both be paid on a “salary basis,” 29

C.F.R. 541.3(e), and have primarily professional duties,

29 C.F.R. 541.3(a)-(d) (defining “professional” em-

ployees). See also 29 C.F.R. 541.1 (defining “execu-

tive” employees), 541.2 (defining “administrative”

employees). Subject to several exclusions, an em-

ployee is not paid on a “salary basis,” and thus is not a

“bona fide * * * professional,” if he is paid hourly or

piecework wages rather than a salary. 29 C.F.R.

| Although petitioner filed a document denominated

“motion for rehearing en banc,” the local rules of the Sixth

Circuit provide that a suggestion of rehearing en banc will also

be treated as a petition for panel rehearing. See Local R. 14(a).

Accordingly, the period for filing a petition for a writ of

certiorari in this Court did not begin to run until the court of

appeals denied petitioner’s motion. See Sup. Ct. R. 13.1, 13.4.

541.3(e) (bona fide professional employee must be

“compensated for services on a salary * * * basis” at

no less than a specified weekly rate), 541.2(e)(1)

(administrative employee), 541.1(f) (executive

employee).”

An employee is, however, paid on a “salary basis” if

he regularly receives a predetermined amount of

compensation that “is not subject to reduction because

of variations in the quality or quantity of the work

performed.” 29 C.F.R. 541.118(a). As a general rule, a

“salary basis” employee must also receive “his full

salary for any week in which he performs any work

without regard to the number of days or hours

worked.” Ibid.’ An employer may, however, make

deductions from a salaried employee’s predetermined

compensation to reflect absences of “a day or more” for

personal reasons other than sickness or accident (29

C.F.R. 541.118(a)(2)) and to reflect absences for “a day

or more” due to sickness or disability if “made in

accordance with a bona fide plan, policy or practice of

providing compensation for loss of salary occasioned

by both sickness and disability” (29 C.F.R. 541.118(a)

(3)). But under no circumstances is an employee from

whom pay is deducted to reflect partial-day absences

paid on a “salary basis.”

The regulations further provide, in a subsection

commonly referred to as the “window of correction,”

that an employer who has improperly deducted pay

* Professional and administrative employees may also be

paid on a fee basis. See 29 C.F.R. 541.2(e)(1), 541.3(e).

% An employee need not be paid for any workweek in which

he performs no work. 29 C.F.R. 541.118(a).

* As explained, p. 10, infra, special provisions apply in the

case of public employers. 29 C.F.R. 541.5d.

from an employee to reflect partial-day absences may

be given an opportunity to repay the deducted amount

in order to restore retroactively the employee’s

professional status. See 29 C.F.R. 541.118(a)(6) (effect

of an impermissible deduction for an absence of less

than a day “will depend upon the facts in the particular

ease”). The regulation states in pertinent part (2bid.):

Where deductions are generally made when there

is no work available, it indicates that there was no

intention to pay the employee on a salary basis. In

such a case the exemption would not be applicable

to him during the entire period when such

deductions were being made. On the other hand,

where a deduction not permitted by these inter-

pretations is inadvertent, or is made for reasons

other than lack of work, the exemption will not be

considered to have been lost if the employer

reimburses the employee for such deductions and

promises to comply in the future.

2. Petitioner is the founder, owner and president of

Pierce Processing, Inc. (PPI), an engineering con-

sulting firm. Pet. App. Al, C2. PPI employed en-

gineers, design managers and designers and paid them

a set amount that, under company policy, was reduced

when, for personal reasons, the employees worked less

than aday. Jd. at A2, C3. PPI calculated an hourly

rate for each employee by dividing the employee’s

compensation by 2080 hours (40 hours per week times

52 weeks), and PPI deducted pay for hours not worke

based on this calculation. Jbid. PPI also paid em-

ployees overtime based on this straight hourly rate; it

did not pay employees tle FLSA-mandated overtime

premium of one and one-half times their regular rate of

pay. Id. at A2.

