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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Resurrection Bay Auto Parts, Inc. v. Alder (11/28/2014) sp-6969

Resurrection Bay Auto Parts, Inc. v. Alder (11/28/2014) sp-6969

         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  


RESURRECTION BAY AUTO                                )  

PARTS, INC. and DILLIP                               )        Supreme Court No. S-15139  

MULLINGS,                                            )  

                           Appellants,               )        Superior Court No. 3AN-11-07991 CI  


                  v.                                 )        O P I N I O N  


DENNIS ALDER,                                        )        No. 6969 - November 28, 2014  


                           Appellee.                 )  


                  Appeal from the Superior Court of the State of Alaska, Third  


                  Judicial District, Anchorage, Eric A. Aarseth, Judge.  

                  Appearances:  Joe  P.  Josephson,  Josephson  Law  Offices,  

                  LLC, Anchorage, for Appellants.  Dani Crosby and Eva R.  


                  Gardner, Ashburn & Mason, P.C., Anchorage, for Appellee.  

                  Before:  Fabe, Chief Justice, Winfree, Stowers, Maassen, and  


                  Bolger, Justices.   

                  MAASSEN, Justice.  


                  This case arises from a dispute over whether the manager of an auto-parts  


store was owed overtime pay.  The employer claims the manager was exempt from the  


overtime laws, but the superior court found he was not and awarded overtime pay and  

liquidated damages.  The employer appeals.  

----------------------- Page 2-----------------------


                    Because the employer failed to show that the manager satisfied all four  


requirements of the overtime laws' exemption for executive employees, we affirm the  


finding that the manager is owed overtime pay under Alaska and federal law.  We also  


affirm the superior court's award of liquidated damages, because the employer failed to  


carry his burden of demonstrating by clear and convincing evidence that he acted in good  



                    Dillip  Mullings  owned  a  NAPA  auto-parts  store  in  Seward  called  


Resurrection Bay Auto Parts, Inc.  Mullings hired Dennis Alder to be the store manager,  


a position Alder held from 2006 to 2010, when he was terminated.  Alder did not keep  


a time card, but it is undisputed that he typically worked from 6:30 a.m. to 6:30 p.m.  

Monday  through  Friday.    The  extent  of  Alder's  overtime  is  not  at  issue  on  appeal;  


Mullings concedes that Alder worked over 40 hours a week.  It is also undisputed that  

Alder was paid a salary and did not receive overtime pay.  


                    After Alder was terminated, he sought unemployment compensation from  


the State Department of Labor.  The Department's Wage and Hour office determined that  

Alder  was  entitled  to  overtime  pay  and  attempted,  without  success,  to  negotiate  a  

settlement on his behalf with Resurrection Bay.  

                    Alder  then  filed  suit,  alleging  that  Mullings  and  Resurrection  Bay  


(collectively  "Mullings")   had  violated  state  and  federal  overtime  laws.    Mullings  

responded that Alder was an executive employee and therefore exempt.   


                    Following a  bench trial, the superior court decided that Alder did not fall  

within   the   executive   exemption   and   that   Mullings   had   failed   to   pay   overtime  



                    The superior court found that because Mullings controlled the business and  


acted as Alder's manager, he was Alder's "employer" for purposes of the Fair Labor  

Standards Act definition.  This finding is not challenged on appeal.  

                                                              - 2 -                                                            6969  

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compensation required by law. The court awarded $48,125 in overtime pay and imposed  


an equal amount of liquidated damages against Mullings for a total award to Alder of  


                     Mullings  appeals  the  superior  court's  decisions  (1)  that  Alder  was  not  

exempt from the overtime laws, and (2) that liquidated damages were appropriate under  

the circumstances.  



