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KENNEY v. WIGTON-ABBOTT CORP.

October 15, 1948

KENNEY et al.
v.
WIGTON-ABBOTT CORPORATION et al.



The opinion of the court was delivered by: MEANEY

This action is brought under the Fair Labor Standards Act of 1938, 29 U.S.C.A. 1 201 et seq. All of the plaintiffs, as a basis for their claims for recovery, assert that they were clerical workers at the Bayonne Naval Supply Depot and employees of the defendant companies which were engaged in the construction of the supply depot, under a cost-plus-fixed-fee contract. They allege that they were engaged in commerce and in production of goods for commerce, and worked at various times for more than forty hours weekly, and thus were entitled to overtime compensation at the rate fixed by statute. They charge that they were not so compensated, and therefore bring this suit to recover the unpaid overtime wages and an additional amount of liquidated damages because of the failure of defendants to make the overtime payments allegedly due.

The Amended Answer sets up the defenses that some of the plaintiffs were not employees of defendants, but were employees of the United States Navy; that all defendants' employees were engaged in governmental activity and were not engaged in commerce; that defendants relied in good faith on a circular letter issued by the Navy, containing instructions for overtime compensation; that all plaintiffs received compensation as established by these instructions; that all payrolls were supervised and approved by the Navy; that defendants relied on a release of the Department of Labor, Wage and Hour Division, Office of the General Counsel as an interpretation that none of their employees were entitled to the benefits of the Act; that defendants relied on a policy of the Navy that the Act had no application to construction of Naval facilities; that the United States was the real party in interest; and that defendants were instrumentalities of the United States and entitled to immunity from the provisions of the Act.

 Section 7 of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 207, provides in part as follows: 'No employer shall, except as otherwise provided in this section, employ any of his employees who is engaged in commerce or in the production of goods for commerce * * * (3) for a workweek longer than forty hours after the expiration of the second year from such date, 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.'

 Section 3(d) of the Act, 29 U.S.C.A. § 203(d) defines an employer as ' * * * any person acting directly or indirectly in the interest of an employer in relation to an employee but shall not include the United States * * * '

 It becomes apparent from the sections of the Act above quoted that, in order to recover, plaintiffs must establish that they were employees of defendants as distinguished from employees of the United States, and that they were either 'engaged in commerce' or 'in the production of goods for commerce'.

 It is to the issue of whether plaintiffs were employees of defendants that the court will first address itself.

 All of the plaintiffs were carried on defendants' payroll, and were paid by checks of defendants. Social security and unemployment insurance deductions were made by defendants and returns carried the names of plaintiffs as employees of defendants. These facts alone, however, are not determinative since the mode of compensation does not control the determination of whether one is an employee within the meaning of the Act. United States v. Rosenwasser, 323 U.S. 360, 65 S. Ct. 295, 89 L. Ed. 301. Neither are common law employee categories or employer-employee classifications under other statutes of controlling significance. Walling v. Portland Terminal Co., 330 U.S. 148, 67 S. Ct. 639, 91 L. Ed. 809. Section 3(e) of the Act, 29 U.S.C.A. 203(e) defines an 'employee' as including 'any individual employed by an employer.' The term 'employ' includes 'to suffer or permit to work.' Section 3(g), 29 U.S.C.A. 203(g).

 Plaintiffs Esposito and Mirabella were hired by the Office of the Officer in Charge of Construction for work under the contract. Attendance records of these plaintiffs were kept by the Office of the Officer in Charge of Construction and weekly statements of time were furnished the defendants. Letters from the Officer in Charge of Construction stated that it was desired that these plaintiffs be carried on defendants' payroll. This was done, however, for the convenience of the government. From the evidence, it appears to the court, that Esposito worked as a Navy Checker checking materials and labor at the depot for the Navy. Mirabella was a fiscal accountant checking vouchers, payrolls, and purchase orders submitted by the contractor for reimbursement from the Navy Department. Both Esposito's and Mirabella's employments were terminated by the Officer in Charge of Construction. From these facts the court concludes that Esposito and Mirabella were hired by the Navy, that their work was performed on behalf of the Navy, and that defendants had no control over the hours worked. Consequently, defendants had not suffered or permitted these plaintiffs to work for them and they were not employees of defendants within the meaning of the Act. Walling v. Jacksonville Terminal Co., 5 Cir., 148 F.2d 768; Helena Glendale Ferry Co., v. Walling, 8 Cir., 132 F.2d 616, See also Bowman v. Pace Co., 5 Cir., 119 F.2d 858.

