LABOR AGREEMENTS ‑- OPENING FOR RENEGOTIATION DURING EFFECTIVE PERIOD ‑- DEFINITION OF "MONTHLY WAGES" AS CONTEMPLATING OR NOT OVERTIME PAY FOR SPECIFIC HOLIDAYS AND CONTRIBUTIONS BY EMPLOYER TO HEALTH AND WELFARE FUND.
Where labor agreement can be opened for renegotiation and review of "monthly wages," subject of overtime pay for specific holidays is open to equal consideration, but subject of employer contributions to health and welfare fund is not; former being included within meaning of "monthly wages" and latter being excluded.
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September 13, 1954
Washington Toll Bridge Authority
Olympia, Washington Cite as: AGO 53-55 No. 315
Attention: !ttMr. F. J. McDowell, Manager
Washington State Ferries
Pursuant to your oral request, we offer herein our interpretation of Rule 25 of the labor agreement executed March 19, 1953, between the Washington Toll Bridge Authority and the Inland Boatmen's Union of the Pacific.
In our opinion, overtime and vacation pay are included with the term "monthly wages" as used in Rule 25; but health and welfare contributions are not included.
A labor dispute has arisen between the Inland Boatmen's Union of the Pacific and the Washington State Ferries, a subdivision of the Washington Toll Bridge Authority. Several issues are involved, and a question has arisen whether or [[Orig. Op. Page 2]] not all the issues are properly justiciable before the Marine Employee Commission. Both by agreement and by statute, this commission has jurisdiction to adjudicate labor disputes between the parties. See Rule 13 and RCW 47.64.030. The question is, therefore, not one of jurisdiction, but rather it is whether, by agreement, the parties have precluded any review of certain questions during the term of this agreement.
Under Rule 25, the term of the agreement is fixed and each party is granted the right to reopen the agreement, upon certain conditions, for a review of "monthly wages." The exact question is: When the agreement is reopened pursuant to this rule, may overtime pay for specific holidays worked, and increased contributions to the health and welfare fund be arbitrated as a part of "monthly wages"?
The guiding principle in construing labor contracts is the intent of the parties as expressed in the agreement. Brampton Woolen Co. v. Local Union 112, 61 A. (2d) 796; Smart v. Hernandez, 66 A. (2d) 643. Where the terms used are not self-explanatory nor defined in the agreement, it must be assumed that they were intended to be used in their common or ordinary sense. To aid in identifying this meaning, resort should be had to establish legal principles and available judicial authority. This agreement does not define the term "monthly wages." However, in Rule 16, the schedule of monthly wages is set forth. In the same schedule, the overtime rate, on an hourly basis, has been calculated to correspond to each monthly salary. This is some indication that overtime pay was intended to be calculated from and incidental to, monthly wages. On the other hand, overtime pay is separately covered and more elaborately defined in Rule 19. Nowhere in the agreement is there any reference to the payment of overtime rate for work performed on holidays.
The new element involving overtime pay for holiday work does not affect the hourlyrate of pay, but goes only to the question of when an agreed hourly rate shall go into effect. It does not affect themonthly wages, in the sense that this term contemplates a basic rate of pay per month worked. It will, however, affect the total compensation the employee will receive for a given work period. Since the agreement itself is ambiguous as to whether this is sufficient to render the matter arbitrable, it is necessary to consider the legal authorities on the question.
The term "wages" is generally defined as every form of remuneration paid an employee for personal service or labor which has a direct relation to the [[Orig. Op. Page 3]] amount of work done, or the time applied to the job. It is distinguishable from several other forms of benefits which employees receive because of the merefact of employment; e.g., health and medical protection, etc. SeeSwain v. Kirkpatrick Lumber Co., 78 So. 140;State v. Minneapolis, 219 N.W. 924. The term is defined in Ernst v. Industrial Commission, 16 N.W. (2d) 867, as follows:
"Wages means every form of remuneration payable for a given period to an individual for personal services, including salaries, commissions, vacation pay, dismissal wages, bonuses, and the reasonable value of board, rent, housing, lodging, payments in kind, tips, and any other similar advantage received from the individual's employer or directly with respect to work done for him."
The only case we have found directly on the question of what is arbitrable under the term "wages" is Brampton Woolen Co. v. Local Union 112, 61 A. (2d) 796. In holding that vacation pay could be arbitrated as a form of "wages," the court said:
"We have no hesitation in saying under the agreement before us that vacation pay is includable in the term 'wages' and therefore arbitrable. We believe that ordinary men in the position of these individual defendants would have thought of vacation pay as part of their pay or wages and no reason appears why the same meaning would not have been equally plain to their employer."
The authorities seem to indicate that the term "wages" is interpreted in its most liberal sense. The fact that it is modified by the word "monthly" indicates only the time basis upon which the wages are paid, unless the substance of the agreement compels some other construction. The only thing in this agreement which indicates an intent to apply a different construction is the separate treatment of overtime pay in Rule 19. A careful analysis of Rule 19 indicates that it is a definition of the overtime formula only. It has nothing to do with the conditions under which the overtime rate will be paid. This new element, now sought to be injected into the contract, would, if accepted, affect the employees' [[Orig. Op. Page 4]] total remuneration for any given month in which a holiday was worked. This effect has a direct relation to the amount of work done. It falls within the definition of the term "wages" as expressed in theErnst case, supra. Therefore, following the philosophy of the Brampton Woolen Co. case, supra, we must conclude that this issue is arbitrable under the agreement as a part of "monthly wages."
With respect to contributions to health and welfare plans, the current rule is that such contributions are not considered "wages." The Wage and Hour Division ruled, in February, 1946, that contributions to an employees' health and welfare fund need not be reflected in overtime rate of pay. This ruling was based upon R-1743 of the Wage and Hour Administrator, p. 50:519, that such contributions need not affect the employee's regular rate of pay on which overtime is computed. See WHM [[Wage and Hour Manual]](1949 ed.) 50:599, "Employee Benefit Payments: Effect on Overtime." The regular rate of pay is that remuneration denominated as the basic wage and is within the definition of the general term "wages." It follows that if health and welfare contributions are not considered "wages," any issue involving such contributions would not be arbitrable under a review pursuant to Rule 25 of the agreement here in question.
We conclude, therefore, that the term "monthly wages," as used in Rule 25, includes the issue of overtime pay for specific holidays, but does not include increases or other changes in employer contributions to health and welfare plans. In our opinion, the issues before the Marine Employee Commission should be limited accordingly.
Very truly yours,
RALPH M. DAVIS
Assistant Attorney General