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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Diaz v. Silver Bay Logging, Inc (9/27/2002) sp-5635

Diaz v. Silver Bay Logging, Inc (9/27/2002) sp-5635

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA

GLOBEN A. DIAZ, for Himself        )
and on Behalf of All Others        )    Supreme Court No. S-10023
Similarly Situated,                )
                              )    Superior Court No.
               Appellant,          )    1JU-98-1521 CI
                              )
     v.                       )
                              )    O P I N I O N
SILVER BAY LOGGING, INC.,     )
                              )
               Appellee.       )     [No. 5635  -  September  27,
2002]
                              )


          Appeal  from the Superior Court of the  State
          of  Alaska, First Judicial District,  Juneau,
          Larry R. Weeks, Judge.

          Appearances:  Laurel K. Tatsuda,  Law  Office
          of   Laurel   K.   Tatsuda,  Anchorage,   for
          Appellant.   Robert  K.  Reges,  Jr.,  Ruddy,
          Bradley,  Kolkhorst  &  Reges,  Juneau,   for
          Appellee.

          Before:    Fabe,  Chief  Justice,   Matthews,
          Eastaugh,  and Bryner, Justices.  [Carpeneti,
          Justice, not participating.]

          MATTHEWS, Justice.
          FABE,  Chief Justice, with whom BRYNER, Justice, joins,
dissenting.

          The  main question in this case is whether a regulation

prohibiting  an  employer from deducting the costs  of  food  and

lodging  from an employees pay applies to all such deductions  or

only  those that reduce the employees pay below the minimum wage.

We  conclude that the latter meaning applies because the language

of the regulation will not reasonably support the former meaning.

          The  regulation  in  question is 8  AAC  15.160  as  it

existed  until 1998.  It was promulgated under section  23.10.085

of  the  Alaska Wage and Hour Act (AWHA) and became effective  on

September  28, 1985.  We set out in the margin the  text  of  the

relevant subsections of the regulation, 8 AAC 15.160(a) and (d),1

and  the  statutory section which authorized the  regulation,  AS

23.10.085.2

          Globen  Diaz worked as a logger for Silver Bay Logging,

Inc., during the logging seasons of 1994 through 1997.  While  so

employed  he stayed at Silver Bays remote camps.  Pursuant  to  a

written  agreement, Silver Bay deducted from his earnings  $10  a

day  for  board and lodging.  This deduction did not  reduce  his

wage  rate  below  the  statutory minimum wage.   No  alternative

public  board and lodging facilities were accessible to  Diaz  at

any of the camps.

          Diaz brought this action against Silver Bay on his  own

behalf  and  as  a  class  representative  for  others  similarly

situated claiming, among other things, that the board and lodging

deductions  were unlawful under 8 AAC 15.160.  Silver  Bay  moved

for  summary judgment.  After several rounds of briefing and oral

argument,  summary judgment was granted and a final judgment  was

entered.

          Diazs  main contention was and is that 8 AAC  15.160(d)

prohibits  deductions  for  board and  lodging  except  where  an

employee  opts out of alternative board and lodging, an exception

not  applicable to his case as alternative board and lodging  was

never  available.  In the superior court Silver  Bay  took  issue

with  this interpretation and argued that subsection .160(d) does

not apply to deductions that do not reduce an employees wage rate

below  the  minimum  wage.   The  superior  court  took  a  third

position.   The  court  ruled  that subsection  (d)(1)  states  a

requirement that is additional to those of subsections (d)(2) and

(d)(3) and that it only applies where alternative facilities  are

available.   When alternative facilities are not  available  only

subsection  (d)(2)  and  (d)(3) must be  satisfied.   The  courts

          ruling implies that subsection (d) applies to cases where the

deduction  does not reduce compensation to a wage rate below  the

statutory minimum.

          For the reasons that follow we conclude that subsection

(d)  does  not bar deductions that are permitted under subsection

(a).   Instead,  subsection  (d) permits,  under  the  limits  it

expresses,   deductions  that  would  otherwise  be   barred   by

subsection (a).  We thus agree with the position taken by  Silver

Bay  before the superior court that subsection (d) does not apply

to  deductions that do not reduce an employees wage rate to below

the minimum wage.3

          The  prefatory language of subsection (d)   nothing  in

(a)  of  this  section  prohibits  can only  function  to  permit

conduct  that subsection (a) would otherwise prohibit, it  cannot

prohibit  conduct  that subsection (a) permits.   Subsection  (a)

prohibits written deductions that have the effect of reducing  an

employees  wage rate below the statutory minimum . .  .  .   Thus

subsection (d) can permit deductions that would take a wage  rate

below  the  minimum  because those deductions are  prohibited  by

subsection (a).  But it cannot serve to prohibit deductions  that

do  not  reduce wages below the minimum, because such  deductions

are permitted by subsection (a).

          Meaning,  of  course,  can be conveyed  by  a  negative

implication.   But the negative implication that might  otherwise

be  drawn by a failure to satisfy one of the three conditions  of

subsection  (d) is limited by the nothing in (a) of this  section

prohibits  prefatory language of subsection (d).  The failure  to

meet  one  of  the  (d)  conditions  implies  only  that  conduct

prohibited by subsection (a) is indeed prohibited.4

          If  the  prefatory  language  to  subsection  (d)  were

Notwithstanding (a), deductions are prohibited unless, (1) . .  .

(2)  .  .  . (3) the interpretation Diaz offers would be correct.

