BOYKIN v BOEING, No. 9635482
U.S. 9th Circuit Court of Appeals
BOYKIN v BOEING
No. 9635482
RAYMOND BOYKIN; ROBERT A.NELSON; DANIEL C. COMPTON;STEPHEN A. MARCHESI; GEOFFREYK. WILLSON, and the class of No. 96-35482similarly situated persons,D.C. No.Plaintiffs-Appellants,CV-95-01253-JCCv.OPINIONBOEING COMPANY, a Delawarecorporation,Defendant-Appellee.
Appeal from the United States District Courtfor the Western District of WashingtonJohn C. Coughenour, District Judge, PresidingArgued and SubmittedMay 9, 1997--Seattle, WashingtonMemorandum Filed August 15, 1997Order and Opinion Filed October 23, 1997Before: Donald P. Lay,* Robert R. Beezer andStephen S. Trott, Circuit Judges.Opinion by Judge BeezerSUMMARY
______________________COUNSEL Mark E. Cavanagh, Carney, Badley, Smith & Spellman andDavid C. Bratz and B. Otis Felder, LeGros, Buchanan & Paul,Seattle, Washington, for the plaintiffs-appellants.Paul E. Smith and Lawrence B. Hannah, Perkins, Coie, Seat-tle, Washington, for the defendant-appellee.
_____________________________ORDER Defendant-appellee's request for publication, received bythe court on September 18, 1997, is GRANTED.The memorandum disposition filed August 15, 1997, isredesignated as an authored opinion by Judge Beezer withminor modifications.
_____________________________OPINION BEEZER, Circuit Judge:Raymond Boykin and other purported representatives of aclass of employees at the Boeing Company appeal the districtcourt's grant of summary judgment in favor of Boeing in theemployees' action for overtime wage benefits under the FairLabor Standards Act (FLSA), 29 U.S.C. SS 201-09, and theWashington Minimum Wage Act (MWA), Wash. Rev. Codech. 49.46. The employees contend that the district court erredin its conclusion that Boeing did not violate the FLSA or theMWA by failing to pay the employees time and one-half forovertime work. We have jurisdiction under 28 U.S.C.S 1291,and we affirm.IIn July 1995, representatives of a putative class filed acomplaint alleging that Boeing violated both the FLSA andthe MWA by failing to pay a rate of time-and-a-half for over-time work. The purported class includes engineers who arecompensated according to the 1992-1995 collective bargain-ing agreement between Boeing and the Seattle ProfessionalEngineering Employees Association ("SPEEA"). Under theagreement with SPEEA, the engineers have a standard work-week of 40 hours. Boeing may require the engineers to work"spot overtime," overtime necessitated by unanticipateddemands upon the engineers, without compensation up to anadditional eight hours per week. If spot overtime exceedseight hours, Boeing pays a "premium rate" equalling the rateof straight time plus $6.50 per hour. Boeing also pays thispremium rate for "scheduled overtime," i.e., anticipated orplanned periods of overtime due to large projects or short-term fluctuations in the production cycle.The proposed class also includes management employeesas well as professional and administrative employees. Boeingpays some of these employees on a salary basis with addi-tional pay for overtime. Managers receive overtime compen-sation for all hours beyond a 40 hour workweek. Thisovertime pay for managers consists of either time-and-a-halfor the premium rate. The professional and administrativeemployees also receive the premium rate for overtime.After plaintiffs moved for class certification, Boeing movedfor summary judgment on all claims. In response, the employ-ees cross-moved for summary judgment and moved for certi-fication to the Washington Supreme Court of the issuesrelating to the application of Senate Bill 6029, whichamended the MWA. Without ruling on the class certification,the district court granted summary judgment for Boeing onthe employees' FLSA and MWA claims, denied the employ-ees' summary judgment motion, and denied certification tostate court.This appeal followed. On September 16, 1996, this courtdenied the employees' motion to certify the state law issue tothe Washington Supreme Court.IIWe review de novo a grant of summary judgment and ques-tions of state law. See Bagdadi v. Nazar, 84 F.3d 1194, 1197(9th Cir. 1996) (summary judgment); In re Park at DashPoint, L.P., 985 F.2d 1008, 1010 (9th Cir. 1993) ("DashPoint") (state law questions).III[1] The employees assert that the FLSA requires Boeing topay them time and one-half for any hours they work over a40-hour workweek. The FLSA generally requires employersto pay their employees at a rate of one and one-half times theemployee's regular pay rate for time worked in excess of 40hours per week. 29 U.S.C. S 207(a). The FLSA exempts cer-tain classes of employees, those who work in "bona fide exec-utive, administrative, or professional capacit[ies,]" from thisrequirement. 29 U.S.C. S 213(a)(1). The Act does not define"executive, administrative, or professional;" rather, it grantsthe Secretary of Labor broad authority to "define[ ] anddelimit[ ]" these terms. Id.; see Auer v. Robbins, 117 S. Ct.905, 909 (1997).