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Akron Brief, final

No. 05-3647
________________________________________________________________
________________________________________________________________

IN THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

_________________________________________

ELAINE L. CHAO, SECRETARY OF LABOR,
UNITED STATES DEPARTMENT OF LABOR,

Plaintiff/Appellee,

v.

AKRON INSULATION AND SUPPLY, INC.,
and DINO L. LOMBARDI,

Defendants/Appellants.

_________________________________________

On Appeal from the United States District Court
For the Northern District of Ohio, Eastern Division
_________________________________________

FINAL BRIEF FOR THE SECRETARY OF LABOR
_________________________________________

HOWARD M. RADZELY
Solicitor of Labor

STEVEN J. MANDEL
Associate Solicitor

PAUL L. FRIEDEN
Counsel for Appellate Litigation

PAULA WRIGHT COLEMAN
Attorney
United States Department of Labor
Office of the Solicitor
Room N-2716
200 Constitution Avenue, NW
Washington, D.C. 20210
(202) 693-5555

________________________________________________________________
________________________________________________________________

TABLE OF CONTENTS

TABLE OF AUTHORITIES

STATEMENT OF JURISDICTION

STATEMENT REGARDING ORAL ARGUMENT

STATEMENT OF THE ISSUE

STATEMENT OF THE CASE

A.    Course of Proceedings

B.    Statement of Facts

C.    The District Court's Decision

SUMMARY OF ARGUMENT

ARGUMENT

AKRON VIOLATED THE FLSA WHEN IT FAILED TO COMPENSATE ITS INSULATION INSTALLERS FOR THE TIME THEY SPENT AT AKRON'S SHOP PERFORMING CERTAIN INTEGRAL AND INDISPENSABLE ACTIVITIES, AND FOR THE TIME THEY SPENT THEREAFTER TRAVELING FROM THE SHOP TO THE WORK SITES AND BACK TO THE SHOP

A.    Standard of Review

B.    Compensable Time Commenced with the Performance of the Employees' Requisite Pre-Shift Activities at the Shop and Ended with the Performance of their Post-Shift Activities at the Shop; Travel to the Job Sites and Back to the Shop was Compensable Because it was "All in the Day's Work"

C.    The District Court Correctly Determined the Back Wages Due to the Employees

CONCLUSION

CERTIFICATE OF COMPLIANCE

STATEMENT OF RELATED CASES

CERTIFICATE OF SERVICE

ADDENDUM A - APPELLEE'S DESIGNATION OF JOINT APPENDIX CONTENTS

ADDENDUM B

TABLE OF AUTHORITIES

Cases:

Alvarez v. IBP, Inc., 339 F.3d 894 (9th Cir. 2003), cert. granted, 125 S.Ct. 1292 (2005)

Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946)

Armour & Co. v. Wantock, 323 U.S. 126 (1944)

Barnhart v. Walton, 535 U.S. 212 (2002)

Barrentine v. Arkansas-Best Freight Sys., Inc., 750 F.2d 47 (8th Cir. 1984), cert. denied, 471 U.S. 1054 (1985)

Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728 (1981)

Brock v. City of Cincinnati, 236 F.3d 793 (6th Cir. 2001)

Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)

Dole v. Enduro Plumbing, Inc., 1990 WL 252270, (C.D. Cal. Oct. 16, 1990)

Douglas v. Argo-Tech Corp., 113 F.3d 67 (6th Cir. 1997)

Dunlop v. City Elec., Inc., 527 F.2d 394 (5th Cir. 1976)

Herman v. Fabri-Centers of America, Inc., 308 F.3d 580 (6th Cir. 2002), cert. denied, 537 U.S. 1245 (2003)

Herman v. Palo Group Foster Home, Inc., 183 F.3d 468 (6th Cir. 1999)

Herman v. Rich Kramer Constr., Inc., 163 F.3d 602 (Table), 1998 WL 664622 (8th Cir. 1998)

Hodgson v. American Concrete Constr. Co., 471 F.2d 1183 (6th Cir. 1973), cert. denied, 412 U.S. 949 (1973)

Kline v. Tennessee Valley Authority, 128 F.3d 337 (6th Cir. 1997)

Mireles v. Frio Foods, Inc., 899 F.2d 1407 (5th Cir. 1990)

Mitchell v. King Packing Co., 350 U.S. 260 (1956)

Myers v. Copper Cellar Corp., 192 F.3d 546 (6th Cir. 1999)

Shultz v. Tarheel Coals, Inc., 417 F.2d 583 (6th Cir. 1969)

Skidmore v. Swift & Co., 323 U.S. 134 (1944)

Steiner v. Mitchell, 350 U.S. 247 (1956)

Tennessee Coal, Iron & R.R. Co. v. Muscoda Local No. 123, 321 U.S. 590 (1944)

Tum v. Barber Foods, Inc., 360 F.3d 274 (1st Cir. 2004), cert. granted, 125 S.Ct. 1295 (2005)

United States Dep't of Labor v. Cole Enterprises, Inc., 62 F.3d 775 (6th Cir. 1995)

Vega v. Gasper, 36 F.3d 417 (5th Cir. 1994)

Wirtz v. Mississippi Publishers Corp., 364 F.2d 603 (5th Cir. 1966)

Statutes and Regulations:

28 U.S.C. 1291

28 U.S.C. 1331

28 U.S.C. 1345

Fair Labor Standards Act of 1938, as amended; 29 U.S.C. 201 et seq.

29 U.S.C. 206(a)
29 U.S.C. 207
29 U.S.C. 207(a)
29 U.S.C. 207(a)(1)
29 U.S.C. 211(c)
29 U.S.C. 215(a)(2)
29 U.S.C. 215(a)(5)
29 U.S.C. 217

Portal-to-Portal Act of 1947, 29 U.S.C. 251 et seq.

29 U.S.C. 254(a)

Code of Federal Regulations

29 C.F.R. 516.2
29 C.F.R. 516.2(a)(7)
29 C.F.R. 778.115
29 C.F.R. Part 785
29 C.F.R. 785.7
29 C.F.R. 785.14
29 C.F.R. 785.15
29 C.F.R. 785.16
29 C.F.R. 785.17
29 C.F.R. 785.18
29 C.F.R. 785.19
29 C.F.R. 785.38
29 C.F.R. 785.48(a)
29 C.F.R. Part 790
29 C.F.R. 790.6(b)
29 C.F.R. 790.7(c)
29 C.F.R. 790.7(f)
29 C.F.R. 790.7(h)
29 C.F.R. 790.8(a)
29 C.F.R. 790.8(b)
29 C.F.R. 790.8(c)

Miscellaneous:

93 Cong. Rec. 4269 (1947)

Fair Labor Standards Amendments of 1949, Pub. L. No. Ch. 736, 16, 63 Stat. 920 (1949)

Federal Register 12 Fed. Reg. 7655 (Nov. 18, 1947)

Federal Rules of Civil Procedure

Rule 52
Rule 52(a)

S. Rep. No. 48, 80th Cong., 1st Sess. (1947)

Secretary's Interpretive Bulletin No. 13 (1939)

IN THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

__________________________

No. 05-3647
__________________________

ELAINE L. CHAO, SECRETARY OF LABOR,
UNITED STATES DEPARTMENT OF LABOR,

Plaintiff/Appellee,

v.

AKRON INSULATION AND SUPPLY, INC.,
and DINO L. LOMBARDI,

Defendants/Appellants.

__________________________

On Appeal from the United States District Court
For the Northern District of Ohio, Eastern Division
__________________________

FINAL BRIEF FOR THE SECRETARY OF LABOR
__________________________

STATEMENT OF JURISDICTION

    The district court had jurisdiction over this case under section 17 of the Fair Labor Standards Act ("FLSA" or "Act"), 29 U.S.C. 217. Subject matter jurisdiction was also vested in the district court under 28 U.S.C. 1331 (federal question jurisdiction) and 28 U.S.C. 1345 (suits commenced by an agency or officer of the United States). A final order of the district court granting judgment to the Secretary of Labor ("Secretary") was entered on May 5, 2005 (District Court Civil Docket ("R.") 37; Joint Appendix ("Apx.") 447), from which a timely notice of appeal was filed on May 16, 2005 (R. 38 Notice; Apx. 472). This Court has jurisdiction under 28 U.S.C. 1291.

STATEMENT REGARDING ORAL ARGUMENT

    The Secretary believes that oral argument would be helpful to this Court in this case.