But  those  are not the words used, and the words that  are  used

will not, in our view, reasonably bear Diazs offered meaning.5

          The Alaska Department of Law has interpreted subsection

.160(d) as we do.  The attorney general, in a memorandum  to  the

Department of Labor dated April 23, 1986, concerning the  meaning

of subsection .160(d), stated:

          Thus,  if the conditions in paragraphs  (1)--
          (3)  [of  .160(d)]  are met  (i.e.,  for  our
          purposes,  the employee is not  at  a  remote
          site)  nothing in (a) prohibits  a  deduction
          for  room  and board.  Although one inference
          that might be drawn from this is that if (1)-
          -(3)  are not met, (a) would prohibit such  a
          deduction, a reading of (a) does not  support
          this  conclusion.  . . .  When  (d)  is  read
          together  with subsection (a),  it  seems  to
          provide  that if the conditions in paragraphs
          (d)(1)--(3) are met, a written agreement  for
          deductions  is  valid even  though  it  would
          reduce  the  employees wage  rate  below  the
          minimum.  There is nothing else in subsection
          (a)  that would appear to limit the employers
          ability to deduct the cost of room and  board
          from   an   employees  wages.    Nowhere   in
          subsections  (a)  or  (d)  is  the  situation
          explicitly   addressed  regarding  deductions
          when the conditions listed in (d)(1)--(3) are
          not  present  (for example, when  alternative
          facilities    are   not   accessible),    and
          therefore,  the  general prohibition  in  (a)
          against agreements for deductions that reduce
          the  employees wage rate below the  statutory
          minimum  is the only limitation on deductions
          in  that situation.  Stated simply, if  there
          are alternative facilities available, and the
          employee   declines   to   use   them,   then
          deductions   for  the  cost   of   facilities
          furnished  by the employer are allowed,  even
          though  they have the effect of reducing  the
          employees  wage  below  a  minimum  wage;  if
          alternative  facilities  are  not  available,
          then  the exception in subsection (d) to  the
          limitations  of  (a)  does  not  apply,   and
          deductions  for facilities furnished  by  the
          employer  may not reduce the employees  wages
          below   the  statutory  minimum.   In  short,
          nothing  in 8 AAC 15.160 prohibits deductions
          for room and board in a remote-site situation
          if the deductions do not take the wages below
          the  statutory  minimum.  .  .  .   (Footnote
          omitted.)
          
          Diaz  argues that his interpretation of 8 AAC 15.160(a)

and  (d) reflects the longstanding and consistent position of the

Alaska  Department  of  Labor.  Diaz argues  that  his,  and  the

Department of Labors, position is therefore entitled to deference

in  accordance with the well-settled rule that courts are to give

deference  to an agencys construction of its own legislative-type

regulations . . . .

          It  appears  that  the Department of  Labor  interprets

subsection  .160(d) in accordance with Diazs  position.   Counsel

for  Diaz wrote the department in 1998, asking about the  meaning

of  subsection  .160(d).  J. R. Carr, Chief of  Labor  Standards,

responded  that subsection (d) applies regardless  of  whether  a

deduction  reduces  the  wages below the statutory  minimum  wage

.  .  .  .   And  there are internal memoranda and correspondence

dating back to 1986, which suggest that this was the position  of

the  department.  In addition, Diaz has gathered  affidavits  and

deposition  testimony  of officials of the  Department  of  Labor

indicating  that  subsection (d) was, from the outset,  meant  to

apply  to deductions that did not reduce wages below the  minimum

wage.   On  the  other hand the testimonial evidence  as  to  the

departments original interpretation of subsection .160(d)  is  in

conflict.   Donald  Wilson,  who  as  Deputy  Director  of  Labor

Standards in the Department of Labor drafted subsection  .160(d),

testified  that it did not bar a deduction that does  not  reduce

the employees wage below the statutory minimum.

          Given the 1986 opinion of the attorney general and  the

conflicting  testimonial evidence of labor department  officials,

the deference due the Department of Labors current interpretation

of  subsection (d) is debatable,6 but, in context, the  point  is

unimportant.  Our rule is that an agencys interpretation  of  its

own  regulation is normally given effect unless plainly erroneous

or  inconsistent  with  the regulation.7   Here  the  departments

interpretation  does  not  satisfy the conditions  of  this  rule

because, as we have explained above, it is inconsistent with  the

language of the regulation and, as such, it is unreasonable.

          Diaz  also  argues that the board and lodging deduction

violated the second sentence of 8 AAC 15.160(a) because Diaz  was

required  to  give  up . . . the compensation to  which  [he]  is

entitled.   The  superior court ruled that  a  written  agreement

between  an  employee  and employer made  before  the  employment

relationship  commenced would not fall within the prohibition  of

this sentence:

          The terms of 8 AAC 15.160(a) apply only where
          the    employer/employee   relationship   has
          commenced.  Prior to accepting and commencing
          employment  with [Silver Bay], Diaz  was  not
          entitled to any remuneration because  he  was
          not  yet an employee of [Silver Bay] and  had
          not performed any services for them.
          
This rationale is correct.  The concept of entitlement must refer

to  an  employees contractual or statutory and regulatory rights.

In  this case contracts between Silver Bay and Diaz entered  into

at the outset of each season provided for a $10 lodging and board

deduction.  No statutory or regulatory provision prohibited  this

deduction.   Thus Diaz was not required to give up  any  part  of

compensation to which he was entitled.

          Diaz  also  argues that the superior court  should  not

have  granted summary judgment concerning claims he asserted  for

unpaid overtime compensation and under-reporting of his wages  to

the   Internal   Revenue   Service  and   the   Social   Security

Administration.   His argument concerning these  claims  is  that

Silver  Bay should have added the $10 (divided by 8 for an 8-hour

day)   to  his  stipulated  hourly  pay  rate  for  purposes   of

calculating  his overtime rate of pay and reported it  as  income

for  purposes of tax withholding.  The superior court  determined

that  these claims lacked merit because the furnishing  of  board

and lodging was not a benefit furnished by Silver Bay as part  of

Diazs  compensation package:  Because the court  finds  that  the

deduction  for room and board does not constitute a  wage,  Diazs

claims  for underreporting of income, failure to withhold  income

and  failure  to  pay  taxes  on the unreported  income  are  all

precluded  as a matter of law.  This conclusion is also  correct.

Diaz  was not paid $10 or its equivalent in food and lodging,  he

was  charged  $10.8  To the extent that the charge reflected  the

value of what he received, this was not an employee benefit.   He

does not contend that the value of the board and lodging exceeded

$10 per day.9

          Diaz  also  argues that the courts award  of  $3500  in

attorneys fees was error.  Silver Bays actual attorneys fees were

$142,542.   The  norm under Civil Rule 82 in a  summary  judgment

case  would  be  to  award twenty percent of  actual  fees   here

$28,508  to Silver Bay as the prevailing party.10  Diaz correctly

notes  that absent a finding of bad faith a losing claimant under

the AWHA may not be subjected to an award of attorneys fees,11 and

that he litigated in good faith.

