KELLI K. GOODROW vs. LANE BRYANT, INC.

SPINA, J. Kelli K. Goodrow (Goodrow) commenced a class action [Note 1] against Lane Bryant, Inc. (Lane Bryant), for failing to pay overtime compensation at the rate of one and one-half times her hourly rate for the hours she worked in excess of forty in any work week, contrary to G. L. c. 151, s. 1A. She also sought individually triple damage[s] under G. L. c. 151, s. 1B. After a jury-waived trial, a Superior Court judge found for Goodrow and awarded her damages in the amount of $3,773.58, [Note 2] plus interest, costs, and reasonable attorney's fees. Lane Bryant appealed, claiming (1) Goodrow was exempt from the provisions of s.1A because she was a "bona fide executive"; (2) the judge's method of calculating overtime compensation for Goodrow, a salaried employee, was incorrect; and (3) G. L. c. 151, s.s.1A and 1B, are unconstitutionally vague as applied. We granted its application for direct appellate review. The judge further found, as a matter of discretion, that individually Goodrow was not entitled to triple damages. Goodrow appealed, claiming the judge lacked discretion to deny triple damages after finding a violation of s.1A. We granted her application for direct appellate review. We reverse the judgment for Goodrow and affirm the judgment denying punitive damages.

1. Background facts. We summarize the facts found by the judge. Lane Bryant operates a nationwide chain of retail stores that sell clothing and related goods to larger women. Goodrow began working at the Lane Bryant store in the Greendale Mall in Worcester on November 9, 1993. After a brief period of training Goodrow was transferred to the Lane Bryant store in Auburn, where she remained until she resigned, on April 10, 1995.

On an average day, two or three employees worked in the Auburn store: a store sales manager, a co-sales manager, and a

Page 167

sales associate. Goodrow's job title was "co-sales manager." Store sales managers and co-sales managers were paid on a weekly salary basis. Sales associates, who were generally part-time workers, were paid on an hourly basis. Goodrow never worked less than forty hours per week, and ordinarily worked forty-six to forty-seven hours per week. During holiday seasons, Goodrow worked an additional five to seven hours per week. Her initial salary was $320 per week. On March 6, 1994, Goodrow's pay was raised to $325 per week. On March 12, 1995, her pay was raised again to $342 per week.

Goodrow's daily duties were as follows. She arrived at approximately 9:30 A.M., when she would turn on the cash registers, put cash in the registers, and examine the "register mail." At 10 A.M. the store opened to customers. For the rest of the day she and the other employees performed retail sales work, including such tasks as waiting on and assisting customers, ringing up sales, setting up special promotional sales displays, replacing sold items on shelves, racks, or hangers, and keeping the store neat and presentable. Goodrow's other duties included cleaning bathrooms, putting out trash, and providing on-the-job guidance and assistance to sales associates. At about 12:30 P.m. the part-time sales associate would go home and another co-sales manager would arrive and stay until closing while Goodrow remained until 6:30 P.m. When Goodrow was the co-sales manager who arrived at 12:30 P.M., she would stay until the store closing process was completed at about 9:30 P.M. The closing process included cleaning up the premises, vacuuming the floor, replacing light bulbs, washing mirrors, dusting, closing the cash registers, putting away the day's receipts, making bank deposits, and locking the store for the night. Whenever Goodrow left the store her pocketbook and bags were checked by another employee pursuant to a company policy designed to minimize employee theft. Co-sales managers such as Goodrow did not have authority to hire, fire, or discipline other employees.

During the period Goodrow worked in the Auburn store, the position of store sales manager was left unfilled on two occasions that lasted approximately four and ten weeks, respectively. Goodrow, the co-sales manager with seniority on those occasions, assumed some of the responsibilities ordinarily held by the sales manager. Her assumption of those duties was unofficial and resulted in no increase in compensation. During those

Page 168

two periods the Lane Bryant district manager visited the store more often, sometimes as many as three or four times each week.

Prior to the time of Goodrow's employment co-sales managers were paid on a salary basis plus some overtime. Then, in 1991, they were paid only straight salary with no overtime. The United States Department of Labor (DOL) investigated Lane Bryant's overtime payment practices to determine whether they complied with the Federal Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. s.s. 201-219. In November, 1992, one year before Goodrow joined Lane Bryant, the company reached an accord with the DOL. Under the terms of that agreement Lane Bryant was to "pay [its] co-managers on a fluctuating workweek basis" beginning November 15, 1992. That agreement further provided that, "in order to avoid weekly computations and to provide additional compensation, co-managers, in accordance with [Field Operations Handbook] s. 32b04b(a) [Note 3] will receive an extra half-time based on their salary divided by 40 hours."

