such as migrant farm workers, seasonal construction workers, house painters, and other independent contractors who offer their services on a per-day or per-job basis for a flat fee. Workers such as these do not generally receive paid vacations, holidays, or sick days, as plaintiffs did.
Defendant argues that plaintiffs received the same salaries "regardless of the number of hours worked" as the regulation requires. However, the regulation does not stop there. It says, "regardless of the number of hours worked in the day or at the job." (emphasis supplied.) Again, this language suggests an employee who receives a lump sum for day's work or for doing a particular job, rather than an employee who works for an annual salary disbursed in bi-weekly increments.
The regulation's next clause instructs that the regular rate is to be determined "by totaling all the sums received at such day rates or job rates in the workweek and dividing by the total hours actually worked." (emphasis supplied.) Again, the use of the plurals "sums" and "rates" seems to contemplate an employee who contracts to earn money in diverse amounts or from diverse sources, rather than one who earns a regular salary from a single employer. In this case, defendant did not determine the regular rate by adding plaintiffs' income from day rates and job rates for a particular week, and then dividing by the number of hours worked. Nor could it have, since plaintiffs had no day rates or job rates. Rather, defendants took each employee's weekly salary and skipped to the second step, dividing the weekly salary by the hours worked.
Defendant argues that in the Memorandum and Order of August 23, 1990, I found that defendant properly compensated plaintiffs under § 231.43(b). In that Memorandum and Order, I found that defendants properly calculated plaintiffs' overtime compensation under 29 C.F.R. § 778.114, and that § 778.114 applied to plaintiffs. By implication, I found that defendants had properly calculated plaintiffs' overtime compensation under § 231.43(b), since that regulation is "substantially identical to § 778.114 in its calculation of the regular rate. . . " Slip Op. at 8-9 (emphasis supplied). I have restated that observation here: defendant did properly compensate plaintiffs, assuming that § 231.43(b) applies. However, the issue now before the court -- whether § 231.43(b) applies -- was not addressed in the previous Memorandum and Order. As stated above, I find that § 231.43(b) does not apply to plaintiffs. Therefore, it is ultimately irrelevant whether defendants correctly calculated plaintiffs' overtime compensation under that regulation.
Defendant invites the court's attention to South Florida Beverage Corp. v. Figueredo, 409 So. 2d 490 (Fla. App. 1981). In that case, the court applied 29 C.F.R. § 778.112, the federal provision governing day-rate and job-rate employees, to employees who were paid one-fifth of their weekly salaries for each weekday they reported to work. The plaintiffs in that case truly were day-rate employees: they received a flat sum for a day's work regardless of the number of hours they worked that day. The court pointed out that the payments there, which were calculated under § 778.112, were identical to the payments which would have resulted had the calculations been done under 29 C.F.R. § 778.114, which governs salaried employees such as the plaintiffs in this case. In other words, the court observed that under federal law, salaried, day-rate, and job-rate employees are treated alike for overtime purposes.
In this case, defendant has argued that it properly compensated plaintiffs under § 778.114, which governs salaried employees. It has prevailed on that argument. Section 231.43(b) of the Pennsylvania Code is analogous to 29 C.F.R. § 778.112. Both govern day-rate and job-rate employees. In fact, the two regulations are identical, word for word. There is no state-law analog to 29 C.F.R. § 778.114. Defendant argues that this lacuna in the state law must mean that salaried employees are governed by § 231.43(b). To support its argument, defendant points to the South Florida court's observation that §§ 778.112 and 778.114 are "analytically identical." South Florida, 409 So. 2d at 493. Defendant then points out that § 231.43(b) is analytically identical to both federal regulations. Indeed, that is true -- but only as to the mathematical computations. The two federal regulations are not identical in their scopes of coverage. In fact, they are mutually exclusive. Section 778.112 covers day-rate and job-rate employees, and § 778.114 covers salaried employees. Section 231.43(b) covers day-rate and job-rate employees, but not salaried employees.
This court's research has discovered that the overtime compensation scheme outlined in the federal regulations was adopted at least as far back as 1950. See, 15 Fed. Reg. 624-25.
The state regulations were adopted in 1977. See, 7 Pa. Bull. 750; 7 Pa. Bull 25. The fact that § 231.43(b) is analytically identical to the two federal regulations -- and exactly identical to one of them, § 778.112 -- indicates that the Industrial Board of the Department of Labor and Industry knew about the federal regulations when drafting the state regulations. The Industrial Board adopted -- verbatim -- one of the regulations, but did not adopt the other. To hold that the Industrial Board intended to adopt both federal regulations, even though the language of only one appears in the state regulations, would be to ignore what the Industrial Board actually did. While it might be convenient for defendant and other multi-state employers if federal law and Pennsylvania law were identical on the issue of overtime compensation, the fact is that they are not.