          The trial court adhered to this rule.  But two of Diazs

claims  were  not  covered by the AWHA.  These  were  claims  for

breach  of contract and for violation of AS 23.05.140(b).   Civil

Rule  82 applies to these claims.  The trial court ordered Silver

Bay  to  apportion  its fees between the AWHA and  these  claims.

Silver  Bay made an effort to do so but the trial court  did  not

accept Silver Bays calculations.  The court allocated most of the

work  performed  by Silver Bays counsel to the  AWHA  claims  and

attributed only a little less than 12 1/2% of the total effort to

the  other  claims.  Decisions such as this are  discretionary.12

The  courts allocation here was easily within the bounds  of  its

discretion.

          For these reasons the judgment of the superior court is

AFFIRMED.

FABE,   Chief   Justice,  with  whom  BRYNER,   Justice,   joins,

dissenting.

I.   INTRODUCTION

          Due to the remoteness of Silver Bays logging operations

and the fact that it frequently moved those operations during the

logging  season,  it was necessary for Silver Bay  to  house  its

employees on highly mobile, waterborne barges in order to conduct

its  business.   Thus, Silver Bays board and  lodging  facilities

were  indispensable  to  Silver Bays logging  business  and  were

furnished  primarily for Silver Bays convenience.  No alternative

public facilities were available to Diaz that were accessible  to

Silver  Bays  worksite, and it was not Diazs choice  to  live  at

Silver Bays facilities.  For these reasons, the cost of the board

and  lodging provided by Silver Bay cannot be deducted from Diazs

earnings.

          The  pluralitys  interpretation of 8 AAC  15.160(d)  to

allow  such  a  deduction flatly ignores the  federal  regulatory

definitions  and interpretations that have been  adopted  by  the

Alaska  Department  of Labor pursuant to its grant  of  authority

from  the  legislature.  And the pluralitys decision  affords  no

deference to the Departments longstanding interpretation  of  its

own regulation to prohibit board and lodging deductions where  no

alternative  public facilities are accessible  to  the  worksite.

Finally,  the pluralitys unique interpretation of the  regulatory

scheme  finds  no  support  in case law  from  any  jurisdiction,

federal or state.  This is because its interpretation would place

the Alaska Wage and Hours Act in direct conflict with the federal

Fair Labor Standards Act (FLSA) by allowing an employee to deduct

board  and  lodging  costs  from wages  under  circumstances  not

recognized  as reasonable under FLSA regulations.  We  have  held

that  the Alaska Act should be construed to avoid conflicts  with

the FLSA.1  And it is only where state law is more restrictive or

more  favorable to the employee that it governs in  lieu  of  the

federal Act.2 I therefore disagree with the plurality opinion.3

II.  THE   ALASKA   DEPARTMENT  OF  LABOR  HAS  ADOPTED   FEDERAL
     REGULATORY DEFINITIONS THAT PREVENT DEDUCTION OF SILVER BAYS
     LODGING AND BOARD FROM DIAZS PAY.
     
          The   Alaska   Legislature  has  granted   the   Alaska

Department of Labor broad discretionary power to formulate policy

consistent  with the Alaska Wage and Hours Act.4  Alaska  Statute

23.10.145  requires  us  to apply federal regulatory  definitions

where  terms  have not been defined by the Alaska  Department  of

Labor.5    The   legislature  has  left  it  to  the  Departments

discretion   whether   federal   definitions   can   be   applied

consistently with the Alaska Wage and Hours Act.6  The Department

has  used  this broad grant of discretionary authority  to  adopt

regulations requiring an employers lodging and board  charges  to

be  reasonable7  and  has  incorporated federal  regulations  and

interpretations to determine the reasonable cost of the employers

board  and lodging deductions.8  Under these federal regulations,

reasonable cost does not include the cost of furnishing board  or

lodging  found to be primarily for the benefit or convenience  of

the  employer.9   Thus,  under the Alaska  Department  of  Labors

regulations, an employer may deduct from an employees  wages  the

cost  of  employer-provided board and lodging facilities only  if

the  facilities  are furnished primarily for the benefit  of  the

employee.

          The  relevant  state  regulation, 8  AAC  15.160(d)(3),

provides  that the cost of employer-furnished board  and  lodging

must be reasonable:

          Nothing  in  (a)  of  this section  prohibits
          deductions from earnings, based on a  written
          agreement, to reimburse an employer  for  the
          reasonable  cost  of  furnishing  board   and
          lodging, if
          
          . . . .
     
               (3)   the  cost to the employer for  the
          use   of  the  employers  board  and  lodging
          facilities, is reasonable and without  profit
          to the employer
          
(Emphasis  added.)  The regulations expressly  provide  that  the

director  of the Wage and Hour Division will make a determination

of  reasonable cost based on standards set forth under the  FLSA,

adopting  by  reference the FLSAs regulations pertaining  to  the

determination of reasonable cost.10  The language  of  29  C.F.R.

531.3(d)(1) excludes from the definition of reasonable  cost  the

cost  of furnishing meals and lodging that are primarily for  the

benefit or convenience of the employer:

          The  cost  of furnishing facilities found  by  the
          Administrator to be primarily for the  benefit  or
          convenience of the employer will not be recognized
          as reasonable and may not therefore be included in
          computing wages.
          
In addition, reasonable costs may not exceed the employers actual

cost,11  may not include a profit to the employer,12 and may  not

exceed  the  fair  rental value or fair price  of  the  employer-

provided lodging.13

          Thus, to determine reasonable costs in accordance  with

these provisions of the Code of Federal Regulations, a threshhold

determination must be made as to whether the housing and meals at

issue   are   being  furnished  primarily  for  the  benefit   or

convenience  of  the  employer or the employee.   Only  when  the

lodging  and  board  are found to be provided primarily  for  the

convenience of the employee does one move to the second  step  of

evaluating  whether the amount to be deducted from the  employees

wages is the reasonable value of the furnished board and lodging.

In  this  case, it is clear from the record that the lodging  and

board that Silver Bay furnished to Diaz were primarily for Silver

Bays benefit, and thus could not be deducted from Diazs wages  as

reasonable costs.14

III. THE   DEPARTMENT  OF  LABORS  LONGSTANDING  AND   CONSISTENT
     INTERPRETATION  PROHIBITS DEDUCTIONS OF  LODGING  AND  BOARD
     COSTS FROM DIAZS WAGES.
     
