Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Minnesota Living Assistance, Inc.

Supreme Court of Minnesota

September 18, 2019

In the Matter of Minnesota Living Assistance, Inc., d/b/a Baywood Home Care.

          Court of Appeals Office of Appellate Courts

          Keith Ellison, Attorney General, Jonathan D. Moler, Assistant Attorney General, Saint Paul, Minnesota, for appellant Minnesota Department of Labor and Industry.

          Bruce J. Douglas, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Minneapolis, Minnesota, for respondent Minnesota Living Assistance, Inc.

         SYLLABUS

         1. All hours worked by an employee after the first 48 hours in a given workweek are hours worked "in excess of 48 hours," as that phrase is used in Minn. Stat. § 177.25, subd. 1 (2018), regardless of how the employee was compensated during the first 48 hours of employment in the workweek.

         2. Time-and-a-half compensation is not excluded from an employee's remuneration to calculate the regular rate of pay under Minn. R. 5200.0130–.0140 (2017), when the compensation is for work that is neither in excess of the 48-hour limit of Minn. Stat. § 177.25, subd. 1, nor outside of the employee's regular working time.

         3. Although we do not defer to an agency's interpretation of a rule when that interpretation is not promulgated, agencies may argue in favor of the interpretation as a litigation position-and we may adopt the interpretation-when our de novo consideration leads us to conclude that the interpretation is correct.

         Reversed.

          OPINION

          HUDSON, JUSTICE.

         From 2012 to 2014, respondent Minnesota Living Assistance, Inc., d/b/a Baywood Home Care (Baywood) paid its employees using a split-day plan, meaning that for the first 5.5 scheduled hours of each 16-hour workday employees were paid at one rate of pay and for the remaining 10.5 scheduled hours they were paid 1-1/2 times that rate. Baywood used this split-day plan even after an employee had worked 48 hours (the overtime threshold under Minnesota law) in a workweek.[1] Minn. Stat. § 177.25, subd. 1 (2018). In 2014, following complaints that Baywood was not paying its employees overtime, appellant Department of Labor and Industry (the Department) began investigating Baywood, and ultimately the Commissioner of the Department of Labor and Industry (the Commissioner) issued an order for Baywood to pay approximately $550,000 in unpaid overtime wages and an additional $550,000 in liquidated damages.

         Baywood petitioned for a writ of certiorari, and the court of appeals reversed, concluding, inter alia, that the Commissioner's conclusion that split-day plans are not permitted under the Minnesota Fair Labor Standards Act (the Act), Minn. Stat. §§ 177.21-.35 (2018), was based on an unpromulgated rule. We conclude that (1) the Act requires employers to pay their employees at least time-and-a-half wages for all hours worked after the first 48 hours of a given workweek, regardless of whether the employee received time-and-a-half compensation during the first 48 hours of employment in that workweek, and (2) under Minn. R. 5200.0140 (2017), time-and-a-half payments for regularly scheduled work that occurs before an employee has worked 48 hours in a workweek may not be excluded from an employee's remuneration to calculate the employee's regular rate. We further conclude that, although the Commissioner's failure to promulgate interpretive rules to that effect means that we will not give deference to the Department's interpretation, the Department may nevertheless advocate in favor of its interpretation, and we may adopt the interpretation when our de novo consideration of the statute and rule leads us to conclude that the Department's interpretation is correct. We therefore reverse the court of appeals decision.

         FACTS

         This case comes before us following an order by the Commissioner granting summary disposition, which is the administrative equivalent of summary judgment. In re Gillette Children's Specialty Healthcare, 883 N.W.2d 778, 785 (Minn. 2016). Accordingly, "[w]e view the facts in the light most favorable to the party against whom summary [disposition] was granted."[2] Dewitt v. London Rd. Rental Ctr., Inc., 910 N.W.2d 412, 415–16 (Minn. 2018).

         Baywood employs home health aides to provide companionship services for individuals who are elderly or otherwise in need of assistance to stay in their homes. Its employees often reside in the homes of clients for a period of up to 24 hours per day, ranging from a single day to an entire week, but more typically 5 days out of 7.