Defendant cannot have it both ways. In proving that plaintiffs were not hourly employees, defendant convinced the court that plaintiffs were salaried employees paid on a bi-weekly basis. Now defendant attempts to convince the court that plaintiffs were day-rate employees. As discussed above, they were not. Further, in prevailing on the FLSA claims, defendant convinced the court that 29 C.F.R. § 778.114 applied to plaintiffs. Now defendant attempts to convince the court that § 34 Pa. Code § 231.43(b) applies to plaintiffs. As discussed above, § 231.43(b) is identical to 29 C.F.R. § 778.112, which covers a separate and distinct class of employees from § 778.114. Plaintiffs were covered by § 778.114, not § 778.112 or § 231.43(b). Therefore, defendant's compliance with § 231.43(b) does not immunize it from plaintiffs' state law claims.
PMWA Exclusion of Individuals Subject to FLSA
Before the 1988 Amendments to the PMWA, effective February 1, 1989, the PMWA excluded from its definition of "employe" "any individual to the extent that he is subject to the Federal Fair Labor Standards Act . . . " 43 P.S. § 333.103(h), Historical and Statutory Notes. Defendant argues that, since plaintiffs were covered by the FLSA, they were excluded from the coverage of the PMWA before February 1, 1989. However, this court has held, and the Third Circuit has agreed, that plaintiffs were not covered by the FLSA's overtime compensation requirements because of the Motor Carrier Act exemption. 974 F.2d at 419. The PMWA excluded individuals from its coverage only "to the extent " that they were subject to the FLSA. Since plaintiffs were not subject to the FLSA's overtime compensation requirements, then the former § 333.103(h) did not exclude them from the PMWA's overtime compensation requirements.
The Motor Carrier Act Exemption
On July 9, 1990, the Pennsylvania General Assembly amended the PMWA by exempting motor carriers from the minimum wages portion of the PMWA. The exemption provides: "(b) Employment in the following classifications shall be exempt from the overtime provisions of this act [the PMWA]: . . . (7) any motor carrier with respect to whom the Federal Secretary of Transportation has power to establish qualifications and maximum hours of service under 49 U.S.C. § 3102(b)(1) and (2). 43 P.S. § 333.105(b)(7). This court has held, and the Third Circuit has agreed, that the Federal Secretary of Transportation has the power to establish qualifications and maximum hours of service for plaintiffs. 974 F.2d at 419. For that reason, plaintiffs' claims under the FLSA have been dismissed. Upon the same reasoning, the motor carrier exemption to the PMWA extinguishes plaintiffs' claims from July 9, 1990, forward.
Sections 4 and 5 of the Act of July 9, 1990, made the motor carrier exemption immediately effective and retroactive to February 1, 1989. However, in Sanders v. Loomis Armored, Inc., 418 Pa. Super. 375, 614 A.2d 320 (1992), the Pennsylvania Superior Court held that retroactive application of the motor carrier exemption would violate both the United States and Pennsylvania Constitutions. The court reasoned that, under the Pennsylvania Supreme Court's holding in Gibson v. Commonwealth, 490 Pa. 156, 415 A.2d 80 (1980), "employees have a vested right in their cause of action which cannot be extinguished by the 1990 amendment to the Minimum Wage Act without violating their constitutional right to due process." Sanders, 614 A.2d at 324.
Defendant argues that Sanders is wrongly decided.
According to defendant, employees have no vested right to overtime compensation. However, the Sanders court did not hold that employees have a vested right to overtime compensation. Rather, the court held that each plaintiff had a vested right in his or her cause of action, which accrued when that plaintiff worked in excess of forty hours in a week and allegedly was paid less money than the PMWA required.
Indeed, in Gibson, the Pennsylvania Supreme Court held: "'there is a vested right in an accrued cause of action.'" Gibson, 490 Pa. at 161; 415 A.2d at 83 (quoting Lewis v. Pennsylvania R.R. Co., 220 Pa. 317, 324, 69 A. 821, 823 (1908)).
Since this is a question of state law, this court must predict how the Pennsylvania Supreme Court would decide it. Dillinger v. Caterpillar, Inc., 959 F.2d 430, 434, n. 11 (3d Cir. 1992). While this court need not give decisions of the Pennsylvania Superior Court binding effect, "[a] decision of 'an intermediate appellate state court . . . is a datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.'" Dillinger, 959 F.2d at 435, n. 11 (quoting West v. American Telephone & Telegraph Co., 311 U.S. 223, 237, 85 L. Ed. 139, 61 S. Ct. 179 (1940)).
