Wage Claims of Stewart v. Region II Child & Family Services

No. 89-082

IN THE SUPREME COURT OF THE STATE OF MONTANA

IN THE MATTER OF WAGE CLAIMS OF
RANDALL P. STEWART, ALLEN W. COPELAND,
LIONEL F. McKNIRE, GREG W. BRANTNER, ARTHUR
BRISCOE,
Petitioners and Respondents,
-VS-

REGION I1 CHILD AND FAMILY SERVICES,
Respondent and Appellant.

APPEAL FROM: District Co.urt of the First Judicial ~istrsct,
In and for the County ~ e v ~ i s Clark,
&
The Honorable Jeffrey Sherlock, J.udqe presiding.

COUNSEL OF RECORD:
For Appellant:
Richard Larson; waiter Schuster & Larson, Great Falls,
Montana

For Respondent :
Timothy J. McKittrick; Mc~ittrickLaw Firm, Great Falls,
Montana
For Amicus curiae:
~ e l a n i eA. Syrnons, Dept. of Labor & Industry, ~ e l e n a ,
Montana
an ice Van ~ i p e r ;Meloy Law ~ i r m ,
Montana ~esidential
Child Care Assoc., Helena, Montana
Nick ~otering,Dept. of Institutions, Helena, Montana
Cary B. Lund, Dept. of S.R.S., Helena, Montana
patrick M. Driscoll; ~hronister,~riscoll& Moreen,
Mt. Council of Mental Health Centers, Helena, Montana
Joe R. Roberts, Mt. Assoc. of Independent isa abilities
services, Helena, Montana

Submitted: December 12, 1989
Decided: March 15, 1990

Filed:
Chief Justice J. A. Turnage delivered the Opinion of the Court.

Region 11, Child and Family Services, Inc., appeals the First
Judicial District Court, Lewis and Clark County, review of
administrative hearings held by the Montana Department of Labor and
Industry. The District Court reversed the agency's determination
that live-in employees were not entitled to compensation for time
spent sleeping during supervision of residential care facilities
and ordered the appellant to pay back wages, liquidated damages,
costs, and attorney fees against the employer. We reverse.
ISSUES
Appellant Region 11, Child and Family Services, Inc., raises
the following issues.
(1) Did the District Court err in substituting its own
findings of fact for those of the Montana Department of Labor and
Industry?

(2) Did the District Court err in holding that the respon-

dents1 wage claims were subject to the Montana Minimum Wage and
Maximum Hour Act as well as the federal Fair Labor Standards Act?

(3) Did the District Court err in holding that the claimants'

sleep time was compensable?

(4) Did the District Court err in rejecting interpretative

opinions of the Administrator of the Wage and Hour Division of the
United States Department of Labor?
 (5) Did the District Court err in holding that Region I1 was

not entitled to use the good faith defense of the federal Portal
to Portal Act?
(6) Did the District Court err in holding that the claimants

were entitled to damages, penalties, costs and attorney fees?
The claimants cross-appeal the issue of whether the District
Court erred in failing to award attorney fees based on the
claimantst contingency agreement or in the alternative to apply a
multiplier to the award.
FACTS
Region 11, Child and Family Services, Inc., is a private,
nonprofit corporation which, under contract with the State of
Montana, provides residential care facilities for the developmen-
tally disabled and multiple handicapped.
The wage claimants worked at Region 11's group homes between
1983 and 1985 as either full-time or weekend trainers and super-

visors. Weekend trainers reported to the group home Friday
afternoon and remained until Sunday evening. Full-time trainers
covered from Sunday night through Friday morning. The full-time
employees were on duty, and required to actively supervise clients,
from about 7:00 a.m. until 10:OO a.m., when the clients left to
attend training programs at the Great Falls Easter Seals Center.
Typically, full-time trainers were off duty and free to leave the
facilities until the clients returned from school. This four- to

n i n e - h o u r p e r i o d was t h e o n l y time t h e y were f r e e t o l e a v e t h e
3
group home. As the Center provided no training on Saturday or
Sunday, weekend employees were required to be on duty throughout
each day.
Region I1 required both types of employees to remain at the
group homes overnight and provided sleeping facilities. The
overnight period lasted from about 10:OO p.m. to 7:00 a.m.
Employees who received five consecutive hours of uninterrupted
sleep during this period were compensated only for the time they
spent attending clients. If employees did not receive five
consecutive hours of uninterrupted sleep, Region I1 paid for the
entire overnight period. Region I1 established this overnight
policy in compliance with two interpretative opinions, known as the
White and Cohen letters, issued by the Wage and Hour Division of
the United States Department of Labor. The claimants understood
the overnight policy when they went to work for Region 11.
The claimants filed individual wage claims with the Montana

Department of Labor and Industry [hereinafter the Department] for
the uncompensated sleep time Region I1 required them to be present
at the group homes. The Department consolidated the claims and
held an administrative hearing. The hearing examiner rejected the

claims after applying the federal Fair Labor Standards Act
[hereinafter F.L.S.A.] (codified at 29 U.S.C. 5 5 201 through 2 1 9 )

and interpretative opinions of the Administrator of the Wage and
Hour Division of the United States Department of Labor.
 The claimants appealed to the First Judicial District Court
for judicial review of the Department's decision, claiming error
in the Department's use of the F.L.S.A. as opposed to the Montana
Minimum Wage and Maximum Hour Act [hereinafter M.W.M.H.A.]
(codified at 8 8 39-3-401 through -410, MCA). The District Court
reversed the Department's decision. It agreed with the Department
that the F.L.S.A. applied to the claims, but rejected the White and
Cohen opinion letters as contrary to legislative intent and held
that the F.L.S.A. regulations required that overtime be paid in the
claimants1 situation. The District Court remanded the claims to
the Department directing it to determine damages.
Region I1 petitioned the court for another review arguing that
the good faith defense of the federal Portal to Portal Act
[hereinafter P.P.A.] (codified at 29 U.S.C. 8 8 216, 251 through
262) barred the wage claims under federal law. The District Court
denied second review reasoning that even if the P.P.A. barred the

claims under federal law, the M.W.M.H.A. would apply and produce

the same result.
In compliance with the District Court's order, the Department
ordered Region I1 to pay the claimants a total of $99,393.50 in
back wages and an equal amount in penalties as required by § 39-

