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not regulations, orders, rulings, approvals, interpretations, administrative practices or enforcement policies of the agency within the meaning of sections 9 and 10.

RESTRICTIONS AND LIMITATIONS ON

EMPLOYEE SUITS

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House, accompanying the Conference Committee Report, that the term "agency" as appearing in the Portal Act was employed in this sense. As there stated (p. 16), the regulations, orders, rulings, approvals, interpretations, administrative practices and enforcement policies relied upon and conformed with “must be those of an 'agency' and not of an individual officer or employee of the agency. Thus, if inspector A tells the employer that the agency interpretation is that the employer is not subject to the (Fair Labor Standards) act, the employer is not relieved from liability, despite his reliance in good faith on such interpretation, unless it is in fact the interpretation of the agency. Similarly, the Chairman of the Senate Judiciary Committee, in explaining the conference ageement to the Senate, made the following statement concerning the "good faith" defense. “It will be noted that the relief from liability must be based on a ruling of a Federal agency, and not a minor official thereof. I, therefore, feel that the legitimate interest of labor will be adequately protected under such a provision, since the agency will exercise due care in the issuance of any such ruling.'

(c) Accordingly, the defense provided by sections 9 and 10 of the Portal Act is restricted to those situations where the employer can show that the regulation, order, ruling, approval, interpretation, administrative practice or enforcement policy with which he conformed and on which he relied in good faith was actually that of the authority vested with power to issue or adopt regulations, orders, rulings, approvals, interpretations, administrative practices or enforcement policies of a final nature as the official act or policy of the agency. Statements made by other officials or employees are

$ 790.20 Right of employees to sue; restrictions on representative actions. Section 16 (b) of the Fair Labor Standards Act, as amended by section 5 of the Portal Act, no longer permits an employee or employees to designate an agent or representative (other than a member of the affected group) to maintain an action for and in behalf of all employees similarly situated. Collective actions brought by an employee or employees (a real party in interest) for and in behalf of himself or themselves and other employees similarly situated may still be brought in accordance with the provisions of section 16 (b). With respect to these actions, the amendment provides that no employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought. The amendment is expressly limited to actions which are commenced on or after the date of enactment of the Portal Act. Representative actions which were pending on May 14, 1947 are not affected by this amendment.130 However, under sections 6 and 8 of the Portal Act, a collective or representative action commenced prior to such date will be barred as to an individual claimant who was not specifically named as a party plaintiff to the action on or before September 11, 1947, if his written consent to become such a party is not filed with the court within a prescribed period.***

790.21 Time for bringing employee suits. (a) The Portal Act provides a statute of limitations fixing the time limits within which actions by employees under section 16 (b) of the Fair Labor

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123 See also statement by Representative Gwynne, 1947 Cong. Rec. 1620; and statement by Senator Wiley explaining the conference agreement to the Senate, 1947 Cong. Rec. 4398.

124 Statement of Senator Wiley, 1947 Cong. Rec. 4398.

126 Statement by Representative Gwynne, 1947 Cong. Rec. 1620; statements by Representative Walter, 1947 Cong. Rec. 1550, 451415; statement by Representative Robsion, 1947 Cong. Rec. 1553-4; statement by Senator Thye, 1947 Cong. Rec. 4578.

128 Conference Report, p. 13.

127 Conference Report, pp. 14, 15. The claimant must file this consent within the shorter of the following two periods: (1) Two years, or (2) the period prescribed by the applicable State statute of limitations. See Conference Report, p. 15.

128 See sections 6-8, Inclusive.

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an action to enforce such a cause of action shall be considered to be "commenced":

(1) In individual actions, on the date the complaint is filed;

(2) In collective or class actions, as to an individual claimant,

(i) On the date the complaint is filed, if he is specifically named therein as a party plaintiff and his written consent to become such is filed with the court on that date, or

(ii) On the subsequent date when his written consent to become a party plaintiff is filed in the court, if it was not so filed when the complaint was filed or if he was not then named therein as a party plaintiff.134

(c) The statute of limitations in the Portal Act is silent as to whether or not the running of the two-year period of limitations may be suspended for any

In this connection, attention is directed to section 205 of the Soldiers' and Sailors' Civil Relief Act of 1940,1 as amended, which provides that the period of military service shall not be included in the period limited by law for the bringing of an action or proceeding, whether the cause of action shall have accrued prior to or during the period of such service.