STATEMENT OF THE ISSUE

    Whether the district court correctly concluded that the shop time, including waiting time, and the travel time between the shop and the job sites are compensable under the FLSA, as amended by the Portal-to-Portal Act.

STATEMENT OF THE CASE

A.    Course of Proceedings

    The Secretary filed this action under section 17 of the FLSA, 29 U.S.C. 217, on March 4, 2004, to enjoin Akron Insulation Supply, Inc. and its president and sole owner, Dino L. Lombardi (collectively "the employers") from violating the overtime pay and recordkeeping provisions of the FLSA, and from withholding back wages due. See 29 U.S.C. 207, 211(c), 215(a)(2), and 215(a)(5) (R. 1 Complaint; Apx. 6). [1]

    District Court Judge James S. Gwin conducted a one-day bench trial in Akron, Ohio on October 21, 2004. In a Findings of Fact and Conclusions of Law Granting Judgment for Plaintiff, dated May 5, 2005, the court issued a restitutionary injunction against the employers for the company's violations of the Act's overtime requirements. (R. 37 Decision; Apx. 447). The court concluded that back wages were due 45 employees in the amount of $94,830.96, plus interest. (Id. at 471). The court also granted the Secretary's request for a prospective injunction enjoining further violations of the Act's recordkeeping and overtime provisions. (Id. ).

    The employers filed a timely notice of appeal on May 16, 2005 (R. 38 Notice; Apx. 472).

B.    Statement of Facts

    1.    Akron Insulation and Supply, Inc. ("Akron") is an Ohio corporation located in Akron, which installs insulation into residential and commercial structures. (Tr. 239; Apx. 248). Dino L. Lombardi ("Lombardi") is the president and sole owner of Akron. (Tr. 238; Apx. 247).

    2.    Beginning in July, 2003, the Department of Labor's ("Department") Wage and Hour investigator Dale Zimmerman conducted an investigation of Akron's practices covering a two-year period from September 1, 2001 to August 31, 2003. (R. 37 Decision at 2; Apx. 448; Tr. 97; Apx. 106). The investigation revealed that Akron violated the overtime and recordkeeping provisions of the FLSA; Akron failed to pay its full-time employees for required "shop" time and travel time during the relevant period. (Tr. 100-01; Apx. 109-10). [2]

    3.    At the trial held on October 21, 2004, five current or former employees of Akron who were found by the Department to be due additional overtime compensation testified. Tevell Moss, a former carpenter, and Mitchell Westfall, a former crew chief, testified for the Department; Jacob Weyrick and Bill Kreitzburg, both current installers, and John DiMichele, a current foreman, testified for Akron. (Decision at 2; Apx. 448).

    Akron employees were required to report to a designated meeting place, the employers' shop, and clock in before traveling to the actual job site each day. (Decision at 4; Apx. 450; Tr. 20, 28, 55; 61, 70, 89; 160; 174; 190; Apx. 29, 37, 64; 70, 79, 98; 169; 183; 199). Employees were required to be at the shop to receive instructions, assemble work crews, get the job assignment for the day, and load trucks before traveling to the job site. (Decision at 4; Apx. 450; Tr. 21, 28, 42; 61-62; 180; 204; Apx. 30, 37, 51; 70-71; 189; 213). Lombardi testified that he is the person who assembles the crews to send out to the jobs (Decision at 5; Apx. 451; Tr. 275-77; Apx. 284-86) and he "gets the people out" each morning. (Decision at 4; Apx. 450; Tr. 260; Apx. 269). Moss testified that, depending upon who showed up on a given day, he could possibly "switch crews." (Tr. 25, 56-57; Apx. 34, 65-66); Westfall testified that employees would wait around at the shop "for Dino to decide who's going where and who's taking who." (Tr. 61-62; Apx. 70-71); DiMichele testified that he would wait to see who was coming in each day because he was "supposed to have so many people to a crew," and that "a lot of people say they're coming in and they don't." (Tr. 197; Apx. 206).

    The employees would be given their job assignments for the day after clocking in each morning at the shop. Sometimes the assignment would be in the form of a "job ticket." (Decision at 5; Apx. 451; Tr. 62; 166; 180; Apx. 71; 175; 189). Kreitzburg testified that he could not show up at 7:30 a.m. (the official start time) because he wanted to find out what he needed for that particular job, discuss the job with the rest of his crew, and establish what his routine would be for the day. (Tr. 179-80; Apx. 188-89). Employees also were required to load trucks with materials, insulation, mixing machines, and other equipment needed for the day's job before leaving for the job site. (Decision at 5; Apx. 451; Tr. 21; Apx. 30). Akron has one loading dock and three or four company-owned trucks (Id. ); consequently, sometimes employees would need to wait for the loading dock to become available. (Tr. 21; 180; 204; Apx. 30; 189; 213).

    During the time that the employees were at the shop in the morning, some of them would drink coffee or socialize while waiting for their assignments, waiting for their crewmembers to arrive, or waiting for the loading dock to become available so that they could load their trucks. (Decision at 5; Apx. 451; Tr. 21; 61-62; 160; 179; Apx. 30; 70-71; 169; 188). The waiting time could range from as little as ten minutes to as long as one hour. (Decision at 5; Apx. 451; Tr. 61-62, 64, 67; Apx. 70-71, 73-76). Although Lombardi claimed that the employees reported to the shop early simply to socialize and were not working (Tr. 250; Apx. 259), the district court found it "incredible that employees would voluntarily clock-in early to socialize and drink coffee for that much time." (Decision at 6; Apx. 452). "Ample testimony shows that Lombardi required employees to report at specific times and perform several required tasks before departing from the shop for the job site." (Id. ).

    Several employees called to testify by the employers testified that they clocked in "voluntarily" and drank coffee at the shop. (Decision at 5; Apx. 451; Tr. 161; 173-74, 176, 179; 189, 192; Apx. 170; 182-83, 185, 188; 198, 201). However, these employees further testified that they also performed job-related tasks in the shop such as picking up job tickets, receiving job assignments, obtaining gas money from the employer, [3] and loading trucks. (Decision at 5-6; Apx. 451-52; Tr. 166, 170; 179; 191, 197; Apx. 175, 179, 188; 200, 206).

    At the end of the day, Akron's full-time employees would travel from the job site back to the shop to return the trucks, and materials and equipment, and to report back to Lombardi on the progress of the day's work. (Decision at 7; Apx. 453; Tr. 64; 84; 202; Apx. 73; 93; 211). For example, Moss testified that the employees would sometimes wait for Lombardi, from ten minutes up to an hour, because Lombardi wanted to talk to them about what had transpired during the day (for instance, how the job went and any problems such as equipment breaking down). (Tr. 64; Apx. 73). Lombardi would also give instructions for the next day's work, and would consult with the crew leaders. (Id. ).

    4.    The official start time was 7:30 in the morning. (Tr. 249; Apx. 258). However, a number of employees testified that Lombardi routinely instructed the employees to arrive at the shop before 7:30 a.m. (Decision at 10; Apx. 456). Sometimes Lombardi would instruct the workers to arrive earlier than 7:30 for a particular job (Tr. 28, 55; 61, 63; 177; Apx. 37, 64; 70, 72; 186). Indeed, as noted supra, workers would often clock-in before 7:30 in order to perform certain essential tasks and to ensure that they arrived at the job site on time. (Tr. 61, 63, 70; Apx. 70, 72, 79). Crews would generally depart from the shop before 7:30 a.m., and an employee arriving at that time would likely miss the crew; to avoid this eventuality, Moss would arrive at the shop between 6:00 a.m. and 6:15 a.m. (Tr. 21, 28; Apx. 30, 37). Kreitzburg, for example, testified that he needed to arrive earlier than 7:30 a.m. in order to be able to discuss the needs of the job with Lombardi, talk to his crew, and get himself organized before traveling to the work site. (Tr. 179-80; 188-89).