Given the Pennsylvania Supreme Court's holding in Gibson that "the Legislature may not extinguish a right of action which has already accrued to a claimant," Gibson, 415 A.2d at 83, and that court's recent reaffirmance of that proposition in Cranberry Township v. Builders Assoc. of Metro. Pittsburgh, Pa. , 621 A.2d 563 (1993), I believe that the Superior Court's holding in Sanders accurately predicts how the Supreme Court would decide the retroactivity issue. Therefore, I hold that retroactive application of the motor carrier exemption would violate plaintiffs' rights under the Due Process Clause of the Pennsylvania Constitution. I shall enter summary judgment in favor of defendant only with respect to plaintiffs' claims from July 9, 1990 forward.
Statute of Limitations
Next, defendant argues that plaintiffs' claims before March 8, 1987 are barred by the three-year statute of limitations in 43 P.S. § 260.9a(g).
Plaintiffs argue that the statute of limitations has been equitably tolled because defendant failed to post, in a conspicuous place, a summary of the Minimum Wage Act and any applicable regulations promulgated thereunder.
Defendant does not dispute plaintiffs' assertion that there was no posting of the law.
The Third Circuit, in a recent case also governed by § 260.9a(g), described the Pennsylvania standard for tolling:
Under Pennsylvania law governing the doctrine of equitable tolling, it is clear that 'the courts have not required fraud in the strictest sense, encompassing an intent to deceive, but rather have defined fraud in the broadest sense to include an unintentional deception.' Nesbitt v. Erie Coach Co., 416 Pa. 89, 96, 204 A.2d 473, 476 (1964). Even under this broad interpretation of fraud, however, it is clear that, in order for the doctrine of equitable tolling to apply, the defendants' actions must have amounted 'to an affirmative inducement to plaintiff to delay bringing the action.' Ciccarelli v. Carey Canadian Mines, Ltd., 757 F.2d 548, 556 (3d Cir. 1985). The intent of the defendant in making this affirmative inducement is irrelevant; 'it is the effect upon the plaintiff, not the intention of the defendant, that is pertinent.' Swietlowich v. County of Bucks, 610 F.2d 1157, 1162 (3d Cir. 1979).
In Kamens v. Summit Stainless, Inc., 586 F. Supp. 324 (E.D. Pa. 1984), a suit for overtime compensation under the FLSA, the court held that an employer's failure to post a notice of its employees' rights under the FLSA, as required by 29 C.F.R. § 516.4, tolled the running of the statute of limitations. Kamens relied on Bonham v. Dresser Industries, Inc., 569 F.2d 187, 193 (3d Cir. 1978), for the proposition that "an employer's failure to post a statutorily required notice of this type tolls the running of any period of limitations." In Bonham, the Third Circuit held that an employer's failure to post a notice of its employee's rights under the Age Discrimination in Employment Act, 29 U.S.C. §§ 621 et seq., as required by 29 U.S.C. § 62, tolled the applicable statute of limitations. The court observed:
the posting requirement was undoubtedly created because Congress recognized that the very persons protected by the Act might be unaware of its existence. Failure to post the required notice will toll the running of the 180-day period, at least until such time as the aggrieved person seeks out an attorney or acquires actual knowledge of his rights . . . Any other result would place a duty upon the employer to comply without penalty for breach, and would grant to the employee a right to be informed without redress for violation.
Bonham, 569 F.2d at 193.
Although both Bonham and Kamens were cases construing federal law, their reasoning is equally applicable to this case. Section § 333.108 gives employees the right to have their employers give them notice of their rights under the PMWA. Their only remedy, and the only penalty available against employers, for a violation of § 333.108 is to toll the statute of limitations with respect to the employer's other alleged violations of the PMWA. Without tolling, the purpose of the posting requirement would not be served. Therefore, I hold that the statute of limitations did not begin to run until plaintiffs knew or should have known of their rights. Defendant has not supplied the court with sufficient information to determine with accuracy when any of the plaintiffs knew of his or her rights. That question might well be one which must be left to a jury. At this juncture, I shall deny that portion of defendant's motion for summary judgment which is based on the running of the statute of limitations.
34 Pa. Code § 231.43(d)
At oral argument, defendant asserted, for the first time, that it is entitled to summary judgment because its overtime compensation scheme complied with 34 Pa. Code § 231.43(d). That section provides that an employer shall not be deemed to have violated the overtime provisions of the PMWA if:
pursuant to an agreement or understanding arrived at between the employer and the employe before performance of the work, the amount paid to the employe for [overtime] (3) is computed at a rate not less than 1 1/2 times the rate established by such agreement or understanding as the basic rate to be used in computing overtime compensation thereunder . . .