Schneider v. Snyder's Foods, Inc.

66 P.3d 640, 116 Wash. App. 706
Court of Appeals of Washington·Decided February 13, 2003·No. No. 20728-5-III·Published·Cited by 13 cases

Opinion

Kurtz, J.

The issue before us is whether United States Bakery’s (the Bakery’s) compensation agreement with its route sales representatives (Salespersons), complies with RCW 49.46.130(2)(f) by providing compensation for the Salespersons that is reasonably equivalent to overtime. This issue was initially submitted to the Washington De[709] partment of Labor and Industries (the Department), which ruled that the compensation agreement complied with the statute, and was then resubmitted to the superior court, which agreed with the Department. We conclude that the Bakery’s compensation for Salespersons is reasonably equivalent to overtime, as required by RCW 49.46.130(2)(f), and affirm.

FACTS

The Bakery was formed from five family bakeries in Washington and Oregon.1 The Bakery produces many different items such as bagels, bread, and pastries and sells them to supermarkets, restaurants, and schools.

The Bakery employs approximately 380 Salespersons. Five days a week, the Salespersons sell and deliver fresh baked goods to the customers on their designated routes. The Salespersons are fairly autonomous and have little supervision.

The Salespersons are represented by the Teamsters Union and in Washington are organized into nine different locals. A joint council of these locals coordinates the organizations throughout the state. Formerly, the Salespersons were not covered by one statewide contract, and instead were covered by three regional contracts based in Yakima, Spokane, and Seattle.

The Salespersons are paid a base salary plus a commission of sales, up to 7 percent. Total commissions a representative earns vary considerably among the Salespersons. On average, a Salesperson earns about $45,000 per year, but some earn $80,000.

One reason the earnings vary between Salespersons is that each route is unique. Some routes have high volume customers, such as supermarkets, in an urban setting with frequent stops. Other routes have lower volume customers [710] located in rural areas where the Salesperson must drive several miles in between customers.

Routes are assigned according to the seniority of the Salesperson. When a Salesperson retires, his or her route comes up for bid.

On several previous occasions, the union and the Salespersons have reevaluated the Salespersons’ compensation system. They have discussed converting to a straight hourly system with time and one-half for hours over 40. If an hourly system were adopted, the Salespersons would no longer receive a salary plus commission.

In the past, the union has analyzed data for each route and compared the payment for its members under each pay system. The union has consistently concluded that the current pay system of base salary plus commission provides more money to the Salespersons, and thus the union has not renegotiated the current compensation system.

The Original Lawsuit. In 1996, however, several Salespersons were unhappy with the compensation system, and filed a class action lawsuit seeking payment for overtime wages. The court granted the Bakery summary judgment on the basis that the complaint was preempted by federal labor statutes that required the Salespersons to first arbitrate the dispute before filing suit. This court reversed on appeal, holding that federal law did not require plaintiffs to resort to arbitration, and remanded for a trial on the merits. Schneider v. Snyder’s Foods, Inc., 95 Wn. App. 399, 976 P.2d 134 (1999).

The trial was never held. After remand, the parties agreed to settle the case. The Salespersons did not appeal.

The New Collective Bargaining Agreement. While the Bakery was litigating with the Salespersons, it was also negotiating with the union about how to pay the Salespersons in the future. The Salespersons’ chief negotiator testified that the Salespersons did not want a change in compensation or distribution. Eventually, the Bakery and the union agreed on a new collective bargaining agreement. [711] The Salespersons ratified this new agreement by a vote of 76 percent.

In the new agreement, the Bakery agreed to pay the Salespersons what it terms the reasonable equivalent of overtime:

In generating sales and serving their accounts, Route Salespersons may have to work more than forty (40) hours in a week. Accordingly, consistent with the -understanding and practice that has been in effect since 1991, the parties agree to continue to provide additional compensation for those Route Salespersons who work more than forty (40) hours per week. The parties understand and agree that this additional compensation continues to exceed or be at least reasonably equivalent to any overtime compensation that could otherwise be calculated in accordance with RCW 49.46.

Ex. 119, at 33.

The Salespersons’ Pay Structure. The pay system for the Salespersons has three components: (1) a premium for excessive hours, (2) a mileage premium, and (3) part of the commission on sales. When a Salesperson has consistently worked over 50 hours in a consecutive four-week period, the Bakery and the Salesperson will meet to discuss solutions to reducing the hours. If the parties do not reach an agreement, the Bakery will pay an excessive hours premium of $15 per hour for all hours over 50 in a week.

The mileage premium is implicated in rural routes that require more driving than urban routes. Salespersons who drive more than 400 miles per week are paid $15 more per week, with an upward sliding scale depending on the number of miles driven.

Finally, Salespersons earn up to a 7 percent commission on sales, less on certain items. Up to 2.5 percent of this commission is designated as a component that is "reasonably equivalent” to overtime. Ex. 119, at 33. The salary plus commission was compared to hourly overtime by the Bakery using mathematical calculations. The calculations were based on a collection of detailed information on each of the [712] nearly 400 routes. Calculations were performed with simultaneous equations and the results were reported in a spreadsheet.

The Salespersons are now required to track their hours with a handheld computer. Periodic reviews of the routes are required by the collective bargaining agreement, as well as the Department of Labor and Industries. If a year-end review shows that a route deviates significantly from the original calculation, it will be adjusted.

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Schneider v. Snyder's Foods, Inc., 66 P.3d 640, 116 Wash. App. 706 (Wash. Ct. App. 2003).

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Schneider v. Snyder's Foods, Inc.
66 P.3d 640 (Court of Appeals of Washington, 2003)