    5.    The employees clocked in each day upon arrival at Akron's place of business using the employers' time clock. (Decision at 4; Apx. 450; Tr. 21, 28; 61-62; 160; 177; 190; Apx. 30, 37; 70-71; 169; 186; 199). In addition, the employees wrote in work times spent at the job site on their time cards; the handwritten times indicated the times spent on the particular job site for that day. (Decision at 7; Apx. 453; Tr. 20-24; 61, 65; 160-61; 173-74, 181; 190; Apx. 29-33; 70, 74; 169-70; 182-83, 190; 199). [4]

    Moss, for example, would clock in upon arrival at the shop at 6:00 to 6:15 a.m. At the end of the day, he would clock out and write in the job site for the day, and the times spent on that job site, on his time card. (Decision at 10; Apx. 456; Tr. 20, 24, 27-28, 37; Apx. 29, 33, 36-37, 46). Kreitzburg also testified that the handwritten times on the time cards indicate time spent at the job site. (Tr. 181; Apx. 190). Kreitzburg also stated that Akron's office closed at 5:00 p.m. Therefore, if employees returned to the shop after 5:00 p.m., they would not clock out, and the times would be written on the time cards the following morning. (Tr. 175, 181; Apx. 184, 190).

    6.    Employees were paid only for the times written on the time cards by the employees, which represented the hours that the employees spent at the job site, unless Lombardi approved additional hours by initialing the time card. (Tr. 214-15; Apx. 223-24). Significantly, however, this practice was not consistently followed inasmuch as many of the time cards show that Lombardi paid employees for hours worked before 7:30, even though those cards were not initialed. (Decision at 10; Apx. 456; Tr. 183-84; 233; Apx. 192-93; 242; Pltf's Ex. 3 (sample timecards for each employee) at 11-12 (Dennis); 41-42 (Kreitzburg); Apx. 315-16; 345-46).

    Based on Akron's practice of paying only for handwritten times appearing on the timecards, time spent working in the shop in the morning or afternoon, as well as any travel time to the job sites and back, was not compensated (even if the time in the morning occurred after 7:30). (Decision at 11; Apx. 457; Tr. 43, 46; 63-64, 91; Apx. 52, 55; 72-73, 100; Pltf's Ex. 3 (sample timecards) (Apx. 305-92) and Pltf's Ex. 4 (all timecards)).

    7.    Lombardi testified that he pays non-union employees for all hours worked, including travel time. (Decision at 8; Apx. 454; Tr. 249, 255, 265; Apx. 258, 264, 274). However, the time cards do not indicate payment for all hours non-union employees were clocked in. (Decision at 8-9; Apx. 454-55; Pltf's Exs. 3 and 4). [5] But travel time was not paid to employees who were members of labor unions. (Decision at 8; Apx. 454; Tr. 247; Apx. 256). These employees were paid only for time spent on the job sites. (Decision at 8; Apx. 454; Tr. 247-48; Apx. 256-57). In this regard, Lombardi claimed that travel time is not required by the applicable collective bargaining agreements ("CBAs"). (Decision at 8; Apx. 454; Tr. 241-45, 270-73; Apx. 250-54, 279-82).

    8.    The Wage-Hour investigation revealed that many hours recorded on the timecards, as taken from the time clock, were uncompensated. (Decision at 11; Apx. 457; Tr. 101-02; Apx. 110-11). The uncompensated hours, when added to the compensated hours, often resulted in a workweek of more than 40 hours. (Tr. 99-108; Apx. 108-17). Based on investigator Zimmerman's interviews with the employees, and his examination of Akron's payroll records, he concluded that the large number of unpaid hours on the time cards were for required shop and travel time. (Decision at 7, 11, 23; Apx. 453, 457, 469; Tr. 102, 133; Apx. 111, 142; Pltf's Exs. 3 and 4). [6]

    Zimmerman testified that he computed the back wages by reviewing all of Akron's time cards for the investigation period of September 1, 2001 to August 31, 2003, using a formula for each calculation. (Decision at 2; Apx. 448; Tr. 103-05; Apx. 112-14). Utilizing a computer spreadsheet for each time card, he determined the total hours worked based upon the clock-in/clock-out times. (Decision at 2; Apx. 448; Tr. 104, 132; Apx. 113, 141). [7] If there was no clock-out time on the card, Zimmerman used the handwritten time. (Decision at 2; Apx. 448; Tr. 116; Apx. 125). The hours were totaled; from that figure, Zimmerman then subtracted half an hour for lunch. (Decision at 2; Apx. 448; Tr. 105; Apx. 114). He then compared that number to the number of hours that the employee was paid for that day. (Tr. 105; Apx. 114). If there was a difference between the clocked-in hours and the paid hours, then the unpaid hours were calculated at the employee's regular rate of pay for hours worked under 40 per week and time and one-half the employee's regular rate of pay for hours worked over 40 in a workweek. (Tr. 104-18; Apx. 113-27; Pltf's Ex. 2 (an individualized computation sheet for each employee summarizing the back wage calculation).

    Akron regularly paid employees at two different pay rates for work performed in the same workweek. (Tr. 105-06; Apx. 114-15). Akron's payroll records reflect that on some occasions, Akron did pay overtime, but not at the correct rate in those workweeks in which more than one rate was paid. (Decision at 24; Apx. 470; Tr. 107; Apx. 116). Akron would pay time and one-half the lower rate for the overtime hours (Tr. 112; Apx. 121), as opposed to a weighted average or "blended" rate as required by the regulations. (Decision at 24; Apx. 470). Therefore, it was necessary for Zimmerman to recalculate the overtime compensation in those workweeks. (Tr. 107; Apx. 116; Pltf's Ex. 2). [8]

    As a result of the review of the time cards, it was determined that Akron owed overtime compensation in the amount of $95,426.74 to 45 [9] past and present employees (Pltf's Ex. 1 (summary of unpaid wages); Apx. 302-04), representing 4,724.8 unpaid hours. (Tr. 6; Apx. 15). [10]

    Akron's bookkeeper, Eileen Smoot, testified at the trial that she reviewed Zimmerman's calculations and, based on a sample of the timecards, prepared a recalculation. (Tr. 223; Apx. 232; Dfts' Ex. G-1). However, in an affidavit submitted by Zimmerman in response to Smoot's calculations, Zimmerman stated that Smoot's recalculations were based on the use of the employees' hand-written times spent at the job site rather than the time clock times, which is the central legal dispute in this matter. Smoot, though, did identify some mathematical errors (Tr. 227; Apx. 236), which Zimmerman then corrected; the revised total found due by Wage-Hour was $94,830.96, a reduction of approximately $600. (Decision at 3 n.1, 25; Apx. 449, 471; R. 35 Zimmerman Affidavit at 4 and Ex. A (attached); Apx. 434, 436-37).

C.    The District Court's Decision

    In its May 5, 2005 decision, the district court held that Akron violated the FLSA by failing to compensate its insulation installers for their pre- and post-shift work at Akron's shop and their travel time between the shop and the job sites, resulting in unpaid hours worked in excess of 40 in a workweek for which the employees were due compensation at the overtime rate. (Decision at 1; Apx. 447). In addition, the court held that Akron violated the recordkeeping requirements of the Act by failing to accurately record the employees' pre- and post-shift times. (Id. at 2; Apx. 448).

    The district court rejected Akron's argument that the shop and travel time constituted preliminary or postliminary activities within the meaning of the Portal-to-Portal Act ("Portal Act"), 29 U.S.C. 254(a), exception to the FLSA. Relying on Steiner v. Mitchell, 350 U.S. 247, 256 (1956) (Decision at 13; Apx. 459), the court concluded that the work performed by Akron's employees at the shop, before and after traveling to and from the job sites, also was compensable under the FLSA. (Id. at 14; Apx. 460).

    The district court found that Lombardi requires his full-time employees to report to the shop before traveling to the job site; there, the workers complete various tasks at Lombardi's request. (Decision at 4; Apx. 450). The court determined that the workers performed essential activities at the shop, which benefited Akron, including receiving crew assignments, loading tools and equipment onto trucks, driving the company trucks to the job sites, and returning the trucks to the shop at the end of the day, where the employees reported to Lombardi about the day's work. (Id. at 16; Apx. 462). In finding these activities compensable, the district court stated that they did not come within the Portal Act because they "are integral to the employees' predominant activities associated with installing insulation, [and therefore] they are not excluded as preliminary or postliminary activities under the Portal-to-Portal Act." (Id. ).