         Baywood advertises to recruit employees. According to Baywood's CEO, the customary practice in the industry is to "establish a compensation program that, although computed on an hourly-rate basis, yielded a daily rate." Baywood advertised the positions as paying "$165–$170/day" with no indication of how that pay was divided by hour or how Baywood structured its overtime payments. Once employees were hired, however, one of Baywood's administrative employees explained the daily compensation rate to new employees, including that employees were paid at one rate "for the first 5.5 hours of a shift and at 1.5 times that rate as a daily premium for the next 10.5 hours of the shift."[3]

         In 2014, the Department received a complaint alleging that Baywood was not paying its employees overtime after they had worked more than 48 hours in a workweek. Based on the complaint, the Department audited Baywood's pay records from March 21, 2012, to March 21, 2014. Following the audit, the Department concluded that Baywood did not pay its employees $557,713.44 in overtime wages that the employees were due. In May 2016, the Commissioner issued a compliance order, which ordered Baywood to cease and desist from failing to pay overtime and to pay $557,713.44 in unpaid overtime wages and an equal amount in liquidated damages to the affected employees.

         Baywood timely challenged the compliance order, and a contested-case proceeding was initiated before the Minnesota Office of Administrative Hearings. See Minn. Stat. § 177.27, subd. 4 (2018). Following cross-motions for summary disposition, an administrative law judge recommended summary disposition in favor of the Department, concluding that: (1) there was no genuine issue of material fact that Baywood paid its employees the same rate for all hours worked (in other words, that Baywood did not pay its employees using a split-day plan); (2) even if Baywood paid its employees using a split-day plan, the premium payments for hours 5.5–16 of each day could not be excluded from the calculation of the employees' regular rate of pay, because such premium payments are not listed in the rules implementing the Act as excluded from the calculation; and (3) even if Baywood paid its employees using a split-day plan, Baywood was required to pay time-and-a-half for every hour worked after the first 48 hours, not just hours 5.5 to 16 of each day. Baywood filed exceptions with the Commissioner, who affirmed the matters material to this appeal.

         Baywood petitioned for certiorari review in the court of appeals. In a published opinion, the court of appeals reversed and remanded on two grounds. In re Minn. Living Assistance, Inc., 919 N.W.2d 87 (Minn.App. 2018). First, the court concluded that a genuine issue of material fact existed as to whether Baywood paid its employees using a split-day plan. Id. at 93. Second, the court concluded that the Department's position that premium payments for hours 5.5–16 could not be excluded from an employee's regular rate was an unpromulgated rule, and thus invalid. Id. at 96. The court of appeals did not address the Department's arguments regarding the meaning of the Act or its implementing regulations.

         We granted the Department's petition for further review.

         ANALYSIS

         This case requires resolution of three issues. First, we must determine which hours of employment require time-and-a-half compensation by interpreting Minn. Stat. § 177.25, subd. 1. Second, because the amount of time-and-a-half compensation due depends on employees' regular rate of pay, we must determine how the regular rate of pay is calculated by interpreting the administrative rules implementing Minn. Stat. § 177.25, subd. 1. Third, because we conclude that the statute and rules prohibit split-day plans, we must address Baywood's argument that it should still prevail because the Department did not promulgate additional rules that unambiguously resolve the first two issues.[4]

         Before beginning our analysis, it is helpful to briefly mention the history of split-day plans. The concept of split-day plans stems from case law under the federal Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. §§ 201–19 (2018). In the early years after passage of the FLSA, some employers adopted split-day plans in an attempt to avoid increased wage costs. See generally Walling v. Helmerich & Payne, Inc., 323 U.S. 37, 38 (1944) (describing split-day plans). Under a split-day plan, the employer would arbitrarily divide the day into two parts for purposes of calculating and applying hourly wage rates; the employer would pay a "regular" lower rate for the first portion of the day and then an "overtime" rate for the balance of the day, with the resulting average hourly wage being no higher than before passage of the FLSA. See id. at 38–41.

         With this background in mind, we begin with the first substantive issue: which hours of employment require time-and-a-half compensation under the Act.

         I.