 The testimony offered as to plaintiff, Helen Behr, showed that she was hired by Mr. Walcott, personnel manager for Wigton-Abbott Corporation. Defendants' personnel records disclose an employee's history card, a hiring and assignment card, and an employment termination order, all forms of defendants bearing Helen Behr's name. Her name does not appear on the weekly reports from the Officer in Charge as to time worked by employees of his office. She performed services as a clerk, typing purchase orders for material coming into the project and kept inventory records. Since, by the terms of the contract, materials were to be supplied by the contractors, the court concludes her work was performed on behalf of the defendants. Thus, since plaintiff Behr was hired by defendants, performed work for them, and was terminated by them, the court concludes that she was their employee during the time alleged. See Bowman v. Pace Co., supra.

 It was stipulated by counsel at the trial that plaintiff, A. Woodruff, was an employee of defendants from February 22, 1943 to August 30, 1943; that plaintiff Harold Harz was an employee of defendants from April 23, 1942 to April 26, 1943, and that plaintiff William Maher was an employee of defendants from July 16, 1942 to August 16, 1943. Consequently, the court need not consider the employment records of these men.

 No testimony or proof having been offered on behalf of plaintiff George Hall, the case must fail as to him since the burden of proof is on such person to show he is within the coverage of the Act. Warren-Bradshaw Drilling Co., v. Hall, 317 U.S. 88, 63 S. Ct. 125, 87 L. Ed. 83.

 The next inquiry then must be whether these employees of defendants were 'engaged in commerce of in the production of goods for commerce' within the meaning of section 7 of the Act, 29 U.S.C.A. § 207. It is to the activities of the employees to which the court must direct its inquiry rather than to the nature of the employers' business. Kirschbaum v. Walling, 316 U.S. 517, 62 S. Ct. 1116, 86 L. Ed. 1638; Warren-Bradshaw Drilling Co. v. Hall, supra; Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S. Ct. 332, 87 L. Ed. 460. The fact that defendants were primarily engaged in local construction would not prevent some of their employees from being 'engaged in commerce' of 'the production of goods for commerce' within the meaning of the Act.

 Plaintiffs contend they were engaged in the 'production of goods for commerce. This contention is based on the fact that part of the project included construction and operation of railroad lines, roads, and docks within the Depot, which are asserted to be instrumentalities of commerce. To support this contention plaintiffs have called the court's attention to Overstreet v. North Shore Corp., 318 U.S. 125, 63 S. Ct. 494, 87 L. Ed. 656. That case held employees engaged in operating a toll road and a draw bridge over a navigable waterway were engaged in commerce. The case did not go on the ground that those employees were engaged in the production of goods for commerce and hence is not applicable on this point. The court is of the opinion that these facilities are not 'goods, wares, products, commodities, merchandise, or articles or subjects of commerce of any character' within the meaning of section 3(i) of the Act, 29 U.S.C.A. § 203(i). Nieves v. Standard Dredging Corp. 1 Cir., 152 F.2d 719; Zehring v. Brown Materials, D.C., 48 F.Supp. 740. The question was left open in Ritch v. Puget Sound Bridge & Dredging Corp., 9 Cir., 156 F.2d 334. Walling v. McCrady Const. Co., 3 Cir., 156 F.2d 932, held that employees engaged in work on roads and streets were engaged in the production of goods for commerce as well as being engaged in commerce within the meaning of the Fair Labor Standards ...


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