Equal Employment Opportunity Commission, Plaintiff-appellant,anddarlene Walters, Intervening Plaintiff-appellant, v. Metropolitan Educational Enterprises, Incorporated, Andleonard Bieber, Defendants-appellees, 60 F.3d 1225 (7th Cir. 1995)

This case presents the question whether, by virtue of recent legislative developments or a closer look at old ones, this Court should overrule its decision in Zimmerman v. North American Signal Co., 704 F.2d 347 (7th Cir. 1983). In that case, we defined "employer" in the context of the Age Discrimination in Employment Act ("ADEA"), a construction since extended to other anti-discrimination legislation including Title VII. The Equal Employment Opportunity Commission ("EEOC") urges us to adopt a more expansive definition. Intervening plaintiff Darlene Walters joins in this plea for the simple reason that our Zimmerman definition forecloses her Title VII retaliatory discharge claim against the defendants, her former employer and the company's president. We are not persuaded that subsequent events dictate overruling Zimmerman, however, and therefore reject the EEOC's and Walters' invitation to do so.

BACKGROUND

The EEOC sued Metropolitan under Sec. 704(a) of Title VII (42 U.S.C. § 2000e-3(a)) in 1993, alleging that Metropolitan had fired Walters three years earlier in retaliation for her filing of a gender discrimination charge. Walters subsequently intervened as plaintiff. Metropolitan moved to dismiss the suit for lack of subject matter jurisdiction, alleging that the company was not an "employer" under Title VII, and the parties proceeded to discovery on that question. In August 1994, after analyzing the parties' stipulations regarding Metropolitan's payroll records, the district court granted defendants' motion to dismiss on the ground that Metropolitan did not qualify as an employer under Title VII and there was accordingly no federal jurisdiction.¹  864 F. Supp. 71, 73 (N.D. Ill. 1994).

Under Title VII, an employer is "a person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year." 42 U.S.C. § 2000e(b). The statute does not explicitly prescribe a method of counting employees to verify whether the requisite minimum of 15 is reached, but two have emerged from case law. One, endorsed by the EEOC and adopted by a number of courts, is the "payroll method." It looks at the number of employees maintained on an employer's payroll within a given week: if this number is at least 15 for at least 20 calendar weeks the jurisdictional minimum is satisfied, regardless of whether or not every employee on the payroll shows up for work every day of the calendar week.

The alternative method counts all salaried employees toward the minimum, but takes a different approach toward hourly or part-time workers. Such workers are considered employees only on days when they are physically present at work or are on paid leave. The jurisdictional minimum of employees must be at the workplace or on paid leave for each day of the work week, or the week will not be counted.

In Zimmerman, the Seventh Circuit endorsed this counting system and rejected the payroll approach.²  The panel in that case examined the statutory language of the ADEA and focused on its provision (like Title VII's) that an employer must have the requisite number of employees "for each working day of a week before that week can be counted toward the jurisdictional minimum." Id. at 353-354. Seeing no way to reconcile the phrase "for each working day" with the payroll method, the panel held that the correct method excluded hourly paid workers on days when they were neither working nor on paid leave. Id. To conclude otherwise, the Zimmerman panel held, would render the words "for each working day" superfluous and would be contrary to the "explicit definitional restriction chosen by Congress." Id.³  The panel also noted that had Congress wanted to define the jurisdictional minimum in terms of the number of employees on the payroll each week, it could certainly have done so. Id.

ANALYSIS

The EEOC and Walters aim a fusillade of arguments at Zimmerman. Primarily they contend that in enacting the Family and Medical Leave Act ("FMLA"), Congress endorsed the payroll method over the Zimmerman alternative in a manner that counsels deference from this Court. They also point to other case law and the EEOC's own guidelines which are contrary to the holding in Zimmerman. Finally, they submit that the payroll approach comports better with public policy considerations.

