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(c) Any such compromise

in the absence of fraud or duress, shall, according to the terms thereof, be a complete satisfaction of such cause of action and a complete bar to any action based on such cause of action.

(d) The provisions of this section shall also be applicable to any compromise

heretofore so made or given. (e) As used in this section, the term "compromise" includes “adjustment”, "settlement", and "release”. The foregoing provisions authorize compromise only of those causes of action accruing prior to May 14, 1947, and of actions thereon; the statute does not change existing law as to compromise of such claims, with respect to any cause of action accruing 64 after the date of enactment of the act.65. Subject to the conditions discussed below in paragraph (b), this statutory authorization of compromises extends to the following:

(1) All or any part of any cause of action accruing prior to May 14, 1947.

(2) All or any part of any action to enforce cause of action included in (1), above, whether such action was instituted before, on, or after May 14, 1947.

(3) Any compromise made prior to May 14, 1947, which comes within the terms of section 3 of the Portal-to-Portal Act. (b) The compromise of existing claims just described is permitted, if, and only if, all of the following conditions are fulfilled in each

(1) Existence of a bona fide dispute as to the amount payable by an employer to employee.

(2) Absence of fraud and duress.

(3) The compromise sum for straight-time hours worked must be based on an hourly wage rate not less than the minimum rate per hour prescribed by the Fair Labor Standards Act or by a wage order issued thereunder, which is at present 40 cents (except in certain industries in Puerto Rico and the Virgin Islands).

(4) The compromise sum for overtime hours worked must be based on a rate not less than one and one-half times the minimum hourly wage rate prescribed by the Fair Labor Standards Act or by a wage order issued thereunder, which at the present means at least 142 by 40, or 60 cents for each overtime hour (except in cer

tain industries in Puerto Rico and the Virgin Islands). (c) As pointed out in paragraph (b) (4) of this section, the sums paid in compromise of overtime claims may be based, as a minimum,

case:

Prior to the Portal Act, it was settled ha claims of employees for minimum and overtime wages under the Fair Labor Standards Act could not be compromised because of disputes as to coverage of the act. Schulte Co. v. Gangi, 328 W. S. 108.

bun For the meaning of "accruing" see sec. 790.21 (b) of this bulletin. The legislative history indicates that the omission of a provision for compromises or settlement of claims arising after enactment of the statute constitutes a recognition by the Congress of the danger, emphasized by the Supreme Court, that such a provision would lead to a breakdown of the labor standards established in the Fair Labor Standards Act. See Senator Donnell's statement, 1947 Cong. Rec. 2192.

as Conference Report, p. 12.

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one one and one-half times the 40-cent minimum hourly wage. Thus, an employee whose regular hourly rate is 50 cents and who, accordingly, has a right to overtime at 75 cents per hour may compromise an existing claim, as authorized by section 3, for 60 cents an overtime hour, but not for less. 66 Permitting compromises of certain existing claims as specified does not, of course, alter the general requirement of section 7 of the Fair Labor Standards Act that overtime compensation under the act must be paid at a rate not less than one and onehalf times the regular rate at which the employee is actually employed.

(d) A "bona fide dispute" which must exist before any compromise can be made, would seem to mean an honest disagreement between employer and employee. It follows that no compromise would be permitted where there is no actual dispute as to the facts or the applicable law, or where the exact amount of an employer's liability under the law is clear. The Portal Act does not permit an employee to merely release his undisputed right to straight-time or overtime wage payments.67

SECTION 790.28. WAIVER OF RIGHT TO LIQUIDATED DAMAGES (a) The general rule that an employee whose employer has failed to pay him the minimum or overtime wages required by the Fair Labor Standards Act is not permitted to waive his right under section 16 (b) of the Act to liquidated damages for withholding the compensation due,68 is modified by section 3 (b), (c), (d) of the Portal Act. Under these provisions, an employee may waive, in whole or in part, his right to liquidated damages with respect to activities performed before May 14, 1947. This permission is extended retrospectively to waivers of liquidated damages made by employees prior to May 14, 1947. Such waivers are made valid unless their invalidity was determined prior to that date by a final court judgment. It is provided that, in the absence of fraud or duress and according to the terms of the waiver, any waiver authorized by section 3 shall be a complete satisfaction of the employee's cause of action for the liquidated damages so waived and a complete bar to any action based on such cause of action.

(b) The general rule stated in paragraph (a) remains in effect in all situations where the liquidated damages are based on underpayments for activities performed on or after May 14, 1947. The Portal Act does not authorize the waiver by an employee of his right to such liquidated damages.