3. The Secretary of Labor brought this action

against petitioner and PPI alleging that PPI had

violated the FLSA by failing to pay employees at the

overtime rate required by the Act. Pet. App. A2. Peti-

tioner and PPI denied that overtime compensation had

been due, on the ground that the employees in question

were “professionals” within the meaning of Section

13(a)(1) of the Act. Pet. App. C1-C2. The parties

agreed that the employees in question carried out

“professional” duties as defined by the Secretary.

They disagreed, however, as to whether, as petitioner

and PPI claimed, the employees had been paid on a

“salary basis” within the meaning of the regulations,

or whether, as the Secretary alleged, deductions had

been made to reflect partial-day absences. /d. at C4,

C7.

Following a trial, the district court found that, prior

to January 1, 1989 — at which point petitioner and PPI

agreed to comply prospectively with the FLSA — “{iJt

was [petitioner’s and PPI’s] practice to take

deductions from an employee’s salary when the

employee was absent for personal reasons for less than

a day.” Pet. App. C7. The court initially held that it

was unnecessary to decide whether, as a result of

those deductions, the pertinent employees failed the

“salary basis” test, because, in the court’s view,

petitioner and PPI were entitled to eliminate their

liability retroactively by taking advantage of the

“window of correction” provided by 29 C.F.R.

541.118(a)(6). That recourse was available, the court

held, based on a combination of factors: deductions had

not been made when work was lacking, but only when

employees voluntarily had been absent for personal

reasons; petitioner and PPI had promised to reimburse

employees for the deductions PPI had made; PPI was

presently in compliance with the FLSA; and petitioner

and PPI had promised to remain in compliance. Pet.

App. C7-C8. The court accordingly ruled that,

provided that petitioner and PPI repaid the improper

deductions, it would enter an order to the effect that

petitioner and PPI were exempt from the Act under

the “window of correction.” Jd. at C8. That decision

was issued on March 25, 1992. Five months later, the

district court was notified that petitioner and PPI had

not complied with its order requiring them to

compensate employees for the improper deductions.

The district court thereupon, in September 1992,

issued an order requiring petitioner to show cause

why the court’s earlier order should not be rescinded

and judgment entered in favor of the Secretary. /d. at

A3, B2. On November 30, 1992, the district court

ordered PPI and petitioner to reimburse the em-

ployees within 30 days. On February 9, 1993, with

petitioner and PPI having still failed to repay the

deducted income, the court entered judgment in favor

of the Secretary. It held that “[djefendants’ employees

were not exempt from the overtime provisions of the

Act[,j [slee 29 U.S.C. §207(a)(1), 29 C.F.R. §541.3(e),

541.118(a), (a)(2) and (a)(6),” and ordered petitioner and

PPI to pay $10,842 in back overtime wages plus

interest. Jd. at B2-B3.

4. The court of appeals affirmed. Pet. App. A1-A8.°

It held that because petitioner’s employees were

5 Both petitioner and PPI appealed, but the court of appeals

dismissed PPI’s appeal because PPI was not represented by

counsel. See Pet. App. A3 n.1. The Secretary also filed a cross-

appeal challenging the district court’s refusal to grant a

permanent injunction prohibiting petitioner and PPI from

engaging in future violations of the FLSA. The court of appeals

docked pay for missing a fraction of a day, they could

not be considered salaried employees, but rather were

hourly workers entitled to overtime pay at the one-

and-one-half-time premium mandated by the FLSA. I/d.

at A5-A6. In so ruling, the court first rejected

petitioner’s argument that the Secretary’s regulation

defining “salary basis” was inconsistent with what

petitioner claimed was Congress’s intent, as revealed

in “subsequent legislation,” to require compensation

of employees “only when they perform work and

flexible unpaid leave.” Jd. at A5. The court held that

the enactments identified by petitioner do “not dismiss

[sic] the regulatory exemption for salaried workers

and [petitioner’s] argument must fail.” Jbid.® It also

rejected petitioner’s claim that the term “day” as used

in 29 C.F.R. 541.118(a)(2) in fact includes partial days

and that he was therefore entitled to deduct employees’

wages for partial-day absences, because such absences

were not “less thana * * * day.” Pet. App. A5. The

court held that the term “day” refers to “the standard,

eight-hour day.” Ibid.