                     Whether an employee falls within an employee exemption from overtime  

                                                              2  "We set aside a lower court's factual findings  


pay is a mixed question of law and fact.  

only when they are clearly erroneous," that is, "when, after a review of the record as a  


whole, we are left with a definite and firm conviction that a mistake has been made."3  


We  review  de  novo  the  superior  court's  application  of  the  law  to  established  facts,  

applying our independent judgment.4  

                     In reviewing an award of liquidated damages, "[t]he question of whether  

an employer has shown good faith and reasonableness by clear and convincing evidence  


is a mixed question of law and fact."5  


                     [F]actual findings will be overturned only if they are clearly  


                     erroneous, but an application of the law to established facts  

                     will  be  reviewed  de  novo.   Once  it  is  established  that  the  


                     superior court did  not err in  finding  clear  and  convincing  


                     evidence  of  good  faith  and  reasonableness,  the  superior  

           2         Fred Meyer of Alaska, Inc. v. Bailey                    , 100 P.3d 881, 883-85 (Alaska 2004).       



                     Id. at 883-84 (quoting Bennett v. Bennett , 6 P.3d 724, 726 (Alaska 2000))  

(internal quotation marks omitted).  

           4         Id. at 884 (citing  Wyller v. Madsen, 69 P.3d 482, 485 (Alaska 2003)).  

           5         Air Logistics of Alaska, Inc. v. Throop , 181 P.3d 1084, 1097 (Alaska 2008).  

                                                                 - 3 -                                                           6969

----------------------- Page 4-----------------------

                   court's decision regarding whether or not to award any level   


                   of liquidated damages is reviewed for abuse of discretion.  


         A.	       Mullings  Did  Not  Satisfy  His  Burden  Of  Proving  That  Alder Was  


                   Exempt  From  The  Alaska  Wage  and  Hour  Act's  Overtime  Pay  


                   "The  Alaska  Wage  and  Hour  Act  (AWHA)  governs  the  payment  of  



                 It provides that "[i]f an employer finds it necessary to employ an employee  

for hours in excess of the limits set in this subsection, overtime compensation for the  



overtime at the rate of one and one-half times the regular rate of pay shall be paid." 


limits defined by the subsection include work in "excess of eight hours a day" or "in  

                                       9  A federal statute, the Fair Labor Standards Act (FLSA),  


excess of 40 hours a week."  

applies concurrently and requires overtime pay under circumstances identical to those  

         6        Id. at 1097 (footnote omitted).

       Hoendermis  v.  Advanced  Physical  Therapy,  Inc. ,  251  P.3d  346,  351  

(Alaska 2011) (citing AS 23.10.050-.150).  

         8         AS 23.10.060(b).  

         9	       Id.  

                                                          - 4 -	                                                  6969

----------------------- Page 5-----------------------



identified in the AWHA.                     The terms used in the AWHA, if not defined in Alaska law,  


carry the definitions used in the FLSA.                            


                      There is no dispute on appeal that both the AWHA and the FLSA apply to  


Mullings as an employer and that Alder worked a number of hours defined as overtime  


during the relevant period.  Mullings, however, challenges the superior court's finding  


that Alder was not exempt from the overtime laws.  The AWHA and the FLSA -  

including their overtime pay requirements - do not apply to "bona fide executive,  


administrative,  or  professional"  employees.                                  Under  both  state  and  federal  law,  

exemptions "are to be narrowly construed against the employer."13  Under both laws, the  


burden of proof is on the employer to prove that an exemption applies.14  


           10        See 29 U.S.C.  207(a)(1), 213(a)(1) (2012).  We have held before that the     

AWHA is not preempted by the FLSA.                               Quinn v. Alaska State Emps. Ass'n/Am. Fed'n  

of State, Cnty. & Mun. Emps.,                       Local  52,  944  P.2d  468,  471  (Alaska  1997)  ("After  

comparing the history and purposes of the two Acts, we concluded that FLSA did not  

explicitly  or  implicitly  preempt  AWHA  in  its  entirety.    We  also  determined  that  

AWHA's  more  generous  minimum  wage,  overtime  pay,  and  liquidated  damages  

provisions did not actually conflict with similar provisions in FLSA." (citation omitted))  


(citing  Webster v. Bechtel, Inc., 621 P.2d 890, 900-905 (Alaska 1980).  

           11        AS 23.10.145.  

           12        AS 23.10.055(b)-(c)(1); 29 U.S.C.  213(a)(1).   



                     Fred Meyer of Alaska, Inc. v. Bailey , 100 P.3d 881, 884 (Alaska 2004)  

(quoting Dayhoff  v.  Temsco  Helicopters,  Inc. ,  848  P.2d  1367,  1372  (Alaska  1993))  

(internal quotation marks omitted); Solis v. Washington, 605 F.3d 1079, 1088 (9th Cir.  