3-206, MCA. The Department found that it had no authority to grant

the claimants1 request for attorney fees. The District Court also
reviewed this agency ruling at Region 11's request and approved the
Department's decision. The District Court further ordered Region

5
but did not then look to the regulations propagated under the Act.
Instead, it went directly to the interpretative opinions of the
Administrator of the United States Department of Labor found in the
White and Cohen letters. The District Court initially agreed that
the F. L. S .A. controlled the claims, but analyzed the case under the
F.L.S.A. regulations.
While the findings of fact necessary to apply the interpreta-
tive opinions and those necessary to apply the regulations are
substantially the same, the District Court came upon at least one
discrepancy. The court refused to apply one regulation, 29 C.F.R.
785.22, because the Department did not make the requisite finding
that the claimants usually enjoyed an uninterrupted night s sleep.
The Department apparently never considered the issue since the
interpretative opinions relied upon by the Department required no
such finding. The District Court, however, proceeded as though the
examiner had found that the claimants usually -did not enjoy an
uninterrupted night s sleep. The court thereby interjected its own
findings of fact into the proceedings.
The reviewing court has the duty to determine whether the
agency applied the appropriate law and whether its findings of fact
are sufficient to justify the agency's rulings. When the court
determines that the agency's findings are insufficient or that the
agency applied the wrong law, it may not use the opportunity to
usurp the agency's role as the trier of fact. We hold that the
I1 to pay the claimants $13,000 in attorney fees to cover expenses
incurred by the claimants while before the District Court.
Region I1 now appeals the District Court's reversal of the
Department's determination of no liability, denial of retrial,
review of the Department's determination of damages and penalties,
and judgment on attorney fees.
We note that Judge Gordon R. Bennett issued all the substan-
tive orders and opinions that are now the subject of this appeal.
The judge of record, Jeffrey M. Sherlock, handled only the final
procedural matters following Judge Bennett's retirement in December
of 1988.
FINDINGS OF FACT
A district court's review of an agency's findings of fact is
strictly limited. The reviewing court may affirm the agency's
findings. Section 2-4-704 (2), MCA. It may clarify the agency's
findings so long as it does not substitute its judgment for that
of the agency. Montana State Highway Patrol Officers v. Board of
Personnel Appeals (1984), 208 Mont. 33, 39, 676 P.2d 194, 198. The
court may overrule an agency's findings of fact if they are clearly
erroneous. They are not clearly erroneous if the record contains
substantial credible evidence supporting the findings. City of
Billings v. Billings Firefighters (1982), 200 Mont. 421, 430-31,
651 P.2d 627, 632. In no case may the district court substitute
its own findings of fact for those of the agency. Section 2-4-
704 ( 2 ) , MCA. The rules of agency review rely on the principle that
6
the agency, and not the district court, is the finder of fact. If

a factual question is essential to an agency's decision, and the
agency's findings of fact are so insufficient that they cannot be
clarified or are entirely absent, the district court should remand
the case to the agency for appropriate findings.
In the present case, the District Court violated this
principle by relying on its own findings of fact in at least two
instances. The first instance centers on the Department's Finding
of Fact No. 11 which states:
Allen Copeland was viewed by the respondent as
-

working periods in excess of 24 hour duty.
The other claimants were viewed by the respon-
-

dent as residing on the premises for an ex-
tended period of time. (Emphasis added.)
The District Court correctly noted that this finding is little more
than a recitation of the testimony. However, instead of clarifying
the finding or remanding it to the Department, the court rejected
the finding and proceeded as though the Department had come to the
opposite conclusion. The court utilized 29 C.F.R. 785.21, a

regulation which applied only if the claimants were not on duty in
excess of twenty-four hours and did not live on the employer's
property for an extended period. The court thereby substituted its
own findings of fact for those of the Department in violation of
section 2-4-704 (2), MCA.
The second instance resulted from a disagreement between the
Department and the District Court as to what law controlled. The
Department determined that the F.L.S .A. governed the wage claims,
District Court committed reversible error by failing to remand this
case to the Department for suitable findings of fact.
DOES THE M.W.M.H.A. APPLY?
The determinative issue in this case is whether employees,
such as the present claimants, who are subject to the federal Fair
Labor Standards Act may also rely on the Montana Minimum Wage and
Maximum Hour Act. The problem arises from the interaction of the
federal Fair Labar Standards Act, the Montana Minimum Wage and
Maximum Hour Act, and the federal Portal to Portal Act.
In 1938, Congress passed the Fair Labor Standards Act to
prevent the use of unfair trade practices in interstate commerce
leading to "labor conditions detrimental to the maintenance of the
minimum standard of living necessary for health, efficiency, and
general well-being of workers . . . . 29 U.S.C. 5 202(a). To
ensure a minimum living standard, the F.L.S.A. establishes a
minimum hourly wage, 29 U.S.C. 5 206, and a maximum workweek
without overtime compensation, 29 U.S.C. 5 207. Part of the Act's
enforcement mechanism allows employees to recover all unpaid wages
plus an equal amount in liquidated damages for any violation of its

wage and hour provisions. 29 U.S.C. 5 216(b) . Although nation-
wide in scope, the F.L.S.A. does not cover all employees. See 29
U.S.C. 5 203(e); 29 U.S.C. 5 213.
In 1971, the Montana Legislature enacted the Minimum Wage and