The court of appeals also rejected petitioner’s claim

that the district court improperly denied him the

opportunity to take advantage of the “window of

correction.” It held that the district court had acted

properly and consistent with the Secretary’s regula-

held that the district court did not abuse its discretion in

refusing to enter such an injunction. Jd. at A7-A8.

6 We assume that in the quoted passage the court meant

“discuss,” rather than “dismiss.” The legislation upon which

petitioner relied was the Portal-to-Portal Act of 1947, 29 U.S.C.

251 et seq., and the Family and Medical Leave Act of 1993

(FMLA), 29 U.S.C. 2601 et seg. See Pet. App. A5 n.2. Peti-

tioner does not rely on the FMLA in his petition.

tion when it conditioned its finding of exempt status on

petitioner’s reimbursement of the deductions he had

improperly taken, and on petitioner’s promise to

comply with the FLSA in the future. Pet. App. A6-A7.

The court also rejected petitioner’s claim that his

alleged “financial inability excuse[d] his failure to

reimburse the past deductions,” noting that the

regulation establishing a “window of correction” does

not provide for an extension of exempt status due to

inability to pay and that, in any event, petitioner

“provided no evidence [regarding] his ability to repay

the deductions.” Jbid. The court of appeals thus held

that the district court correctly “removed the window

of correction” and ordered PPI and petitioner to pay

the overtime compensation due. Jd. at A7.

ARGUMENT

The decision below is correct, and it conflicts with

no decision of this Court or of any court of appeals.

Moreover, the judgment that has been entered in this

case against PPI, petitioner’s wholly owned cor-

poration, is now res judicata. See n.5, supra. Review

is therefore not warranted.

1. Petitioner argues (Pet. 8-17) that he was denied

the equal protection of the laws because the

Secretary’s regulations presently define “salary

basis” more restrictively in the context of private

employers than in that of public employers. That

claim was neither raised nor ruled upon below, and has

therefore been waived. See Sisson v. Ruby, 497 U.S.

358, 359 n.1 (1990). Moreover, petitioner’s conduct

7 In a paragraph in the second of his two briefs to the court

of appeals, petitioner argued that the more lenient definition of

“salary basis” used in the public-employee context made

9

occurred prior to the Secretary’s adoption of a

different “salary basis” test governing public em-

ployers. As we explain below, the Secretary has

promulgated a regulation, 29 C.F.R. 541.5d, that

generally permits public employers to make de-

ductions based on partial-day absences from the

salaries of professional employees, without losing

their exempt status. That regulation, however, was

not adopted until August 1992, see 57 Fed. Reg. 37,666,

37,677 (1992), more than three years after the

violations at issue in this case, and it does not apply

retroactively. See id. at 37,678; Kinney v. District of

Columbia, 994 F.2d 6, 10 (D.C. Cir. 1993). Petitioner

thus has no standing to challenge in this lawsuit the

distinction presently drawn by the Secretary between

employees of public and private employers.*

“common sense,” and argued that the same standard should

apply to employees of private employers. See C.A. Br. 9-10.

Petitioner, however, nowhere asserted that the differing

standards utilized by the Secretary constituted a violation of the

equal protection component of the Due Process Clause of the

Fifth Amendment.

8 A precursor of 29 C.F.R. 541.5d was adopted on an interim

basis in September 1991, but adoption of that interim regulation

also postdated the violations in this case. See 56 Fed. Reg.