[2] Under the Department of Labor's (DOL) definitions, anemployee qualifies for exempt status if the employee per-forms certain duties and is compensated on a genuine salarybasis. See 29 C.F.R. SS 541.1, 541.2, 541.3 (defining"executive" "administrative" and "professional"); SEIU,Local 102 v. County of San Diego, 60 F.3d 1346, 1350 (9thCir. 1995) (failure to satisfy either the salary or the duties testresults in loss of exemption), cert. denied, 116 S. Ct. 774(1996). At issue in this appeal is whether the class of employ-ees receives compensation on a salary basis.The DOL considers an employee to be paid on a "salarybasis" within the meaning of the regulations if he or she: regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount consti- tuting all or part of [his or her] compensation, which amount is not subject to reduction because of varia- tions in the quality or quantity of the work per- formed. . . . [T]he employee must receive[his or her] full salary . . . without regard to the number of days or hours worked.29 C.F.R. S 541.118(a). The employees contend that they arenot compensated on a salary basis because, in addition to theirfixed salary, Boeing pays them for their overtime work.[3] The employees' argument, however, disregards theDOL's interpretation of its own regulation. The DOL hasunequivocally and consistently declared that additional com-pensation in the form of hourly overtime payment does notdefeat exempt status under the salary-basis test. For example,in an opinion letter dated April 5, 1995, the DOL stated: As discussed in section 541.118(b) of Regulations, Part 541 . . . , additional compensation besides the required minimum weekly salary guarantee may be paid to exempt employees for hours worked beyond their standard workweek without affecting the salary basis of pay. Thus, extra compensation may be paid for overtime to an exempt employee on any basis. The overtime payment need not be at time and one- half, but may be at straight time, or at one-half time, or flat sum, or on any other basis.D.O.L. Wage & Hour Division Opinion Letter No. 1738(April 5, 1995); see also D.O.L. Wage & Hour Division Opin-ion Letter No. 1737 (April 5, 1995).[4] The Supreme Court has recently stated that "[b]ecausethe salary-basis test is a creature of the Secretary's own regu-lations, his interpretation of it is, under our jurisprudence,controlling unless plainly erroneous or inconsistent with theregulation." Auer, 117 S. Ct. at 910 (quotations omitted). TheSecretary's interpretation of the salary-basis test as it relatesto overtime compensation is articulated clearly in the DOL'sOpinion letters and is entitled to our court's deference. Seeid.; see also Frank v. McQuigg, 950 F.2d 590, 595 (9th Cir.1991) (applying the Chevron standard to the DOL's interpre-tation of its regulations announced in an Opinion Letter).[5] The plain language of the regulation implementing thesalary-basis test supports the Secretary's conclusion that over-time compensation, by itself, does not spoil exempt status. Inrelevant part, the regulation reads: "[a] salary may consist ofa predetermined amount constituting all or part of theemployee's compensation. In other words, additional compen-sation besides the salary is not inconsistent with the salarybasis of payment." 29 C.F.R. S 541.118)(b) (emphasis added).Moreover, the focus of the regulations is to prohibitemployers from claiming that their employees are compen-sated on a salary basis when the employees are subject todeductions in pay. 29 C.F.R. S 541.118(a)(1)-(6). As the dis-trict court aptly noted: "it is difficult to perceive the allegedinjury to a salaried employee who receives some form ofhourly overtime compensation without fear of having com-pensation docked on the same basis." The DOL's interpreta-tion of the salary-basis test is not plainly erroneous orinconsistent with the regulations.The plaintiffs point to our decision in Abshire v. County ofKern as contrary authority. 908 F.2d 483 (9th Cir. 1990). Thedispositive issue in Abshire, however, is not the issue here;the dispute in Abshire concerned whether the plaintiff-employees were exempt under the salary-basis test when thedefendant deducted pay from the employees for less than aday's absence from work. Id. at 485. In holding that theemployees were not exempt, the court determined that thispractice violated the specific regulation against pay docking.Id. at 486. The court also stated that "additional compensationfor extra hours worked is also not generally consistent withsalaried status." Id. Because this statement is dictum, weaccord it no precedential value.