In considering these arguments, we bear in mind that compelling reasons are required to overturn Circuit precedent. "Stare decisis is of fundamental importance to the rule of law," Hilton v. South Carolina Public Railways Comm'n, 502 U.S. 197, 202, 112 S. Ct. 560, 563, 116 L. Ed. 2d 560 (1991), and has even greater force when the precedent in question involves a statutory construction. See Patterson v. McLean Credit Union, 491 U.S. 164, 172, 109 S. Ct. 2363, 2370, 105 L. Ed. 2d 132 (1989).

We also note that this Court based Zimmerman on a reading of the statute's plain text that we continue to endorse. As the Zimmerman panel noted, the phrase "for each working day" must be given some meaning within the context of the statute, and the most natural interpretation of that phrase looks to the number of employees physically at work on each day of the week. Plaintiffs suggest an alternative interpretation that looks to situations when an employee joins or exits the payroll mid-week; this seems a highly unlikely reading of the statute, particularly since instances where employees begin work on Wednesdays or depart on Thursdays are unlikely to occur with sufficient frequency to merit inclusion in a federal anti-discrimination statute.

While agreeing that the statute could have been worded more clearly, we believe that the Zimmerman court's interpretation of its plain text has stood the test of time and a new set of appellate eyes. Generally, a judicial construction of the plain language of the statute ends the matter conclusively: the law is clear that when a court can glean the meaning of a statute from its text, it should look no further. United States v. Hudspeth, 42 F.3d 1015, 1022 (7th Cir. 1994), certiorari denied, --- U.S. ----, 115 S. Ct. 2252, 132 L. Ed. 2d 260 (1995).

Notwithstanding this fact, plaintiffs contend that the recent passage of the FMLA, with a definition of "employer" that closely tracks those in the ADEA and in Title VII, is reason enough for us to re-examine Zimmerman 's holding.⁴  The Senate Report for the FMLA endorses the payroll approach to identifying employers:

The quoted language parallels language used in Title VII of the Civil Rights Act of 1964 and is intended to receive the same interpretation. As most courts and the EEOC have interpreted this language, "employs * * * employees for each working day" is intended to mean "employ" in the sense of maintain on the payroll. It is not necessary that every employee actually perform work on each working day to be considered for this purpose.

S.Rep. No. 3, 103d Cong., 1st Sess. 21-22 (1993), U.S.Code Cong. & Admin.News 1993, pp. 3, 24. Such congressional commentary, unfortunately for plaintiffs, has little effect on our view of Title VII. First, the Congress that passed the FMLA has no special sanction to interpret the actions of a previous Congress. "The interpretation given by one Congress (or a committee or Member thereof) to an earlier statute is of little assistance in discerning the meaning of that statute." Pub. Employees Retirement Sys. of Ohio v. Betts, 492 U.S. 158, 168, 109 S. Ct. 2854, 2862, 106 L. Ed. 2d 134 (1989).

Second, although plaintiffs designate the adoption of the FMLA as a "significant development of the law on the proper interpretation of the statutory definition of 'employer' contained in Title VII," Pl.Br. at 13, this purported legal milestone occurred not within the text of the statute, but within legislative history, which has no force of law. As the District of Columbia Circuit recently observed, "A congressional report, even a conference report, is not legislation ... and it does not change the law." In re North, 50 F.3d 42, 46 (D.C. Cir. 1995); see also Davel v. Sullivan, 902 F.2d 559, 562 (7th Cir. 1990) ("The words of the statute, not the words of the legislative history, control statutory interpretation").

The Supreme Court has explicitly rejected the notion that judicial interpretation of a statute owes deference to language in a legislative report. In Pierce v. Underwood, the Court held that where there was an "almost uniform appellate interpretation" of legislation, re-enactment of the same statutory language would be presumed to re-enact that "settled judicial interpretation" regardless of a legislative report to the contrary. 487 U.S. 552, 567, 108 S. Ct. 2541, 2551, 101 L. Ed. 2d 490 (1988). While further action taken by Congress can justify the abandonment of statutory precedent, see Patterson v. McLean Credit Union, 491 U.S. 164, 173, 109 S. Ct. 2363, 2370-71, 105 L. Ed. 2d 132, legislative history is not akin to legislative action. See Pierce, 487 U.S. at 567-568, 108 S. Ct. at 2551-52.

