Free Proposed Findings of Uncontroverted Fact - District Court of Federal Claims - federal

Case 1:05-cv-01043-VJW

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No. 05-1043C (JUDGE WOLSKI)

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

JORGE A. DELPIN APONTE, ET AL., Plaintiff, v. THE UNITED STATES, Defendant.

DEFENDANT'S PROPOSED FINDINGS OF UNCONTROVERTED FACT

PETER D. KEISLER Assistant Attorney General DAVID M. COHEN Director

MARK A. MELNICK Assistant Director

Of Counsel: NICOLE WYNN Attorney Law Department United States Postal Service 475 L'Enfant Plaza, SW Washington, D.C. 20260

JEFFREY S. PEASE Trial Attorney Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Tel: (202) 307-0292 Fax: (202) 514-8624 Attorneys for Defendant

August 10, 2006

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS JORGE A. DELPIN APONTE, ET AL. Plaintiffs, v. THE UNITED STATES, Defendant ) ) ) ) ) ) ) ) )

No. 05-1043C (Judge Wolski)

DEFENDANT'S PROPOSED FINDINGS OF UNCONTROVERTED FACT 1. Plaintiffs are current or former United States Postal Service employees in the

Commonwealth of Puerto Rico, which is within the Postal Service's Caribbean District. See Complaint at ¶¶ 4, 5; Defendant's Exhibit 3, Affidavit of Jo Ann Mitchell at ¶ 9. 2. Postal Service employees entitled to a TCOLA work in Alaska, Hawaii, the

Commonwealth of Puerto Rico, the Commonwealth of Northern Mariana Islands, the territory of Guam, and the United States Virgin Islands. Aff. at ¶ 9. The Postal Service pays a territorial cost of living allowance ("TCOLA") in the same manner to its employees in Alaska, Hawaii, the Commonwealth of Puerto Rico, the Commonwealth of Northern Mariana Islands, the territory of Guam, and the United States Virgin Islands. Aff. at ¶¶ 9, 17, 18. 3. The Postal Service calculates and pays TCOLA as a percentage of an employee's

pay for their basic work week, up to 40 hours in a week (or 48 hours in a week for rural carriers working a 6-day basic work week). Aff. at ¶ 9; Def. Ex. 5, Postal Service Employee & Labor Relations Manual ("ELM") § 439.12. 4. The Postal Service includes TCOLA payments in its calculations of employees'

"regular rate" for purposes of determining the Postal Service's obligations under the FLSA. Aff. at ¶ 8; Def. Ex. 5.

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5.

In July 1992, although the Postal Service did not agree with the McQuigg

decision, it complied with the decision by implementing a new formula applicable to all of its TCOLA-entitled employees, including employees in Puerto Rico, part of the Postal Service's Caribbean district. Aff. at ¶¶ 9, 17, 18; Def. Ex. 4. 6. The Postal Service decided to implement the decision for all of its TCOLA-

entitled employees to avoid duplicate litigation, such as the instant case. Aff. at ¶ 18. 7. The revised overtime formula accords all TCOLA-entitled employees an extra

"TCOLA premium" to compensate for what the Ninth Circuit determined was impermissible "proration." Aff. at ¶ 17. 8. For the purposes of the mathematical formulas in these proposed findings of

uncontroverted fact, we define "base rate" as the standard hourly wage paid to an employee before adding any night differentials, bonuses, premiums, or TCOLA. See Def. Ex. 5, ELM § 432.21; 5 C.F.R. § 591.201 (defining "rate of basic pay"); 5 C.F.R. § 551.512(b) (defining "straight time rate of pay"). For example, an employee working full-time for an annual salary of $20,800 would have a base rate of $10 per hour based upon 52 40-hour workweeks. 9. "TCOLA" as used in these formulas is the amount of territorial cost of living

adjustment calculated and paid to an employee, pursuant to statute, in a standard 40-hour work week. See 5 C.F.R. § 591.238(a). Because only the treatment of TCOLA is at issue in this action, we are able to simplify our examples by assuming no other pay modifiers, such as differentials, bonuses, and other premium pay required under applicable collective bargaining agreements. 10. Under the Postal Service's collective bargaining agreements with its unions, the

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agency must in certain circumstances pay certain differential and premium pay which exceed the requirements of the FLSA (e.g., night differential, Sunday premium, holiday-worked pay, double overtime). Some of these additional payments, such as night differential and Sunday premium, are also included in the calculation of the regular rate. Aff. at ¶¶ 7, 8; Def. Ex. 5, ELM § 434. Other payments, though paid under collective bargaining agreements, are statutorily excluded from inclusion in computing the FLSA regular rate and are creditable toward the agency's FLSA premium liability. See 29 U.S.C. §§ 207(e)(5), 207(h)(2). 11. We define "regular rate," as it is defined by statute, to mean the average hourly

rate paid during an overtime week used to calculate the FLSA premium. The regular rate includes "all remuneration for employment" (excluding certain specified payments, such as overtime premiums, but including TCOLA). 29 U.S.C. § 207(e); 29 C.F.R. § 778.109; see also 5 C.F.R. § 591.239(a) (including cost-of-living adjustments in the computation of regular rate of pay). 12. Under its pre-McQuigg method of calculation, the Postal Service first computed

the total remuneration for the week. Total remuneration was computed by adding together the pay, at the base rate, for all hours that an employee works in a workweek, including those over 40, plus the amount of TCOLA earned for the first 40 hours of the work week (and certain other differentials, bonuses, and other non-overtime premium pay, which are not material to this case). Aff. at ¶¶ 6-8, 16. 13. The Postal Service next computed the employee's regular rate by dividing total

remuneration by the total number of hours worked. Aff. at ¶ 10. 14. Additional premium pay due for the overtime hours under the FLSA was