Goodrow testified that, at the time she was hired in 1993, the Lane Bryant district manager who interviewed her told her that she would receive eight dollars per hour, which "averaged out to $320 a week for forty hours," and that, for all hours she worked in excess of forty, she would be paid at half of her hourly rate. On March 15, 1995, Goodrow signed a memorandum explaining the compensation scheme as it applied to her first pay raise. In pertinent part, the memorandum read:

Page 169

"As a Co-Sales Managers [sic] ('CSM') of Lane Bryant, you are an Exempt, Salaried associate. This means that you will be paid a weekly salary for hours worked each week. For all hours worked in excess of 40 per week, you will receive a supplemental rate of pay equal to one-half (.5) your regular rate of pay. . . . Please note that any benefits to which you may be entitled (sick, vacation, holiday, etc.) are paid based on a 40-hour week, or 8 hours per day."

The memorandum also included the following example:

Goodrow resigned, voluntarily, on April 10.

2. "Bona fide executive" exemption. Lane Bryant argues that Goodrow was exempt from the overtime provisions of G. L. c. 151, s. 1A, because she was a "bona fide executive" within the meaning of G.L. c. 151, s. 1A(3), especially during the periods of time when she temporarily assumed the responsibilities of a store manager. Lane Bryant contends that, because neither the statute nor the corresponding regulations define "bona fide executive," and absent any Massachusetts appellate decision construing the term, we should look to the FLSA and the Federal regulations to determine whether Goodrow was an

Page 170

exempt employee. Lane Bryant further argues that employees who have limited control or discretion in the workplace and who spend the majority of their time on nonexempt tasks may nevertheless be considered exempt as bona fide executives under the FLSA, [Note 4] and should receive similar treatment under G. L. c. 151, s. 1A (3). Generally, the party claiming an exemption from the provisions of a statute has the burden to show that it is entitled to the exemption. Cf. New England Legal Found. v. Boston, 423 Mass. 602, 609 (1996) (burden on taxpayer claiming exemption to prove entitlement); Burnham v. Mark IV Homes, Inc., 387 Mass. 575, 580 (1982) (burden on party claiming exemption under G. L. c. 93A to prove entitlement).

Where a "statute does not effectively define [terms] we have said that the Legislature should be supposed to have adopted the common meaning of the word, as assisted by a consideration of the historical origins of the enactment." Jancey v. School Comm. of Everett, 421 Mass. 482, 490 (1995), S.C., 427 Mass. 603 (1998), quoting Westinghouse Broadcasting Co. v. Commissioner of Revenue, 382 Mass. 354, 357, appeal dismissed, 452 U.S. 933 (1981). The legislative history of G. L. c. 151, s. IA, provides no guidance as to the meaning of the term "bona fide executive." See St. 1960, c. 813; 1960 Senate Doc. No. 1; 1960 House Doc. Nos. 1348, 2414, 3 100; 1959 House Doc. No. 2666. In such instances we may look to interpretations of analogous Federal statutes for guidance, see Tate v. Department of Mental Health, 419 Mass. 356, 361 (1995), but we are not bound by them. See Blare v. Husky Injection Molding Sys. Boston, Inc., 419 Mass. 437, 441 (1995); College-Town, Div. of Interco, Inc. v. Massachusetts Comm'n Against Discrimination, 400 Mass. 156, 163 (1987).

There is also the matter of preemption. Title 29 U.S.C. 218(a) makes clear that the wage and hour standards sa forth in the FLSA are the floor, and that "the FLSA does not preempt any existing state law that establishes a higher minimum wage or a shorter workweek than the federal statute." Cosme Nieves

Page 171

v. Deshler, 786 F.2d 445, 452 (1st Cir.), cert. denied, 479 U.S. 824 (1986). Conversely, a State law may be preempted by the FLSA if it conflicts with the FLSA, or if it is impossible for a third party to comply with both the FLSA and the State law. See Commonwealth Elec. Co. v. Department of Pub. Utils., 397 Mass. 361, 375-376 (1986), cert. denied, 481 U.S. 1036 (1987).