          In  addition  to  adopting  by  reference  the  federal

convenience  to  the  employer  doctrine,  the  Department   also

codified   this  doctrine.   Indeed,  the  language  of   8   AAC

15.160(d)(1) expressly prohibits deductions for board and lodging

          in the two most common circumstances where board and lodging have

been  found to be furnished primarily for the employers  business

convenience or benefit: (a) where no alternative public board and

lodging facilities are accessible to the worksite; and (b)  where

the  employer  requires  the employee  to  accept  the  employers

facilities  to  meet  some  need  of  the  employer  even  though

alternative    facilities   are   available.    The   Departments

longstanding  interpretation of 8 AAC 15.160 to prohibit  lodging

and  board deductions where no alternative public facilities  are

accessible  to  the  employers worksite is  both  consistent  and

reasonable.

          Alaska   Administrative   Code   regulation    8    AAC

15.160(d)(1)  provides  that board and  lodging  deductions  from

wages  are  prohibited  in two circumstances:  (a)  at  a  remote

location where there are no alternative public board and  lodging

facilities accessible to the worksite; and (b) where the employer

requires the employee to use the employers board and lodging even

though  alternative public housing is accessible to the worksite.

This  is  how  the  Department  of  Labor  has  interpreted   its

regulation   disallowing such deductions even where they  do  not

reduce the employees pay below the minimum wage.

          In  1998  Randy  Carr, the Departments Chief  of  Labor

Standards and Safety, issued an opinion letter to Diaz  based  on

the  specific  facts  of Diazs employment  with  Silver  Bay  and

concluded  that  employers may only deduct room  and  board  from

wages where alternative facilities are accessible to the worksite

and  employees  voluntarily choose to reside in employer-provided

facilities,  regardless of whether they reduce the employees  pay

below the minimum wage.15  Carr confirmed that 8 AAC 15.160(d)(1)

requires  that  alternative  facilities  be  accessible  to   the

worksite and that use of the employers facilities be voluntary in

order for such a deduction [for lodging and board] to be allowed.

.  .  .   When  work is performed at a remote site,  the  use  of

employer-provided  room and board is a condition  of  employment.

          It is not voluntary.  No deduction may be made.  Moreover, in

response to a query whether his conclusion depend[s] in  any  way

on  whether  the  deductions from wages reduce an employees  wage

rate  below  Alaskas statutory minimum rate, his answer  was  No.

Carr  proceeded  to  point  out  that  whereas  8  AAC  15.160(c)

specifically  states  that  deductions  for  transportation   are

allowed  so long as they do not reduce the employees wages  below

the  statutory minimum, no such requirement is contained in 8 AAC

15.160(d),  leading  to the conclusion that  the  prohibition  of

deductions  from  wages  for  involuntary  lodging  is   entirely

independent of the statutory minimum wage.

             Carr   later  confirmed  that  this  opinion  letter

accurately  reflects both the Departments current  interpretation

of  the  regulation and its interpretation at  the  time  of  the

regulations adoption in 1985.  An earlier opinion letter   issued

by  Carr  in 1985, at the time the regulation was being  drafted,

confirms  the  longstanding consistency of this interpretation.16

When  asked if charges for room and board could be withheld  from

an  employees wages, Carr, then statewide Supervisor of the Labor

Standards and Safety Division, responded:

          Yes,  if  alternate facilities are  available
          and the employee has declined the use of such
          alternate  facilities. . . .  Deductions  for
          the cost of room & board are not permitted on
          floating processors or shore based operations
          where alternate facilities are not available.
          
          We   uphold  an  agencys  interpretation  of  its   own

regulations  unless  it is plainly erroneous.17   Although  under

this deferential standard we exercise our independent judgment in

determining the validity of an administrative regulation  and  in

interpreting  the underlying regulation, we will  not  substitute

our  judgment for that of the agency with regard to the  efficacy

or  wisdom  of  the  regulation.18  Even  under  the  independent

judgment  standard,  this court gives some  weight  to  what  the

agency  has  done, especially where the agency interpretation  is

longstanding.19

          The plurality opinion today affords no deference to the

Alaska Department of Labors interpretation of 8 AAC 15.160.  Carr

testified  that the Departments purpose in writing the regulation

was  to prevent employers from requiring employees at remote work

sites  to  shoulder  the  cost of the employers  doing  business.

Thus,  adoption  of 8 AAC 15.160(d)(1) reflected a  clear  policy

choice,  and  policies regarding the determination  of  allowable

wage  deductions are squarely within the Departments purview  and

expertise.

          Moreover,    the    Departments    interpretation    is

longstanding   and,   contrary  to  the  pluralitys   suggestion,

consistent.    The Department has always maintained  that  8  AAC

15.160  prevents employers from deducting the cost of  board  and

lodging  from  employee  wages at  remote  work  sites  where  no

alternative  housing is available.  Regulations implementing  the

Alaska  Wage  and Hours Act were not adopted until 1974,  but  at

that  time  they did not address wage deductions  for  board  and

lodging.20   A  1969 letter from then Attorney  General  G.  Kent

Edwards  provided  that deductions for room and  board  were  not

permitted unless the director decided otherwise:

          The  Alaska Legislature enacted AS  23.10.085
          as  a  permissive statute, leaving the  board
          and  lodging deductions at the discretion  of
          the  director.  By doing so, it  is  apparent
          that  the legislature intended that no  board
          and  lodging  deductions be made  unless  and
          until the director so provides by regulation.
          
(Emphasis added.)

          In  1982  a  team from the Department began to  redraft

what is now 8 AAC 15.160.  Notice of the proposed regulations was

published  in newspapers throughout Alaska in 1983, and  hearings

were  held  the  same  year.  The record reveals  that  companies

likely to be affected by the proposed regulation understood it to

mean  that  employers  operating in  remote  locations  where  no

alternative lodging facilities were available would have to  bear

the cost of employee room and board.21 Donald Wilson, then Deputy

          Director of the Labor Standards and Safety Division, noted that

the  Department elected not to change the regulation in spite  of

opposition  by employers as it was designed to prevent  employers

from shifting their costs to employees:

          Cominco/Alaska,  The  Alliance  and  Colorado
          Mining,  Inc. also took exception  to  8  AAC
          15.160.  We do not intend to make any changes
          to  this section since the law is quite clear
          with   regard  to  employers  causing   their
          employees  to  shoulder  the  cost   of   the
          employer doing business.
          