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cause. 135

Standards Act 120 may be commenced, as follows:

(1) Actions to enforce causes of action accruing on or after May 14, 1947: two years.

(2) Actions to enforce causes of action accruing before May 14, 1947: 130 Two years, or period prescribed by applicable State statute of limitations, whichever is shorter, These are maximum periods for bringing such actions, measured from the time the employee's cause of action accrues to the time his action is commenced."

(b) The courts have held that a cause of action under the Fair Labor Standards Act for unpaid minimum wages or unpaid overtime compensation and for liquidated damages “accrues" when the employer fails to pay the required compensation for any workweek at the regular pay day for the period in which the workweek ends. The Portal Act provides that

128 Sponsors of the legislation stated that the time limitations prescribed therein apply only to the statutory actions, brought under the special authority contained in section 16 (b), in which liquidated damages may be recovered, and do not purport to affect the usual application of State statutes of limitation to other actions brought by employees to recover wages due them under contract, at common law, or under State statutes. Statements of Representative Gwynne, 1947 Cong. Rec. 1545; 1614; colloquy between Representatives Robsion and Celler, 1947 Cong. Rec. 1549.

180 This refers to actions commenced after September 11, 1947. Such actions commenced on or between May 14, 1947 and September 11, 1947, were left subject to State statutes of limitations. As to collective and representative actions commenced before May 14, 1947, section 8 of the Portal Act makes the period of limitations stated in the text applicable to the filing, by certain individual claimants, of written consents to become parties plaintiff. See Conference Report, p. 15; $ 790.20 of this part.

131 Conference Report, pp. 13-15.

132 Reid v. Solar Corp., 6 W. H. Cases 508; Mid-Continent Petroleum Corp. v. Keen, 157 F. (20) 310, 316 (C. C. A. 8). See also Brooklyn Savings Bank v. O'Neil, 324 U. S. 697; Rigopoulos v. Kervan, 140 F. (20) 506 (C. C. A. 2).

In some instances an employee may receive, as a part of his compensation, extra payments under incentive or bonus plans, based on factors which do not permit computation and payment of the sums due for a particular workweek or pay period until some time after the pay day for that period. In such cases it would seem that an employee's cause of action, insofar as it may be based on such payments, would not accrue until the time when such payment should be made. Cf. Walling v. Harnischfeger Corp., 325 U. S. 427.

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133 Section 7. See also Conference Report,

184 This is also the rule under section 8 of the Portal Act as to individual claimants, in collective or representative actions commenced before May 14, 1947, who were not specifically named as parties plaintiff on or before September 11, 1947.

136 A limited suspension provision was contained in section 2 (d) of the House bill, but was eliminated by the Senate. Neither the Senate debates, the Senate committee report, nor the conference committee report, indicate the reason for this. While the courts have held that in a proper case, a statute of limitations may be suspended by causes not mentioned in the statute itself (Braun v. Sauerwein, 10 Wall. 218, 223. See also Richards v. Maryland Ins. Co., 8 Cranch 84, 92; Bauserman v. Blunt, 147 U. S. 647), they have also held that when the statute has once commenced to run, its operation is not suspended by a subsequent disability to sue, and that the bar of the statute cannot be postponed by the failure of the creditor (employee) to avail himself of any means within his power to prosecute or to preserve his claim. Bauserman V. Blunt, 147 U. S. 647, 657; Smith v. Continental Oil Co., 59 F. Supp. 91, 94.