    The district court also rejected Lombardi's claim that the employees reported to the shop voluntarily and clocked-in early simply "to drink coffee and socialize"; "[t]o the extent that the employees were waiting (and drinking coffee or socializing) in the morning, they [were] waiting for the employer's benefit and could not use the time for their own purposes." (Decision at 16; Apx. 462). Observing that the time cards show that employees would sometimes clock-in one hour earlier than the official start time of 7:30 a.m. established by Lombardi, the court found it "incredible that employees would voluntarily clock-in early to socialize and drink coffee for that much time." (Id. ). [11]

    Citing the Secretary's "waiting time" regulations at 29 C.F.R. 785.14 and 29 C.F.R. 785.15, as well as the Supreme Court's decision in Armour & Co. v. Wantock, 323 U.S. 126, 133 (1944), the district court concluded that any waiting time at the shop was compensable because the time spent waiting was predominantly for the employer's benefit, inasmuch as Akron required the employees to report to the shop before departing for the job sites, and that the employees "could not effectively use the time for their own purpose." (Decision at 17; Apx. 463). [12]

    The district court further concluded that the workers' travel time from the shop to the job site and back again was compensable under the FLSA, as being "all in a day's work." (Decision at 18-19; Apx. 464-65). The court cited to the Department's regulation at 29 C.F.R. 785.38, which provides that where an employee is required to report at a meeting place to perform work, the subsequent travel time to the work site is compensable. (Id. at 18). The court also found that when the employees traveled from the shop (to which they were required to report in order to review assignments, assemble crews, and load trucks) to the job site, they transported equipment, materials, company-owned trucks, and other employees on their crews, and that "[u]nder these circumstances, travel is an indispensable part of the employees' principal activities, and the travel time constitutes hours worked." (Id. at 18-19). [13]

    The district court rejected Akron's argument that it need not compensate its employees for work done before its official start time of 7:30 a.m., because this was a custom or practice. (Decision at 20-21; Apx. 466-67). Citing cases decided by this Court, the district court stated that Akron's "custom or practice" "cannot trump" the FLSA, because the employees were actually working during the shop time and travel time, which often occurred before 7:30, and that the FLSA required the employers to pay for all hours worked. (Id. ). In the court's words, "Defendants cannot cower behind an official start time as an excuse for refusing to pay employees for work that they required." (Id. at 20).

    The district court similarly rejected Akron's contention that certain CBAs to which the employers were signatories did not require compensation for travel time, thereby preempting the requirements of the FLSA. (Decision at 21; Apx. 467). The court concluded that Akron's argument failed for three reasons. First, the text of the agreements at issue did not "expressly exclude compensation for travel time." (Id. ). Second, the record did not establish that Akron was signatory to any of the CBAs. (Id. at 21-22; Apx. 467-68). And third, assuming arguendo that the agreements did exclude payment of travel time from and to the shop, the agreements would be unenforceable because they conflicted with the FLSA. (Id. at 22-23; Apx. 468-69). As the court explained, "Just as the employer cannot have a custom or practice that violates the FLSA, so an employer cannot violate the FLSA by contract, including collective bargaining agreements"; "[s]uch an agreement would be impermissible and unenforceable." (Id. at 23).

    Finally, the district court rejected Akron's argument that the Wage-Hour investigator's back wage computations were flawed because Zimmerman had overestimated the number of hours worked and that the clock-in times were not accurate. (Decision at 23-24; Apx. 469-70). Noting that the employers had failed to keep proper records, the district court explained that "it is reasonable for Plaintiff to infer that the clock-in times reflect the amount of hours worked because it includes shop time and travel time." (Id. at 23). Relying on Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 688 (1946), to support the back wage estimates, the district court stated that in view of the employers' failure to maintain accurate records, Akron could not "complain that the calculation of back wages lack[s] exactness and precision," and that to deny recovery "because proof of the number of hours worked is inexact" would "penalize the employee." (Id. at 24).

    The district court considered the consistent testimony that Akron did not routinely pay for shop and travel time. (Decision at 24; Apx. 470). Determining that a reasonable inference could be made that Akron owed back wages established by the clock-in times on the time cards, the district court concluded that the employers had failed to rebut that inference because it could not offer any evidence of the actual number of hours worked or to negate the reasonableness of the inference. (Id. ). The court also noted that even when the employers paid overtime, they paid at the lower of the employee's two rates, which was a violation of the Department's interpretation at 29 C.F.R. 778.115, which requires payment at a weighted average rate. (Id. ).

    The court thus concluded that back wages were due in the amount of $94,830.96, plus interest, for a two-year period prior to the commencement of the lawsuit. (Decision at 25; Apx. 471). Having found the employers in violation of the recordkeeping and overtime pay provisions of the Act, the court granted the Secretary's request for a prospective injunction. (Id. at 24-25; Apx. 470-71).

SUMMARY OF ARGUMENT

    In its thoroughly reasoned decision, the district court correctly concluded that Akron violated the FLSA when it failed to compensate its employees properly for the time they spent between commencing their "integral and indispensable" duties at the shop in the morning (before traveling to their job sites) and completing such duties at the shop in the afternoon (after traveling from their job sites), i.e., for work performed during the "workday." The employees were required to report to the shop in the morning in order to receive assignments, form crews, and load materials onto trucks that they then rode to the job sites. The performance of these requisite duties at the shop, which were integral and indispensable to the employees' principal activity of installing insulation into residential and commercial structures, was compensable. It also triggered the beginning of the workday, which only ended upon the employees' return to the shop at the end of the day and the completion of their duties. Compensability was correctly determined by the district court to be measured by the confines of the workday, as set by the employees' first and last principal activity or activities.

    The FLSA generally requires compensation for "all time during which an employee is necessarily required to be on the employer's premises, on duty or at a prescribed workplace." Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 690-91 (1946). The Portal Act creates a limited exception to that general rule, excluding from compensation "walking, riding, or traveling," and other "preliminary" and "postliminary" activities, but only when they occur outside the workday -- either before an employee commences or after he completes his "principal activity or activities." 29 U.S.C. 254(a). In this case, consistent with the Supreme Court's decision in Steiner v. Mitchell, 350 U.S. 247 (1956), which addressed what constitutes a "principal activity or activities," the employees' "shop time" was an integral and indispensable part of their principal insulation activity, and thus a principal activity in itself. Therefore, the travel time to the job sites that occurred after the employees had reported to the shop, as well as the travel time from the job sites back to the shop, was also necessarily compensable as being "all in a day's work." See 29 C.F.R. 785.38. Any CBAs or industry custom or practice cannot excuse Akron's noncompliance with the dictates of the FLSA.

    The waiting time at the shop was also compensable. The district court correctly determined that the employees were "engaged to wait" at the shop. The time there was spent predominantly for Akron's benefit, and the employees could not use the relatively short periods of waiting time for their own purposes.

    Finally, in light of Akron's failure to keep proper records or offering evidence of specific hours actually worked, the district court correctly concluded under Mt. Clemens that the compensable hours worked should be computed from the actual clock-in time to the actual clock-out time. The employees did not have control over when they were to report to the shop; when they were not instructed to report to the shop at a specific time (which they sometimes were), they were certainly expected to report there before 7:30 a.m. (Akron's ostensible official start time) in order to perform certain specific requisite duties. Absent other evidence, the clock-in and clock-out times provided the best available evidence of hours worked in this case.

ARGUMENT

AKRON VIOLATED THE FLSA WHEN IT FAILED TO COMPENSATE ITS INSULATION INSTALLERS FOR THE TIME THEY SPENT AT AKRON'S SHOP PERFORMING CERTAIN INTEGRAL AND INDISPENSABLE ACTIVITIES, AND FOR THE TIME THEY SPENT THEREAFTER TRAVELING FROM THE SHOP TO THE WORK SITES AND BACK TO THE SHOP

A.    Standard of Review

    The question whether activities performed either before or after an employee's work at the actual job site are compensable under the FLSA is ultimately a question of law, to be reviewed de novo. See Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 738-739 n.13 (1981); Brock v. City of Cincinnati, 236 F.3d 793, 800 (6th Cir. 2001); Myers v. The Copper Cellar Corp., 192 F.3d 546, 550 n.7 (6th Cir. 1999); Kline v. Tennessee Valley Authority, 128 F.3d 337, 341 (6th Cir. 1997). The specific duties that employees perform, as well as when those duties are performed and the amount of time spent performing the duties, are factual questions to be reviewed for clear error under Federal Rule of Civil Procedure 52(a) ("Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses."). See Myers, 192 F.3d at 550 n.7; Kline, 128 F.3d at 341.

B.    Compensable Time Commenced with the Performance of the Employees' Requisite Pre-Shift Activities at the Shop and Ended with the Performance of their Post-Shift Activities at the Shop; Travel to the Job Sites and Back to the Shop was Compensable Because it was "All in the Day's Work."