Title 29 U.S.C. s. 213(a)(1) provides: "[S]ection 207 of this title shall not apply with respect to . . . any employee employed in a bona fide executive, administrative, or professional capacity." This provision is nearly identical to G. L. c. 151, s. 1A (3). However, unlike its State counterpart, it is illuminated by interpretive regulations defining and delimiting the terms "executive, administrative, or professional." See 29 C.F.R. s.s. 541.0 et seq. (1999). To determine whether an employee is an "executive," 29 C.F.R. s. 541.1 [Note 5] establishes a "long test" for employees who earn between $155 and $250 a week, and 29 C.F.R. s. 541.119 establishes a "short test" for those earning more than $250 a week. [Note 6] Goodrow was not a bona fide execu-

Page 172

tive under either test. Her primary duty at Lane Bryant did not consist of "management of the enterprise" or a subdivision thereof, nor did it involve determining Lane Bryant's over-all course or policies. See Bratt v. County of Los Angeles, 912 F2d 1066, 1070 (9th Cir. 1990), cert. denied, 498 U.S. 1086 (1991); 29 C.F.R. s. 541.1(a). Despite her temporary assumption of managerial duties at the Auburn store, Goodrow did not spend more than fifty per cent of her time at Lane Bryant performing managerial duties. "As a 'rule of thumb,' for tasks to constitute an employee's primary duty, 'the employee must devote more than fifty percent of [her] time to these duties.' " West v. Anne Arundel County, 137 F.3d 752, 763 (4th Cir.), cert. denied, 525 U.S. 1048 (1998), quoting Shockley v. Newport News, 997 F2d 18, 26 (4th Cir. 1993). See 29 C.RR. s.s. 541.103, 541.206(b). At best, Goodrow customarily and regularly directed the work of only one part-time sales associate at the store, not the two or more required by 29 C.F.R. s. 541.1(b) and (f). Goodrow had no authority or influence over any decision to hire, fire, promote or demote any other employee in the store. See 29 C.RR. s. 541.1(c). She did not exercise any discretionary powers in the execution of her job because all decisions she made concerning the business of the store were subject to the approval of upper level managers. See 29 C.RR. s. 541. 1 (d). Finally, Goodrow spent well over forty per cent of her time at Lane Bryant engaged in non-managerial activity. See 29 C.F.R. s. 541.1(e). She was primarily occupied with carrying out the day-to-day affairs of the retail business.

Nor do we think that Goodrow was a bona fide executive within the common understanding of those words. Webster's Third New Int'l Dictionary 794 (1993) defines "executive" as "one who holds a position of administrative or managerial responsibility in a business or other organization." "Administrative" pertains to "the management of public affairs [or] the principles, practices, and rationalized techniques employed in

Page 173

achieving the objectives or aims of an organization." Id. at 28. To "manage" is "to control and direct." Id. at 1372. In a related context, the Legislature defined a managerial employee as one who "participate [s] to a substantial degree in formulating or determining policy." G. L. c. 150E, s. 1. "Bona fide" is defined as "in good faith without fraud or deceit. . . . [synonym] authentic." Webster's Third New Int'l Dictionary, supra at 250.

Although her title was "co-manager," Goodrow did not hold a position of managerial responsibility within the Lane Bryant organization. She did not have any significant control or discretion over the principles, practices, and strategies applied by Lane Bryant in achieving its business objectives, and she did not participate to any degree whatsoever in formulating or determining Lane Bryant's policies. She performed the duties of the sales manager on two occasions for a total of only fourteen weeks, but they were not her regular duties, she received no pay differential for the extra work, and the district manager could be seen as the actual temporary manager in light of her stepped up visits to the store. A manager in name does not a manager make. Goodrow's duties and her modest level of compensation do not comport with what is commonly understood as an [e]xecutive" position. The common understanding of the term, which we apply in the absence of any Massachusetts statutory or regulatory definition, is at least as beneficial to the employee as the Federal definition. Consequently, there is no preemption of our gloss. The judge correctly concluded that Goodrow was not employed as a bona fide executive at Lane Bryant and thus was not exempt from the overtime provisions of G. L. c. 151, s. 1A.

3. Calculation of overtime. Lane Bryant argues that the judge erred in calculating Goodrow's overtime pay because the method he used to define her regular rate of pay was inconsistent with the applicable Massachusetts regulation, 455 Code Mass. Regs. s. 2.02, tenth par. (1993), as well as the Federal regulations. Lane Bryant further argues that because G. L. c. 151, s.1A, is largely based on 29 U.S.C. s. 207(a)(1), and application of the "fluctuating workweek" method of calculating overtime as described in 29 C.F.R. s. 778.114 is an acceptable means of complying with Federal law, its application also must be permissible under Massachusetts law.

The judge concluded that G. L. c. 151, s. 1A, requires that all employees receive overtime at the rate of one and one-half

Page 174

times the hourly rate they earn in a forty-hour week. His interpretation is more beneficial to the employee than the method of payment permitted under the Federal regulations, but it ignores the Massachusetts regulations.