The  Departments  regulations were adopted  in  198522  and  have

remained unaltered.23

          In  accordance with its purpose of preventing employers

from  shifting their costs to employees, the Department has  from

the  regulations  inception interpreted it to  prevent  employers

from  deducting  the cost of room and board from  employee  wages

where  there  are  no  alternative  facilities  available.    Jim

Robison,  Commissioner of the Department of Labor  from  1982  to

1986, wrote a letter to Warren Gore, then Executive President  of

the  AFL-CIO,  explaining that employers were  not  permitted  to

charge their employees to use employer-owned facilities where  no

public lodging was available:

               Governor Sheffield has provided me  with
          a  copy  of  your  letter .  .  .  concerning
          employer  campsite  requirements  for  remote
          work.  Having reviewed your comments, I would
          like   to   offer  an  explanation   of   the
          Department of Labors interpretation of  these
          regulations.
          
               . . . .
          
               Employers  operating  in  remote   areas
          where  there  is no public housing  available
          which  is immediately accessible or in  close
          proximity  to  the work site  are  prohibited
          from  charging employees for the use  of  any
          employee facilities. . . .
          
An  affidavit submitted by Robison in this case confirms that the

letter    to    Gore   accurately   reflected   the   Departments

interpretation  of 8 AAC 15.160(d) at the time  it  was  adopted.

Robison  also  specified  that  it  was  Department  policy  that

employers who operate in remote areas with no public housing were

prohibited  from charging employees for the use of employer-owned

room  and  board.   Finally, Robison confirmed that  the  opinion

letter  written  by Carr for Diazs case accurately  reflects  the

Departments interpretation.

          These  interpretations by current and former Department

officials are also consistent with the Departments administrative

decisions on this issue.  For example, in Rhule v.  Gildersleeve,

the  Department determined that an employers deductions  from  an

employees  wages to pay for room and board were unlawful  because

there were no alternative board and lodging facilities accessible

to  the  remote worksite.24  Rhule was an employee  at  a  remote

logging  camp  who  was required to authorize,  before  beginning

employment,  a deduction from his wages of $12 per day  to  cover

the  cost  of  room  and  board.  After quoting  in  full  8  AAC

15.160(d),  a  Wage  and Hour investigator from  the  Departments

Juneau regional office informed Gildersleeve Logging:

          The   key  factor  is  that  there   are   no
          alternative  facilities  accessible  to   the
          worksite.   This  alone,  renders  all  other
          arguments   moot.    The   fact   that   this
          arrangement is also a condition of employment
          reinforces  our determination that deductions
          for  room  & board under these conditions  do
          not   meet   the  requirements  of   [8   AAC
          15.160(d)].
          
(Emphasis added.)  This Wage and Hour investigator emphasized  to

Gildersleeve  that the fact that there are no alternative  public

board  and lodging facilities accessible to the worksite  renders

any deduction from wages unlawful.

          And Silver Bay itself was the subject of a similar wage

complaint  in  1993.  In  Chapman  v.  Silver  Bay  Logging,  the

Department  informed Silver Bay that it was  not  permissible  to

deduct the cost of room and board when alternate facilities  were

not available:25

          Please  note  that there are  three  criteria
          which must be met in order for deductions for
          room  and board to be considered permissible.
          In  order for board and lodging deductions to
          be   valid,  alternative  public  board   and
          lodging facilities must be accessible to  the
          worksite  and the employee must have declined
          to use such facilities. . . .  Unless you can
          prove  that  alternative  public  board   and
          lodging  facilities were  accessible  to  the
          work  site  and  that Mr. Chapman  and  other
          workers declined to use such facilities,  the
          deductions  for  board and  lodging  are  not
          permissible.
          
          Thus,  the record reveals that the Department of  Labor

has  maintained  a  single, consistent interpretation  of  8  AAC

15.160   since  the  regulations  promulgation  in   1985.    The

Departments administrative actions reveal one policy:   Employers

are  not  permitted to make wage deductions for  room  and  board

unless alternative facilities are available and the employee  has

declined  to  use  them   even where those deductions  would  not

reduce the employees pay below minimum wage.

          The  plurality  has accepted Silver Bays argument  that

there  was  not  a  single,  consistent  interpretation  of   the

regulation and that the plurality therefore owes little deference

to  the  Departments interpretation.  Silver Bay  relies  on  the

testimony during the course of this litigation of Donald  Wilson,

who served as Deputy Director of Labor Standards from 1983 to May

1987.   Wilson  is now retired.  Wilson was part of the  original

team  that drafted the regulation.  He was deposed for this  case

and  provided  his own interpretation of the regulation.   Wilson

testified that he did not intend to prohibit deductions for  room

and  board  where  there  was  no alternative  to  employer-owned

lodging.   He  characterizes the employee choice of lodging  this

way:   He  can turn down the job and go somewhere else.  That  is

the  choice. . . .  It is the interpretation of the law as I live

it.

          However,  the plurality overlooks the fact  that  while

Wilson was at the Department, his interpretation was identical to

that of Diaz and the other Department witnesses in this case.  In

a  September  19,  1986  memorandum,  Wilson  explained  to  then

Commissioner Robison that 8 AAC 15.160(d) required that employers

operating  at  inaccessible sites provide  their  employees  with

transportation or bear the cost of room and board:

          Because  [of the companys provision of  free,
          daily, round-trip transportation from Nome to
          the  worksite] and the ready availability  of
          public  board and lodging facilities in  Nome
          it  is  my  opinion  that [the  company]  can
          legally  apply  the terms of 8 AAC  15.160(d)
          and  charge the reasonable cost of board  and
          lodging  at the camp site to those  employees
          who  elect  to use it rather than  return  to
          Nome each day.
          
               Of  course if [the company] should  stop
          providing   transportation   and   the   road
          condition were to remain hazardous, or if  it
          were rendered otherwise impassable by acts of
          God,  [the company] would then have  to  bear
          the  cost  of providing board and lodging  to
          its employees and subcontractors[] employees.
          