    1.    The FLSA requires that an employee must be paid a specified minimum wage for all "hours worked," [14] see 29 U.S.C. 206(a), and overtime compensation for those hours worked in excess of 40 in a workweek, see29 U.S.C. 207(a)(1). [15] Although the term "work" is not defined in the statute, the Supreme Court has defined work as "physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business." Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 598 (1944) (footnote omitted); see also City of Cincinnati, 236 F.3d at 801. Work under the FLSA does not require a threshold level of exertion; even waiting time is compensable if it predominantly benefits the employer. See Armour & Co. v. Wantock, 323 U.S. 126, 132-33 (1944) ("[A]n employer, if he chooses, may hire a man to do nothing, or to do nothing but wait for something to happen. Refraining from other activity often is a factor of instant readiness to serve, and idleness plays a part in all employments in a stand-by capacity."). In Skidmore v. Swift & Co., 323 U.S. 134, 138-39 (1944), a companion case to Armour, the Supreme Court reiterated that "hours worked" under the FLSA is not limited to "active labor." See also 29 C.F.R. 785.7.

    2.    The FLSA generally requires compensation for "all time during which an employee is necessarily required to be on the employer's premises, on duty or at a prescribed workplace." Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 690-91 (1946); see also 29 C.F.R. 785.7 (same). This general rule reflects Congress's judgment that an employee should generally receive compensation for all the time that he is under the direction and control of the employer. See Tennessee Coal, 321 U.S. at 598.

    The Portal Act, passed in 1947, 29 U.S.C. 251 et seq., creates a limited exception to this general rule. It excludes from compensation "walking, riding, or traveling to and from the actual place of performance of the principal activity or activities [of an employee]," and other "preliminary" and "postliminary" activities, but only when they occur outside the "workday" -- "either prior to the time on any particular workday at which such employee commences, or subsequent to the time on any particular workday at which he ceases, such principal activity or activities." 29 U.S.C. 254(a). [16] Travel that occurs during the workday -- after the employee commences his first principal activity and before he concludes his last principal activity -- is not affected by the Portal Act. Instead, such travel is compensable in accordance with the general rule that compensation is required for all the time the employee is required to be "on the employer's premises, on duty or at a prescribed workplace." Mt. Clemens, 328 U.S. at 691.

    3.    Thus, in the present case, determining the "principal activity" will be dispositive of what time is compensable. If, as the district court held, employees engaged in compensable principal activities at the shop, then that time and the subsequent travel time to the job sites, as well as the travel time back to the shop, also are compensable.

    The Supreme Court addressed the meaning of the term "principal activity" in Steiner v. Mitchell, 350 U.S. 247 (1956). In that case, the Court held that "principal activity or activities" in the Portal Act "embraces all activities which are an integral and indispensable part of the principal activities." Steiner, 350 U.S. at 252-53 (citation omitted). Thus, the Court held in Steiner that clothes changing and showering that are integral and indispensable parts of an employee's principal job activities are themselves encompassed within the category of principal activities and therefore fall outside the scope of the Portal Act's exclusion for preliminary and postliminary activity. Id. at 256; see also Mitchell v. King Packing Co., 350 U.S. 260, 261-63 (1956) (knife sharpening by meat packers at the beginning and end of their shifts is an integral and indispensable part of their principal activities and therefore is compensable); Alvarez, 339 F.3d at 903 ("Plaintiffs' donning and doffing of job-related protective gear satisfies Steiner's bipartite 'integral and indispensable' test.").

    4.    Applying these principles to the facts of this case supports the district court's conclusion that the employees engaged in compensable activity from the time they began performing integral activities at the shop until the time they finished performing their integral activities at the shop. At the beginning of the day, the employers required the employees to be at the shop to clock in, receive their assignments, gather or join a crew, and load the necessary materials and equipment onto the trucks for purposes of transporting them to the job sites; at the end of the day, most employees returned the equipment and trucks back to the shops and reported to Akron's president, Lombardi, about the day's work. (Decision at 4-7; Apx. 450-53).

    Steiner teaches that this required "shop time" is integral and indispensable to the performance of the employees' principal activity of performing insulation work at the job sites (and was clearly deemed as such by the employers) and is thus compensable; therefore, all activity that occurs between the commencement of integral activity subsequent to reporting to the shop and the completion of integral activity after returning to the shop (including the traveling time to, and back from, the job sites) is necessarily compensable. [17] In other words, all activity between the first and last principal activities of the day is compensable because it occurs during the "workday." The plain language of the Portal Act and the Supreme Court's holding in Steiner require no less.

    5.    The Department's regulations, as buttressed by case law, support the conclusion that all the employees' time between their first and last principal activities is compensable. The Department has issued interpretive regulations setting forth the principles for determining hours worked, see 29 C.F.R. Part 785, and the effect of the Portal Act on such a determination, see 29 C.F.R. Part 790. The hours-worked regulations have their origin in Interpretive Bulletin No. 13, which was originally issued in 1939 (shortly after the enactment of the FLSA), and which was in effect when Congress enacted the Portal Act. The Portal Act regulations were originally issued in 1947, immediately after enactment of that Act. See 12 Fed. Reg. 7655 (Nov. 18, 1947). Those contemporaneous and longstanding regulations, which have been left undisturbed by Congress in its numerous subsequent reexaminations of the FLSA and which reflect the considered and detailed views of the agency charged with enforcing the FLSA and the Portal Act, are entitled to deference. See Barnhart v. Walton, 535 U.S. 212, 221-22 (2002) (Chevron deference appropriate absent notice-and-comment rulemaking in light of "the interstitial nature of the legal question, the related expertise of the Agency, the importance of the question to administration of the statute, the complexity of that administration, and the careful consideration the Agency has given to the question over a long period of time); cf. Skidmore, 323 U.S. at 140 (Administrator's FLSA interpretations "constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance"). [18]

    As noted supra, the FLSA regulations state that compensable work generally includes all time "during which an employee is necessarily required to be on the employer's premises, on duty or at a prescribed work place." 29 C.F.R. 785.7 (citation omitted); see also 29 C.F.R. 785.38 ("Where an employee is required to report at a meeting place to receive instructions or to perform other work there, or to pick up and to carry tools, the travel time from the designated place to the work place is part of the day's work, and must be counted as hours worked regardless of contract, custom, or practice."). Thus, receiving instructions or picking up and loading equipment are integral and indispensable parts of the employees' principal activity or activities, and accordingly qualify as principal activities for purposes of the Portal Act. See 29 C.F.R. 790.8(b) and (c) (preparatory activities, including being required to report to work 30 minutes early to distribute work items and prepare machinery, are integral to principal activities).

    In the instant case, the employees were required to be on the employers' premises -- at the shop -- prior to 7:30 a.m. (Akron's "official" starting time) in order to perform certain necessary duties; that "shop time" was therefore compensable because the requisite activities performed at the shop were integral and indispensable to the employees' insulation work. See Barrentine v. Arkansas-Best Freight System, Inc., 750 F.2d 47, 50 (8th Cir. 1984) (time spent by truck drivers on pre-shift safety inspections was an integral and indispensable part of the principal work activity), cert. denied, 471 U.S. 1054 (1985); Dunlop v. City Elec., Inc., 527 F.2d 394, 401 (5th Cir. 1976) (pre-shift filling out of daily time sheets, removing trash accumulated during the previous day's work, and fueling trucks was compensable); Hodgson v. American Concrete Construction Co., Inc., 471 F.2d 1183, 1185 (6th Cir. 1973) (substantial evidence of uncompensated overtime work was found sufficient to withstand a motion to dismiss when, in part, "several employees testified that in practice they were required to report to the employer's garage as early as 7 A.M. in order to load trucks and travel to the construction site, arriving by 8 A.M. Yet, work time was calculated as beginning at 8 A.M."); Dole v. Enduro Plumbing, Inc., 30 WH Cases (BNA) 196, 200; 1990 WL 252270, at *4-*5 (C.D. Cal. Oct. 16, 1990) (relying on the "express terms" of the Portal Act and 29 C.F.R. 785.38, the district court stated that where an employee is required to arrive at a designated shop to receive instructions or pick up tools, prior to going to the job site, the workday begins at the designated meeting place); see also Herman v. Rich Kramer Constr., Inc., 163 F.3d 602 (Table) (unpublished), 1998 WL 664622, at *2 (8th Cir. 1998) (time spent at shop prior to going to job sites, during which the foremen loaded trucks, received crew assignments, and studied blueprints, as well as time spent at the shop after returning from the job sites, during which the foremen filled out timesheets, unloaded and locked the trucks, and secured equipment, was compensable). The commencement of the employees' integral activities at the shop in the instant case (the first principal activity) triggers the workday, making all subsequent activities until the end of the workday compensable. In this case, the last principal activity occurred, thereby ending the workday and the compensable hours worked, when the employees returned the trucks and materials to the shop and reported back to Lombardi.