138 Act of October 17, 1940, ch. 888, 54 Stat. 1178, as amended by the Act of October 6, 1942, ch, 581, 56 Stat. 769 (50 U. 8. C. A. App. sec. 525).

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§ 790.22 Discretion of court as to assessment of liquidated damages. (a) Section 11 of the Portal Act provides that in any action brought under the Fair Labor Standards Act to recover unpaid minimum wages, unpaid overtime compensation, or liquidated damages, the court may, subject to prescribed conditions, in its sound discretion award no liquidated damages or award any amount of such damages not to exceed the amount specified in section 16 (b) of the Fair Labor Standards Act.137

(b) The conditions prescribed as prerequisites to such an exercise of discretion by the court are two: (1) The employer must show to the satisfaction of the court that the act or omission giving rise to such action was in good faith; and (2) he must show also, to the satisfaction of the court, that he had reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act. If these conditions are met by the employer against whom the suit is brought, the court is permitted, but not required, in its sound discretion to reduce or eliminate the liquidated damages which would otherwise be required in any judgment against the employer. This may be done in any action brought under section 16 (b) of the Fair Labor Standards Act, regardless of whether the action was instituted prior to or on or after May 14, 1947, and regardless of when the employee activities on which it is based were engaged in. If, however, the employer does not show to the satisfaction of the court that he has

187 Section 16 (b) of the Fair Labor Standards Act provides that an employer who violates the minimum-wage or overtime provistons of the act shall be liable to the affected employees not only for the amount of the unpaid minimum wages or unpaid overtime compensation, as the case may be, but also for an additional equal amount as liquidated damages. The courts have held that this provision is "not penal in its nature" but rather that such damages "constitute compensation for the retention of a workman's pay" where the required wages are not paid "on time." Under this provision of the law, the courts have held that the liability of an employer for liquidated damages in amount equal to his underpayments of required wages become fixed at the time he fails to pay such wages when due, and the courts were given no discretion, prior to the enactment of the Portal-to-Portal Act, to relieve him of any portion of this liability. See Brooklyn Savings Bank v. O'Neil, 324 U. S. 697; Overnight Motor Transp. Co. v. Missel, 316 U. S. 572.

(c) What constitutes good faith on the part of an employer, and whether he had reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act are mixed questions of fact and law, which should be determined by objective tests. *** Where an employer makes the required showing, it is for the court to determine in its sound discretion what would be just according to the law on the facts shown.

(d) Section 11 of the Portal Act does not change the provisions of section 16 (b) of the Fair Labor Standards Act under which attorney's fees and court costs are recoverable when judgment is awarded to the plaintiff. PROVISIONS RELATING TO CERTAIN ACTIVITIES

ENGAGED IN BY EMPLOYEES BEFORE MAY 14, 1947

8 790.23 Liability of employer; effect of contract, custom, or practice. (a) Section 2 of the Portal Act, which relates to activities engaged in by employees prior to the effective date of the act, was designed to meet the problem which Congress found had arisen as a result of existing "portal-to-portal" claims. Subsections (a) and (b) of this section provide as follows:

(a) No employer shall be subject to any liability or punishment under the Fair Labor Standards Act of 1938, as amended, (in any action or proceeding commenced prior to or on or after the date of the enactment of this act), on account of the failure of such employer to pay an employee minimum wages, or to pay an employee overtime compensation, for or on account of any activity of an employee engaged in prior to the date of the enactment of this act, except an activity which was compensable by either:

(1) an express provision of a written or nonwritten contract in effect, at the time of such activity, between such employee, his

an

138 See Conference Report, p. 17; remarks of Representative Walter, 1947 Cong. Rec. 1550: President's message of May 14, 1947 to the Congress on approval of the Portal Act.

139 Cf. $$ 790.13 to 790.16.

140 See Portal Act, section 1; Conference Report, pp. 9, 10; House Reports, pp. 1-6; Senate Report, pp. 1-45; statement of Representative Gwynne, 1947 Cong. Rec. 4513; statements of Senator Wiley, 1947 Cong. Rec. 2151-2156, 4397; statements of Senator Donnell, 1947 Cong. Rec. 2196, 2197.

