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FLSA in the Public Sector
Numerous court
challenges have gone all the way to the United States Supreme Court
where cities and counties were claiming that the Fair Labor Standards
Act (FLSA) should not apply to them. Despite their efforts, the Supreme
Court conclusively held that FLSA provisions apply to local government
entities. Garcia v. San Antonio Metro Transit Authority 469 U.S. 528
(1985).
While most people view
the FLSA as applicable only to “overtime” payment, there are several
other provisions within the FLSA that may subject public employers to
liability, including proper computation of the overtime rate, allowing
the use of compensatory time off, misclassifying “exempt” employees, and
even the timeliness of overtime payment.
Applicability of FLSA in Law Enforcement
The threshold question for any FLSA issue is whether the
positions in question are “exempt” or covered by the provision of the
FLSA. In law enforcement, an employee that is generally “exempt” is one
defined under the FLSA as “executive” employees, which require both of
the following:
1.
The
employee's primary duty must consist of the management of the enterprise
in which the employee is employed, or of a customarily recognized
department, subdivision or agency thereof; and
2.
The
employee's work must involve the customary and regular direction of the
work of two or more employees.
The Department of Labor has promulgated factors in
determining whether an employee participates in enough management
activities to fall within the executive exemption. These factors
include:
·
Hiring or
firing employees;
·
Scheduling of employees;
·
Evaluating employees;
·
Directing
the work of employees; and
·
Assigning
work to employees.
The most recent
battlefield of FLSA litigation in law enforcement involves sergeants’
status as exempt or not. The Courts have looked to the above factors in
determining whether or not the sergeant in question spends more than 50%
of his or her time performing the above tasks. The more management and
discretion provided to sergeants in handling their employees, the more
likely they will be allowed to be exempt pursuant to the FLSA. The
Department of Labor has in effect resolved this dispute by expressly
providing that “police sergeants are entitled to overtime pay even if
they direct the work of other police officers because their primary duty
is not management.”
What some consider to
be the last loophole for what would otherwise be “exempt” employees is
the applicability of disciplinary action to exempt employees. Exempt
employees are required to be salaried and thus paid a certain sum
regardless of hours worked. Where an employer has in practice or in
policy “as a practical matter” the ability to, or has imposed unpaid
suspensions of less than one week against exempt employees, the employer
classification of the employees as
FLSA exempt may be defeated.
Computation of Overtime Rate
Overtime pay equals one
and one-half times the employee's “regular rate” of pay. Where disputes
arise in this area is in calculating the correct “regular rate” of pay
to determine what the overtime payment should be. The FLSA does not
equate the “regular rate” as merely the employee's salary. Pursuant to
the FLSA, the regular rate includes “all remuneration for employment
paid.” Below are examples of what have been held to be required
inclusions in determining the regular rate of pay:
·
Shift
differential pay;
·
Longevity
pay;
·
Special
assignment pay;
·
Hazard
pay;
·
Educational incentive pay;
·
POST
Certificate pay
·
On call
pay; and
·
Bonus for
quality of work.
Items which, although
are part of remuneration to employees, that have been held not to be
required as part of the regular rate of pay include the following:
·
Discretionary bonus;
·
Holiday pay (if equivalent to regular earnings);
·
Retirement contributions;
·
Call back
pay;
·
Health
premiums;
·
Uniform
allowances; and
·
Tuition
reimbursement.
Timeliness of Payment
of Overtime
Public employers have lost millions of dollars by simply
failing to timely pay overtime. In one significant case the City of Los
Angeles paid out fifty million dollars to its police officers for
failing to timely pay their overtime after the riots which occurred in
the aftermath of Rodney King. The FLSA requires an employer to pay
overtime “as soon as practicable.” Courts have generally construed these
requirements to require that overtime be paid on the regular payday
following the pay period in which the overtime was worked. The only
exception to this is where the amount of overtime compensation cannot be
determined until sometime after the regular pay period. However, in such
case, the overtime must be paid as soon as the employer can compute the
pay and arrange for payment.