In this case, as plaintiffs point out, there is an existing Circuit split, not a settled judicial interpretation, regarding the correct means of determining who is an employer. Still, we note that had Congress truly intended to enact the payroll method into law, it certainly could have done so in clear and unambiguous terms. Cf. Pierce, 487 U.S. at 568, 108 S. Ct. at 2551 (where legislative report is out of accord with prior usage, "the clearest indication of congressional command" will be required). Instead, knowing (because Zimmerman and other like cases so instructed it) that Title VII's and the ADEA's "for each working day" language was problematic, Congress chose not to respond to these concerns in enacting the FMLA. If indeed Congress wished to resolve the Circuit conflict in a particular direction, this was "a strange way to make a change." In re North, 50 F.3d at 46, quoting Pierce, 487 U.S. at 567, 108 S. Ct. at 2551.

Plaintiffs also argue that judicial and regulatory authority from other Circuits and from the EEOC support overruling Zimmerman. Among our sister Circuits, the First and Fifth have adopted the payroll method, as have a number of district courts;⁵  the Eighth Circuit and several other district courts have adopted the Zimmerman approach.⁶  The EEOC's Statement of Policy Guidance explicitly rejects the Zimmerman approach and endorses the payroll method. EEOC Policy Guidance, EEOC Compliance Manual, Vol. II, Notice No. N-915-052 (April 20, 1990).

Regarding the Circuit split, it is enough to note the large number of recent cases on both sides of the issue; that some courts have disagreed with our analysis while others have adopted it hardly presents a pressing reason to overturn settled precedent. The EEOC's Compliance Manual, on the other hand, was promulgated well after our decision in Zimmerman. While we afford deference to legitimate agency interpretations of statutory language made before we have ruled on an issue, the converse is not true: the judiciary, not administrative agencies, is the final arbiter of statutory construction. See Chevron, USA, Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843 n. 9, 104 S. Ct. 2778, 2781 n. 9, 81 L. Ed. 2d 694 (1984).

Finally, plaintiffs urge us to consider potential policy problems inherent in our retention of the Zimmerman standard in the face of a conflicting interpretation regarding the FMLA. We have not yet been asked to interpret the FMLA and decline to create a conflict where none yet exists. Plaintiffs also present a parade of horribles that could result from continued application of Zimmerman, most notably an employer's ability to evade the strictures of anti-discrimination legislation simply by structuring operations to avoid having the jurisdictional minimum present on each working day. Yet in more than a decade since this Court ruled in Zimmerman, this parade has had conspicuously few participants. Finally, plaintiffs argue that the payroll method is simpler to implement; this rationale, however, simply is not sufficient to override settled statutory interpretation.

CONCLUSION

Failing to see a compelling reason for overturning our Circuit precedent in Zimmerman, we affirm the judgment of the district court dismissing plaintiffs' suit for lack of jurisdiction.

RIPPLE, Circuit Judge, concurring.

I join the judgment of the court. Although the correctness of Zimmerman v. North American Signal Company, 704 F.2d 347 (7th Cir. 1983), is not free from doubt, I must conclude, with some reluctance, that the EEOC has not made a sufficiently strong case to warrant our overruling established precedent of long standing. As the majority notes, our obligation to adhere to the doctrines of stare decisis and precedent is especially strong when we are dealing with matters of statutory construction. See Patterson v. McLean Credit Union, 491 U.S. 164, 172, 109 S. Ct. 2363, 2370, 105 L. Ed. 2d 132 (1989). That obligation is tempered somewhat by our obligation to reassess our work when a thoughtful divergence of opinion emerges from the other circuits. Upon examination of the case law to the contrary, however, I cannot say that those cases cast such a shadow on Zimmerman as to justify its overruling. This issue is one, however, that deserves definitive legislative attention. The ambiguity of the present situation ought to be clarified. The scope of Title VII ought to be the same in Boston and New Orleans as it is in Chicago.