1. In a proceeding brought by the Administrator to enjoin
alleged violations of the Fair Labor Standards Act, the District
Court did not abuse its discretion in refusing to enjoin the
employer's use of a method of wage payments which the employer had
abandoned on the day before the trial where the court found no
evidence of intent to resume use of such method of payments, nor of
willful violation of the Act, nor of intent to violate the Act in
future. P. 325 U. S.
2. The regular rate contemplated by § 7(a) of the Fair Labor
Standards Act refers to the hourly rate actually paid the employee
for the normal, nonovertime workweek for which he is employed. In
the case of piecework wages, this regular rate is the quotient of
the amount received during the week divided by the number of hours
worked. P. 325 U. S.
Page 325 U. S. 420
3. The regular rate, by its very nature, must reflect all
payments which the parties have agreed shall be received regularly
during the workweek, exclusive of overtime payments. The
determination of this rate is a matter of mathematical calculation,
and is unaffected by any designation of a contrary "regular rate"
in the wage contracts. P. 325 U. S.
4. Wage agreements between a lumber manufacturer and employees
engaged as stackers provided for compensation at a "regular rate"
of 35 cents per hour and one and one-half times that rate for
overtime, with a guaranty of 70 cents per 1,000 board feet of
lumber ricked and 80 cents stacked. The guaranteed piece rate would
result in an average hourly rate of 59 cents for a normal,
that the wage agreements, so far as they failed
to provide for overtime compensation of one and one-half times the
regular rate actually received, which in this instance would equal
the average hourly rate of 59 cents, violated § 7(a) of the Fair
Labor Standards Act. P. 325 U. S.
The individual regular rate which must be used will depend upon
the number of hours worked and the wages received by each stacker
during the particular workweek in question, but such a rate is the
one that must enter into any calculations of overtime payments due
under § 7(a).
5. Walling v. Belo Corp., 316 U.
, is not authority for fixing by contract a
"regular rate" wholly unrelated to payments which the employees
actually and normally receive each week. P. 325 U. S.
145 F.2d 349 reversed.
Certiorari, 324 U.S. 837, to review the affirmance of a judgment
dismissing a suit by the Administrator to enjoin alleged violations
of the Fair Labor Standards Act.
MR. JUSTICE MURPHY, delivered the opinion of the Court.
The respondent corporation manufactures lumber for shipment in
interstate commerce, employing various men
Page 325 U. S. 421
to pick up and stack boards. Prior to the trial in this case,
these stackers were compensated at agreed piece rates per thousand
board feet ricked or stacked. The Administrator of the Wage and
Hour Division of the Department of Labor brought suit to enjoin
alleged violations of the overtime and recordkeeping provisions of
the Fair Labor Standards Act of 1938 [Footnote 1
] in connection with these stackers. On the day
before the commencement of the trial in the District Court, the
respondent ceased to use the allegedly illegal mode of piece rate
compensation and entered into new and more elaborate wage
agreements with the stackers. Following the trial, the District
Court dismissed the complaint, and the Fifth Circuit Court of
Appeals affirmed the judgment. 145 F.2d 349. We granted certiorari
because of important questions as to whether the new wage
agreements comply with the requirements of Section 7(a) of the
The District Court found that, even though the
former piece rate agreements be considered unlawful, the respondent
had no apparent intention of resuming their use. It also found no
willful intention on the part of the respondent to violate the Act,
and no evidence of any intention of future violations. It therefore
felt that there was no necessity for an injunction. While
"voluntary discontinuance of an alleged illegal activity does not
operate to remove a case from the ambit of judicial power,"
Walling v. Helmerich & Payne, Inc., 323 U. S.
, 323 U. S. 43
may justify a court's refusal to enjoin future activity of this
nature when it is combined with a bona fide
comply with the law and not to resume the wrongful acts. Cf.
United States v. United States Steel Corp., 251 U.