Maximum Hour Act. Like the federal Act, the M.W.M.H.A. ensures
workers a minimum living standard by setting minimum hourly wages,

§ 39-3-404, MCA, and maximum allowable work hours per week, 39-
3-405, MCA. Also like the F.L.S.A., the M.W.M.H.A. allows em-
ployees to recover unpaid wages plus up to 100% in liquidated
damages, 9 39-3-407, MCA; 5 39-3-206, MCA. In Plouffe v. Farm &

Ranch Equipment Co. (1977), 174 Mont. 313, 570 P.2d 1106, this
Court held that in passing the F.L.S.A., Congress declined to
preempt the entire field of wage and hour regulation. Therefore,
employees not covered by the F.L.S.A. gained analogous rights from
the M.W.M.H.A. Plouffe, 174 Mont. at 319-20, 570 P.2d at 1109.
The federal and Montana Acts differ, however, in one important
aspect.
Nine years after passing the F. L.S .A. , Congress determined
that expansive judicial interpretation of the federal Act had
placed llwholly unexpected liabilities, immense in amount and
retroactive in operation, upon employers . . . . 29 U.S.C.

§ 251(a). To correct the situation, Congress passed the Portal to
Portal Act giving employers a good faith defense to wage claims.

In any action . . . no employer shall be
subject to any liability or punishment for or
on account of the failure of the employer to
pay minimum wages or overtime compensation
under the Fair Labor Standards Act ... if he
pleads and proves that the act or omission
complained of was in good faith in conformity
with and in reliance on any written . .
.
interpretation of [the Administrator of the
 Wage and Hour Division of the Department of
Labor]. Such a defense, if established, shall
be a bar to the action or proceeding, not-
withstanding that after such act or omission,
such . .
. interpretation . ..
is modified or
rescinded or is determined by judicial author-
ity to be invalid or of no legal effect.
29 U.S.C. H 259. Similarly, if the employer satisfies the court
that it believed in good faith that the act or omission complained
of was not a violation of the F.L.S.A., the P.P.A. authorizes the
court to reduce or eliminate liquidated damages. 29 U.S.C. 5 260.
In the present case, the parties do not dispute that the
claimants are subject to the F.L.S.A. Enterprises covered by the
F.L.S.A. include:
[A]n institution primarily engaged in the care
of the sick, the aged, the mentally ill or
defective who reside on the premises of such
institution .
. .
29 U.S.C. 5 203(r)(i). There is also no doubt that the P.P.A.'s
good faith defense protects Region 11. Although it did not apply
the Portal to Portal Act, the Department did find as a conclusion

of law that Region I1 had relied on the written interpretations of
the Administrator of the Wage and Hour Division of the Department

of Labor found in the White and Cohen letters in formulating its
overnight policies. This reliance satisfies the requirements of
the good faith defense thereby barring the claims under the
F.L.S.A. The issue now is whether the claimants can fall back on
the M.W.M.H.A. to recover wages and liquidated damages for their
sleep time.
The District Court relied on one F.L.S.A. provision to find
that they could. The federal Act defers to state laws which
provide greater benefits.
No provision of this chapter or of any order
thereunder shall excuse noncompliance with any
. .
. . State law . . establishing a minimum
wage higher than the minimum wage established
under this chapter or a maximum workweek lower
than the maximum workweek established under
this chapter . . . .
29 U. S.C. 5 218 (a) . The District Court reasoned that since the
claims are barred by the P.P.A. good faith defense, the claimants
are entitled to no benefits under the federal law. Montana law has
no provision comparable to the P.P.A. good faith defense and,
therefore, provides the claimants with a higher minimum wage.

According to F.L.S .A. section 218 (a), therefore, the M. W.M. H.A.
should apply to the wage claims.
The District Court, however, failed to consider the effect of
a limiting provision in the Montana Act; the M.W.M.H.A. explicitly
excludes employees covered by the federal Act.

The provisions of [the M.W.M.H.A. ] shall be in
addition to other provisions now provided by
law for the payment and collection of wages
and salaries but shall not apply to employees
covered by the Fair Labor Standards Act.
Section 39-3-408, MCA (1985). (Emphasis added. ) The Montana law
defers to the federal law while the federal law defers to the
Montana law. Like two overly-polite gentlemen standing before a
single door, the State and federal provisions are caught in a
classic "you first" impasse.
Both parties and five amici curiae have extensively briefed
and argued this issue. Most of the authority offered, however,
does not solve the current impasse and leaves this issue a question
of first impression.
In Glick v. Department of Institutions (1973), 162 Mont. 82,
509 P.2d 1, cert. den. 414 U.S. 856, 94 S.Ct. 158, 38 L.Ed.2d 106,
we relied on Montana law to determine the number of hours neces-
sary to trigger overtime compensation, Glick, 162 Mont. at 89, 509
P.2d at 5, but applied the F.L.S.A. in determining liquidated
damages, Glick, 162 Mont. at 90-91, 509 P.2d at 6. This case
provides no guidance on the present issue because we did not apply
the M.W.M.H.A. We relied instead on the Montana constitutional and
statutory provisions guaranteeing an eight-hour work day. Glick,
162 Mont. at 86-87, 509 P.2d at 4.
In Plouffe v. Farm & Ranch Equipment Co., the F.L.S.A.
exempted the employer from federal wage regulation. We held that
by enacting I?. L.S .A. !
j 218, Congress declined to preempt the entire
field of wage and hour regulations and, therefore, the employee
could still rely on the M.W.M.H.A. Plouffe, 174 Mont. at 319-20,
570 P.2d at 1109. Because the F.L.S.A. never applied to the
employee, we did not need to decide if the employee was covered by
both the federal and the Montana Acts.
In State v. Holman Aviation Co. (1978), 176 Mont. 31, 575 P. 2d
923, the issue was whether M.W.M.H.A. 5 408 prevented the State as
assignee from pursuing an F.L.S.A. employee's wage claim under the
Montana Wage Payment Act. The parties asked this Court to consider
the effect of M.W.M.H.A. § 408's limiting provision on F.L.S.A.
claims, but we did not reach that issue. We held only that 5 408
does not apply to acts other than the M.W.M.H.A. , but noted in
passing that the section