(c) It should be noted that an employee is not permitted to waive his right to the statutory minimum wages or to overtime payments at

69

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to See Conference Report, p. 11; statement of Senator Wiley explaining the conference agreement to the Senate, 1947 Cong. Rec. 4397; statement of Representative Gwynne, 1947 Cong. Rec. 4513.

67 Representative Walter, explaining the conference agreement to the House of Repre. sentatives, 1947 Cong. Rec. 4515, indicated that the phrase, "dispute as to the amount payable," would include disagreements as to matters of law such as whether employee's work is covered by the Fair Labor Standards Act or whether the employer is exempt, as well as disagreements as to matters of fact such as the number of hours worked or the wage rates paid. * See O'Neil v. Brooklyn Savings Bank, 324 U. S. 697.

Bu See conference Report, p. 12. As to discretion of courts in awarding liquidated damages in such a case, see sec. 790.22 of this bulletin.

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one and one-half times his regular hourly rate. For example, an
employee covered by the Fair Labor Standards Act who had been paid
only 30 cents per hour for work performed in 1947 to May 14, and
who did not work more than 40 hours in any workweek, has a valid
claim for 10 cents for each hour worked plus liquidated damages in an
equal amount." He is permitted to waive only his right to liquidated
damages. Similarly, an employee who worked 48 hours a week prior
to May 14, 1947 and was paid only 80 cents an hour has a valid claim
for an additional 40 cents for each hour worked after 40 in the work-
week, which he is not permitted to waive, although he may waive all
or part of the equal amount to which he may be entitled as liquidated
damages.

(d) No waiver by an employee of his right to recover attorney's
fees and court costs in an action under section 16 (b) of the Fair Labor
Standards Act is authorized by section 3.

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SECTION 790.29. “AREA OF PRODUCTION” EXEMPTION PRIOR TO

DECEMBER 26, 1946
(a) As explained in the conference report on the bill, section 12 of
the Portal Act relieves employers from liability and punishment for
failure to pay employees minimum wages or overtime compensation as
prescribed in the Fair Labor Standards Act for or on account of any
activity (within the scope of one of the area of production" exemp-
tions) 12 engaged in by their employees prior to December 26, 1946,75 if
such employer can show that he
(1) was relieved from such liability or punishment by reason of a valid defini-
tion of “area of production" by the Administrator applicable at the time of the
performance of the activity, or (2) would have been so relieved by reason of an
invalid definition applicable at the time of the performance if such definition had
been valid, or (3) would have been so relieved if the definition finally made by
the Administrator on December 18, 1946, and published in the Federal Register on
December 25, 1946, had been in force on and after the effective date of the sec-
tions of such act of 1938 providing for minimum wages and overtime compen-
sation,74
The conference report points out also that the protection to the em-
ployer under the foregoing provisions for acts or omissions up to De-
cember 26, 1946, will exist even though hereafter the regulation of
December 1946 is held invalid.

(b) It should be noted, however, that the provisions of section 12
do not relieve employers from liability or punishment under the Fair
Labor Standards Act for acts or omissions with respect to any of the
following activities engaged in by their employees:

(1) Activities engaged in on and after December 26, 19-46.5

LT

19 As to compromise of such claims arising out of activities performed before May 14,
1947, see sec. 790.27 of this bulletin.

71 The recovery of this amount as liquidated damages is made subject to the sound dis-
cretion of the courts under certain conditions. See the discussion of sec. 11 of the Portal
Act in sec. 790.22 of this bulletin.

12 These exemptions are contained in secs. 7 (c) and 13 (a) (10) of the Fair Labor
Standards Act.
13 See Addison v. Holly Hill Fruit Products, Inc., 322 U. 8. 607.
74 Conference Report, p. 17.

73 As to activities performed on or after December 26, 1946, and prior to March 1, 1947,
see sec. 790.18(f) of this bulletin.

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(2) Activities engaged in during the period from October 24, 1938, through December 25, 1946, by employees who were not employed within the “area of production" as defined in either (i) any regulation of the Administrator (valid or invalid) which was applicable at the time they were performed, or (ii) the currently effective regulation issued December 25, 1946.78

(3) Activities other than those for which section 13 (a) (10) or the relevant portion of section 7 (c) provides an exemption, even though performed by employees employed within the "area of

production” as defined in such a regulation.All these latter activities remain subject to the applicable provisions of the Fair Labor Standards Act of 1938, as amended, and to current and subsequent regulations of the Administrator, to the same extent as they would have been had section 12 of the Portal-to-Portal Act not been enacted. Other sections of the Portal-to-Portal Act may, of course, be applicable in appropriate situations.

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