45,824 (1991). Before that interim regulation was adopted, the

Secretary had in 1987 announced that the Department of Labor

would not enforce the “no partial-day deduction” rule against

state and local governments in discrete circumstances. The

Secretary’s policy, however, did not alter the substantive

standards of the “salary basis” test for public employers as set

forth in the regulations, and the Department specifically

advised public employers that “[(t]his nonenforcement policy is

not intended to affect any employee’s rights under section 16(b)

of [the] FLSA.” See Letter Ruling, Department of Labor, Wage

& Hour Division (Jan. 9, 1987), reprinted at 57 Fed. Reg. 37,668

10

In any event, the Secretary’s differing definitions of

“salary basis,” depending on whether the employer is a

public or private concern, comport with equal pro-

tection principles. A classification that treats some

groups differently from others, but is not based on

suspect classifications and does not affect fundamental

rights, is valid if it has a rational basis. McGowan v.

Maryland, 366 U.S. 420, 425 (1961); see also Tony &

Susan Alamo Found. v. Secretary of Labor, 471 U.S.

290, 306 n.32 (1985). The Secretary’s regulation, 29

C.F.R. 541.5d, which amended the generally applicable

“salary basis” test to provide greater latitude for

public employers in making deductions from the pay of

otherwise FLSA-exempted employees, has a rational

basis.

The regulation provides, in pertinent part, that a

public employee who otherwise qualifies as an

executive, professional, or administrative employee

will not lose that status if the employee

is paid according to a pay system established by

statute, ordinance, or regulation, or by a policy or

practice established pursuant to principles of

public accountability, under which the employee

accrues personal leave and sick leave and which

requires the public agency employee’s pay to be

reduced or such employee to be placed on leave

without pay for absences for personal reasons or

because of illness or injury of less than one work-

day.

(1992); see also Kinney, 994 F.2d at 9 (despite nonenforcement

policy, holding public employer liable based on its violations of

pre-1992 regulatory scheme).

11

29 C.F.R. 541.5d. As the Secretary has explained, the

Department of Labor modified the “no partial-day

deductions” rule in the public-employee context based

on its evaluation of the unique nature of public

employment. That evaluation was occasioned by this

Court’s decision in Garcia v. San Antonio Metro-

politan Transit Authority, 469 U.S. 528 (1985), which

held that the FLSA could constitutionally be applied to

state and local government employees performing

traditional governmental functions.2 The Secretary

noted that the general “salary basis” regulations—

first promulgated in 1940—had been based on evidence

that professional, executive, and administrative

employees in the private sector were nearly always

paid on a salary basis. 57 Fed. Reg. 37,666-37,668

(1992). By contrast, the Secretary noted, public

employers are normally subject to “principles of public

accountability” that prohibit paying employees for

time not worked. See id. at 37,667.

Applying to public employers the traditional “salary

basis” rule regarding the deduction of pay for partial-

day absences, the Secretary recognized, would prevent

state and local governments from availing themselves

of the exemption to the requirement of overtime pay

for professional, administrative, and executive

employees. 57 Fed. Reg. 37,667 (1992). That result,

however, would be inconsistent with Congress’s intent

in extending the FLSA to state and public employers,

* The FLSA had been amended in 1966 and 1974 to cover

governmental employers. However, it was not until the 1985

decision in Garcia, in which this Court overruled National

League of Cities v. Usery, 426 U.S. 833 (1976), that the FLSA’s

provisions could constitutionally extend to state and local public

employees engaged in traditional governmental functions.

12

because it was clear that Congress had intended that

such employees be exempt in the public-sector context.

Id. at 37,672. Indeed, the Secretary noted that, since

the decision in Garcia, public employers had been

exposed to “potentially enormous and generally

unexpected back wage liabilities” for wages owed to

employees who would have been considered exempt

“professionals” were it not for their employers’

adherence to a “public accountability” pay system that

required partial-davy deductions. Jd. at 37,663, 37,670.