by its plain meaning provides merely that the
provisions of this act . .. shall be applic-
able to set minimum wages and maximum hours
for certain Montana employees in occupations
not covered by the F.L.S.A., and that the
F.L.S.A. shall apply to those employees which
the federal act specifies.
Holman Aviation, 176 Mont. at 34, 575 P.2d at 925. (Quotations
omitted. )
Following Plouffe and Holman Aviation, the Montana Attorney
General issued an opinion on whether state and local government
employees are covered by both M.W.M.H.A. and F.L.S.A. 41 Op. Mont.
Att'y Gen. No. 58 at 240 (1986). In concluding that they are not,
the Attorney General relied on the plain meaning of M.W.M.H.A. 5
408, the above quoted statement from Holman Aviation, and the 1973
Legislature's refusal to amend the limiting provision of M.W.M.H.A.
§ 408 to read I1shall not apply to employees covered by the Fair
Labor Standards Act, provided that act requires a hisher standard."
H.B. 279, 43rd Leg. (1973) (text available from the Archives of the
Mont. Historical Society; emphasis indicates proposed addition).
Interpretations of the law by the executive branch provide per-
suasive authority when acquiesced in by the legislature. Cornwall
v. Department of Justice (Mont. 1988), 752 P.2d 135, 139, 45
St.Rep. 429, 435. In this case, however, the legislature did not
acquiesce in the opinion, but, as is noted below, acted in 1987 to
reverse its effect.
Like Montana authority, cases from other jurisdictions provide
little authority for resolving the present impasse, though two
cases deserve mention.
In Cosme Nieves v. Deshler (1st Cir. 1986) 786 F. 2d 445, cert.
den. 479 U.S. 824, 107 S.Ct. 96, 93 L.Ed.2d 47, the federal court
considered whether F.L.S.A. 5 218(a) allowed civilian employees of
the federal government covered by the F.L.S .A. to bring wage claims
under the more beneficial provisions of Puerto Rican law. The
court held against the claimants because the commonwealth law
specifically excluded federal employees. Cosme Nieves, 786 F.2d
at 452 (citing P.R. Laws Ann. tit. 29 246e(a) (2)). While
superficially similar to the present case, Cosme Nieves is distin-
guishable; the claimants in that case were not barred from bringing
their claims under the F.L.S.A. Cosme Nieves, 786 F.2d at 453.
 In Webster v. Bechtel, Inc. (Alaska 1980), 621 P.2d 890, the
Alaska Supreme Court considered whether the F.L.S.A. preempted the
Alaska Wage and Hour Act. In holding that it did not, the court
found no conflict between the liquidated damages provisions of the
state and federal acts because the Alaska act contained no good
faith defense similar to that in the Portal to Portal Act. The
court noted that the provisions are complimentary; the Alaska
statute would provide greater benefits furthering the purposes of
F.L.S.A 5 216(b). Webster, 621 P.2d at 904. The same analysis
would apply to the present case if not for the limiting provision
of M.W.M.H.A. 5 408. Webster is distinguishable from the present
case in that the Alaska act does not exclude employees covered by
F.L.S.A. as does M.W.M.H.A. 5 408. See Alaska Stat. 8 8 23.10.050
through .150.
Like case law, public policy considerations are insufficient
to solve the issue. Policy considerations weigh heavily on both
sides. The obvious intent of both the F.L.S.A. and the M.W.M.H.A.

is to ensure the health, efficiency, and general welfare of
employees through enhancement and protection of wages and reasonab-
le work-hour requirements. 29 U.S.C. 5 202; 5 39-3-401, MCA.
Allowing F.L.S.A. employees to fall back on the M.W.M.H.A. when the
federal law bars their claims would increase the protection of the
present claimants and similarly situated employees.
 On the other hand, extending M.W.M.H.A. protection to F. L.S.A.
employees would have serious adverse consequences. In passing the
good faith defenses of the Portal to Portal Act, Congress recog-
nized that without amendment, F. L.S .A. claims would "bring about
[the] financial ruin of many employers . . . curtailing employment,
and the earning power of employees . . . . 29 U.S.C. 9 251 (a)(1).
A number of amici curiae argued that these same results will occur
in Montana if group home operators are forced to pay greater wages
for overnight periods. The effect in this time of fiscal restraint
is likely to be fewer employees and a curtailment in services to
a deserving clientele.
Although much of the authority presented by the parties and
the amici curiae does not resolve the question, the language of
the Montana statute is determinative. The judicial function in
construing statutes is to give effect to the intention of the
legislature. Legislative intent is determined by first looking to
the plain meaning of the statute. Thiel v. Taurus Drilling Ltd.
(1985), 218 Mont. 201, 205, 710 P.2d 33, 35. Section 39-3-408, MCA
(1985), clearly states that the M.W.M.H.A. I1shall not apply to
employees covered by the Fair Labor Standards Act." In passing
F. L.S .A. 9 218 (a), Congress gave the states the option of providing
more beneficial wage and hour protection than that available under
the federal law. The Montana legislature explicitly declined to
exercise that option for employees already protected by the
F.L.S.A.
To hold that the limiting provision of M.W.M.H.A. 5 408 does
not prohibit the application of the M.W.M.H.A. to F.L.S.A. em-
ployees would be to hold that it is superfluous. In interpreting
a statute, we may not ignore what is found in it, 5 1-2-101, MCA,
but must endeavor to give effect to each provision of the statute,
Darby Spar, Ltd. v. Department of Revenue (1985), 217 Mont. 376,
379, 705 P.2d 111, 113. If the legislature intended to allow
F.L.S.A. employees to also take advantage of the M.W.M.H.A., the
limiting provision of M.W.M.H.A. 5 408 would not have been neces-
sary; F.L.S.A. 5 218(a) already serves that function. When it
acts, the legislature is presumed to have full knowledge of
existing laws, Thiel, 218 Mont. at 207, 710 P.2d at 36, and is
presumed to have intended to change those laws, Cantwell v. Geiger
(1987), 228 Mont. 330, 333-34, 742 P.2d 468, 470. Therefore, we
must assume that the legislature was aware that F.L.S.A. 5 218(a)
would allow F.L.S.A. employees to fall back on the M.W.M.H.A. when
it provided greater benefits. And we must assume that by enacting
the limiting provision of M.W.M.H.A. 5 408, the legislature acted
to counter the effect of F.L.S.A. 5 218(a).
The 1971 Legislature's intent to exclude F.L.S.A employees
from M.W.M.H.A. coverage is further evidenced by the recent amend-
ment to M.W.M.H.A. § 408. The 1987 Legislature amended the section
to provide that the minimum-wage provisions of the M.W.M.H.A.
''shall apply to an employee covered by the Fair Labor Standards Act
if state law provides a minimum wage that is higher than the
minimum wage established under the federal law." Act approved
April 9, 1987, ch. 446, 5 2, 1987 Mont. Laws 1012. Again, presum-
ing that the Legislature intended to change the law, the pre-1987
version of the Montana law under which the present wage claims
arose must have excluded F.L.S.A. employees.
CONCLUSION
In passing the Portal to Portal Act, Congress noted that if
it failed to amend the F.L.S.A., "employees would receive windfall
payments, including liquidated damages, of sums for activities
performed by them without any expectation of reward beyond that
included in their agreed rates of pay . . . . II 29 U.S.C.