[6] Boeing did not violate the FLSA by failing to pay theemployees time and one-half for overtime work.IVThe plaintiffs also allege that Washington's MWA, whichwas modeled after the FLSA, requires Boeing to compensatethem for overtime work at a rate of time and one-half. Similarto the FLSA, the MWA generally requires an employer to paytime and one-half to employees who work in excess of fortyhours per week. Wash. Rev. Code S 49.46.130(1). The Wash-ington Act also contains an exemption for "[a]ny individualemployed in a bona fide executive, administrative, or profes-sional capacity" who is paid on a salary basis. Id.S 49.46.010(5)(c).In 1995, the Washington Court of Appeals determined thatpayment of overtime on an hourly basis defeats an employ-ee's exempt status under the salary-basis test. Tift v. Profes-sional Nursing Servs., Inc., 76 Wash.App. 577 (1995). Soonthereafter, the Washington Legislature amended the MWA inresponse to Tift. Senate Bill 6029 added the following lan-guage to the MWA: "The payment of compensation or provi-sion of compensatory time off in addition to a salary shall notbe a factor in determining whether a person is exempted underRCW 49.46.010(5)(c)." Wash. Rev. Code S 49.46.130(2)(a)(West 1997). The legislature intended the law to apply retro-actively: "This act applies to all administrative and judicialactions commenced on or after February 1, 1995, and pendingon the effective date of this act and such actions commencedon or after the effective date of this act," 1995 Wash. Laws,Ch.5, S 2.1[7] The employees contend that the Washington Legislatureexceeded its authority in passing Senate Bill 6029; theemployees argue that state law precluded the legislature fromretroactively overruling Tift. Plaintiff's argument overlooksthat the rule which bars the legislature from retroactivelyoverruling court decisions applies only to the decisions of theWashington Supreme Court. See Overton v. WashingtonEcon. Assistance Auth., 96 Wash.2d 552, 558 (1981) ("[W]ehave held that separation of powers problems are raised whena subsequent legislative enactment is viewed as a clarificationand applied retroactively, if the subsequent enactment contra-venes the construction placed on the original statute by thiscourt [the Washington Supreme Court]." Johnson v. Morris,87 Wash.2d 922, 927 (1976) ("once a statute has been con-strued by the highest court of the State, that construction oper-ates as if it were originally written into it"); see also DashPoint, 985 F.2d at 1012 (noting that a Washington statutoryamendment did not "contravene[ ] any prior decisions of theWashington Supreme Court").[8] The employees next argue that the retroactive applica-tion of Senate Bill 6029 impairs their vested rights under theWashington Constitution. A vested right is "an immediate,fixed right of present or future enjoyment." Gillis v. KingCounty, 42 Wash.2d 373, 377 (1953) (quotation omitted). Inorder for a vested right to be entitled to protection from legis-lation, it "must be something more than a mere expectationbased upon an anticipated continuance of the existing law."Washington v. Hennings, 129 Wash.2d 512, 528 (1996) (quo-tation and citation omitted). The proper inquiry in determin-ing the constitutionality of retroactive legislation is "whethera party has changed position in reliance upon the previous lawor whether the retroactive law defeats the reasonable expecta-tions of the parties." Id. at 528-29.[9] The employees have not changed position in relianceupon Tift: As Boeing notes, at issue in this case are primarilythe 1992-1994 compensation practices at Boeing; Tift was notannounced until 1995. Further, retroactive application of Sen-ate Bill 6029 does not defeat any reasonable expectations ofthe employees. The employees governed by the SPEEA col-lective bargaining agreement cannot claim any expectationsfrom the terms of their contract, as it provides for overtimecompensation at a rate less than time and one-half. Moreover,none of the employees had expectations, under the MWA, toovertime pay at a rate of time and one-half prior to Tift.[10] The Boeing employees never performed work with theexpectation that they would be paid time and one-half underthe MWA until the Court of Appeals announced its decisionin Tift: "there is no injustice in retroactively depriving a per-son of a right that was created contrary to his expectations atthe time he entered into the transaction from which the rightarose." In re Marriage of Giroux, 41 Wash.App. 315, 320(1985) (quotation omitted). As Tift, thus, did not create vestedrights for the employees, the application of Senate Bill 6029does not impair employees' vested rights.[11] Boeing did not violate the MWA by failing to payemployees time and one-half for overtime work.AFFIRMED
___________________________FOOTNOTES *The Honorable Donald P. Lay, Senior Circuit Judge for the Eighth Cir-cuit, sitting by designation.1 The plaintiffs argue at length that although their action was com-menced approximately three months after the purported effective date ofthe Senate Bill, it does not apply prospectively to their action; they claimthat the emergency clause of the bill, which causes the bill to becomeeffective immediately rather than after the constitutionally mandated 90-day waiting period, is invalid. We do not reach this issue. If a statute byits terms applies retroactively, as does the statute at issue here, an emer-gency clause is not needed. Agency Budget Corp. v. Washington Ins.Guaranty Ass'n, 93 Wash.2d 416, 425 (1980).