Thus, the Secretary concluded, “the regulatory

requirements adopted before Congress extended

FLSA coverage to State and local governments simply

could not operate in a manner that effectively

distinguished exempt from non-exempt public

employees.” Jd. at 37,672.”

The distinction presently drawn between the

“salary basis” test applicable to private employers and

that applicable to public employers therefore plainly

has a rational basis. In the judgment of the Secretary,

the “public accountability” pay systems under which

public employees are paid make the “no partial-day

deductions” rule an ill-suited and unrealistic measure

of whether particular employees are exempt pro-

fessionals. By contrast, the Secretary reasoned, the

traditional “salary basis” test remains a_ useful

1 In light of the Secretary’s detailed explanation of his

reasons for adopting Section 541.5d, petitioner’s suggestion (Pet.

11-12) that the Secretary has not supplied an adequate

explanation for his change of policy is without merit. See 57

Fed. Reg. 37,667-37,673 (1992). Moreover, the regulation is

clearly a valid exercise of the broad rulemaking authority

granted to the Secretary to define and delimit the Section

13(a)(1) exemptions. Compare Batterton v. Francis, 482 U.S.

416, 424-426 (1977).

13

criterion in the private sector. See Mueller v. Reich,

Nos. 94-3262 & 94-3263 (7th Cir. May 15, 1995), slip op.

6-7 (to be reported at 54 F.3d 438) (holding, based on the

need for public employees to be subject to principles of

“public accountability,” that 29 C.F.R. 541.5d is

rationally related to the objectives of the FLSA).

2. Petitioner next argues (Pet. 17) that the

Secretary has misinterpreted his own regulations in

determining that a private-sector employee who has

been subject to deductions reflecting partial-day

absences is not an exempted “professional.” Peti-

tioner contends that those regulations should be

interpreted to bar employers only from making

deductions for hours not worked due to the un-

availability of work, and that employees should not lose

their exempt status where pay has been deducted for

hours that the employee has not worked due to

personal unavailability. Petitioner’s claim is defeated

by 29 C.F.R. 541.118(a)(2), which makes an exception

from the general rule that salaried employees are paid

“without regard to the number of days or hours

worked,” but only “if an employee is absent for a day

or longer to handle personal affairs.” Ibid. (emphasis

added). No such exception applies for deductions

reflecting partial-day absences. See Michigan Ass’n

of Governmental Employees v. Michigan Dep't of

Corrections, 992 F.2d 82, 84 (6th Cir. 1993); Klein v.

Rush-Presbyterian-St. Luke’s Medical Ctr., 990 F.2d

279, 283 (7th Cir. 1993); Donovan v. Carls Drug Co.,

703 F.2d 650, 652 (2d Cir. 1983).

Also unavailing is petitioner’s claim (Pet. 17-24) that

there is “confusion” about what constitutes a day

within the meaning of the regulation. The Secretary

has interpreted that term, consistent with its ordinary

usage, to mean the employee’s customary work day,

14

see Gov't C.A. Br. 24-26, and the court of appeals

likewise recognized that term to connote “the

standard eight-hour day,” Pet. App. A5. The decisions

on which petitioner relies (Pet. 18 nn.10, 12) do not

discuss the proper interpretation of the term “day.”

There is some tension in those decisions on a separate

question: whether an employer loses the Section

13(a)(1) exemption when employees are merely

“subject to” a policy of partial-day deduction, or

whether the employer must have made an actual

deduction from employees’ compensation to reflect a

partial-day absence. Compare Atlanta Professional

Firefighters Union v. City of Atlanta, 920 F.2d 800,

805 (lith Cir. 1991) (actual deductions required in

order for employer to lose exemption) with Abshire v.

County of Kern, 908 F.2d 483 (9th Cir. 1990)

(exemption lost where employees are “subject to”

policy under which such deductions would be

mandated), cert. denied, 498 U.S. 1068 (1991). That

issue is not presented in this case, however, because it

is clear that petitioner and PPI actually deducted

compensation from employees based on partial-day

absences. See Pet. App. C7. Moreover, petitioner has

not argued that relief in this case should have been

awarded only to those employees who experienced

actual deductions and only to the extent of those

deductions.