General Laws c. 151, s.1A, provides that "no employer in the commonwealth shall employ any of his employees . . . for a work week longer than forty hours, unless such employee receives compensation for his employment in excess of forty hours at a rate not less than one and one half times the regular rate at which he is employed." The corresponding regulation in effect during Goodrow's employment provided that the basic minimum overtime rate was "1 1/2 times the employee's regular rate of pay." 455 Code Mass. Regs. s. 2.03(l) (1993). The term "regular rate of pay," however, is defined neither in the statute nor in the regulation.

Title 455 Code Mass. Regs. s. 2.02 [Note 7] defines "[r]egular [h]ourly [w]age rate" as "the amount that the employee is regularly paid for each hour of work. When an employee is paid on a piece work basis, salary, or any basis other than an hourly rate, the regular hourly rate shall be determined by dividing the total hours worked during the week into the employee's total earnings." This regulation recognizes that a salaried employee's regular hourly rate [Note 8] may fluctuate on a weekly basis depending on the number of hours worked, and is inversely proportional to the number of hours worked. The nonexempt salaried employee is still entitled under 455 Code Mass. Regs. s. 2.03(l) (1993) to receive one and one-half times that rate for overtime hours worked, but that requirement is satisfied by paying the employee an additional fifty percent of the regular hourly rate for the overtime hours worked. This is so because the

Page 175

employee's salary is considered to include "straight time" for all hours worked, including the overtime hours. Had this not been the case the regulation would have provided that the regular hourly rate be determined by dividing weekly salary by forty hours. The check on this method of payment is found in the same regulation, which provides that "[r]egardless of the basis used, whether time rate, commission basis or piece rate, the employee shall be paid not less than the applicable minimum wage each week." 455 Code Mass. Regs. s. 2.02. We must determine whether this method of calculating overtime for a nonexempt salaried employee is at least as beneficial to the employee as what she would receive under the FLSA.

Title 29 U.S.C. s. 207(a)(1), which is nearly identical to G.L. c. 151, s. 1A, provides that "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." Four years after Congress enacted the FLSA, the Supreme Court construed the term "regular rate" as "[w]age divided by hours. . . ." Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 580 n.16 (1942). Three years later, the Supreme Court further explained that the regular rate of pay is "the hourly rate actually paid the employee for the normal, non-overtime workweek for which he is employed." Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424 (1945). In 1968, the DOL promulgated several interpretive regulations governing the calculation of overtime compensation for several types of employees. [Note 9]

Under 29 C.F.R. s. 778.109 (2000) the "regular rate" of pay is a rate of pay per hour. The hourly rate for employees paid on an hourly basis is the "regular rate," and overtime compensation is one and one-half times the hourly rate multiplied by the number of hours worked in excess of forty during the week. 29 C.F.R. s. 778.110 (2000). For employees paid on a salary basis, the "regular hourly rate of pay, on which time and a half must be paid, is computed by dividing the salary by the number of

Page 176

hours which the salary is intended to compensate." [Note 10] 29 C.FR. s. 778.113 (2000).

The regular rate of pay for salaried employees whose hourly work week varies, and who have an understanding with their employers that their fixed salary constitutes straight-time pay for whatever hours they are called on to work in a work week is calculated by dividing the regular weekly pay by the total number of hours worked in the week. 29 C.F.R. s. 778.114 (2000). The overtime rate of pay in this scenario is calculated by multiplying one-half the regular rate of pay by the number of hours worked in excess of forty hours." Id. This is the so-called "fluctuating work week" method of calculating overtime. It falls heavily on those at the lower rungs of the economic ladder, but its use has been approved by the Supreme Court in Overnight Motor Transp. Co. v. Missel, supra at 580. It is the same as the method of calculating overtime for nonexempt salaried employees under 455 Code Mass. Regs. s. 2.02 and 455 Code Mass. Regs. s. 2.03(l). See Valerio v. Putnam Assocs. Inc., 173 F.3d 35, 39-40 (1st Cir. 1999). The Commissioner of Labor and Industries has authority to provide lower income salaried employees with a more favorable method of calculating overtime than the method used here.

Lane Bryant calculated Goodrow's overtime under the

Page 177

fluctuating work week method, but it used a denominator of forty hours rather than the actual number of hours worked in a given week. The DOL approved Lane Bryant's use of this method to calculate overtime for co-sales managers. This method is permitted under the DOL Field Operations Handbook, although it is not included in either the Federal or the Massachusetts regulations. See note 4, infra. It affords employers an easier means of calculation because it uses the same denominator in the calculation every week. The trade-off, in the view of DOL, is that it affords more money to the employee. Because this method resulted in more overtime pay than Goodrow was entitled to receive under either the State or Federal regulations, she has not been prejudiced.

