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United States v. Klinghoffer Brothers Realty Corp.

January 30, 1961

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE
v.
KLINGHOFFER BROTHERS REALTY CORPORATION, ET AL., DEFENDANTS-APPELLANTS.



Author: Clark

Before SWAN, CLARK and FRIENDLY, Circuit Judges.

CLARK, C. J.: The defendants and the United States of America both petition for rehearing. We shall first consider the defendants' petition, which may be disposed of quickly.

Defendants seek reconsideration of the court's conclusion that their alleged right to inspection under the Jencks statute, 18 U.S.C. § 3500, was lost for lack of specific reference. We agree that "no ritual of words" is necessary to invoke the rights granted by the statute. See Howard v. United States, D.C. Cir., 278 F.2d 872, 874. In the present case, however, defendants' request was for inspection of documents used by a government witness to refresh his recollection, and the court undertook to grant the request. The contention now is that all reports should have been delivered up; but at the time the defendants said nothing to alert the court to the fact that they were making a claim under the Jencks statute. Since the defendants failed to urge the asserted error at a time when the court could have made the necessary correction, the contention comes too late on appeal to show reversible error. The point is one of ordinary trial procedure, not of interpretation of the new statute. Defendants' petition is denied.

The United States of America petitions for rehearing on the reversal of the conviction under Count 1 for failure to pay minimum wages. We concluded that 29 U.S.C. § 206(a) was not violated, because each employee received during each week compensation equal to or exceeding the product of the total number of hours worked and the statutory minimum hourly rate. The government contends that this holding runs counter to authority that payments for certain hours in excess of the statutory minimum cannot be reallocated to make up for deficiencies in payments made for other hours during the week. In general and except to the extent stated below we do not quarrel with the cases on which the government relies. We think, however, that their meaning cannot be stated so broadly.

The government first relies on a series of cases arising under the overtime provisions of 29 U.S.C. § 207(a) and holding that payments for straight time in excess of the statutory minimum wage cannot be reallocated to overtime hours to make up for deficiencies in overtime payments.*fn1 The language and function of § 207(a) differ from § 206(a), and the overtime cases cited by the government are not controlling on the interpretation of the minimum wage provision. Section 207 (a) requires overtime payments to be made at one and one-half times the "regular rate." A reallocation of payments in excess of the statutory minimum to make up for overtime deficiencies would deviate from this statutory requirement by limiting overtime liability to one and one-half times the minimum, rather than one and one-half times the "regular," rate. The particular wording of § 207(a), which is the basis of the overtime cases, is not found in § 206(a), which simply requires minimum wage payments "at the following rates - (1) not less than $1 an hour; * * *"

The existence of different rules regarding reallocation under § 206(a) and § 207(a) is an understandable result of the different functions of those two sections. The former is directed at providing a minimum living standard, and can be satisfied so long as the weekly wage is sufficient to provide that minimum. Section 207(a), on the other hand, is concerned also with deterring long hours by making such long hours more expensive for the employer. This purpose can be successfully accomplished only if the base for computing "time and a half" is the regular, rather than the minimum, wage. Otherwise an employer whose regular rate was one and one-half times the minimum would face no incentive to avoid overtime.

The government also relies on cases involving a failure to allocate an amount equal to the statutory minimum to such "borderline" periods as lunch on the job, preparation for work, etc., which may be determined in certain circumstances to constitute compensable periods of employment. A failure to allocate at least the statutory minimum wage to these compensable "borderline" work periods has been held to violate § 206 (a), even though the wage paid for the usual work hours exceeds the statutory minimum by an amount sufficient to make up for the deficiency in the "borderline" work time.*fn2 The Stock case, cited in footnote 2, may rest on the ground that when an employer has failed to pay a bargained-for hourly wage, minimum or otherwise, for a compensable period of employment, he has of course breached his contract. To the extent that the cited cases go beyond this, my brothers are unwilling to follow them. For my part, however, I believe they may be justified on the ground that a contrary rule would deprive the employees of their bargained-for right to payment in excess of the minimum for the usual work hours. But I find it unnecessary now to pass final judgment on this line of cases, since the present case is sufficiently distinguishable in that the hours for which no payment was received were clearly part of the compensable work week and were recognized as such. Under these circumstances the agreement to work certain additional hours for nothing was in essence an agreement to accept a reduction in pay. So long as the reduced rate still exceeds $1 an hour, an agreement to accept reduced pay is valid, notwithstanding 29 U.S.C. § 218. White v. Witwer Grocer Co ., 8 Cir., 132 F.2d 108. Such an agreement does not become illegal merely because it takes the form of additional hours worked without compensation, rather than of an express reduction of the hourly rate.

The prosecution also stresses that the position it advocates is that taken consistently by the Department of Labor over a period of years as shown by published opinions of the Administrator of the Wage-Hour Division, even though earlier rulings had been to the contrary. We do not stress this change in position further than to point out that the government's present position, on its own showing, is not a necessary one, or one buttressed by precedents; and for the reasons we have indicated it should not be the interpretation given a penal statute. The desirable results urged seem to us ...


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