3. Petitioner next argues (Pet. 28-30) that the

decision below is inconsistent in two respects with the

Portal-to-Portal Act of 1947, 29 U.S.C. 251 et seq.

Petitioner claims first (Pet. 30-31) that his practice

of making deductions for partial-day absences was

justified under Section 4(a)(2) of the Act, 29 U.S.C.

254(a)(2), which relieves employers of the duty to pay

minimum wage and overtime compensation for

15

activities either preliminary or subsequent to the

principal activities that the employee is employed to

perform. The Portal-to-Portal Act, however, merely

defines certain activities for which the employer is not

required to provide compensation at all; it does not

address the question whether an employee is

“salaried” or otherwise falls within the Section

13(a)(1) exemption for professional, executive, or

administrative employees. Moreover, the Secretary’s

“salary basis” regulation does not require that

employees be compensated for absences of less than a

day. It merely provides that if deductions are made to

reflect such absences, the affected employees may not

be considered exempted professional, administrative,

or executive employees.

Petitioner also claims (Pet. 31) that he is entitled to

a defense under Section 10 of the Portal-to-Portal Act,

29 U.S.C. 259, because, he alleges, he undertook his

pay practices believing them to be lawful. Petitioner

has waived that claim by failing to raise it below. In

any event, Section 10 of the Portal-to-Portal Act does

not apply to this case. Section 10 absolves an employer

for liability for acts or omissions that he demonstrates

were in “good faith in conformity with and in reliance

on any written administrative regulation, order,

ruling, approval, or interpretation” by the Admin-

istrator of the Wage and Hour Division of the

Department of Labor. However, as we have explained,

the Department’s regulations supply no basis for a

defense of reasonable good-faith reliance here, but

instead make clear that an employer who makes

deductions from employees’ wages to reflect partial-

day absences cannot claim that those employees are

professionals paid on a “salary basis.” Petitioner does

not identify any written opinion of the Department

16

upon which he claims to have relied in making such

deductions while withholding the overtime com-

pensation required by the FLSA.

4. Finally, petitioner’s unfocused discussion (Pet.

25-26) of the Secretary’s “window of correction”

regulation presents no issue warranting review. The

district court gave petitioner the opportunity to take

advantage of the window of correction and to avoid

liability for overtime compensation by reimbursing his

employees for the partial-day deductions he had made

and by promising to comply with the FLSA in the

future. The district court imposed liability only after

petitioner failed to reimburse his employees for the

deductions, as petitioner concedes. See Pet. 6n.2. The

court of appeais affirmed on the ground that peti-

tioner’s failure to repay the wages he had deducted

supplied a valid basis for closing the window of

correction and for imposing liability for the unpaid

overtime wages. That is the only ruling below re-

lating to the window of correction that adversely

affected petitioner, and he does not seek review of it.”

Thus, no question pertaining to the window of

correction is suitable for review by this Court.

11 In the court of appeals, the Secretary argued that the

district court’s ruling could be upheld on the alternative ground

that, because petitioner had not made deductions inadvertently

and because petitioner did not otherwise pay the employees in

question on a salary basis, he was not entitled to take advantage

of the window of correction. Gov’t C.A. Br. 29. The court of

appeals did not reach that issue, however, because it held that

the district court had properly “removed” the window of

correction when petitioner failed to correct his pay practice by

reimbursing his employees for past deductions. Pet. App. A7.

17

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

DREw S. DAYS, III

Solicitor General

THOMAS S. WILLIAMSON, JR.

Solicitor of Labor

ALLEN H. FELDMAN

Associate Solicitor

STEVEN J. MANDEL

Deputy Associate Solicitor

MARK S. FLYNN

Senior Appellate Attorney

Department of Labor

JULY 1995