A
shipbuilder that provided a retroactive contract ratification incentive
that boosted hourly pay by 60 cents should have included that bonus in
the worker's regular rate of pay for purposes of determining overtime,
the Washington Court of Appeals ruled Sept 16 (Hisle v. Todd Pacific
Shipyards Corp., Wash. Ct. App. No 48478-8-1, 9/16/02)
Rejecting an
earlier finding in favor of Todd Pacific Shipyards Corp., the state
appeals court said A strong policy considerations favor treating
contract ratification incentives that are tied to the number of hours
worked as compensation for hours worked. This is especially true in
Washington, which has a long and proud history of being a pioneer in the
protection of employees' rights, A the court said, citing the state
supreme court's 2000 decision in another case involving an attempt to
recover overtime, Drinkwitz v. Alliant Techsystems, Inc. (968 P.2d 582)
Todd
included in its 1997 collective bargaining agreement with Puget Sound
Metal Trades Council a one-time retroactive incentive payment of 60
cents an hour for certain unionized employees. More than 800 workers
were entitled to receive the retroactive payments which covered a
16-month period during which they had worked overtime.
While the
workers maintained the ratification inducement came to 90 cents for
overtime hours. Todd insisted that the retroactive incentive payment was
to be paid at the regular rate of 60 cents an hour, regardless of how
many hours a week were worked. The employees brought suit under
Washington's minimum wage law contending they had been underpaid for
overtime hours worked in the period covered by the retroactive
incentive.
A lower
court however, granted Todd's motion for summery judgment, determining,
among other things, that under 301 of the Labor Management Relations
Act, the wage claim was preempted by the collective bargaining
requirement.
Overtime
Pay Requirements Apply
Section 301
A cannot be read broadly to pre-empt non-negotiable rights conferred on
individual employees as a matter of state law, the appellate court said
in a decision by Judge Faye C. Kennedy. A The claims raised in the
instant case are based on substantive, non-negotiable rights contained
in the state wage law, it explained.
A It is
undisputed that Todd and the union intended to formulate a ratification
inducement and not a retroactive pay increase as such, the court said. A
The question is whether, by lying the payment to actual hours worker at
the shipyard during the retroactive payment period, they brought the
payments under the overtime requirements of the state law, A regardless
of intent to the contrary.
Washington's
wage law A requires that contract ratification incentives that are
conditioned upon the number of hours worked must be treated as part of
an employee's regular pay, regardless of any contrary intent of the
parties to the collective bargaining process, for purposes of
calculating overtime pay for the period covered by the retroactive
payment, the court held. The ratification incentive in this case was
connected directly to the number of hours worked, the court said.
Because the
state's wage law is modeled after the Fair Labor Standards Act, the
court looked to the federal statute for its treatment of the inclusion
or exclusion of bonuses from an employee's regular rate of pay. It
determined that a A retroactive pay increase in the form of a lump sum
for a particular period must be prorated back over the hours of the
period to which it is allocable to determine the resultant increases in
the regular rate, in precisely the same manner as a lump sum bonus.
The court
reversed the summary judgment award in favor of Todd and remanded the
case for a trial on damages and attorneys' fees. The employees' motion
for class certification, which was never considered on its merits at the
lower court level, also was remanded.