, 251 U. S. 445
We cannot say therefore that the District Court abused its
discretion in refusing to enjoin the abandoned method of wage
Page 325 U. S. 422
At the same time, however, the validity of the new wage
agreements was also at stake. These agreements, on their face,
contemplated future hourly payments at regular and overtime rates,
as well as additional piece rate payments. Since the
Administrator's complaint alleged generally that the respondent was
violating Sections 7 and 15(a)(2) by employing its stackers on a
piecework basis for more than 40 hours a week without compensating
them for overtime at one and one-half times the regular rate, the
question as to whether the new contracts satisfied Section 7(a) was
properly in issue. Upon proof that these new provisions did not
comply with Section 7(a), the Administrator was therefore entitled
to an injunction absent any recognized mitigating factor. Evidence
on this matter was introduced at the trial, and the two courts
below considered the contracts thoroughly, predicating their
judgments in part upon the belief that the agreements did comply
with Section 7(a). We accordingly turn to a consideration of that
For approximately six months immediately
preceding the trial, the stackers were paid piece rates of 60 cents
per thousand board feet ricked and 70 cents per thousand board feet
stacked. During this period, they earned at these rates an average
of 51 cents an hour. Under the new contracts made on the day before
the trial, however, they were compensated according to the
"The basic or regular rate of pay is 35 cents per hour for the
first forty hours each week, and, for time over forty hours each
week, the pay shall not be less than one and one-half times such
basic or regular rate above mentioned, with a guaranty that the
employee shall receive weekly for regular time and for such
overtime as the employee may work a sum arrived at as follows:"
"The amount of stacking done by said employee shall be figured
the basis of 80 cents per thousand board
Page 325 U. S. 423
feet of lumber for flat stacking and 70 cents per thousand board
feet of lumber ricked.
Using by way of illustration the labor performed and the hours
worked during the six-month period preceding the trial, the
Administrator points out that, under the new guaranteed piece rates
of 70 and 80 cents per thousand, the stackers would earn an average
of about 59 cents an hour for all hours actually worked, including
those in excess of the statutory maximum. On the basis of the
contract "regular rate" of 35 cents an hour, [Footnote 2
] on the other hand, the excess hours
would yield the stackers only 52 1/2 cents hourly. It is thus
apparent that the guaranteed piece rates would yield greater
returns on an hourly basis for both regular and overtime work, and
that they would actually be the rates paid.
The respondent argues that these contract provisions satisfy
Section 7(a), since they provide for a "regular rate" of 35 cents
an hour and for payment of one and one-half times that rate, or 52
1/2 cents, for all overtime hours. Inasmuch as the Act does not
forbid incentive pay or compensation above and beyond the statutory
requirements, it is urged that the additional payments resulting
from the operation of the guaranteed piece rates are unaffected in
any way by Section 7(a). We cannot agree, however, that this scheme
of compensation is obedient to this statutory mandate.
Under Section 7(a), an employer is required to compensate his
employees for all hours in excess of 40 at not less than one and
one-half times the regular rate at which they are employed. Thus,
by increasing the employer's labor costs by 50% at the end of the
40-hour week and by giving the employees a 50% premium for all
excess hours, Section 7(a) achieves its dual purpose of inducing
Page 325 U. S. 424
to reduce the hours of work and to employ more men and of
compensating the employees for the burden of a long workweek.
Overnight Motor Transp. Co. v. Missel, 316 U.
, 316 U. S.
-578; Walling v. Helmerich & Payne,
supra, 323 U. S. 40
Jewell Ridge Coal Corp. v. Local No. 6167, ante,
325 U. S. 161
325 U. S.
The keystone of Section 7(a) is the regular rate of
compensation. On that depends the amount of overtime payments which
are necessary to effectuate the statutory purposes. The proper
determination of that rate is therefore of prime importance.
As we have previously noted, the regular rate refers to the
hourly rate actually paid the employee for the normal, nonovertime
workweek for which he is employed. Walling v. Helmerich &
Payne, supra, 323 U. S. 40
United States v. Rosenwasser, 323 U.
, 323 U. S. 363
In the case of piecework wages, this regular rate coincides with
the hourly rate actually received for all hours worked during the
particular workweek, such rate being the quotient of the amount
received during the week divided by the number of hours worked.