                     Solis, 656 F.3d at 1088 (Under the FLSA, "the employer has the burden of  


showing that a particular exemption applies."); Fred Meyer , 100 P.3d at 884 (citing  

Dayhoff , 848 P.2d at 1371-72).   

                      The  superior  court  held  that  Mullings  "had  the  burden  of  proving  the  



                                                                  - 5 -                                                            6969

----------------------- Page 6-----------------------


                    Alaska's law specifically directs that for purposes of its exemptions, the  


term  "bona  fide  executive"  employee  "has  the  meaning  and  shall  be  interpreted  in  


accordance with 29 U.S.C. 201 - 219 [FLSA] as amended, or the regulations adopted  


                                     Under the federal rule, an "employee employed in a bona fide  

under those sections." 

executive capacity" includes any employee:  


                    (1) Compensated on a salary basis at a rate of not less than  

                    $455  per  week  .  .  .  ,  exclusive  of  board,  lodging  or  other  



                    (2) Whose primary duty is management of the enterprise in  

                    which   the   employee   is   employed   or   of   a   customarily  

                    recognized department or subdivision thereof;  


                    (3) Who customarily and regularly directs the work of two or  

                    more other employees; and  


                    (4) Who has the authority to hire or fire other employees or  

                    whose  suggestions  and  recommendations  as  to  the  hiring,  


exemption by clear and convincing evidence," citing Desmond v. PNGI Charles Town  


Gaming,  LLC,  564  F.3d  688,  691  (4th  Cir.  2009).    We  have  held,  however,  that  

employers are required to prove AWHA exemptions "beyond a reasonable doubt."  Fred  

Meyer , 100 P.3d at 884; Dayhoff , 848 P.2d at 1371-72.  Although the burden-of-proof  


issue is not raised on appeal, we note that other than the Fourth, the circuits that have  


explicitly adopted a standard of proof for the applicability of FLSA exemptions require  


proof by a preponderance of the evidence.  See Meza v. Intelligent Mexican Mktg., Inc.,  


720 F.3d 577, 581 (5th Cir. 2013); Foster v. Nationwide Mut. Ins. Co. , 710 F.3d 640, 646  


(6th Cir. 2013); Lederman v. Frontier Fire Prot., Inc. , 685 F.3d 1151, 1158 (10th Cir.  


2012);  Yi v. Sterling Collision Ctrs., Inc., 480 F.3d 505, 507 (7th Cir. 2007); Dybach v.  


State of Fla. Dep't of Corr., 942 F.2d 1562, 1566 n.5 (11th Cir. 1991); Dickenson v.  


United States, 353 F.2d 389, 392 (9th Cir. 1965) .   

          15        AS 23.10.055(c)(1).  

                                                              - 6 -                                                        6969

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                     firing, advancement, promotion or any other change of status  


                     of other employees are given particular weight.  

                     The  superior  court  found  that  Mullings  proved  only  the   first  of  these  

requirements:  it was undisputed that Alder's salary met the regulatory threshold of "not         

less than $455 per week."  As for the other three requirements, the superior court found           

that  Alder's  primary  duties  were  not  managerial,  that  he  did  not  customarily  and  


regularly direct the work of two or more other employees, and that he did not have any  

significant influence on decisions about hiring and firing.  Since all four requirements  



must be met before an exemption applies,                           the superior court concluded that Mullings  

had failed to prove that Alder was an exempt executive employee.  

                     The focus of Mullings's argument on appeal is that for purposes of the  

exemption's  second  requirement,  Alder's  "primary  duty"  was  management.                                                  The  



evidence at trial was conflicting.                   However, as noted above, all four requirements of the  

exemption must be satisfied before the exemption applies.  The third requirement -  


proof that the employee "customarily and regularly directs the work of two or more other  

employees" - is the most precisely defined of the four and the one Mullings clearly  

failed to meet.   

          16         29 C.F.R. 541.100(a)(1)-(4) (2014).  