    The general rule -- that an employee is entitled to compensation for activities that occur while the employee is on the employer's premises, on duty, or at a specified work station -- applies not only to the time that an employee in involved in productive work, but also to required waiting time, see 29 C.F.R. 785.7, 785.14-785.17, normal rest periods, see 29 C.F.R. 785.18, and travel time during the course of the workday, see 29 C.F.R. 785.38. The regulations except from that general rule, and treat as noncompensable, "bona fide meal periods," 29 C.F.R. 785.19, and "[p]eriods during which an employee is completely relieved from duty and which are long enough to enable him to use the time effectively for his own purposes." 29 C.F.R. 785.16. The question of whether waiting time is time worked under the FLSA is fact-intensive, and the key is whether those facts show "that the employee was engaged to wait, or . . . that he waited to be engaged." See 29 C.F.R. 785.14 (quoting Skidmore, 323 U.S. at 137); see also Armour & Co., 323 U.S. at 133 (an employee is engaged to wait when the "time is spent predominantly for the employer's benefit," rather than for the employee's).

    The regulations state that "[a] stenographer who reads a book while waiting for dictation, a messenger who works a crossword puzzle while awaiting assignments, [a] fireman who plays checkers while waiting for alarms and a factory worker who talks to his fellow employees while waiting for machinery to be repaired are all working during their periods of inactivity." 29 C.F.R. 785.15. Thus, when an employer requires the employee to wait and the employee cannot use the waiting time effectively for his own purposes, such waiting time is generally compensable. See 29 C.F.R. 785.15; see also 29 C.F.R. 790.6(b) ("If an employee is required to report at the actual place of performance of his principal activity at a certain specific time, his 'workday' commences at the time he reports there for work in accordance with the employer's requirement, even though through a cause beyond the employee's control, he is not able to commence performance of his productive activities until a later time."); 29 C.F.R. 790.7(h) (when an employee "is required by his employer to report at a particular hour at his workbench or other place where he performs his principal activity, if the employee is there at that hour ready and willing to work but for some reason beyond his control there is no work for him to perform until some time has elapsed, waiting for work would be an integral part of the employee's principal activities").

    The Fifth Circuit's decision in Mireles v. Frio Foods, Inc., 899 F.2d 1407 (5th Cir. 1990), is instructive in this regard. The court there, relying upon the Secretary's definition of "workday" in 29 C.F.R. 790.6(b), held that employees required to arrive at work at a specific time to sign in and then wait until the beginning of productive work should be compensated for their waiting time. As the court stated, "Plaintiffs are not seeking compensation for periods of time spent waiting outside the workday. Rather, plaintiffs contend that they are entitled to pay for the time spent waiting during the workday that they are not able to use effectively for their own purposes." Id. at 1414 (footnote omitted); see also Vega v. Gasper, 36 F.3d 417, 426 (5th Cir. 1994) ("[I]f the workers were on duty in the morning so as to get an early start for their employer's benefit (e.g., to assure that work would start promptly at sunrise) or because of Gasper's scheduling, the morning wait time is a compensable principal activity.").

    Similarly, the district court below found that necessary waiting time benefited Akron:

In this case, to th[e] extent that employees had waiting time in the shop in the morning, the waiting time is integral to their principal activities. The waiting time predominantly benefited Akron Insulation. Lombardi required employees to report to the shop at designated times before departing for the job site to receive assignments, assemble crews, load company-owned vehicles, and drive the trucks to the job sites. Furthermore, although employees may have been drinking coffee or socializing while waiting, they could not effectively use this time for their own purposes. The waiting time occurred in short intervals in the morning, and Lombardi required full-time employees to report to the shop before going to the job sites. Under the circumstances described, the waiting time is compensable under the FLSA because it is an indispensable part of the employees' principal activities.

(Decision at 17; Apx. 463). [19] Akron's employees, who were required to report to the shop in order to perform integral and indispensable activities to their principal insulation activity, and were essentially confined to that shop, were engaged to wait for the benefit of Akron. This "waiting" time therefore also was compensable.

    The regulations also specifically address the effect of the Portal Act on the compensability of travel. They explain that while time spent walking or riding from the plant gate to the place where the employee performs his first principal activity is excluded by the Portal Act from the category of "principal activities" and thus is not compensable, see 29 C.F.R. 790.7(f); 790.8(a), travel from the place of performance of one principal activity to the place of performance of another principal activity is not subject to the Portal Act (because it occurs during the workday), and is instead subject to the general rules for determining compensability under the FLSA, see 29 C.F.R. 790.7(c).

    Thus, ["t]ime spent by an employee in travel as part of his principal activity, such as travel from job site to job site during the workday, must be counted as hours worked." 29 C.F.R. 785.38. Moreover, the regulations are dispositive of this case because they expressly state that when an employee is required to report to a designated place to receive instructions, perform other work, or pick up tools, and then must travel to another location to perform his work, "the travel from the designated place to the work place is part of the day's work, and must be counted as hours worked." Id. See Enduro Plumbing, Inc., 30 WH Cases at 200, 1990 WL 252270, at *5 ("Where, as in this case, an employee is required to report to a designated meeting place (such as the shop in this case) to receive instructions before he proceeds to another work place (such as the jobsites in this case), the start of the workday is triggered at the designated meeting place, and subsequent travel is part of the day's work and must be counted as hours worked for purposes of the FLSA, regardless of contract, custom, or practice; see 29 C.F.R. 785.38."); see also Rich Kramer Const., Inc., 1998 WL 664622, at *2 (where foremen transported laborers, equipment, and supplies from the employer's shop to a job site, the travel time was compensable not only as a principal activity in and of itself, but "because the work day began when foremen reported to the shop").

    Therefore, the travel engaged in by the employees in this case was clearly compensable as being "all in the day's work," 29 C.F.R. 785.38, because the employees were required to report to the shop to receive assignments, assemble crews, and pick up materials to be transported by truck before traveling to the job sites. The travel time after the employees engaged in the first principal activity, both to the job sites and back to the shop (where the last principal activity was performed), was consequently compensable.

    6.    On appeal, Akron argues that for those employees who were members of unions, existing CBAs as well as custom or practice made the travel time noncompensable. (Brief ("Br.") at 18-22). This argument clearly is without merit. Decades ago, the Supreme Court held that an industry's longstanding practice of not paying for certain time does not establish its validity. See Tennessee Coal, 321 U.S. at 602. The Supreme Court has also stated that its "decisions interpreting the FLSA have frequently emphasized the nonwaivable nature of an individual employee's right to a minimum wage and to overtime pay under the Act. Thus, [it has] held that FLSA rights cannot be abridged by contract or otherwise waived because this would nullify the purposes of the statute and thwart the legislative policies it was designed to effectuate." Barrentine, 450 U.S. at 740 (internal quotation marks omitted). Therefore, "congressionally granted FLSA rights take precedence over conflicting provisions in a collectively bargained compensation arrangement." Id. at 740-41. This Court has issued similar rulings. In Douglas v. Argo-Tech Corp., 113 F.3d 67, 70 (6th Cir. 1997), this Court stated that the "right to overtime pay cannot be waived during the course of collective bargaining." This general principle disposes of Akron's argument (Br. at 25), that Weyrick, Kreitzburg, DiMichele, and Moss testified that they were "paid in full." These employees cannot waive their FLSA rights. [20]

    The Secretary's regulations cannot be clearer on this precise point as it specifically relates to travel time. They state that "[w]here an employee is required to report at a meeting place to receive instructions or to perform other work there, or to pick up and to carry tools, the travel time from the designated place to the work place is part of the day's work, and must be counted as hours worked regardless of contract, custom, or practice." 29 C.F.R. 785.38 (emphasis added).

C.    The District Court Correctly Determined the Back Wages Due to the Employees.

    1.    The FLSA mandates that an employer maintain adequate and accurate payroll records. See 29 U.S.C. 211(c), 215(a)(5). [21] Because they facilitate enforcement and prevent the concealment of violations, the recordkeeping requirements of the FLSA are the "fundamental underpinnings of the Act." Wirtz v. Mississippi Publishers Corp., 364 F.2d 603, 607 (5th Cir. 1966).

