The opinion of the court was delivered by: John E. Miller, District Judge.
The defendants on June 23, 1954, filed their answer in which
they denied violating the Act. Thereafter, plaintiff served upon
defendants certain interrogatories and requests for admissions,
which in due time were answered by defendants.
Upon the issues thus joined the case was tried to the Court,
without a jury, on October 27, 1954, and at the conclusion of the
trial the Court, having considered the pleadings, ore tenus
testimony of the witnesses, interrogatories and request for
admissions and responses thereto, exhibits, and contentions of
the parties, orally announced its findings of fact and
conclusions of law, and in accordance therewith the Court now
makes and files herein its formal findings of fact and
conclusions of law, separately stated.
The plaintiff is the Secretary of Labor, United States
Department of Labor. The individual defendants are citizens and
residents of the Western District of Arkansas, El Dorado
Division, and are doing business as a partnership under the name
of J.W. Reynolds Lumber Company.
Prior to 1954, Investigators of the Wage and Hour Division of
the Department of Labor had investigated defendants' business
several times. On at least one of these occasions it was
discovered that defendants were not in full compliance with the
Fair Labor Standards Act, and defendants were required to make
additional payments to some of their employees, apparently for
unpaid overtime compensation. However, in each of these
investigations defendants cooperated fully with the Investigators
and made an honest effort to meet the requirements of the Act.
In fact, defendants were so desirous of complying with the Act
that they employed John F. Stroud, a former Investigator of the
Wage and Hour Division, to check their books periodically and
assist them in complying with the Act. Mr. Stroud first began
working for defendants in July of 1950, and at that time he
ascertained that defendants' books were apparently being kept
properly, but noticed that certain employees were turning in the
same number of hours each week.
Due to the nature of the work, it was not feasible for the
defendants' supervisory personnel to keep an accurate record of
the number of hours worked each week by each employee, and
beginning in July, 1950, certain employees were given individual
time cards upon which they were to record the number of hours
they worked each day and each week. Most of these employees had
been working for defendants for a number of years, and were
trusted with the keeping of their own hours. At the time the
cards were given to the employees Stroud instructed them to keep
an accurate record of the actual number of hours they worked each
week, and J.L. Toland, defendants' bookkeeper and office manager,
typed the following notation upon the backs of the employees'
first time cards:
"In line with your talk to Mr. Stroud in regard to
your working hours, please fill in the exact number
of hours you have worked and at the end of each pay
period please turn in your time card and pick up a
new card for the next period. J.L. Toland."
Subsequent to that time, and up until April of 1954, Stroud,
Toland and N.B. Rutledge, Manager of the Company, each instructed
the employees from time to time that they should keep an accurate
record of the actual number of hours worked each week. However,
some of the employees did not keep an accurate record of the
number of hours they worked, but instead recorded the same number
of hours every week or every two weeks. There were two reasons
for the employees' failure to keep accurate records of the number
of hours worked.
First, they thought it was unnecessary and was too much trouble,
and second, they wanted to be assured of the same amount of pay
each pay period, even though some weeks they might not work the
required number of hours they thought necessary to entitle them
to receive the same amount of pay for each pay period.
In January and February of 1954, Charles F. Routon, Jr., an
Investigator of the Wage and Hour Division, made an investigation
of defendants' business. He discovered that several of the
employees were not recording the actual number of hours they
worked each week, and also learned that one of the persons
defendants had classified as an executive or administrative
employee did not meet the necessary requirements for such an
exemption. As a result of this investigation, and the fact that
prior investigations of defendants' business had revealed ...