5 251(a) (4). This seems particularly true in the present case; the
claimants were aware of the overnight policy when they agreed to
work for Region 11. Imposing an unexpected penalty upon Region I1
seems particularly inappropriate when the group-home operator
formulated its overnight policy to conform with the government's
interpretation of the wage and hour laws.
We hold that 5 39-3-408, MCA (1985), excludes the claimants
from coverage under the Montana Minimum Wage and Maximum Hour Act.
Any claim under the federal Fair Labor Standards Act is barred by
29 U.S.C. 3 259 of the Portal to Portal Act because Region I1
relied in good faith upon the interpretations of the Administrator
of the Wage and Hour Division of the United States Department of
Labor in formulating its overnight policies. Because the claims
are barred, we need not reach any other issue presented by either
party. The claimants are not entitled to back wages, liquidated
damages, costs, or attorney fees.
Reversed.

Chief Justice
We concur:

Justices
Justice John C. Sheehy, dissenting:

A resident worker should be paid though he is sleeping on the
job, where demands of work may interrupt his sleep-time. It is
because he is on call, that he may not sleep at all, and it is
otherwise too onerous to keep time.
At base this is a simple case, which gets lost in all of the
rhetoric of the majority opinion. These employees are on the job
most of the 24 hour day. The employer deducted from their pay the
hours in the ItovernightItt
from 10:OO p.m. to 7:00 a.m. If the
worker got at least five consecutive uninterrupted hours of sleep,
he was compensated only for the time he was interrupted by the
bfl
clients. If he did not enjoy five consecutive interrupted hours,
\r
he was compensated for the entire overnight. The majority opinion
holds that even though the employee, sleeping or not, is at the
command of his employer, and his sleep-time is given over entirely
to his employer, it is not necessary for the employer to compensate
the employee fully for that time. The majority opinion is akin to
holding that a fireman need not be paid for the time he is at the
fire station unless he is fighting fires.
To reach their indefensible result, the majority have several
hurdles to clear. The first is that the district judge made no
findings in this case. The majority leaped this hurdle nicely by
asserting that the district judge did make findings. The record,
however, belies their position.
 The district judge in this case expressly relied on the
findings of the hearing examiner. He relied not only on the
findings of the examiner, but noted particularly findings that the
examiner did not make. The district judge based his decision then
upon the findings as the hearing examiner expressed them. When
the district judge first issued his conclusion in a formal order,
the employers moved for a new trial before the District Court. In
its order denying new trial, the District Court expressly rejected
the implication that he had departed from the findings of the
hearing examiner. The District Court stated:
Respondentlsbrief implies this court found the findings
ofthe hearings examiner were either totally insufficient
or clearly erroneous. Additionally, it argues that we
made new findings of fact. While we did comment on the
hearings examiner's failure to address certain pertinent
issues, we did not hold that any of his findings were in
error nor did we determine that the findings were wholly
inadequate. We explicitly based our opinion on lt. . .
the facts properly found by the examiner . . .11
Specifically, respondent claims we made a factual finding
that petitioners were not on duty five to eight hours a
day and that they were on overnight status for eight
hours. To the contrary, these facts were found by the
hearings examiner and made part of his findings of fact
by reference. Finding of fact number 3 adopts a
stipulation by the parties as to the duration and terms
of the shifts worked by the petitioners. That
stipulation clearly shows there was a period of time
during the day where the petitioners were relieved of
their duties and that they were generally on overnight
status from 10 p.m. to 7 a.m.
Respondent suggests additional findings of fact are
necessary before a proper decision can be rendered in
this case. We reiterate that our oriqinal opinion was
based upon the findinqs of fact actually made by the
hearinqs examiner. Furthermore, 5 2-4-704, MCA, provides
for remand for additional factual findings only if they
are essential to the decision and if they were not made
althoush requested. As we noted in the original
decision, neither party raised exceptions to the hearings
examinerls findings of fact or questioned their
 sufficiency. (Emphasis added.)
Memorandum and Order re motion for a new trial, pages 4, 5.
The majority opinion makes no reference to this clear
statement of the District Court as to the facts it based its
opinion on, nor does the majority opinion attempt to state the
purported new findings made by the District Court outside those
made by the hearing examiner.
truth, the District Court followed carefully the rule that
it is bound, as is this Court, by factual findings of the hearing
examiner and stipulations by the parties. Hutchin v. State (1984),
213 Mont. 15, 688 P.2d 1257.
In Wage Appeal of Highway Patrol Officers v. Board of
Personnel Appeals (1984), 208 Mont. 33, 676 P.2d 194, we upheld