    More than half a century ago, the Supreme Court held that an employer's failure to maintain accurate records of hours actually worked shifts the burden of proof concerning back wage liability to the employer. See Mt. Clemens, 328 U.S. at 686-88. While acknowledging that under the FLSA, the plaintiff generally carries the burden to demonstrate that the employer is in violation of the Act, the Court in Mt. Clemens, emphasizing "the remedial nature of this statute and the great public policy which it embodies," allocated the burden as follows, where the employer has failed to maintain adequate and accurate wage and hours records:

[W]here the employer's records are inaccurate or inadequate . . . an employee has carried out his burden if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference. The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee's evidence. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.

328 U.S. at 687-88; see also Herman v. Palo Group Foster Home, Inc., 183 F.3d 468, 472 (6th Cir. 1999); Shultz v. Tarheel Coals, Inc., 417 F.2d 583, 584 (6th Cir. 1969). The Supreme Court stated that the solution for an employer's failure to keep proper records "is not to penalize the employee by denying him any recovery on the ground that he is unable to prove the precise extent of uncompensated work." Mt. Clemens, 328 U.S. at 687. And, "[t]he employer cannot be heard to complain that the damages lack the exactness and precision of measurement that would be possible had he kept records in accordance with the requirements of 11 of the Act." Id. at 1192-93.

    2.    Akron did not keep proper payroll records of hours worked each workday and workweek, as required by the applicable regulations, specifically of the compensable pre-shift and post-shift hours of work. See 29 C.F.R. 516.2. The district court, therefore, correctly accepted the Wage-Hour investigator's computations based on clock-in and clock-out times. (Decision at 23-24; Apx. 469-70). The Wage and Hour investigator reviewed all of the employers' time cards for the investigation period of September 1, 2001 to August 31, 2003. (Id. at 2; Apx. 448). Those time cards contain the clock-in and clock-out times, which represent the time the employees arrived at the shop in the morning and the time they left the shop after returning there from the job sites. (Id. at 7-9; Apx. 453-55). The time cards also contain handwritten times, which represent the times spent by the employees on the particular job site for that day; the district court did not find credible Akron's witnesses' (Lombardi, Weyrick, Kreitzburg, and DiMichele) testimony that the hand-written times represented the times the employees left and returned to the shop. (Id. at 8-9; Apx. 454-55). [22] As the district court found, the Wage-Hour investigator "correctly measured the [uncompensated] shop and travel time as the difference between the clock-in times and the hand-written times, while giving credit for the hours that Defendants paid" (Id. at 7; Apx. 453). Thus, the court aptly concluded that, because Akron failed to keep proper records or offer evidence of the specific hours actually worked, "it is reasonable for Plaintiff to infer that the clock-in times reflect the amount of hours worked because it includes shop time and travel time." (Id. at 23; Apx. 469). [23]

    3.    Akron's argument on the computation of back wages essentially restates its contention that the employees voluntarily clocked in early, and then did not perform any work. (Br. at 25). But the district court, "[a]fter observing the demeanor of the witnesses and considering the evidence and parties' arguments" (Decision at 1; Apx. 447), found otherwise, and did not commit clear error in doing so. [24] As this Court has stated in this regard, "When the findings rest on credibility determinations, Rule 52 [of the Federal Rules of Civil Procedure] requires even greater deference [under the clearly erroneous standard]." Cole Enterprises, Inc., 62 F.3d at 778.

    Specifically, the district court found "it incredible that employees would voluntarily clock-in early to socialize and drink coffee for that much time [more than one hour in a single day]" (Decision at 6; Apx. 452). The court noted that while Akron's three witnesses -- Weyrick, Kreitzburg, and DiMichele -- testified that they clocked in voluntarily and drank coffee at the shop (Tr. 161; 173; 189; Apx. 170; 182; 198), Weyrick testified that he received his job assignment and picked up his job ticket at the shop, from which he drove co-workers to the job site (Decision at 5; Apx. 451; Tr. 166, 170; Apx. 175, 179); Kreitzburg testified that he received job assignments and loaded trucks at the shop (Decision at 6; Apx. 452; Tr. 179-80; Apx. 188-89); and DiMichele testified that he waited for crew members to arrive and helped load trucks at the shop, and would arrive even earlier to the shop when there was a big job (Decision at 6, 10; Apx. 452, 456; Tr. 191, 197; Apx. 200, 206). Moreover, Moss and Westfall testified that Lombardi expected employees to report to the shop at approximately 6:00 a.m. in the morning to perform necessary duties; and Moss testified that if he were to have arrived at the shop at 7:30 a.m., everyone would already have been gone (Decision at 10; Apx. 456; Tr. 20, 24, 27-28, 37; 61-62, 70; Apx. 29, 33, 36-37, 46; 70-71, 79). [25] Therefore, the district court's finding that the employees did not voluntarily come to the shops in order to socialize, which forms the very crux of the employers' case, was not clearly erroneous.

    Thus, contrary to Akron's argument, the employees could not arrive at the shop whenever they chose. When they were not directed to come in at a specific time, the employees were nevertheless expected to come into the shop to perform certain duties prior to 7:30 a.m. (Akron's "official" start time). Because the evidence clearly established the existence of uncompensated time, in the absence of precise records or other countervailing evidence, the district court reasonably determined under Mt. Clemens that the clock-in and clock-out times were the best measure of back wages due. Employers, of course, can structure their operations in such a way that the employees' pre- and post-shift work is captured exactly. Akron did not do so here.

    4.    In a final attempt to attack the back wage award, Akron challenges the accuracy of the computations as mathematically flawed, because Akron's bookkeeper found some calculation errors in a sample. (Br. at 22-24). However, Akron's specific objections to the calculations were considered by the Wage-Hour investigator, who submitted a revised back wage calculation based on the bookkeeper's corrections.

CONCLUSION

    For the foregoing reasons, the Secretary respectfully requests that this Court affirm the decision of the district court granting the Secretary both restitutionary and prospective injunctive relief.

Respectfully submitted,

HOWARD M. RADZELY
Solicitor of Labor

STEVEN J. MANDEL
Associate Solicitor

PAUL L. FRIEDEN
Counsel for Appellate Litigation

___signed__________________
PAULA WRIGHT COLEMAN
Attorney

U.S. Department of Labor
Office of the Solicitor
Suite N-2716
200 Constitution Avenue, N.W.
Washington, DC 20210
(202) 693-5555

CERTIFICATE OF COMPLIANCE

    This brief complies with the type-volume limitation of Fed. R. App. 32(a)(5) and (7). This document is monospaced, has 10.5 or fewer characters per inch, and contains less than 14,000 words.

___signed__________________
PAULA WRIGHT COLEMAN
Attorney

STATEMENT OF RELATED CASES

    There are no related cases pending in this Court.

CERTIFICATE OF SERVICE

    I certify that on this 16th day of December, 2005, copies of the Secretary of Labor's Final Brief were served by Federal Express Overnight Delivery on counsel for Defendants/Appellants:

Ted Chuparkoff
Michael Chuparkoff
Chuparkoff & Chuparkoff
1655 W. Market Street, Suite 430
Akron, OH 44313

___signed__________
Paula Wright Coleman
Attorney


Footnotes

[1]    Relevant parts of the pertinent statutes and regulations cited in this brief are set out in an addendum.

[2]    Some of the employees are members of unions. (Decision at 4; Apx. 450; Tr. 99; Apx. 108).

[3]    At Lombardi's request, employees sometimes drove other crew members to the job site. Lombardi would give these employees money for gas. (Decision at 7; Apx. 453; Tr. 49; 163, 170; 251; Apx. 58; 172, 179; 260).

[4]    The employer's witnesses -- Lombardi, Weyrick, Kreitzburg, and DiMichele -- testified that the handwritten times represented the times that the employees left and returned to the shop, i.e., included travel time. (Tr. 163; 178-79; 191; 255, 265; Apx. 172; 187-88; 200; 264, 274). However, the district court found that this testimony was not credible. (Decision at 9; Apx. 455).

[5]    Some of the time cards indicate that the employees were paid for hours worked in excess of the handwritten times. To the extent that some of this time was paid travel time, the Wage and Hour investigator credited Akron with these payments. (Decision at 9 n.3; Apx. 455; Tr. 236; Apx. 245).

