No. 80-236
IN THE SUPFW!lE COURT OF THE STATE OF MONTANA
1980
ROSEBUD COUNTY, Montana a body
Politic and Corporate,
Petitioner and Respondent,
LYNDON W. ROAN and LABOR STANDARDS
DIVISION, Department of Labor &
Industry, State of Montana,
Respondents and Appellants.
Appeal from: District Court of the Sixteenth Judicial District,
In and For the County of Rosebud, Montana
Honorable Alfred B. Coate, Judge presiding.
Counsel of Record:
For Appellants:
Lucas and Monaghan, Miles City, Montana
A. Lance Tonn argued, Miles City, Montana
James Gardner, Jr. argued, Dept. of Labor, Helena,
Montana
For Respondent:
John S. Forsythe argued, County Attorney, Forsyth, Montana
Submitted: November 24, 1980
Decided: hP!?3 0 19BI
Mr. Justice Daniel J. Shea delivered the Opinion of the
Court.
Lyndon Roan, a wage claimant, and the Department of
Labor and Industry, appeal the decision of the Rosebud
County District Court which reversed a ruling of the Depart-
ment awarding Roan overtime pay as an employee of Rosebud
County, and also reversing the penalty award for failure to
pay the overtime.
Lyndon Roan left the employ of Rosebud County on January
17, 1979. On February 3, 1979, he filed a claim with the
Department of Labor and Industry alleging that Rosebud
County failed to pay him for 426.75 hours worked as overtime.
At the hearing on June 21, 1979, Roan reduced his claim to
358 overtime hours. The hearings officer ruled that Roan
had worked and was entitled to 277.25 hours worked as overtime
between February 1, 1978 and August 21, 1978. The hearings
officer also ruled that Roan's position with the County did
not exempt the County from the duty to pay him overtime,
although he ruled that from August 21, 1978 until the end of
his employment, Roan was a bona fide executive and the
County had no duty to pay him overtime. Under section 39-3-
206, MCA, the hearings officer also ruled that the County
must pay the penalty in the amount of the overtime wages
owed. The overtime amounted to $2,606.50 and the penalty was
$2,606.50, and this combined amount was awarded to Roan.
The County appealed this decision to the Rosebud County
District Court and there obtained a reversal of the Department's
ruling. The County alleged in District Court that Roan's
method of keeping track of his overtime hours was inadmissible
as a matter of law and that absent this evidence, the award
of overtime could not be sustained. The County also alleged
that the penalty was improper as a matter of law, in essence
arguing that the County acted in good faith and therefore
was not subject to the penalty provision.
The District Court ruled that the calendar on which
Roan kept track of his overtime hours was properly admitted
at the agency hearing to prove his overtime hours. It also
appears that the District Court found nothing wrong with the
method by which Roan proved the overtime hours worked. But
the District Court nonetheless ruled on three separate
grounds that Roan was not entitled to collect overtime pay.
Although not necessary to its decision reversing the award
of overtime, the District Court also ruled that the County
had acted in good faith, and therefore, that the penalty
provision under section 39-3-206, MCA, cannot be enforced.
We attempt here to summarize the District Court's
rulings that Roan cannot collect overtime. First, the trial
court ruled that Roan failed to demand the overtime at the
time he did the work and that he failed to fill out the
overtime forms, and therefore is precluded from collecting
overtime. Second, Roan cannot collect overtime because
"there is no evidence that the employer ever demanded,
requested or even suggested that the employee work any
overtime . . ." On this ground, the District Court ruled
that because Roan had never been directed to work the overtime
hours, and in doing it anyway Roan had illegally created his
own employment contract. Third, without analyzing the required
factors, the District Court ruled that Roan was at all times
a bona fide executive and therefore, exempt from application
of the overtime laws. Fourth, although not necessary to its
decision, the District Court ruled that the County did not
have to pay the statutory penalty under section 39-3-206, MCA,
because the coun'ty had acted in good faith.
Both Roan and the Department of Labor and Industry
appeal from these rulings reversing the order of the agency.
The County also alleges that the trial court erred in ruling
that Roan's calendar was properly admitted to prove overtime
hours. We note that when the County appealed to the District
Court, Roan also appealed from the ruling of the hearings
officer that Roan became a bona fide executive on August 21,
1978 and therefore could not collect overtime wages between
then and January 17, 1979, when his employment ended. But
Roan does not raise this issue in this appeal.