          17        Dayhoff , 848 P.2d at 1372.  

          18         The superior court found that Mullings managed the business and Alder  

"was essentially reduced to a team leader of the customer service employees," with his  


duties "limited to ensuring that the store was closed and opened, that inventory was  


received  by  the  store,  that  the  store  was  staffed,  and  that  employees  complied  with  


rules."    While  Alder  clearly  performed  many  duties  that  would  be  considered  

"management"  under  the  federal  definition,  29  C.F.R.    541.102  (2014),  the  more  

difficult  issue  was  whether  they  constituted  his  "primary  duties"  or  were  instead  

secondary to ministerial duties such as serving customers on the retail floor.  See Fred  


Meyer , 100 P.3d at 884-85.  


                                                               - 7 -                                                         6969

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                    Under federal law - which the AWHA incorporates19 - "two or more  


other employees" means "two full-time employees or their equivalent," in total 80 hours  


of work per week.              The phrase "customarily and regularly" means "a frequency that  


must be greater than occasional but which, of course, may be less than constant."                                           

                    There was evidence that Alder directed the work of other store employees  


when  they  were  present.    However,  the  evidence  fell  short  of  proving  that  Alder  


"customarily and regularly direct[ed] the work of two other full-time employees."  The  


court found at the conclusion of trial that "it was rare for two full time employees to be  

present" at the store, and Mullings's own evidence bore this out.   


                    Trial Exhibit 3 was a schedule that Mullings testified he prepared at the  

request of the Alaska Department of Labor, representing employees' hours from May  

2008 through September 2010, the period at issue.  Mullings testified the exhibit was  


"accurate as far as required time," though he also testified it did not reflect whether an  

          19        AS 23.10.145.  

          20        29 C.F.R. 541.104 (2014); see Sec'y of Labor v. Daylight Dairy Prods.,  

Inc. , 779 F.2d 784, 787 (1st Cir. 1985) (citing Department of Labor handbook for rule  


that "the total number of hours supervised [must exceed] 80" and concluding "that the  


80-hour rule is reasonable:  it is easy to apply and allows employers to be confident that  


they are complying with the statute"), disapproved of on other grounds, McLaughlin v.  


Richland  Shoe  Co. ,  486  U.S.  128  (1988);  Rubery  v.  Buth-Na-Bodhaige,  Inc. ,  470  

F. Supp. 2d 273, 277 (W.D.N.Y. 2007) ("[T]he Regulations and case law provide that  


plaintiff must direct at least 80 hours of subordinate work a week to be exempt."); Perez  


v. RadioShack Corp. , 386 F. Supp. 2d 979, 989 (N.D. Ill. 2005) ("[T]he court defers to  


the regulations and case law, all of which suggest that the FLSA imposes a bright-line  


80  hours  per  week  subordinate  supervision  requirement  in  order  for  the  executive  

exemption  to  apply.").    There  are  recognized  exceptions  to  the  80-hour  rule,  not  

applicable here, "where the industry as a whole has a standard workweek of slightly less  

than 40 hours." Daylight Dairy , 779 F.2d at 787 n.2.  

          21        29 C.F.R.  541.701 (2014).  

                                                             - 8 -                                                      6969

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employee actually worked as scheduled - if, for example, an employee was out sick.  


According to Exhibit 3, there was just one other full-time employee scheduled to be  


                                                                                                               In 2009, there was one  

present at the store throughout 2008 when Alder was working. 


other full-time and one part-time employee present at the store when Alder was working,  


for  a  total  of  at  most  53  hours  a  week  of  other  employees'  time  under  Alder's  

supervision.    The  schedule  for  2010  shows  that  there  was  just  one  other  full-time  


employee in the store from January through May; from June through August there was  


one full-time employee and one close-to-full-time employee in the store on weekdays,  


totaling  at  most  (in  August)  68.5  hours  of  other  employees'  time  under  Alder's  

supervision.    During  none  of  these  documented  periods,  thus,  did  Alder  meet  the  

regulatory  minimum  of  supervising  "two  full-time  employees  or  their  equivalent"  


totaling 80 hours.  And although he may have come close in the summer of 2010, a few  

months  of  supervising  even  80  hours  of  other  employees'  time  does  not  meet  the  


requirement that the supervision be "customary and regular" in the context of the two  


years at issue.                 