See Overnight Motor Transp. Co. v. Missel, supra,
316 U. S. 580
As long as the minimum hourly rates established by Section 6 are
respected, the employer and employee are free to establish this
regular rate at any point and in any manner they see fit. T hey may
agree to pay compensation according to any time or work measurement
they desire. United States v. Rosenwasser, supra.
"But this freedom of contract does not include the right to
compute the regular rate in a wholly unrealistic and artificial
manner so as to negate the statutory purposes."
Walling v. Helmerich & Payne, Inc., supra,
323 U. S. 42
The regular rate, by its very nature, must reflect all payments
which the parties have agreed shall be received regularly during
the workweek, exclusive of overtime payments. It is not an
arbitrary label chosen by the parties; it is an actual fact. Once
the parties have decided upon the amount of
Page 325 U. S. 425
wages and the mode of payment, the determination of the regular
rate becomes a matter of mathematical computation the result of
which is unaffected by any designation of a contrary "regular rate"
in the wage contracts.
Here, it is established that, under the new wage agreements, the
stackers will receive 70 or 80 cents per thousand board feet ricked
or stacked. Translated to an hourly basis, this means that they
will receive approximately 59 cents per hour for both regular and
overtime hours. [Footnote 3
That amount is guaranteed them under the terms of the contracts,
and accurately mirrors all payments that they normally will receive
from the respondent during the workweek. This 59-cent figure is
therefore the average regular rate at which the stackers are
employed. The individual regular rate which must be used depends,
of course, upon the number of hours worked and the wages received
by each stacker during the particular workweek in question. But
such a rate is the one that must enter into any calculations of
overtime payments due under Section 7(a). Insofar as the wage
agreements failed to provide for the payment of one and one-half
times this regular rate for all overtime hours, they plainly
violated the requirements of Section 7(a).
The 35-cent per hour "regular rate" fixed by the contracts is
obviously an artificial one, however bona fide
it may have
been in origin. Except in the extremely unlikely situation of the
piecework wages falling below a 35-cent per hour figure, this
"regular rate" is never actually paid. In the normal case where the
stackers earn more than 35 cents per hour on the piece rate basis
during nonovertime hours, they are guaranteed this higher figure,
and are actually so compensated. And, even when the
Page 325 U. S. 426
stackers work overtime, they actually receive at the present
time an average of 59 cents an hour under the guaranteed piece rate
system, rather than one and one-half times the 35-cent "regular
The 35-cent figure thus does not constitute the hourly rate
actually paid for the normal nonovertime workweek. Nor is it used
as the basis for calculating the compensation received for overtime
labor. It is not, in fact, the regular rate under any normal
circumstances. And reliance upon it to prove compliance with
Section 7(a) only allows respondent to escape completely the burden
of a 50% premium for the hours so worked, and prevents the stackers
from receiving the benefits of such a premium, as Congress
intended. Thus, by a mere label, respondent would be enabled to
nullify all the purposes for which Section 7(a) was created. We are
unable to perceive any reason for sanctioning that result.
This Court's decision in Walling v. A. H. Belo Corp.,
316 U. S. 624
lends no support to respondent's position. The particular wage
agreements there involved were upheld because it was felt that, in
fixing a rate of 67 cents an hour, the contracts did in fact set
the actual regular rate at which the workers were employed. The
case is no authority, however, for the proposition that the regular
rate may be fixed by contract at a point completely unrelated to
the payments actually and normally received each week by the
The judgment of the court below is reversed with directions to
remand the case to the District Court for further proceedings
consistent with this opinion.
For opinion of MR. JUSTICE FRANKFURTER, concurring, see
p. 325 U. S. 433
and of MR. CHIEF JUSTICE STONE, dissenting, see post,
325 U. S.
52 Stat. 1060, 29 U.S.C. § 201 et seq.
At the time these contracts were made, the minimum wage for the
timber products industry had been fixed at 35 cents an hour in an
order issued by the Administrator.
This 59-cents an hour average is based upon a six-month study of
work actually done by the stackers, and there is no substantial
basis for assuming that it is incorrect, or that the average is
likely to vary appreciably in the future.