Roan's status as an employee of Rosebud County centers
around three time periods: First, from February 1, 1978 to
March 14, 1978, when he was employed as a mechanic and was
paid a monthly salary of $1,022 per month. He was one of
two mechanics in the shop and he was supervised by Virgil
Ferris, the county road foreman. Second, from March 14,
1978 to August 21, 1978, when Roan acted as foreman of the
county shop and supervised,to an extenbthe work of one
mechanicrand also supervised 20 to 25 percent of the time
of a secretary who divided her time between county shop matters
and county road foreman matters. Roan's salary as foreman
was increased by $50 per month to $1,072 per month on April
1, 1978 and on July 1, 1978, Roan's salary was increased
another $50 per month to $1,122 per month. His salary increase
amounted to a 5 percent higher salary than the other mechanic
who worked in the shop. Third, the period between August 21,
1978, when a third mechanic started working in the county
shop, and January 17, 1979, when Roan's employment ended.
The hearings officer ruled that Roan was not a bona
fide executive until August 21, 1978, and therefore that
between February 1, 1978 and August 21, 1978, the County
owed him overtime for all overtime hours worked during this
period. The District Court's ruling is unclear as to when
Roan became a bona fide executive, but it is clear to the
extent that Roan was effectively declared a bona fide executive
for all of the time periods in which he claimed overtime.
Lyndon Roan started working for Rosebud County in
November 1977 when he was hired as a truck driver. His
employment ended on January 17, 1979. As a truck driver, he
was paid an hourly wage plus time and a half for overtime.
Three months later, on February 1, 1978, the county com-
missioners hired him as a mechanic and changed his pay to a
monthly salary. Roan was then one of two mechanics in the
shop who had the duty of maintaining about 75 vehicles and
assorted pieces of heavy machinery belonging to the County.
The repair shop also housed the office and general headquarters
of the road and bridge supervisor. Roan and the other
mechanic worked under the direction of the road foreman.
Roan started at a salary of $1,022 per month.
Because the County had a policy of not paying overtime
to salaried employees, the County did not keep hourly records
for salaried employees. Salaried employees, including Roan,
were required to sign a handful of blank time sheets and the
payroll clerk later filled in these time sheets--apparently
to the effect that each salaried employee worked a 40-hour
week. The county commissioners were aware of and approved
of this procedure. Roan, however, kept a record of his
overtime hours by writing them on a calendar he kept at
home. He did so because he thought he would still be paid
overtime even though he was a salaried employee.
Within two or three months of starting work as a mechanic
on salary, Roan asked the county commissioners to be paid
for his overtime. He was told that the County did not pay
overtime to salaried employees. Later, he gave one of the
county commissioners a list of the overtime hours worked,
but still the County did not pay him. Roan continued as a
fulltime mechanic until March 14, 1978.
On March 14, 1978, the county commissioners created the
job of shop-foreman and hired Roan. They gave him a $50 per
month salary increase which put his salary 5 percent above
the other mechanic in the shop. The shop foreman was in charge
of all mechanic work in the shop. Although Roan started as
shop-foreman on March 14, his salary increase did not become
effective until April 1.
After his appointment as shop-foreman, Roan's day-to-
day activities did not change much. He supervised to an
extent, the other mechanic in that he told him which equip-
ment to work on, but both mechanics independently ordered
parts as needed. They had no discretion where they purchased
parts; the county commissioners told them where to purchase
them.
Roan had no power to hire and fire, although on one or
two occasions, the commissioners may have relied in part on
Roan's recommendation when more help was hired for the
county road department. In addition to supervising somewhat
the work of the other mechanic, Roan also supervised the
work of a secretary who spent 20 to 25 percent of her time
on shop-related work. The remaining 75 to 80 percent of her
time was spent on county road department matters and she was
directed by Virgil Ferris, the county road foreman.
During times of equipment breakdown or bad weather,
road crew employees stayed at the county shop and did minor
repair and mechanical work on their equipment. But Roan had
no control over these employees; the county road foreman
directed their activities.
This situation continued until August 21, 1978, when
the county commissioners hired a third mechanic for the
shop. It was only then that Roan actually began supervising
the work of at least two mechanics and devoting more than 50
percent of his time to supervisory work rather than mechanic
work. Roan continued to direct 20 to 25 percent of the
secretary's time. Roan's employment with Rosebud County
ended on January 17, 1979.