the District Court, stating that it had acted correctly when it
merely translated the hearing examiner's findings of fact without
substituting its judgment for that of the agency the weight of
the evidence on questions of fact. That is precisely what the
district judge did at bar.
These then are the facts on which the District Court acted,
which were found by the hearing examiner or stipulated to by
counsel and which bound not only the District Court but this Court:
Petitioners worked as trainers or supervisors of
developmentally disabled clients at groups homes between
1983 and 1985. Their work schedules varied somewhat,
but generally they were required to be present at the
homes 24 hours a day except for a period (anywhere from
4 to 9% hours) during which the clients were at a day
school, and during which time the trainers were free to
leave the homes and do what they chose. They were Ifon
duty" ( e l required to be actively supervising the
clients) from 6:30 or 7:00 in the morning before the
 clients left for day school, and from the time when the
clients returned until 10:OO p.m. Uniformly it seems,
the trainer's workday was suspended from 10:OO p.m. to
7:00 a.m., even though he was sometimes scheduled to
begin supervising at 6:30 a.m:, and even though he was
generally the only trainer In the home during this
period. This period was called the llovernight.llIf
during the I1overnight1'
the trainer enjoyed at least five
consecutive uninterrupted hours, he was compensated only
for the time he was interrupted by the clients. If he
did not enjoy at least five consecutive uninterrupted
hours, he was compensated for the entire glovernight. "
The petitioners here, however, claim entitlement to full
payment (usually at time-and-half overtime rates) for all
of the "overnight" time, 10:OO p.m. to 7:00 a.m.
regardless of interruptions, most of which was in excess
of 8 hours per day, 40 hours per week, and 80 hours per
14-day period.
Opinion and Order on Petition for Judicial Review, District Court,
page 2.
In this dissent, I rely on those facts and none other in
determining what the legal results should be.
The next hurdle over which the majority stumble is the effect
and applicability of the Federal Fair Labor Standards Act to the
facts of this case. The majority either missed the application by
the District Court of the Federal Acts, or they fail in their own
interpretation.
The Fair Labor Standards Act, 29 U.S.C. 5 207 is clear. It
provides :
(a)(l) Except as otherwise provided in this section, no
employer shall employ any of his employees ... for a
workweek longer than forty hours unless such employee
receives compensation for his employment in excess of the
hours above specified at a rate not less than one and
one-half times the regular rate at which he is employed.

(j) No employer engaged in the operation of a hospital
or . ..
the care of the sick, the aged, or the mentally
 ill or defective who reside on the premises shall be
deemed to have violated subsection (a) of this section
if, pursuant to an agreement or understanding arrived at
between the employer and the employee before performance
of the work, a work period of fourteen consecutive days
is accepted in lieu of the workweek of seven consecutive
days for purposes of overtime computation and if, for his
employment in excess of eight hours in any workday and
in excess of eighty hours in such fourteen-day period,
the employee receives compensation at a rate not less
than one and one-half times the regular rate at which he
is employed.
The Department of Labor has issued implementing regulations
which provide (29 Code of Federal Regulations 1 785):
§ 785.20 General
Under certain conditions an employee is considered
to be working even though some of his time is spent in
sleeping or in certain other activities.
S 785.21 Less than 24-hour duty.
An employee who is required to be on duty for less than
24 hours is working even though he is permitted to sleep
or engage in other personal activities when not busy.
A telephone operator, for example, who is required to be
on duty for specified hours is working even though she
is permitted to sleep when not busy answering calls. It
makes no difference that she is furnished facilities for
sleeping. Her time is given to her employer. She is
required to be on duty and the time is worktime. (Citing
cases. )

With respect to the Federal Act itself, the District Court
pointed out that the applicable portion was subsection (j) of 29
U.S.C. 207 (a). The District Court concluded, correctly, that
that subsection simply allows agreement where overtime compensation
would be computed on the basis of an 8-hour day in a 14-day period
rather than an 8-hour day in a 7-day period. The District Court
further stated that the subsection did not apply here because there
was no agreement beforehand between the employer and the employees.
Instead, the only overtime evidence of agreement was in the
ltemployment
agreementftt
exhibit 38 which provided:
Overnight Agreement: In addition to your 40 hours per
week you will also be providing overnight supervision 5
nights a week. You will be paid for any documented hours
you have to be awake attending client needs.
There is no other evidence of any agreement with respecting pay
than the foregoing phrase. In making that finding, the court
relied expressly on the record and it made no independent findings
of its own.

