Davis Brothers, Incorporated, a Georgia Corporation v. Raymond J. Donovan, Secretary of Labor

700 F.2d 1368
CourtCourt of Appeals for the Eleventh Circuit
DecidedJune 2, 1983
Docket81-7775
StatusPublished
Cited by24 cases

This text of 700 F.2d 1368 (Davis Brothers, Incorporated, a Georgia Corporation v. Raymond J. Donovan, Secretary of Labor) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Davis Brothers, Incorporated, a Georgia Corporation v. Raymond J. Donovan, Secretary of Labor, 700 F.2d 1368 (11th Cir. 1983).

Opinions

RONEY, Circuit Judge:

In meeting the requirements of the minimum wage prescribed by the Fair Labor Standards Act, the appellant restaurant and motel chain claims credit for meals furnished to its employees. Since the employees must take the meals, and are given no option to take cash, the Secretary of Labor disallowed the credit. The district court by declaratory judgment upheld the Secretary. We reverse on the ground that the Secretary has read into the statute a voluntary-choice-by-employee provision that Congress did not require.

The Fair Labor Standards Act (FLSA) guarantees employees covered by the statute a minimum wage. 29 U.S.C.A. § 206. Section 3(m) allows an employer a credit for “the reasonable cost ... to the employer of furnishing [an] employee with board ... if such board . .. [is] customarily furnished by such employer to his employees.” 29 U.S.C.A. § 203(m). This appeal presents a legal question: does this credit apply only if workers are continually given the option to take cash rather than the meal provided. The parties have stipulated to the facts. Appellant Davis Brothers operates restaurants, featuring primarily smorgasboard and cafeteria-style service, as well as motels. Up until a few years ago, Davis Brothers paid most hourly employees at least the full minimum wage in cash without deducting for food provided by the restaurants. Employees had the option to purchase meals from their employer at less than the retail price. In January 1980, however, Davis Brothers began requiring all non-managerial employees to take part of their compensation in the form of meals. Only workers who for medical reasons could not eat the food offered were paid the full minimum wage in cash. For all other hour[1370]*1370ly employees, participation in the meal credit plan became a condition of employment which reduced the cash component of their wages 25-35 cents per hour.

In March 1980, the Department of Labor informed Davis Brothers that it was not entitled to credit because the meal plan was mandatory. Although the Department did not specify how frequently employees have to be afforded the choice of taking cash in lieu of meals, it indicated that an employee’s acceptance of meals is not really voluntary if it is a prerequisite to employment. In reaching this position, the Department relied on 29 C.F.R. § 531.30 (1981), an interpretative rule promulgated by the agency in 1940. This rule, which construes the word “furnished” as used in the credit provision of the FLSA, 29 U.S.C.A. § 203(m), provides in pertinent part: “[n]ot only must the employee receive the benefits of the facility for which he is charged, but it is essential that his acceptance of the facility be voluntary and uncoerced.”

The legality of the Secretary’s choice requirement is a question of first impression for this Court. In addition to the district court whose judgment is reviewed here, two other district courts have upheld the Secretary’s position: Morrison, Inc. v. Donovan, argued on appeal with this case and this day decided at 700 F.2d 1374 (11th Cir. 1983), and Marshall v. New Floridian Hotel, Inc., 24 Wage & Hour Cas. (BNA) 530 (S.D. Fla.1979), aff’d on other grounds sub nom., Donovan v. New Floridian Hotel, Inc., 676 F.2d 468, 473 & n. 8 (11th Cir.1982) (recognizing that substantial questions exist concerning the validity of the Secretary’s position). Another district court has reached the opposite conclusion. Donovan v. Miller Properties, Inc., 547 F.Supp. 785 (M.D.La., 1982).

Section 3(m) of the statute provides that wages include the reasonable cost of meals “customarily furnished” to employees. Through its interpretative regulation, the Secretary of Labor has in effect construed “customarily furnished” by the employer to mean “voluntarily accepted” by the employees. We fail to discern any basis for this construction. Congress is presumed to use words in their ordinary sense unless it expressly indicates the contrary. Addison v. Holly Hill Fruit Products, 322 U.S. 607, 617-18, 64 S.Ct. 1215,1221-22, 88 L.Ed. 1488 (1944) (construing a different provision of the FLSA); Tennessee Coal, Iron and Railroad Co. v. Muscoda Local No. 123, 321 U.S. 590, 598, 64 S.Ct. 698, 703, 88 L.Ed. 949 (1944) (same). The FLSA does not define customarily furnished or otherwise indicate that the phrase is being used in an unusual way. Bound by the ordinary meaning of the terms, two courts seemingly have construed customarily furnished to mean regularly provided. Melton v. Round Table Restaurants, Inc., 20 Wage & Hour Cas. (BNA) 532, 534 (N.D.Ga.1971); Donovan v. Miller Properties, Inc., 547 F.Supp. at 788. We agree. The plain language of section 3(m) focuses on the actions of the employer, not of his employees.

Perhaps aware that the literal language of section 3(m) does not support his position, the Secretary relies on the legislative purpose behind the FLSA. Congress decided to guarantee workers a minimum wage to prevent exploitation through the superior bargaining position often held by employers. See Brooklyn Savings Bank v. O’Neil, 324 U.S. 697, 706-707 & n. 18, 65 S.Ct. 895, 902 & n. 18, 89 L.Ed. 1296 (1945). According to the Secretary, an employer exploits his superior economic power, and hence defeats the intent of the Act, when he forces an employee to accept part of his wages in a form not desired. This argument ignores the safeguard built into section 3(m) by Congress which prohibits an employer from profiting from his bargaining edge. An employer cannot deduct from the cash component of wages more than the “reasonable cost” of the meal as determined by the agency. 29 U.S.C.A. § 203(m). Cf. Walling v. Peavy-Wilson Lumber Co., 49 F.Supp. 846, 862 (W.D.La.1943) (Congress [1371]*1371limited the credit to the reasonable cost of the meals to prevent employers from circumventing the minimum wage law and “profiteering” through excessive deductions from cash wages for facilities provided).

In a second argument based on legislative intent, the Secretary notes that Congress wanted the individual employee to enjoy “the freedom ... to allocate his minimum wage among competing economic and personal interests.” Brennan v. Heard, 491 F.2d 1, 4 (5th Cir.1974). According to the Secretary, the employee loses this freedom if his employer can force him to accept his compensation in a form other than cash. The Secretary’s reliance on Heard and the general legislative intent behind the FLSA is misplaced. The FLSA normally requires employers to pay their workers in cash but, as the Heard court noted, section 3(m) is an express exception to this rule. Brennan v. Heard, 491 F.2d at 3 n. 2. See also Brennan v. Veterans Cleaning Service, Inc., 482 F.2d 1362, 1369 (5th Cir.1973).

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Bluebook (online)
700 F.2d 1368, Counsel Stack Legal Research, https://law.counselstack.com/opinion/davis-brothers-incorporated-a-georgia-corporation-v-raymond-j-donovan-ca11-1983.