In early February 1978, Roan filed with the Department
of Labor and Industry, an overtime wage claim against the
County. For the period between.February 1, 1978 and March
14, 1978, the hearings officer ruled that Roan was a fulltime
mechanic and was entitled to overtime for this period. For
the period between March 14, 1978 and August 21, 1978, the
hearings officer ruled that although Roan was a foreman-
mechanic with some management functions, he was not a bona
fide executive within the meaning of the regulations and was
also entitled to overtime pay for this period. But for the
period between August 21, 1978 and January 17, 1979, the
period during which a third mechanic worked in the shop, the
hearings officer ruled that Roan was a bona fide executive
and was not able to collect overtime. The hearings officer
ordered that Roan be paid for 277.25 overtime hours, which
translated into $2,606.50, and also ordered the County to
pay the statutory penalty in the same amount, as provided
for in section 39-3-206, MCA.
We emphasize first that the trial court impliedly
upheld the sufficiency of the evidence to establish the
number of overtime hours worked. Roan introduced a calendar
into evidence which contained his record of overtime hours
worked during his employment with the County. In addition,
several witnesses supported his testimony that he worked
overtime. The trial court, over the Court's objection,
upheld the introduction of this calendar into evidence. The
County now asks us to reverse the District Court on this
ruling. The ruling was correct. Where the employer fails to
keep adequate records of an employee's hours, it is permissible
for the employee to introduce his own evidence of the hours
worked. Garsjo v. Dept. of Labor and Industry (1977), 172
Mont 182, 189, 562 P.2d 473, 476. There we set out the
policy on introduction of employee evidence to support a
wage claim, and this case creates no violation of that
policy. The testimony and evidence was clearly admissible.
The first ground on which the trial court reversed
the agency ruling appears to be because Roan had not filed
an overtime pay claim with the County for each pay period
and because he did not claim any overtime until the end of
his employment with the County. We are aware of no law
(and the trial! court cited none) that permits such a ruling.
The trial court cited regulation M.A.C. section 24-3.14BII(38)
-S14320 (2) (1979), now A.R.M. 24.16.2505 (2), in support of
its ruling, but did not say what it is or attempt to apply
it to the facts. This regulation states only when overtime
must be paid by the employer, but it does not make liability
for overtime compensation contingent on the employee submitting
records of time worked. It does not support the trial court's
ruling cutting off liability for overtime because a claim
was not submitted.
Furthermore, the trial court cited and quoted from
cases that do not support the trial court's ruling. See,
Gahagan v. Gugler (1935), 100 Mont. 599, 52 P.2d 150; ~ i r t z
v. Harrigill (S.D. Miss. 1963), 214 F.Supp. 813; Jackson v.
Derby Oil Co. (1943), 157 Kan. 53, 139 P.2d 146. These
cases discuss recordkeeping requirements of employers and
employees and have nothing to do with the proposition for
which they are cited.
The duty of the employer to keep a record of an employee's
time is set out in regulation M.A.C. section 24-3J4BII(50)-
S14670 (1979), now A.R.M. section 24.16.61(01). The County
claims it did not keep a record of Roan's hours worked
because it did not pay overtime to salaried employees and so
there was no need to keep the records. But the duty to keep
records is that of the employer and the employer fails to
keep the records at its own peril. If it later turns out
that the employer is exempt from recordkeeping requirements,
that is one thing; but it is yet another if it turns out
that the employer thought he was exempt but in fact has not
exempt. Here, the County attempted to qualify Roan as a
bona fide executive and therefore exempted itself from
recordkeeping requirements as well as a duty to pay overtime.
But the County was wrong.
Although the issue was not raised by the parties in the
appeal to the District Court from the agency ruling, the
second ground on which the court reversed the agency order
is because "there is no evidence that the employer ever
demanded, requested or even suggested that the employee work
any overtime except for Exhibit E at p. 5 [not involved in
the issues on appeal.]" The court cited and paraphrased
regulation M.A.C. section 24-3.14BII(14)-S14040 (1979), now
A.R.M. section 24.16.1002, to the effect that "hours worked"
-
must be shown by the employee as hours that he "is required
- - - - -on the employer's premises."
to be on duty - (Emphasis added.)