On-Call Time
The fact that an employee must remain available for recall,
in and of itself, does not require that such off-duty, on-call time be
compensated. It is the degree of restriction placed upon an employee’s
ability to engage in personal pursuits which will be determinative of
whether an obligation to pay for such off duty time arises.
The Supreme Court first addressed the issue in 1944. The DOL
regulations citing that case and other federal cases, state:
“An employee who is required to remain on-call on the
employer’s premises or so close thereto that he cannot use the time
effectively for his own purposes is working while on-call. An employee
who is not required to remain on the employer’s premises but is merely
required to leave word at his home or with company officials where he
may be reached is not working while on-call.”
While there are certain rules which apply exclusively to
public safety employees (which will be discussed), there are some
general factors which courts and the DOL appear to weigh most regularly
in determining whether compensation is required for on-call time:
-
terms of a
collective bargaining or employment agreement;
-
physical
restrictions placed on an on-call employee;
-
maximum period
of time allowed by the employer between the time the
employee was called and the time he or she responds to work;
-
percentage of
calls expected to be responded to by on-call employees;
-
frequency of
actual calls during on-call periods;
-
actual uses of
on-call time by an employee; and
-
what
disciplinary action, if any, is taken for failure to respond to any
or a certain percentage of calls.
Restrictions on Movement.
Requiring an officer to remain at home and in uniform, ready to respond
immediately would certainly require compensation. See D.O.L. Opinion
Letter, September 4, 1987. However, employees who are free to
pursue personal interests, be with their families or carry on another
business are far less likely to be eligible for compensation. Requiring
an off-duty employee to carry a beeper or leave a phone number where he
or she can be reached at all times, by itself, is not enough to trigger
a requirement for compensation. See Wage and Hour Opinion Letters of
January 4, 1968, March 12, 1987, September 16, 1987, December 10, 1987
and November 3, 1988. In fact, one court felt that wearing a beeper
was something an employee could do to minimize the effect of the
employer’s restrictions.
Norton v. Worthen Van Service, Inc.,
(10th Cir. 1988) 839 F.2d 653.
Response Time.
Where employers require a response within a very short period of time,
there is a greater likelihood that on-call compensation will be
required. However, the geography of the community should be taken into
account. For example, in a rural area, where an employee could
reasonably be expected to reach any location in town within 5-10
minutes, shorter response times might be allowed. However, in a larger
city, even a 15-20 minute response time requirement might trigger
on-call time pay.
By way of example,
EMT’s who were required to report to work in 5 minutes were entitled to
on-call compensation. Wage and Hour Administrator, Opinion Letter,
November 16, 1988. Conversely, in a very small rural community, a
7-minute response time was held not too restrictive. Wage and Hour
Administrator, Opinion Letter, September 8, 1988.
Use of Compensatory
Time
Where employees have
accrued compensatory time off he or she is entitled to use that time at
the employees discretion. The FLSA requires that the employee “shall be
permitted to use such time off” within a “reasonable period” after
making a request unless such time off would “unduly disrupt” the
operations of the employe.
“Reasonable period” is
subject to interpretation and has been construed differently by
different courts. Unfortunately for California public employees the
Federal 9th Circuit Court of Appeals has significantly
altered the past holdings of what a “reasonable period” is. Under
Mortensen v. County of Sacramento, (9th Cir. 2004) 368
F.3d 1082, employers now have up to one-year to allow an employee
to use comp time. Even worse, contrary to prior case law the
Mortensen case allows the employer to select the date in which comp
time off will be granted. Keep in mind that the Mortensen case
controls the minimum requirements under the FLSA. If your MOU
requires the employer to allow use of comp time at the employees option,
the MOU will control. Also, if it has been past practice (since it was
legally required until Mortensen) to allow the employee to decide
when to use comp time, that practice must continue until the employer
changes it in a meet and confer process. El Cajon Police Officers
Association v. City of El Cajon, (2006) WL 1359647.
Remedies for
Violation of the FLSA
Employees who have had their rights pursuant to the FLSA violated may
bring a civil action against their employer. An employee in a civil
action may recover their unpaid wages, an equal amount in liquidated
damages (double) plus costs and attorney's fees. Employees may go back
two years or, if the employer's conduct is “willful,” may go back three
years. |