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agent, or collective-bargaining representative and his employer; or

(2) a custom or practice in effect, at the time of such activity, at the establishment or other place where such employee was employed, covering such activity, not inconsistent with a written or nonwritten contract, in effect at the time of such activity, between such employee, his agent, or collective-bargaining representative and his employer.

(b) For the purpose of subsection (a), an activity shall be considered as compensable under such contract provision or such custom or practice only when it was engaged in during the portion of the day with respect to which it was so made compensable. It will be noted that the above language contains certain words and phrases which are similarly used in section 4 of the Act, relating to future claims. Reference is made to the discussion of that section for comments as to the meaning and effect of such terms." The discussion of these provisions which follows is confined to certain general comments.

(b) Like section 4 of the Act, previously discussed, section 2 affords relief to employers from liability or punishment to which they might otherwise be subject because they did not pay their employees in accordance with the Fair Labor Standards Act for or on account of certain activities which were, at the time of performance, not compensable either by contract or by a custom or practice as described in the statute. A major difference is that section 2 refers only to activities performed before May 14, 1947 (the effective date of the act) while section 4 is concerned only with activities performed on or after that date. Although the same criteria of contract, custom, and practice are used to determine compensability, the provisions of section 2 (a), (b) of the Portal Act differ from the corresponding provisions of section 4, relating to future claims, in that their scope is not confined to activities engaged in outside the workday proper, but extends to such activities engaged in at any time during the 24 hours of the day." However, it is apparent from the statutory language and the legislative history that the quoted provisions were intended to carry out the policy expressed in section 1 of the act and were not intended to relieve an employer from liability or punishment for failing to pay compensation as required

by the Fair Labor Standards Act for or on account of any activities of his employees which were compensable in any amount under a contract, custom, or practice of the kind described in subsection (a), even though such activities were so-called “portal-to-portal” activities."

(c) It will be noted that the relief afforded employers by the provisions quoted in paragraph (a) of this section is relief from liability or punishment "in any action or proceeding." 148 Whether the relief thus provided is available to a particular employer in a given fact situation would, therefore, seem to be a matter for determination in such an action or proceeding on the basis of the proof made therein. The language "any action or proceeding" indicates that, with respect to activities performed before May 14, 1947, these provisions apply in accordance with their terms in any action or proceeding to enforce liability or impose punishment on the employer, whether commenced before or on or after such date."

$ 790.24 Effect of Portal Act on determination of hours worked prior to May 14, 1947. (a) Section 2 (c) of the Portal Act provides as follows:

(c) In the application of the minimum wage and overtime compensation provisions of the Fair Labor Standards Act of 1938, as amended,

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in determining the time for which an employer employed an employee there shall be counted all that time, but only that time, during which the employee engaged in activities which were compensable within the meaning of subsections (a) and (b) of this section." 148 This provision relates to the determination of hours worked prior to May 14, 1947. The effect of the Portal Act on the determination of hours worked under the Fair Labor Standards Act after that date is discussed at another point in this

144 See Conference Report, pp. 9, 10; 1947 Cong. Rec. 1621; 1623; 1629; 2194; 2196; 2197; 2200; 2203; 2252; 2253; 2370; 2371; 2373; 2378; 2383; 2384. See also the President's message on approval of the Portal-to-Portal Act, May 14, 1947.

146 See colloquy between Senators Tydings and Donnell, 1947 Cong. Rec. 2196; colloquy between Senators Lodge, Donnell,

and Hawkes, 1947 Cong. Rec. 2252, 2253.

146 The quoted language does not appear in the corresponding provisions of section 4, relating to future claims. See $ 790.4.