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calculated by multiplying the regular rate by one-half, and multiplying that product by the number of hours worked over 40. Aff. at ¶ 11. Thus, the employee's pre-McQuigg total pay for the work week was the sum of the base rate of pay for all hours worked, the TCOLA payable for up to the first 40 hours, and the calculated overtime premium pay for the hours worked over 40. 15. Because the McQuigg decision required the Postal Service to pay a TCOLA in its

entirety for the first 40 hours worked, and not to apply any portion of a TCOLA to satisfy its FLSA overtime pay requirements, the Postal Service revised its overtime calculation in July 1992 to also add an additional premium payment based upon the TCOLA. See Aff. at ¶ 17. This "TCOLA premium" is calculated by dividing the total TCOLA paid by the total number of hours worked, to reach an hourly TCOLA rate of pay (averaged over the entire work week). Aff. at ¶ 12. The hourly TCOLA rate of pay is then multiplied by the total number of hours worked above 40, and the product is added to an employee's pay to reach the total amount of postMcQuigg compensation. Aff. at ¶¶ 12-13. 16. To illustrate numerically, we will assume that base rate is $10, TCOLA is $100

per 40-hour work week (or 25 percent of base pay), and total hours worked is 50, which includes 10 hours of overtime. The regular rate would be calculated as ((Base rate x total hours) + TCOLA) ÷ total hours worked: (($10 x 50) + $100) ÷ 50 = $12. 17. Prior to July 1992, the Postal Service paid its TCOLA-entitled employees

according to the following pre-McQuigg formula: (Base rate x total hours) + TCOLA + (Regular rate x overtime hours x 0.5), ($10 x 50) + $100 + ($12 x 10 x 0.5) = $660, which is mathematically equivalent to:

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(Regular rate x 40 hours) + (Regular rate x overtime hours x 1.5), ($12 x 40) + ($12 x 10 x 1.5) = $660. See Aff. at ¶¶ 8-16. 18. As a result of the McQuigg decision, the Postal Service changed its pay

calculations to add the "TCOLA premium" for its TCOLA-entitled employees uniformly across the organization, even though McQuigg was binding with respect to Postal Service employees working within the jurisdiction of the Ninth Circuit (i.e., Alaska, Hawaii, Guam, and the Commonwealth of Northern Mariana Islands). Aff. at ¶¶ 16-18. 19. Since July 1992, the Postal Service pays its TCOLA-entitled employees

according to the following post-McQuigg formula: (Base rate x total hours) + TCOLA + (Regular rate x overtime hours x 0.5) + ([TCOLA ÷ total hours] x overtime hours) (the TCOLA premium), ($10 x 50) + $100 + ($12 x 10 x 0.5) + ([$100 ÷ 50] x 10) = $680, which is mathematically equivalent to: (Regular rate x 40 hours) + (Regular rate x overtime hours x 1.5) + ([TCOLA ÷ total hours] x overtime hours) (the TCOLA premium), ($12 x 40) + ($12 x 10 x 1.5) + ([$100 ÷ 50] x 10) = $680; and is also mathematically equivalent to the formula proffered by the McQuigg plaintiffs: (Base rate x 40 hours) + TCOLA + (Regular rate x overtime hours x 1.5), ($10 x 40) + $100 + ($12 x 10 x 1.5) = $680. See Aff. at ¶¶ 8-16; Ex. 1. 20. The post-McQuigg formula is applied to plaintiffs, and to the other Postal Service

employees in the agency's Caribbean District, which includes Puerto Rico. Aff. at ¶¶ 16-18.

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Respectfully submitted, PETER D. KEISLER Assistant Attorney General DAVID M. COHEN Director s/ Mark A. Melnick MARK A. MELNICK Assistant Director s/ Jeffrey S. Pease JEFFREY S. PEASE Trial Attorney Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Tel: (202) 307-0292 Fax: (202) 514-8624 Attorneys for Defendant

Of Counsel: NICOLE WYNN Attorney Law Department United States Postal Service 475 L'Enfant Plaza, SW Washington, D.C. 20260

August 10, 2006

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CERTIFICATE OF FILING I hereby certify that on this 10th day of August, 2006, a copy of the foregoing "DEFENDANT'S PROPOSED FINDINGS OF UNCONTROVERTED FACT" was filed electronically. I understand that notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system.

s/ Jeffrey S. Pease