            22         Mullings contends that he was a full-time employee himself for purposes                                   

of the supervision requirement, not only while he was physically present in the store but   

also while he was away, as he considered himself constantly on call.                                                     But we reject the   

notion that an employer may also be an employee under another employee's supervision     

for purposes of satisfying this requirement of the exemption.  See AS 23.30.395(19), (20)  

(defining "employee" to mean "an employee employed by an employer" and defining  

"employer" to mean "a person employing one or more persons").   

            23         Because it is unnecessary in this case, we do not establish bright-line rules  

about  the  number  of  hours  necessary  to  qualify  other  employees  as  "full  time"  for  

purposes of the supervision requirement or the amount of the plaintiff's own time that  

must involve supervision before it may be considered a "customary and regular" part of  

the plaintiff's duties.  See, e.g., Daylight Dairy, 779 F.2d at 788  ("[T]he district court  


determined that no manager in the category at issue met the 80-hour requirement more  


                                                                       - 9 -                                                                 6969

----------------------- Page 10-----------------------


                    Mullings failed to prove this requirement; there is no evidence in the record  


from which the superior court could have reached a different conclusion.  And because  


one of the four requirements for the exemption  was plainly not met and all four are  

necessary for the exemption to apply, we need not discuss the others.24  


          B.	       The Superior Court Did Not Clearly Err By Finding That Mullings's  

                    Failure To Pay Alder Overtime Was Not In Good Faith, Justifying  


                    Liquidated Damages.  

                    The AWHA provides that a violating employer "is liable to an employee  


affected in the amount of unpaid minimum wages, or unpaid overtime compensation  . . .  


and, except as provided in (d) of this section, in an additional equal amount as liquidated  



damages."           After finding Mullings liable under both the AWHA and the FLSA, the  


than 76 percent of the time.  We agree with the district court's conclusion that this falls  


short of 'regular and customary' supervision of 80 hours of work."); but see Murray v.  


Stuckey's, Inc., 50 F.3d 564, 568 (8th Cir. 1995) (disagreeing with Daylight Dairy that  


76 percent falls short of "regular and customary" but finding that supervising "at least  

two or more employees who worked eighty hours per week 98.2% of the time . . . is  

'customarily and regularly' by any definition"). The court in Murray also observed that  


under Department of Labor guidelines, a 40-hour week "is not a rigid standard" for  


defining full-time employment.  Id.  




                    In his reply brief, Mullings for the first time argues the applicability of the  

administrative  employee  exemption  found  in  AS  23.10.055(a)(9)(A)  and  29  U.S.C.  


 213(a)(1) (2012).  He did not raise the argument below or address it in his opening  


brief on appeal, and we therefore consider it waived.  See Jones v. Bowie Indus., Inc.,  


282 P.3d 316, 337 (Alaska 2012) (citing Gunter v. Kathy-O-Estates, 87 P.3d 65, 69 n.10  

(Alaska 2004)).  



                    AS 23.10.110(a). The FLSA provides for the same damages.  29 U.S.C.  


 216(b) (2012);  see Braswell v. City of El Dorado, Ark., 187 F.3d 954, 957 (8th Cir.  

1999)  ("An  award  of  liquidated  damages  under    216(b)  is  mandatory  unless  the  

employer can show good faith and reasonable grounds for believing that it was not in  


                                                              -  10 -	                                                      6969

----------------------- Page 11-----------------------

superior court calculated unpaid overtime damages under each law and awarded the  


greater of the two (the AWHA award, $48,125.10), plus the same amount in liquidated  

damages, for a total of $96,250.20.  


                     The AWHA allows the court to decline to award liquidated damages, or to  


award an amount less than that set out in the statutory formula, "if the defendant shows  


by clear and convincing evidence that the act or omission giving rise to the action was  


made in good faith and that the employer had reasonable grounds for believing that the  


                                                                                        "This provision contains both  

act or omission was not in violation of AS 23.10.060." 

a subjective element - that the employer acted in good faith - and an objective element  


-  that  the  employer  reasonably  believed  it  was  not  violating  AWHA's  overtime  



provision."           The superior court found that Mullings failed to prove  he was entitled to  

this good-faith defense by clear and convincing evidence.  

