United States v. Townsley

Background

A Panama Canal employee who worked as an operator and master of a dredge was paid monthly and worked eight hours a day, six days a week. He sued after being denied extra pay for the sixth workday, relying on Section 23 of the March 28, 1934 law that set a 40-hour week and required overtime pay. The Court of Claims awarded overtime and the Supreme Court affirmed that judgment on January 15, 1945.

Reasoning

The central question was whether the law’s protection for overtime applies to employees who are paid by the month. The Court said yes: being paid monthly does not exclude a worker from the law that requires payment for hours over 40 each week. The Court rejected the idea that past administrative practice of not paying monthly workers could change what the law requires. The opinion also explained how to compute overtime for monthly-paid workers: convert monthly pay to an annual amount, divide by 52 to find weekly pay, then divide by five to get the daily rate and add one-half of that for overtime.

Real world impact

The decision lets monthly-paid Panama Canal workers recover time-and-a-half for the sixth day in weeks they worked it, and it gives agencies a clear formula to calculate overtime for month-paid employees. It also prevents agencies from relying on earlier unpaid practices to deny overtime that the law promises. The ruling applies to workers in trades covered by wage boards under the same law.

Dissents or concurrances

One Justice (Murphy) agreed with the outcome, while the Chief Justice and two other Justices (Jackson and Rutledge) dissented from the Court’s decision.