147 See Conference Report, p. 9.

148 Subsections (a) and (b) are discussed in $ 790.23.

141 See $$ 790.4, 790.9–790.12.
112 See 88 790.5 (b), 790.10–790.14.

143 See statements of Senator Donnell, 1947 Cong. Rec. 2196, 2255, 2440.

part.14 Under the terms of the quoted provision, time spent by employees prior to the enactment of the latter act in activities which were not compensable by contract, custom, or practice within the meaning of the Portal Act is to be excluded in computing worktime for purposes of determining whether the minimum wage and overtime requirements of the Fair Labor Standards Act were met.180 On the other hand, time that constituted hours worked, which was devoted to activities which were so compensable, is not removed by these provisions from the category of time worked, for purposes of the Fair Labor Standards Act; the statute expressly provides that all such time shall be counted in computing hours worked.151

(b) In determining time worked prior to May 14, 1947, in accordance with the provision quoted in paragraph (a) of this section, regard must be had to the “portion of the day” provisions of section 2 (b) of the Portal-to-Portal Act as well as the more general provisions of section 2 (a),102

$ 790.25 Jurisdiction of courts limited as to wage claims for periods prior to May 14, 1947. (a) Section 2 (d) of the Portal Act provides that:

No court of the United State, of any State, Territory, or possession of the United States,

or of the District of Columbia, shall have jurisdiction of any action or proceeding, whether instituted prior to or on or after the date of the enactment of this Act, to enforce liability or impose punishment for or on account of the failure of the employer to pay minimum wages or overtime compensation under the Fair Labor Standards Act of 1938, as amended,

to the extent that such action or proceeding seeks to enforce any liability or impose any punishment with respect to an activity which was not compensable under subsections (a) and (b) of this section.163

(b) It will be noted that this provision of the act limits the jurisdiction of both Federal and State courts in all such acts or proceedings whether commenced before or after the enactment of the act. It is important to bear in mind that this provision does not affect the jurisdiction of any court in any action or proceeding insofar as it is based on failure to pay minimum wages or overtime compensation for any activities engaged in by employees on or after May 14, 1947. This limitation or jurisdiction affects only those actions or proceedings in which it is sought to enforce liability or impose punishment on an employer for or on account of his failure to pay the required minimium wages or overtime compensation for activities engaged in by employees during periods prior to May 14, 1947, and then only to the extent that such activities were not compensable by contract, custom, or practice as provided in subsections 2 (a), and 2 (b) of the Portal Act." The denial of jurisdiction is “not applicable to actions of proceedings in which judgment has become final prior to the date of the enactment" of the act.166

(c) It appears from the language quoted above that the jurisdiction of the courts with respect to an action or proceeding remains unaffected by this provision to the extent that such an action or proceeding seeks to impose liability or punishment either (1) for failure to pay wages in accordance with the Fair Labor Standards Act for or on account of activities which were compensable by contract, custom, or practice as provided in sections 2 (a), (b) of the Portal Act, or (2) for child labor or other violations of the Fair Labor Standards Act where no

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149 See $ $ 790.5 to 790.8.

150 This aspect of the quoted provision is, as explained in the Conference Report, intended to make clear, as was done in section 2 of the Senate amendment to the bill (H. R. 2157) as passed by the House of Representatives (not contained in the bill as finally enacted), that no judicial or administrative interpretation will have the effect of including as worktime other time which was not made compensable by contract, custom, or practice. Conference Report, p. 10.

161 The purpose of this portion of the quoted provision, as explained by the Conference Committee, is to emphasize that employers are not relieved from liability for the payment of minimum wages and overtime compensation for any time during which the employee engaged in activities compensable under contract, custom, or practice as provided in the statute. Section 3 of the Senate amendment, which so provided, was omitted under the conference agreement as surplusage, and as fully covered by section 2 (c) of the bill as agreed to in conference. Conference Report, p. 10.

162 These provisions are quoted in $ 790.23. See also Conference Report, p. 10, and cf. $790.12.

153 The text of subsections (a) and (b) appears above in § 790.23 (a).

154 See in this connection $$ 790.23 and 790.24.

165 Conference Report, p. 11.

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