         "No employer may employ an employee for a workweek longer than 48 hours, 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. The Commissioner's order interpreted this language as requiring Baywood to pay time-and-a-half wages for all hours worked in excess of 48, regardless of how Baywood's employees were compensated for the first 48 hours. This issue presents a question of statutory interpretation, which we review de novo. Cruz-Guzman v. State, 916 N.W.2d 1, 13 (Minn. 2018).

         The Department argues that Minn. Stat. § 177.25, subd. 1, prohibits split-day plans, relying on the plain meaning of the phrase "in excess of." Baywood argues that nothing in the statute prohibits it from paying employees time-and-a-half before an employee has worked more than 48 hours and then crediting those payments toward the payments it would otherwise be required to pay. We agree with the Department.

         Section 177.25, subdivision 1, requires time-and-a-half compensation for employment "in excess of" 48 hours. The phrase "in excess of" is not defined by statute, so we may look to dictionary definitions to determine the meaning of the phrase. See Gilbertson v. Williams Dingmann, LLC, 894 N.W.2d 148, 152 (Minn. 2017). Looking at dictionary definitions from the time of enactment, "in excess of" is defined as "to an amount or degree beyond." Webster's Third New International Dictionary 792 (1976). After inserting this definition into the statute, it reads, "No employer may employ an employee for a workweek longer than 48 hours, unless the employee receives compensation for employment [to an amount or degree beyond] 48 hours in a workweek at a rate of at least 1-1/2 times the regular rate at which the employee is employed." This definition supports the Department's interpretation. Hours worked after the first 48 hours are "beyond" the first 48 hours, regardless of the compensation an employee received for the first 48 hours; hours worked before the first 48 hours are not. Put another way, the effect of Baywood's interpretation would be that employees would not receive time-and-a-half compensation for the first 5.5 hours of every shift worked after they have worked 48 hours. But by Baywood's own admission, the payments for hours 5.5–16 in a day are not compensation for work that occurs after the first 48 hours; they are payments for work that occurs before reaching 48 hours. This failure to pay time-and-a-half wages for every hour after the first 48 hours violates the plain language of the statute.

         Finally, Baywood's "crediting" argument would require us to read words into the statute that are not present. Nothing in the statute appears to authorize crediting pre-48-hour payments-whether time-and-a-half or otherwise-towards post-48-hour payments. To do so, the statute would have to be amended to read "No employer may employ an employee for a workweek longer than 48 hours, unless the employee receives compensation for employment in excess of 48 hours [worked at a regular rate of pay] in a workweek at a rate of at least 1-1/2 times the regular rate . . . ." But the bracketed words do not appear in the statute as enacted by the Legislature, and "we will not read into a statute a provision that the legislature has omitted." Reiter v. Kiffmeyer, 721 N.W.2d 908, 911 (Minn. 2006). Accordingly, we conclude that once an employee has worked 48 hours in a workweek, the employer must pay that employee at a rate of at least 1-1/2 times the employee's regular rate for any additional hours worked, regardless of how the employee was compensated prior to working 48 hours.[5]

         II.

         Having concluded that employers must compensate their employees at a rate of at least 1-1/2 times the employee's regular rate for all hours worked by an employee after the first 48 hours in a given workweek, we next turn to the calculation of that regular rate. The Department argues that, in calculating the regular rate under Minn. Stat. § 177.25, subd. 1, Baywood may not exclude the time-and-a-half payments that Baywood paid for hours 5.5-16 of each day,[6] because those payments were not for "overtime work." Baywood argues that they were.

         "Regular rate" is not defined by the Act. But pursuant to its rulemaking authority under Minn. Stat. § 177.28, subd. 1, the Department has adopted rules regarding the calculation of the regular rate. Those rules state that "the regular rate of pay is determined by dividing the employee's remuneration in any workweek by the total hours worked." Minn. R. 5200.0130 (2017). Payments "are not considered part of the employee's remuneration," however, if they are "premium payments for overtime work . . . if the premium rate is at least 1-1/2 times the normal rate." Minn. R. 5200.0140 (2017). Thus, the rules contemplate a three-step process to determine an employee's regular rate: (1) add up the employee's total remuneration; (2) subtract from that amount any premium payments for ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.