Turning now to regulation 5 785.21, which is quoted above, it
is obvious that that regulation requires sleeptime be compensated
by the employer, and since his time is given to the employer, he
is working even though he is permitted to sleep.
Another regulation of possible application here is 5 785.22
which states:
5 785.22 Duty of 24 Hours or More.
(a) General. When an employee is required to be on duty
for 24 hours or more, the employer and the employee may
agree to exclude bona fide meal periods and bona fide
regularly scheduled sleeping period of not more than 8
hours from hours worked, provided adequate sleeping
facilities are furnished by the employer and the employee
can usually enjoy an uninterrupted night's sleep. If
sleeping period is of more than 8 hours, only 8 hours
will be credited. Where no expressed or implied
agreement to the contrary is present, the 8 hours of
sleeping time and lunch periods constitute hours worked.
(Citing cases.)
(b) Interruptions of Sleep. If the sleeping period is
interrupted by a call to duty, the interruption must be
counted as hours worked. If the period is interrupted
to such an extent that the employee cannot get a
reasonable nights sleep, the entire period must be
counted. For enforcement purposes, the Divisions have
adopted the rule that if the employee cannot get at least
5 hourst sleep during the scheduled period, the entire
 time is working time. (citing a case.)
In examining the application of 5 785.22, the ~istrictCourt
determined that there was no finding of fact by the examiner as to
an agreement to exclude the sleeping period nor a finding that the
employee usually enjoyed an uninterrupted night's sleep. Moreover,
the application of the regulation is conditioned upon a prior
finding that the employee ttusually
enjoyed an uninterrupted night Is
sleep." Without that, the District Court found that 5 785.22 did
not apply. Finally, the regulation applies only if the employee
is on duty more than twenty-four hours.
The District Court then turned its attention to the third
regulation, 29 CFR 5 785.23 which follows:
5 785.23 Employees residing on employer's premises or
working at home.
An employee who resides on his employer's premises on a
permanent basis or for extended periods of time is not
considered as working all the time he is on the premises.
ordinarily, he may engage in normal private pursuits and
thus have enough time for eating, sleeping, entertaining,
and other periods of complete freedom from all duties
when he may leave the premises for purposes of his own.
It is, of course, difficult to determine the exact hours
worked under these circumstances and any reasonable
agreement of the parties which takes into consideration
all the pertinent facts will be accepted. This rule
would apply, for example, to the pumper of a stripper
well who resides on the premises of his employer and also
to a telephone operator who has the switchboard in her
own home. (Citing cases.)
The District Court was critical of the foregoing regulation,
and properly so. Through the regulation, the United States
Department of Labor is taking a position that "any reasonable
agreement" between the employer and the employee which "takes into
consideration all the pertinent factst1will overturn the basic
command of the Wages and Hours Act. The District Court said "This
regulation, on its face, reduces the clear command of the statute
to a plea to be reasonable." The hearing examiner failed to make
any findings of any kind that would show that the agreement between
the employer and the employees here was reasonable, or that the
agreement took into consideration all the pertinent facts. The
District Court was correct in determining that this regulation
should be cautiously applied, and only after a well-reasoned
analysis by the hearing examiner that it did apply. Nothing of
that sort appears in this case.
Of the three regulations which might apply, therefore, the one
which directly applies, and which the District Court utilized, was
29 CFR 5 785.21. The majority criticizes the District Court for
utilizing this regulation although on the undisputed facts of this
case it is the only regulation which is applicable. In so
deciding, the District Court was making a conclusion of law; the
majority state instead that he was making findings of fact; how and
in what way the application by the District Court of 5 785.21 is
making a finding of fact is not explained in the majority opinion.
We come now to the administrative letters, the basis of the
I1good faith1! defense. The first is a 1981 letter from Henry T.
White, Jr., deputy administrator of the Wage and Hour Division of
the United States Department of Labor, to representatives of
privately-operated community residences for the mentally retarded.
In that letter, White answered three posed questions. The
questions relate (1) to employees who maintain separate
residences, (2) to a clarification of the five day, eight-hour rule
contained in 5 785.23, and (3) to the application of 5 785.21 to
relief employees who come in for two or three days. The letter
candidly stated that with respect to relief employees, a departure
from the general rule of 5 785.21 would be tolerated by the
Department "because of the home-like environment afforded to these
employees in community residences, with private quarters and other
amenities. Ir
The second letter was written in 1985 by Herbert J. Cohen, a
deputy administrator of the same federal agency. Again the letter
concerns itself with relief employees in community residences for
the mentally retarded. It again stated a "special rulev1 for
employees of community residences where they are offered by their
employer "a home-like environment."
As a Court, we should give absolutely no heed to the letters
of these administrators. The conclusions in the letters fly in the
face of the regulations of the Department, and the basic command
of the statute relating to compensable time. If the Congress
intended that a "home-like environmentgfcould be substituted for
wages in the form of money, the Congress did not say so. I agree
with the District Court that administrative rulings and opinions
may be used to explain and clarify regulations, and may not be used
to nullify them. Teamsters v. Daniel (1979), 439 U.S. 551, 58
L.Ed.2d 808, 99 S.Ct. 790.
Based on the foregoing considerations, the District Court, in
its order of January 14, 1988, held that under the Federal Act as
properly interpreted, the employees worked and were entitled to be
compensated for tnovernightll
time. The employers moved the court
for a new trial and brought to the attention of the District Court
for the first time, the provisions of the federal ''Portal to Portal
Act1' (PPA) and especially the provisions of 29 USC § 259(a) of the
Act :
In any action or proceeding based on any act or omission
on or after May 14, 1947, no employer shall be subject
to any liability or 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 ... , if he pleads and proves that the act
or omission complained of was in good faith in conformity
with and in reliance on any written administrative
regulation, order, ruling, approval, or interpretation,
of the agency of the United States specified in
subsection (b) of this section, or any administrative
practice or enforcement policy of such agency with
respect to the class of employers to which he belonged.
Such a defense, if established, shall be a bar to the
action or proceeding, notwithstanding that after such act
or omission, such administrative regulation . . . is
modified or rescinded ...
As the District Court stated, Montana does not have a state
counterpart to the federal PPA. The federal law, however, does
provide that if a state law would provide greater benefits to an
employee respecting either minimum wages or maximum work weeks,
state law applies. 29 USC 5 218 (a). Therefore, if under PPA, the
employees were barred from any relief against their employer, the
provisions of the Montana Act would apply:
§ 39-3-406(2). The provisions of 39-3-405 do not apply
to:
...
(q) An employee of an hospital or other establishment
primarily engaged in the care of the sick, disabled, aged
or mentally ill or defective who is working under a work
period not exceeding 80 hours in a 14-day period
 established through either a collective bargaining
agreement when a collective bargaining unit represents
the employee or by mutual agreement of the employer and
the employee where no bargaining unit is recognized.
Employment in excess of 8 hours per day or 80 hours in
a 14-day period must be compensated for at a rate of not
less than 1% times the hourly wage rate for the employee.
The foregoing statute creates an issue which is another hurdle
which the majority opinion clears in the exercise of legerdemain.
The majority point to 8 39-3-408, MCA, which states that Montana's
law shall not apply to employees who are covered by the Fair Labor
Standards Act. The majority also take note of 29 USC § 218(a)
under which the federal act defers to state laws which provide
greater benefits. It is obvious that 8 8 39-3-405 and 39-3-406(2),
MCA, provide employees of the type involved here with greater
benefits since their employment is in excess of 8 hours per day per
14-day period. The majority have concluded that Montana's superior
benefits may not be recovered because of (1) the majority's dubious
interpretation of nonaction by the legislature (deriving
legislative intent from nonaction), and (2) by engaging in some
spurious fact finding of their own, not based on the record, that
group home operators forced to pay lawful wages will curtail their
services and discharge employees.
There is, however, a clear legislative intent here to which
the majority close their eyes. It is the intent of the Congress,
that when state law provides greater benefits to a worker, the
state law should apply. That beneficent purpose should override
any other consideration and should motivate this Court, as it
motivated the District Court, to cite Tennessee C, I, & R Company
 v. Muscoda Local 123 (1944), 321 U.S. 590, 597, 88 L.Ed 949, 956,