(Emphasis  added.) Wilson also sent a memorandum to Bob  Bacolas,

Director of Labor Standards in July 1984, stating that

          [r]egardless of whether an employer  operates
          or sub-leases his camp site in a remote area,
          the  employer [is] going to have to bear  the
          burden  of  providing board and lodging.   As
          long   as   the   employee   is   essentially
          institutionalized and cannot commute  to  his
          true domicile and the work site except on  an
          infrequent basis, and then only by commercial
          carrier, the cost of providing room and board
          must   be   borne   by  the   employer.   The
          regulations  were heard at public  hearing[s]
          in  the three major population centers of the
          state. . . .  There may be some employers who
          think they can circumvent the law and make  a
          profit.  Every time a law is enacted, someone
          tries  to take advantage of it for the reason
          of   financial  gain.   It  is  up   to   the
          enforcement agency to ensure that such events
          do not occur.
          
(Emphasis added.)  These two documents authored by Wilson at  the

time  of  the  regulations  adoption  contradict  his  deposition

testimony,  given  twelve  years after his  retirement  from  the

Department.

          The  plurality  further  relies  on  a  single  opinion

contained  in  a  letter  from  the  attorney  general  in  1986.

However,  such opinions are not binding authority on this  court,

nor  do  they  have any precedential value.26  Furthermore,  this

particular  opinion letter has been challenged by the  Department

of Labor and therefore is not entitled to great weight.27

          In  conclusion,  when the agency has  received  such  a

broad  delegation  of  power to make policy consistent  with  the

Alaska Wage and Hours Act, has drafted a regulation that reflects

a   policy   choice,  and  has  then  clearly  and   consistently

implemented that regulation over a period of fifteen years,  this

court  must  defer  to the interpretation unless  it  is  clearly

unreasonable.

IV.  THE   DEPARTMENTS  INTERPRETATION  OF  THE   REGULATION   IS
     REASONABLE.
     
          Finally,  the  plurality concludes  that  even  if  the

Departments interpretation is longstanding and consistent, it  is

unreasonable  and  thus  accorded no  deference.   The  plurality

maintains  that when an employee is required to live in employer-

provided  housing because this arrangement suits the  convenience

of the employer, the employer may deduct the cost of that lodging

from the employees wages as long as the deduction does not reduce

the  wages  below  the  statutory minimum.  Yet,  the  pluralitys

strained interpretation of 8 AAC 15.160 finds no support  in  any

federal or state decision, and the Departments interpretation  is

more reasonable.

          First, as discussed above, the Department has expressly

incorporated the federal FLSA definitions of reasonable cost  and

customarily furnished, which exclude the cost of furnishing meals

and lodging that are primarily for the benefit or convenience  of

the  employer  or  that  do not permit  the  employee  to  choose

voluntarily  to  live in the employer-furnished facilities.   The

Departments   interpretation  of  its  regulation   to   preclude

deductions  for  employer-provided lodging when  the  lodging  is

provided  for  the employers convenience is thus consistent  with

          the FLSA definitions adopted by the Department under its

legislative grant of authority and is therefore reasonable.

          Second,  the  plurality concludes that subsection  (d)s

limitations on reimbursement for board and lodging facilities  of

the  employer apply only if the reimbursement would reduce  wages

below  the  statutory  minimum.   The  plurality  maintains  that

subsection (d)  cannot serve to prohibit deductions that  do  not

reduce  wages  below  the minimum, because  such  deductions  are

permitted by subsection (a).28  But subsection (d) contains three

conditions that must be met before a deduction from earnings  can

be  made  for  employer-provided housing: (1) alternative  public

board  and lodging facilities must be accessible to the  worksite

and  the  employee  must  have declined to  use  these  available

facilities;   (2)   the  employer-provided  board   and   lodging

facilities must be customarily furnished by the employer and used

by the employees; and (3) the cost to the employee for use of the

employers  board  and lodging facilities must be  reasonable  and

without  profit  to the employer.  If, as the plurality  reasons,

these  limitations of subsection (d) (1), (2),  and  (3)  do  not

apply  unless  wages are reduced below statutory  minimums,  then

employers could require employees to live in their facilities and

charge  unreasonable  or  profit-making  rates,  deducting  these

charges from wages, as long as the deductions did not reduce  the

employees  wages  below  the  statutory  minimum.   It   is   the

pluralitys   interpretation   of   this   regulation   that    is

unreasonable,  particularly in light of its  purpose  to  prevent

employers  from  shifting  to its employees  the  cost  of  doing

business.

          Finally,  the  Departments analysis  of  the  interplay

between  the  various subsections of 8 AAC 15.160 is superior  to

the  pluralitys  interpretation.29   Randy  Carr  explained  that

interpretation  in his opinion letter to Diaz.   As  Carr  points

out,  subsection (a) of 8 AAC 15.160 lists a number  of  specific

deduction practices that are prohibited, despite the presence  of

          a written employment agreement.  These banned practices include

any  deduction  that would reduce an employees  wages  below  the

statutory  minimum.   However,  subsections  (b),  (c),  and  (d)

proceed  to describe various types of permissible wage  deduction

practices  and  specify that the prohibitions of  subsection  (a)

will  not  apply to these various wage practices as long  as  the

specific  conditions  contained within each subsection  are  met.

For  example, subsection (c), which allows deductions for certain

transportation   costs,   contains   the   condition   that    no

transportation deduction may reduce the employees wages below the

minimum wage.

          However,  the subject of minimum wages is not reflected

in  subsection  (b), which allows deductions from earnings  where

the employee directs the employer to pay a sum for the benefit of

a  creditor,  donee, or third party.  Thus, even if the  directed

third-party  payment  reduces  the  employees  wages  below   the

statutory  minimum, it is permissible.  And similarly, subsection

(d),  which addresses deductions of board and lodging costs, does

not  contain  as  one of its conditions that the employees  wages

must  not  be  reduced  below  the  statutory  minimum.   As  the

Department  concluded  in the opinion letter,  [t]he  subject  of

minimum  wages is not mirrored in subsection (d), which addresses

room  and  board deductions.  If the deduction practices  satisfy

the three conditions listed in the regulations, a deduction would

be  legal  even  if  it  reduced the employees  wages  below  the

statutory minimum.  By implication, however, if any of the  three

conditions  are  not  satisfied, the deduction  cannot  be  made,

regardless of whether this would leave the employees wages  above

the statutory minimum.