In effect, the District Court reversed the agency ruling
because Roan had not proved at the hearing that the County
had ordered him to work overtime, even though that was never
an issue before the agency. The court ruled that Roan
worked the overtime hours to suit his own convenience rather
than to further the demands of his employer.
The County neither raised this issue before the hearings
officer nor in its appeal to the District Court from the
agency ruling. Although the District Courts do not have to
blind themselves to issues not raised by the parties, we do
not think this is the kind of issue on which a reversal
should be grounded if it was not raised before the hearings
officer or before the District Court by the County. It is
unfair to permit the County to take advantage of this ruling
where it never raised the issue in the first instance. We
hold, therefore, that the County waived any right to take
advantage of this ruling by not first raising it before the
hearings officer.
Aside from the waiver holding, the record establishes
that the County knew Roan was working overtime and that Roan
had to work overtime to get the mechanic work done. If he
did not on many occasions come to work an hour earlier in
the morning and leave work an hour later in the evening, the
equipment would not have been ready for the road crew when
they arrived at 8 : 0 0 a.m. The demands of the job required
that Roan work overtime. The county commissioners knew that
Roan worked overtime and at no time directed him to stop
working overtime; they were quite willing to reap the
benefits of Roan's overtime work, but balked only when he
asked to be paid. We cannot adhere to a rule as imposed by
the District Court which arbitrarily denies overtime unless
the employer expressly ordered the employee to work overtime.
Such a rule would effectively defeat many legitimate overtime
wage claims.
Here, two mechanics were required to maintain a fleet
of 75 pieces of equipment. Roan felt that his supervisors
required him to do all things necessary to keep this equipment
running. His early arrival and late departure from work was
his effort to fulfill the terms of his employment rather
than an attempt to create his own employment contract. The
third mechanic, who was hired on August 21, 1978, testified
that he came to work early in the morning so he could do the
mechanical work needed to have the equipment ready by 8:00
a.m. when the road crew operators came to work. To offset
this 7:00 a.m. arrival, the third mechanic left work an hour
earlier in the afternoon. But until the third mechanic was
hired, Roan performed this early morning function as well as
often remaining after 5:00 p.m. in the evening. The county
commissioners did not object to Roan putting in the extra
time to keep the equipment operating; their objections came
only when he claimed compensation for these compensation
hours. Under these circumstances, the commissioners are in
no position to complain. They willingly reaped the benefit
of Roan's overtime hours.
The trial court's ruling on whether Roan was a bona
fide executive is also difficult to understand. It appears
to be a two part ruling: First, that Roan should be judged
on the "sole charge" exception set out in regulation M.A.C.
section 24-3.14BII (2)-S1450 (13) (1979), now A.R.M. section
24 .I6204 (13). But assuming the trial court to be correct,
it did not explain why Roan fit into this "sole charge"
classification. Further, the trial court neglected to
apply the remaining criteria of the regulation which still
must be satisfied before one can be classified as a bona
fide executive.
Second, the trial court ruled that the supervision of
other employees requirement in the regulation, is satisfied
if the employee "had two employees under his supervision"
and that it did not have to be the same two employees. It
appears the court ruled that Roan supervised a mechanic and
a parttime secretary, and therefore, fulfilled this requirement.
The trial court properly quoted the test to be whether the
employee's duties "includes the customary and regular direction
of the work of two or more other employees therein . . ."
But, in ruling that Roan fit the test, the court ignored
another regulation further defining this test. Regulation
M.A.C. section 24-3.14BII(2)-S1450(5) (1979), now A.R.M.
section 24.16.204(5), requires that the employee must "cust-
omarily and regularly supervise - least two fulltime
at
employees - - equivalent."
or the Until August 21, 1978, when
the third mechanic was hired, Roan did not meet this require-
ment.
Further, assuming that Roan did supervise at least
"two fulltime employees or the equivalent", he still could
not be classified as a bona fide executive because regulation
M.A.C. section 24-3.14BII(2)-S1450(3) (1979), now A.R.M.
section 24.16.204(3), further requires that this supervision
be the primary duty of the employee. The testimony establishes
that until August 21, 1978, Roan devoted less than 50 percent
of his time to management responsibilities; that is, he
devoted more than 50 percent of his time to his own work as
a mechanic. Until August 21, Roan's secondary duty was
management and his primary duty was work as a mechanic.
