(dissenting).
I am unable to agree with the majority’s opinion. I cannot agree that the Belo case is authority lor the bold proposition that, where the “regular rate” of pay is defined by contract, that definition is controlling, if the contract is made in good faith and the rate specified is above the minimum of the Wages and Hours Act. True, the Belo case, 316 U.S. 624, 630, 62 S.Ct. 1223, 1226, 86 L.Ed. 1716, said:
“ * * * But nothing in the Act bars an employer from contracting with his employees to pay them the same wages that they received previously, so long as the new rate equals or exceeds the minimum required by the Act.”
This language has been quoted with approval in Bergschneider v. Peabody Coal Co., 7 Cir., 142 F.2d 784, 786; Murray v. Noblesville Milling Co., 7 Cir., 131 F.2d 470, 474; General Mills, Inc. v. Williams, 6 Cir., 132 F.2d 367, 370, 144 A.L.R. 1371; and White v. Witwer Grocery Co., 8 Cir., 132 F.2d 108, 111. Similarly, see Shepler v. Crucible Fuel Co., 3 Cir., 140 F.2d 371. In these cases, the contract set forth a mathematical formula to be applied to the contract “regular rate” to give a round figure, which was the approximate amount actually paid the employee. The computation was done solely for the purpose of enabling the employer to pay the same wages per pay period which he had been paying before the Act went into effect.
In the case at bar, the “regular rate” is likewise defined in the contract, but in practice it is not the rate at which 98%% of the incentive workers are paid. There is no relationship between the “regular rate” and the amounts actually paid per hour. The only purpose of this contract is to enable the company to continue its piecework pay schedule without interference by the Wages and Hours law. In this respect again, the situation differs from the Belo case. In that case, the contract called for a minimum guarantee to each employee of $40 per week. As its opinion shows, the Supreme Court considered that provision very beneficial to the employees in view of the irregular hours worked and the employees’ desire for security. In our case, we have only a minimum hourly guarantee but no weekly guarantee, and since there is no requirement that any minimum number of hours per week be worked, this persuasive aspect of the Belo case is absent. Walling v. Livernois, D.C., 50 F.Supp. 978.
The contract may define a certain “regular rate,” but if the men actually work under, and are paid at, a different rate, it seems to me the latter is the “regular rate.” It is the realities of the situation that control and not the unapplied terms of a contract. The Supreme Court has said as much in the recent case of Walling v. Helmerich & Payne, Inc., 65 S.Ct. 11, 14. In that case the court said:
“It is no answer that the artificial regular rate was a product of contract or that it was in excess of the statutory minimum. The Act clearly contemplates the setting of the regular rate in a bona fide manner through wage negotiations between employer and employee, provided that the statutory minimum is respected. But this freedom of contract does not include the right to compute the regular rate in a wholly unrealistic and artificial manner so as to negate the statutory purposes. Even when wages exceed the minimum prescribed by Congress, the parties to the contract must respect the statutory policy of requiring the employer to pay one and one-half times the regular hourly rate for all hours actually worked in excess of 40. Any other conclusion in this case would exalt ingenuity over reality and would open the door to insidious disregard of the rights protected by the Act.”
Because I believe that the “regular rate” fixed by the contract is not the one actually used, and that the “regular rate” is to be determined by what the parties do and not by what they contract to do, I would affirm the judgment of the District Court.