                     In Air Logistics of Alaska, Inc. v. Throop , we reviewed a number of cases  


that had considered the issue of good faith in the context of overtime claims under the  


FLSA.          We identified "[c]ertain factors . . . that are repeatedly relied upon by the  

courts," among which was that "an employer who does not take affirmative steps to learn  


the law will not be able to show good faith and reasonableness."29  This factor is reflected  


in the AWHA:  "Failure to inquire into Alaska law is not consistent with a claim of good  



violation of the FLSA." (citation omitted)).  

          26         AS 23.10.110(d).  The federal statute gives the court similar discretion to     

decline to award liquidated damages in cases of good faith.  29 U.S.C.  260 (2012).  

          27        Air Logistics of Alaska, Inc. v. Throop , 181 P.3d 1084, 1097 (Alaska 2008).  

          28         Id. at 1098.

          29         Id.

                                                               -  11 -                                                        6969

----------------------- Page 12-----------------------


faith under this subsection."                We further observed in Air Logistics that "courts often   

examine whether the employer went to counsel for advice, and some cases indicate that  



reliance on counsel alone can be sufficient to establish good faith and reasonableness." 

Reliance on advice from the Department of Labor may also indicate good faith.32  


                    In Air Logistics , we affirmed a finding of good faith because the company's  

management showed that it had taken affirmative steps to learn the law before enacting  


new overtime rules: it had taken its proposed pay plan to the Department of Labor "to  

ensure compliance with applicable laws" and, following several meetings and phone  


                                                                                    The company had also shown  

calls, had received approval from an agency supervisor. 


its  plan  to  its  lawyer  and  "provided  employees  with  detailed  information  about  the  




                    In this case, in contrast, the superior court found that Mullings made "no  

reasonable or active efforts . . . to educate himself" about the overtime laws.  Mullings  


argues  that  the  superior  court  clearly  erred  by  not  inferring  good  faith  from  (1)  his  

attendance   at   NAPA   franchisees'   conferences   where   representatives   from   the  

Department  of  Labor  discussed  overtime  requirements,  (2)  his  compliance  with  the  


NAPA payroll guidelines for employee compensation and raises, and (3) Alder's failure  

to request overtime despite his greater experience in store management.  

          30       AS 23.10.110(g).  

          31       Air Logistics , 181 P.3d at 1098 (footnote and citation omitted).  

          32       Id. at 1098-99 (citation omitted).  

          33       Id. at 1099.  

          34       Id.  

                                                           -  12 -                                                     6969

----------------------- Page 13-----------------------

                   But  the  evidence  supports  the  superior  court's  conclusion  that  any  

affirmative efforts Mullings made, unlike those in Air Logistics , were not meaningful.  


Direct consultation with an attorney or the Department of Labor may well have flagged  



the  issue  of  whether  Alder  was  properly  treated  as  an  exempt  employee. 


Mullings's attendance at the NAPA conferences apparently failed to prompt any further  


inquiry, despite presentations by the Department of Labor.  Mullings did not consult a  

lawyer  about  wage  and  hour  issues.    Nor  is  it  apparent  whether  Mullings  correctly  


implemented the NAPA guidelines or justifiably relied on them; the guidelines are not  


in the record.  That Alder never requested overtime is of no significance, as the duty to  


inquire was Mullings's, not Alder's. The absence of any evidence that Mullings inquired  

into whether Alder was properly exempt from the overtime laws supports the superior  

court's finding that Mullings failed to prove his good faith by clear and convincing  


evidence.  We therefore need not reach the question whether Mullings had reasonable  


grounds for believing his omission did not violate the law.  The superior court's award  

of liquidated damages was not an abuse of discretion.  

V.        CONCLUSION  

                   The judgment of the superior court is AFFIRMED.  

          35       According to Mullings, a Department of Labor representative informed him  

after  the  fact  that  to  avoid  liability  would  have  been  "as  simple  as  coming  to  [the  


Department] and sitting down and writing . . . out an agreement between [Mullings] and  


[Alder], . . . stating what would be regular time, what would be overtime, encompassing  

what the salary would be for that."   

                                                           -  13 -                                                        6969  

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