Still another reason we must reverse the District Court
is because it applied the "short test" but should have
applied the "long test" in determining whether Roan was a
bona fide executive. Both tests are in regulation M.A.C.
section 24-3.14BII (2) ,
-S1420 (1979) now A.R.M. section
24.16.201. The "short test" is the last paragraph of this
regulation and applies if the employee is paid a salary of
at least $200 per week, exclusive of board, lodging, or
other facilities .. .I1 Although Roan made well in excess
of $200 a week in salary, this "short test" is qualified by
regulation M.A.C. section 24.3.14BII(2)-S1450(19) (b) (1979),
now A.R.M. section 24.16.204(19) ( b ) , which expressly exempts
mechanics (among other trades) from the short test "no
matter how highly paid they may be." Therefore, the short
test cannot apply to Roan who is a mechanic.
We note that the hearings officer also erroneously
applied the "short test" in determining that Roan was not a
bona fide executive until August 21, 1978. But there was no
prejudice to the County because the short test is more
favorable to the employer than is the long test.
Where the long test applies, in addition to the factors
set out in the short test, the employer must prove additional
facts before the employee can be classified as a bona fide
executive. See, Garsjo, supra, 172 Mont. at 185, 562 P.2d
at 474-475, where we list the factors in the regulation that
must be considered. Two factors are common to the long test
and the short test. First, it must be the primary work of
the employee to manage and supervise rather than to perform
the work itself. Second, the employee must customarily and
regularly direct two or more employees. We have already
ruled that the employer failed the short test and he also
must fail the long test for the same reasons. Because the
employer has clearly failed these two factors in the long
test, there is no need to set out and apply the additional
requirements of the long test.
Finally, we reverse the District Court's ruling that
the penalty provision of section 39-6-206, MCA, does not
apply. The opinion is again unclear, but seems to be primarily
based on the court's conclusion that the County acted in
good faith and therefore the penalty cannot be imposed. The
court cited and quoted from Glick v. State, Montana Dept. of
Institutions (1973), 162 Mont. 82, 94, 509 P.2d 1, to the
effect that an employer's demonstration of good faith will
defeat imposition of the penalty. But, Glick was not a case
arising under Montana's wage claim statutes; rather, it was
a case arising under the Fair Labor Standards Act and this
Act expressly states that liquidated damages need not be
awarded if the employer is found to be in good faith. On
the other hand, section 39-3-206 expressly provides that the
penalty "shall" apply if a violation is found. This statute
leaves no discretion to determine whether the employer was
in good faith, because even if the employer was in good
faith, the finding of a violation requires imposition of the
penalty.
It also appears that the District Court ruled that the
penalty against the County was unjustified for two more
reasons. First, Roan's claim was unjustified because he
originally claimed 426.75 overtime hours but at the agency
hearing on June 21, 1979, he reduced his claim to 358 over-
time hours. The court ruled that Roan's initial claim was
an unjustified claim that there was no duty of the County to
pay it and therefore the first time there was a demand for
payment was on June 21, 1979, when Roan reduced his claim to
358 hours. Second, the court ruled that section 7-6-2421,
MCA, provides the only method for collecting claims against
a county and Roan had not filed a claim for overtime pay on
a proper claim form, nor had the County rejected the claim.
-14-
Therefore, the court ruled that "the award of a penalty
against the County is unjustified."
We know of no law exempting the County from having to
pay a penalty for failure to pay overtime, and that is
precisely the effect of the trial court's ruling. Roan
properly filed an overtime claim with the Department of
Labor and Industry--the Department ruled in his favor and
awarded him overtime and the statutory penalty. Section 39-
3-206, MCA makes no exceptions for failure to pay wages and
we will not create one by holding either that the employer
was in good faith or that Roan had not properly followed the
procedure for processing a claim against the County. The
wage and hour laws of this state do not require an employee
to exhaust his remedies against the county government before
he can file a wage claim with the Department of Labor and
Industry or by filing a claim directly in District Court.
The decision of the District Court is reversed and the
order of the Department of Labor and Industry is reinstated.
This cause is remanded to the District Court for further
proceedings consistent with this op
ice
We Concur:
/chief Just-
Justices
to January 5, 1981.
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