V.   CONCLUSION

          When  the Alaska Department of Labor promulgated 8  AAC

15.160, it made a policy choice to prevent employers from forcing

their  employees  to  shoulder the cost  of  the  employer  doing

business.  Because the Department has adopted the FLSA regulatory

definitions,  has  consistently  interpreted  its  regulation  to

prohibit the deductions made from Diazs wages, and has adopted an

interpretation  that  is not unreasonable, I  believe  that  this

court  should  defer  to  the Departments view  that  alternative

facilities  must be available before an employer may  deduct  the

cost of room and board.


_______________________________
     1    8 AAC 15.160 (1985) provided in relevant part:

               (a)  AS 23.10.085(c) does not limit  the
          right  of  an employer and employee to  enter
          into  a  written  agreement  to  provide  for
          deductions  of  monetary  obligations  of  an
          employee.  Requiring or inducing an  employee
          to   return  or  give  up  any  part  of  the
          compensation   to  which  the   employee   is
          entitled, whether by force, intimidation,  or
          threat  of dismissal from employment,  or  by
          any  other  manner, is prohibited. A  written
          agreement  for  deductions  payable  to   the
          employer  or  person acting in the  employers
          behalf  or interest is not valid if it  would
          have the effect of reducing an employees wage
          rate  below the statutory minimum, or  if  it
          would  require  an employee to reimburse  the
          employer for any of the following:
               (1)  customer  checks  returned  due  to
          insufficient funds  or any other reason;
               (2) non-payment for goods or services as
          a result of theft or credit default;
               (3)  cash  or  cash  register  shortages
          unless the employee admits, willingly and  in
          writing,  to  having  personally  taken   the
          specific amount of cash that is alleged to be
          missing;
               (4)  lost,  missing, or stolen property,
          unless  the employee admits willingly and  in
          writing,  to  having  personally  taken   the
          specific   property  alleged  to   be   lost,
          missing, or stolen; or
               (5)  damage  or  breakage  costs  unless
          clearly  due  to  willful  conduct   of   the
          employee  and  the employee has  acknowledged
          responsibility in writing.
               . . . .
               (d)  Nothing  in  (a)  of  this  section
          prohibits deductions from earnings, based  on
          a written agreement, to reimburse an employer
          for  the reasonable cost of furnishing  board
          and lodging, if
               (1) alternative public board and lodging
          facilities are accessible to the worksite and
          the   employee  has  declined  to  use   such
          facilities;
               (2) the board and lodging facilities  of
          the employer are customarily furnished by the
          employer and used by the employees; and
               (3) the cost to the employee for the use
          of    the   employers   board   and   lodging
          facilities, is reasonable and without  profit
          to the employer.
          
     2    AS 23.10.085 provides:

               (a)  The  director may adopt, amend,  or
          rescind   administrative   regulations    not
          inconsistent with the purposes and provisions
          of   AS   23.10.050  -  23.10.150  that   are
          necessary  for  the  administration   of   AS
          23.10.050 - 23.10.150.
               (b)   The   regulations   may,   without
          limiting  the  generality  of  (a)  of   this
          section, define terms used in AS 23.10.050  -
          23.10.150,    and   restrict   or    prohibit
          industrial   homework  or   other   acts   or
          practices that the director finds appropriate
          to  carry  out the purpose of AS 23.10.050  -
          23.10.150, or to prevent the circumvention or
          evasion of AS 23.10.050 - 23.10.150.
               (c)    The   regulations   may    permit
          deductions  by an employer from  the  minimum
          wage   applicable  under   AS   23.10.050   -
          23.10.150  to  employees for  the  reasonable
          cost,  as  determined by the director  on  an
          occupation  basis,  of  furnishing  board  or
          lodging  if  board or lodging is  customarily
          furnished  by the employer and  used  by  the
          employee.
          
     3     The court can affirm a summary judgment on grounds not
relied  on  by the superior court.  Moreover, we should  consider
any  matter appearing in the record, even if not passed  upon  by
the  lower court, in defense of the judgment.  Beluga Mining  Co.
v. State, Dept of Natural Res., 973 P.2d 570, 574 (Alaska 1999).

     4     Diaz seems to suggest that interpreting subsection (d)
to  apply  only  when board and lodging deductions  would  reduce
effective  pay  to a rate lower than required rates  would  place
AWHA  in  conflict  with  the federal Fair  Labor  Standards  Act
(FLSA), 29 U.S.C.A.  201-219 (1998).  But this is clearly not the
case.   The  regulations concerning board and lodging  deductions
under  the  FLSA explicitly do not apply to deductions where  the
employee  still  receives  more  than  the  minimum  wage   after
deductions  are  taken.  29 C.F.R.  531.36(a) (2002).   Since  we
interpret  subsection (d) of 8 AAC 15.160 to be  effective  under
the  same conditions as the FLSA regulations and since the Alaska
minimum  wage  is  higher  than  the  federal  minimum  wage,  AS
23.10.065(a),  our interpretation of (d) will  not  result  in  a
conflict between AWHA and FLSA.

     5    Similarly, we reject the superior courts interpretation
because  it,  implicitly at least, also accepts  the  proposition
that subsection (d) prohibits what subsection (a) permits.

     6      See   2B   Norman  J.  Singer,  Sutherland  Statutory
Construction  49:05 (6th ed. 2000) ([W]eight given to  an  agency
interpretation  depends on many factors,  including  .  .  .  its
consistency   with   earlier  and  later  agency   pronouncements
. . . .).

     7     Trustees for Alaska v. State, Dept of Natural Res.,795
P.2d 805, 812 (Alaska 1990).

     8    Diaz does not dispute Silver Bays evidence showing that
his overtime rate of pay was calculated before the room-and-board
deductions were made.

     9     If  there  was  an  excess,  it  would  still  not  be
considered as income, at least for federal tax purposes  because,
as  Diaz  concedes, the board and lodging was furnished  for  the
convenience of the employer.  See 26 U.S.C.  119(a) (2002).

