In re the Order to Comply: Labor Law Violation of Daley Farm of Lewiston

816 N.W.2d 671, 19 Wage & Hour Cas.2d (BNA) 1176, 2012 WL 2685087, 2012 Minn. App. LEXIS 65
Court of Appeals of Minnesota·Decided July 9, 2012·No. No. A11-1788·Published·Cited by 1 cases

Opinion

OPINION

COLLINS, Judge.*

Relator Daley Farm of Lewiston, L.L.P. (Daley Farm) challenges an order by respondent Minnesota Department of Labor and Industry (DLI) ordering it to pay overtime to its agricultural employees, arguing that the department incorrectly interpreted the agricultural exemption of the Minnesota Fair Labor Standards Act (MFLSA), Minn.Stat. §§ 177.21-.35 (2010), to be limited to employees paid a salary as defined by Minn. R. 5200.0211, subp. 1 (2011). Because the department correctly interpreted the statutory exemption, we affirm.

FACTS

DLI issued a compliance order, determining that Daley Farm violated the MFLSA by failing to pay overtime compensation to its hourly agricultural employees. Daley Farm challenged the order, arguing that its hourly employees fit within a statutory exemption for agricultural employees, Minn.Stat. § 177.23, subd. 7(2). Contested-case proceedings were initiated, and Daley Farm moved for summary disposition on the exemption issue. An administrative law judge (ALJ) held a hearing, concluded that Daley Farm’s employees met the exemption, and recommended that the order to comply be dismissed. An assistant commissioner for DLI rejected that recommendation and affirmed the order to comply, explaining that hourly workers do not qualify for the agricultural exemption. Following the dismissal of a premature appeal, the ALJ made findings as to the amounts of unpaid overtime compensation due to each employee. The assistant commissioner adopted those findings and issued a final order requiring Daley Farm to cease and desist its violative pay practices and to pay the unpaid overtime plus an equal amount as liquidated damages. This appeal followed.

ISSUES

Did the commissioner of the DLI err by determining that agricultural workers who are paid on an hourly basis are not exempt from the overtime requirements of the MFLSA?

[673] ANALYSIS

The MFLSA “establishes minimum wages and overtime compensation standards that apply to all employees who are not specifically exempt from the requirements of the Act.” Erdman v. Life Time Fitness, Inc., 788 N.W.2d 50, 55 (Minn.2010). The commissioner of the DLI, or his designee, is authorized to enforce the MFLSA through actions including the issuance of orders to comply. Minn.Stat. § 177.27, subds. 4, 7. If an employer timely challenges an order to comply, a contested-case proceeding must be initiated pursuant to Minn.Stat. § 14.59-69 (2010). Id. This court’s review of the agency’s final decision is governed by Minn.Stat. § 14.69, which allows for reversal of the decision if it is legally erroneous. Agency decisions enjoy a presumption of correctness. In re Petition of Excelsior Energy, Inc., 782 N.W.2d 282, 289 (Minn.App.2010).

Under the MFLSA, employers generally are prohibited from requiring employees to work more than 48 hours per week “unless the employee receives compensation for employment in excess of 48 hours in a workweek at a rate of at least 1-1/2 times the regular rate at which the employee is employed.” Minn.Stat. § 177.25, subd. 1. But the MFLSA creates an exemption for certain agricultural workers, by excluding from the definition of an employee “any individual employed in agriculture on a farming unit or operation who is paid a salary greater than the individual would be paid if the individual worked 48 hours at the state minimum wage plus 17 hours at 1-1/2 times the state minimum wage per week.” Minn.Stat. § 177.23, subd. 7(2).

It is undisputed that Daley Farm’s employees were “employed in agriculture on a farming unit or operation.” Daley Farm contends that its employees meet the statutory exemption because their weekly wages exceeded the threshold set by the statute. But DLI asserts that agricultural workers must be paid on a salaried — rather than hourly — basis in order to fit within the exemption. Thus, the dispute in this case centers on the meaning of “salary” in the statutory exemption.

The MFLSA does not define “salary,” but the statute authorizes the commissioner to “adopt rules, including definitions of terms, to carry out the purposes of sections 177.21 to 177.44, to prevent the circumvention or evasion of those sections, and to safeguard the minimum wage and overtime rates established by sections 177.24 and 177.25.” Minn.Stat. § 177.28, subd. 1. The DLI has promulgated a rule providing that “[a] salary is not an hourly rate. An employee is paid a salary if the employee, through agreement with an employer, is guaranteed a predetermined wage for each workweek.” Minn. R. 5200.0211. As a promulgated rule, DLI’s definition of salary has “the force and effect of law.” Minn.Stat. § 14.38, subd. 1 (2010); U.S. West Material Res., Inc. v. Comm’r of Revenue, 511 N.W.2d 17, 20 n. 2 (Minn.1994). Because salary is defined by the rules to require a predetermined wage for each workweek, we must reject Daley Farm’s assertion that the commissioner erred by determining, that the statutory exemption does not apply to Daley Farm’s employees who are paid on an hourly basis.

Daley Farm asserts that the term “salary” in section 177.23, subd. 7(2) should be construed more generally to refer to an employee’s wages. We disagree, because construing the statute in this manner would require us to disregard the commissioner’s authorized and legally binding rule defining salary.

Daley Farm also asserts that the commissioner’s determination is contrary to this court’s decision in Wenigar v. Johnson, 712 N.W.2d 190 (Minn.App.2006). There, we addressed multiple employment-[674] based claims arising out of abusive working conditions experienced by an agricultural employee of a pig farm. Id. at 196-97. We held that the employee could not support a claim under the MFLSA because his annual earnings exceeded the statutory threshold for agricultural workers in Minn.Stat. § 177.23, subd. 7(2). Id. at 204-05 (setting forth calculations). Although the employee was paid an hourly wage, id. at 197, we were not presented with the question of whether the exemption is limited, by operation of Minn. R. 5200.0211, to employees paid on a salaried basis. Because Wenigar did not expressly address that issue, we disagree with Daley Farm’s assertion that it should control our decision here.

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In re the Order to Comply: Labor Law Violation of Daley Farm of Lewiston, 816 N.W.2d 671, 19 Wage & Hour Cas.2d (BNA) 1176, 2012 WL 2685087, 2012 Minn. App. LEXIS 65 (Mich. Ct. App. 2012).

816 N.W.2d 671 (In re the Order to Comply: Labor Law Violation of Daley Farm of Lewiston) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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