[6]    The employees consistently clocked in before 6:30 in the morning. In many instances, the handwritten times (reflecting work at the job sites) began one to two hours later. (Decision at 8-9; Apx. 454-55; Tr. 261-62; Apx. 270-71; Pltf's Ex. 3 at 27 (Grable); Apx. 331). Some of the job sites were located far from the shop, sometimes requiring the workers to travel for more than an hour each way. (Tr. 253-54; Apx. 262-63).

[7]    Zimmerman did not compute any back wages for days when an employee drove directly from home to the job site and from the job site back home without clocking in or out at the employer's premises. (Decision at 4 n.2; Apx. 450; Tr. 115, 121-22; Apx. 124, 130-31).

[8]    In its opinion, the district court noted that "[e]ven when Defendants paid overtime compensation, they sometimes paid overtime at the wrong rate, paying overtime compensation at the lower of the employees' two rates rather than at the blended rate. See 29 C.F.R. 778.115." (Decision at 24; Apx. 470).

[9]    Zimmerman obtained interview statements from 18 employees. (Tr. 130; Apx. 139).

[10]    Zimmerman testified that at the outset of the investigation, when it was anticipated that the case would be resolved administratively, the back wages were calculated based upon an estimate of one hour per day for shop and travel time (Tr. 102; Apx. 111), which resulted in an estimated total of $65,000 due (Tr. 123; Apx. 132). However, during the course of discovery, Zimmerman was instructed to make precise calculations of the back wages owing. (Tr. 103; Apx. 112).

[11]    The court found the testimony of Akron's witnesses in response to questioning by the court was not credible concerning the voluntary nature of the unpaid hours. (Tr. 179-80; 199-208; 253-58; Apx. 188-89; 208-17; 262-67).

[12]    The court noted that testimony established that several of the employees lived in apartments above the shop and often spent time in the shop socializing. The district court found that even for those employees living on the premises, the evidence established that they were working after clocking in and not simply socializing. (Decision at 16; Apx. 462). "Even for employees living on the premises, the Court heard sufficient evidence that they were working in the shop after clocking-in and were not merely clocking-in voluntarily for their own benefit." (Id. at 6; Apx. 452).

[13]    The district court also stated in regard to travel that "[g]iven the amount of travel time necessary to get from the shop to the job site, the clock-in times represent the time that the employees reported to the shop, and the hand-written times represent time spent at the job site"; and that the employees were paid only for the handwritten times, not the travel time. (Decision at 9; Apx. 455).

[14]    See Alvarez v. IBP, Inc., 339 F.3d 894, 902 (9th Cir. 2003), cert. granted, 125 S. Ct. 1292 (2005) ("It is axiomatic, under the FLSA, that employers must pay employees for all 'hours worked.'"). The Supreme Court has also granted certiorari in a related case, Tum v. Barber Foods, Inc., 360 F.3d 274 (1st Cir. 2004), cert. granted, 125 S. Ct. 1295 (2005). Oral argument was held in both cases on October 3, 2005. Both cases present the question whether the time employees spend walking between the places where they don and doff required protective clothing (or safety equipment) and their work stations is compensable when such donning and doffing are integral and indispensable parts of the employee's principal work activities. In Tum, a second question before the Supreme Court is whether employees have a right to compensation for time they must spend waiting at required safety equipment distribution stations. The government filed amicus briefs, and presented oral argument, in both cases. The positions set out in the instant brief are consistent with those set out by the government in those two cases.

[15]    Under the overtime provisions of the FLSA, an employer is required to pay an employee "for a[ny] workweek longer than forty hours . . . at a rate not less than one and one-half times [the employee's] regular rate . . ." 29 U.S.C. 207(a).

[16]    The Senate Report that accompanied the passage of the Portal Act in 1947 illustrates this bedrock principal of the compensability of activities taking place in the course of the workday, i.e., between the performance of the first and last of an employee's principal activities. It states that "[a]ny activity occurring during a workday will continue to be compensable or not compensable in accordance with the existing provisions of the [FLSA]." S. Rep. No. 48, at 48 (80th Cong., 1st Sess.) (emphasis added). The Report defines the "workday" as

that period of the workday between the commencement by the employee, and the termination by the employee, of the principal activity or activities which such employee was employed to perform. [Section 4] relieves an employer from liability or punishment under the [FLSA] on account of the failure of such employer to pay an employee minimum wages or overtime compensation, for activities of an employee engaged on or after [1947], if such activities take place outside of the hours of the employee's workday.

Id. at 46-47 (emphases added); see also 93 Cong. Rec. 4269 (statement of Senator Wiley). For prospective claims, Congress, in enacting the Portal Act, sought to preserve the existing law that had required compensation for all activities during the workday and had included within the workday pre- and post-shift activities that are closely connected to an employee's principal work activities. The only way in which Congress sought to cut back on existing law was by excluding from compensation walking, riding, or traveling, and certain other pre- and post-shift activities that take place before the workday begins and after it ends.

[17]    Whether employees' "waiting time" at the shop is compensable, or is to be excluded from compensable "workday" activities, will be discussed infra. The employers largely argue that the employees voluntarily came to the shop to socialize. As discussed below, the district court made factual findings to the contrary, which have not been shown to be clearly erroneous, thereby making the waiting time at the shop compensable as well.

[18]    Moreover, in 1949, as the Supreme Court indicated in Steiner, Congress amended the FLSA but specifically retained the Portal Act regulations, without expressing any disagreement with the provisions relevant here. See 350 U.S. at 255 & n.8; Fair Labor Standards Amendments of 1949, ch. 736, 16, 63 Stat. 920.

[19]    Although the evidence does not establish that every employee was required to report to the shop at the same precise time, they all were required to be there in order to perform certain requisite activities before traveling to the job sites. The district court made the following factual finding in this regard: "[A]ny waiting time in the shop is at the employer's request and for its benefit and not for the benefit of the employees. Ample testimony shows that Lombardi required employees to report at specific times and perform several required tasks before departing from the shop for the job site. The time cards show that employees clocked in more than one hour on a single day. The Court finds it incredible that employees would voluntarily clock-in early to socialize and drink coffee for that much time." (Decision at 6; Apx. 452).

[20]    On appeal, Akron also states that it had a "policy" that the starting time was 7:30 a.m. and quitting time was 4:00 p.m. "per a sign posted above the time clock, and that employees would only be compensated for time before clock-in or after clock-out times if their time card was initialed by defendants. (Br. at 3). For the same reasons discussed supra, this argument fails. As the district court stated, " Defendants cannot cower behind an official start time as an excuse for refusing to pay employees for work that they required." (Decision at 20; Apx. 466). See Barrentine, 450 U.S. at 741 ("The Fair Labor Standards Act was not designed to codify or perpetuate [industry] customs and contracts.") (internal quotation marks omitted); see also Herman v. Fabri-Centers of America, Inc., 308 F.3d 580, 592 (6th Cir. 2002) (same).

[21]    Specifically, section 11(c) requires that an employer "make, keep, and preserve such records of the persons employed . . . of the wages, hours, and other conditions of employment" as prescribed by regulation of the Secretary. The Secretary's recordkeeping regulations require, in part, that an employer maintain accurate records for each employee of the "[h]ours worked each workday and total hours worked each workweek." 29 C.F.R. 516.2(a)(7).

[22]    The district court noted that "[t]ypically, Defendants paid employees for the hand-written times, although sometimes they paid for hours in excess of the hand-written times (whether of not Lombardi initialed the time card)." (Decision at 7; Apx. 453).

[23]    As argued supra, the Secretary recognizes that the time recorded on time clocks is not necessarily dispositive as to the number of hours worked. See 29 C.F.R. 785.48(a). But, as the district court stated in this case, "the clock-in time most accurately represented the hours worked." (Decision at 24 n.5; Apx. 470).

[24]    While challenging the district court's credibility findings among the witnesses who testified, Akron did not challenge the representative nature of the testimony. "The testimony of fairly representative employees may be the basis for an award of back wages to nontestifying employees." United States Dep't of Labor v. Cole Enterprises, Inc., 62 F.3d 775, 781 (6th Cir. 1995). In addition to the Secretary calling two former employees to testify at trial, the Wage-Hour investigator obtained interview statements from 18 employees.

[25]    Akron argues (Br. at 19 n.3) that Zimmerman, in his computations, failed to factor in that some workers drove straight home from the job and did not return to the office in the company trucks. However, Zimmerman testified that if there was no clock-out entry on a timecard for a certain day, then the handwritten time would prevail (indicating when the employee left the job site), and thus no return travel hours would be computed for that particular worker. (Tr. 122; Apx. 131).