     10    Alaska R. Civ. P. 82(b)(2).

     11     See AS 23.10.110(f).  Prior to 1995, the AWHA did not
authorize  an award of attorneys fees to a prevailing  defendant.
Diazs  claims  for overtime wages earned before August  22,  1995
(the  effective  date for amended AS 23.10.110) are  exempt  from
having  attorneys  fees collected against them  under  former  AS
23.10.110(c) or Civil Rule 82.  See Grimes v. Kinney Shoe  Corp.,
938  P.2d  997, 1001 (Alaska 1997).  His claims for wages  earned
after  that  date  are subject to amended AS 23.10.110(f),  which
allows  a  defendant to collect attorneys fees in an  action  for
unpaid overtime compensation only in the event of a frivolous  or
bad faith claim.

     12     See  Dansereau v. Ulmer, 955 P.2d 916, 918-19 (Alaska
1998)   (within  courts  discretion  to  independently  calculate
reasonable hours in determining appropriate attorney fee award).

     1     Webster  v. Bechtel, Inc., 621 P.2d 890,  901  (Alaska
1980).

     2     Alaska  Intl  Indus. v. Musarra, 602 P.2d  1240,  1246
(Alaska 1979).

     3     Because  we  are equally divided on  this  issue,  the
decision  favoring  affirmance has  the  effect  of  a  plurality
opinion:   it  will  affirm the superior  courts  ruling  in  the
present  case but will not be binding in future cases.  Our  case
law  establishes  that  [a] decision by an evenly  divided  court
results  in an affirmance.  Ward v. Lutheran Hosps. & Homes  Socy
of America, Inc., 963 P.2d 1031, 1037 n.11 (Alaska 1998) (quoting
Thoma v. Hickel, 947 P.2d 816, 824 (Alaska 1997)).  Moreover,  an
affirmance by an equally divided court is not precedent.  City of
Kenai  v.  Burnett, 860 P.2d 1233, 1239 n.11, 1246 (Alaska  1993)
(Compton, J., concurring).

4    See AS 23.10.085, which states:

               (a)   The director may adopt, amend,  or
          rescind   administrative   regulations    not
          inconsistent with the purposes and provisions
          of   AS   23.10.050  -  23.10.150  that   are
          necessary  for  the  administration   of   AS
          23.10.050 - 23.10.150.
          
               (b)    The   regulations  may,   without
          limiting  the  generality  of  (a)  of   this
          section, define terms used in AS 23.10.050  -
          23.10.150,    and   restrict   or    prohibit
          industrial   homework  or   other   acts   or
          practices that the director finds appropriate
          to  carry  out the purpose of AS 23.10.050  -
          23.10.150, or to prevent the circumvention or
          evasion of AS 23.10.050 - 23.10.150.
          
               (c)     The   regulations   may   permit
          deductions  by an employer from  the  minimum
          wage   applicable  under   AS   23.10.050   -
          23.10.150  to  employees for  the  reasonable
          cost,  as  determined by the director  on  an
          occupation  basis,  of  furnishing  board  or
          lodging  if  board or lodging is  customarily
          furnished  by the employer and  used  by  the
          employee.
          
     5    AS 23.10.145 provides:  If not defined in this title or
in  regulations  adopted  under this  title,  terms  used  in  AS
23.10.050 - 23.10.150 shall be defined as they are defined in the
federal  Fair  Labor Standards Act of 1938, as  amended,  or  the
regulations adopted under it.

     6     See Dresser Indus., Inc. v. Alaska Dept of Labor,  633
P.2d  998, 1003 (Alaska 1981).  Alaska Statute 23.10.095 provides
that [t]he commissioner may adopt regulations and interpretations
that  are made by the administrator of the Wage and Hour Division
of  the federal Department of Labor and that are not inconsistent
with AS 23.10.050 - 23.10.150.

     7    8 Alaska Administrative Code (AAC) 15.160(d)(3) (2000).

     8    8 AAC 15.160 (f) provides that [t]he director will make
the  determination regarding the cost of board and lodging  under
(d)(3)  of  this  section.  The determination  will  be  made  in
accordance with 29 C.F.R.  531.3 - 531.5 and 531.29 - 531.35.

     9    See 29 C.F.R.  531.3(d)(1) (2000).

10   8 AAC 15.160(f).

     11   29 C.F.R.  531.3(a) (2002).

     12   29 C.F.R.  531.3(b) (2002).

     13   29 C.F.R.  531.3(c) (2002).

     14     The  Departments  regulations  further  require  that
employer-provided board and lodging must be customarily furnished
by the employer before the employer can require reimbursement.  8
AAC   15.160(d)(2).   Under  the  federal  regulatory  definition
adopted  by  the  Department, board and  lodging  is  customarily
furnished  only  when the employees acceptance of  the  employers
facilities is voluntary and uncoerced.  29 C.F.R.  531.30 (2002).

15   Wage and Hour Opinion Letter (WHOL) # 133.

     16   WHOL # 30.

     17    Bd.  of Trade, Inc. v. State, Dept of Labor, 968  P.2d
86,  89  (Alaska 1998) (quoting State, Dept of Highways v. Green,
586 P.2d 595, 602 n.21 (Alaska 1978)).

     18   Bd. of Trade, 968 P.2d at 89 (citations omitted).

     19   Usibelli Coal Mine, Inc. v. State, Dept of Revenue, 921
P.2d  1134,  1142-43  (Alaska 1996) (quoting  Fairbanks  N.  Star
Borough Sch. Dist. v. NEA-Alaska, Inc., 817 P.2d 923, 925 (Alaska
1991)).

20   The original regulations were numbered as 8 AAC 15.050.

     21    No changes to the proposed regulations were made after
comments and hearings.

22   8 AAC 15.160, am. 9/28/85, Register 95.

     23    8  AAC  15.160  was  last amended  in  1999,  but  the
provisions at issue in this case were not altered.  8 AAC 15.160,
am. 4/29/99, Register 150.

24   Dept of Labor, Claim J1296-076T (1996-1997).

     25   Dept of Labor, Claim J0893-078G (1993-1994).

26   Allison v. State, 583 P.2d 813, 816 n.15 (Alaska 1978).

     27    Id.  (providing that the fact that the opinion of  the
attorney general had not been challenged entitled his opinion  to
great weight).

28   Plurality Opinion at 5.

     29   WHOL #133.