We are not here dealing with mere chattels or articles
of trade but with the rights of those who toil, of those
who sacrifice a full measure of their freedom and talents
to the use and profits of others. Those are the rights
that Congress has specially legislated to protect. Such
a statute must not be interpreted or applied in a narrow,
grudging manner.
One of the great social advances of this century was the
adoption by Congress of laws to protect employees so as to
guarantee reasonable wages and hours in their working conditions.
In the long run, it would be more advantageous to society that we
refuse to allow any inroads that delimit this great social policy.
Moreover, under the interpretation by the majority of the
effect of 5 39-3-408, MCA, the intention of Congress that greater
benefits under state law should apply would never come into effect.
The decision of the majority has the effect of repealing entirely
5 39-3-408 and vitiating any application of 21 USC 5 218(a) to a
Montana case. In holding that the employees are covered by the
Fair Labor Standards Act, even though the employees can make no
recovery under the Act, the majority eliminate any possibility for
an employee whose job is part of commerce to have any benefit from
5 39-3-408. The duty of courts, especially an appellate court, is
to give effect to statutes, not to nullify them by interpreting
them out of existence. The majority remind one of the Walrus and
the Carpenter, who ate the oysters they were supposed to protect.
I dissent and would affirm the decision of the District Court.

I join in the foregoing dissent Ju6Yice Sheehy.
/

. Justice
 No. 89-082
IN THE SUPREME COURT OF THE STATE OF MONTANA

IN THE MATTER OF WAGE CLAIMS OF
RANDALL P. STEWART, ALLEN W. COPELAND,
LIONEL F. McKNIRE, GREG W. BRANTNER, ARTHUR
BRISCOE,
petitioners and Respondents,
-vs-
REGION I1 CHILD AND FAMILY SERVICES,
Respondent and Appellant.

APPEAL FROM: District Court of the First Judicial District,
In and for the County ~ e w i s Clark,
&
The Honorable Jeffrey Sherlock, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Richard Larson; ~ a i t e ,Schuster & Larson, Great Falls,
Montana
For Respondent:
Timothy J. McKittrick; Mc~ittrickLaw Firm, Great Falls,
Montana
For Amicus Curiae:
~elanie A. Symons, Dept. of Labor & Industry, Helena,
Montana
ani ice Van Riper; Meloy Law ~ i r m ,
Montana ~esidential
child Care Assoc., Helena, Montana
Nick Rotering, Dept. of Institutions, Helena, Montana
Cary B. Lund, Dept. of S.R.S., Helena, Montana
patrick M. ~riscoll;Chronister, ~riscoll& Moreen,
Mt. council of Mental Health Centers, Helena, Montana
Joe R. Roberts, Mt. Assoc. of Independent isa abilities
services, Helena, Montana

Submitted: December 12, 1989
Decided: March 15, 1990
Filed :
 Sheehy, dissenting:

worker should be paid though he is sleeping the
r job, where demands of work may interrupt his sleep-time. is
because he is on call, that he may not sleep at all, and it is
otherwise too onerous to keep time.
At base this is a simple case, which gets lost in all of the
rhetoric of the majority opinion. These employees are on the job
most of the 24 hour day. The employer deducted from their pay the
hours in the ttovernight,lt
from 10:OO p.m. to 7:00 a.m. If the
worker got at least five consecutive uninterrupted hours of sleep,
he was compensated only for the time he was interrupted by the
M
clients. If he did not enjoy five consecutive interrupted hours,
A
he was compensated for the entire overnight. The majority opinion
holds that even though the employee, sleeping or not, is at the
command of his employer, and his sleep-time is given over entirely
to his employer, it is not necessary for the employer to compensate
the employee fully for that time. The majority opinion is akin to
holding that a fireman need not be paid for the time he is at the
fire station unless he is fighting fires.
TO reach their indefensible result, the majority have several
hurdles to clear. The first is that the district judge made no
findings in this case. The majority leaped this hurdle nicely by
asserting that the district judge did make findings. The record,
however, belies their position.

21