The trial judge concluded that even if G. L. c. 151 permits the fluctuating work week method of calculating overtime, 29 C.F.R. s. 778.114 requires that there be a "clear mutual understanding" of the parties that any overtime compensation will be calculated by that method. Section 778.114 contains no such requirement. It requires only that the parties have a "clear mutual understanding . . . that the fixed salary is compensation (apart from overtime premiums) for the hours worked each week, whatever their number, rather than for working 40 hours or some other fixed weekly work period." See Valerio v. Putnam Assocs., Inc., supra at 40. Goodrow testified that she always understood how she would be paid, and that the March 15, 1995, written memorandum expresses the same method by which she was paid from the first day of her employment. The absence during seventeen months of employment of any indication that Goodrow did not understand how she would be paid is evidence of a clear mutual understanding concerning how she was paid. Id. at 39. Her understanding as to how her overtime compensation would be calculated need not have been exhaustive, see id. at 40, but here it was. The March 15 memorandum made clear not only that Goodrow's salary covered all hours worked each week, but also included examples of how overtime would be calculated. In that respect Goodrow received more detail than was required. Id. As matter of law, based on Goodrow's testimony and the terms of the March 15 memorandum, Goodrow and Lane Bryant had a "clear mutual understanding" that Goodrow's salary would serve as compensation, apart from overtime, for all hours worked each week. To the extent that 455 Code Mass. Regs. s. 2.02, tenth par., does not require a

Page 178

"clear mutual understanding," it is preempted by 29 C.F.R. s. 778.114.

4. Vagueness. Having determined that the Massachusetts statute and regulations permit a fluctuating workweek method of calculating overtime for nonexempt salaried employees, we need not address Lane Bryant's argument that G. L. c. 151, s. 1A, is unconstitutionally vague.

5. Treble damages. Because we hold that Lane Bryant did not violate G. L. c. 151, s.1A, Goodrow's cross appeal from the denial of her claim of treble damages is moot. However, the issue is likely to arise in the class action, trial of which has been severed from the trial of Goodrow's individual claim, so we express our opinion on the matter.

General Laws c. 151, s. 1B, provides in relevant part that, "if any person is paid by an employer less than such overtime rate of compensation [required by s. 1A], such person may recover in a civil action three times the full amount of such overtime rate of compensation less any amount actually paid to him or her by the employer." Goodrow contends that, in light of the fact that the Legislature declined to require a showing of intent or wilfulness with respect to the treble damages provision, the plain meaning of the word "may" in the context of this sentence is that an employee illegally deprived of overtime compensation is permitted but not required to bring a civil action in which, if successful, she is entitled to recover treble damages. The word "may," argues Goodrow, therefore relates to a plaintiffs option to initiate a civil action for damages rather than to the amount of damages recoverable under the statute. We disagree.

Multiple damages such as the treble damages at issue here "are 'essentially punitive in nature.' " Fontaine v. Ebtec Corp., 415 Mass. 309, 322 (1993), quoting McEvoy Travel Bur, Inc. v. Norton Co., 408 Mass. 704, 717 (1990). See Kansallis Fin. Ltd. v. Fern, 421 Mass. 659, 672 (1996). They are allowed only when expressly authorized by statute, Flesner v. Technical Communications Corp., 410 Mass. 805, 813 (1991), and are ordinarily applied by the Legislature "against those defendants with a higher degree of culpability than that sufficient to ground simple liability." See Kansallis Fin. Ltd., supra. Punitive damages may be awarded for conduct that is "outrageous, because of the defendant's evil motive or his reckless indifference to the rights of others." Dartt v. Browning-Ferris Indus., Inc. (Mass.), 427 Mass. 1, 17a (1998), quoting Restatement (Second) of Torts

Page 179

s. 908(2) (1979). In the instant case, the judge found that, in light of the uncertainty of the state of the law in Massachusetts and the fact that Lane Bryant relied on the advice of counsel and followed law and procedures apparently sanctioned elsewhere, there was "no legal or equitable basis" on which to impose multiple damages. We agree. We find nothing in the record to support a finding that Lane Bryant intentionally or wilfully violated Massachusetts law or that its conduct was "evil in motive" or showed a "reckless indifference to the rights of others," and we therefore decline to award treble damages. To do otherwise absent evidence of heightened culpability would very likely constitute an "arbitrary or irrational deprivation[] of property," TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443 (1993) (Kennedy, J., concurring), and thus would be constitutionally impermissible. There was no error.

The judgment in favor of Goodrow is reversed and judgment for Lane Bryant is to enter therein. The judgment denying punitive damages is affirmed.

So ordered.