The Fair Labor Standards Act and police compensation.

Congress passed the Fair Labor Standards Act (FLSA) (1) during the economic depression in 1938 in an effort to expand the number of jobs available in the United States. They reasoned that if an employer was required to pay employees extra for working more than 40 hours a week, the employer, instead, would decide to hire new workers at the lower wage, thus creating more jobs. In 1974, Congress amended the FLSA, making it applicable to public sector employees. However, in National League of Cities v. Usery, (2) the U.S. Supreme Court held that the 1974 amendment of the FLSA was unconstitutional with respect to employees performing traditional government functions, such as law enforcement. In 1985, the Supreme Court reversed itself and ruled that Congress did have the power to apply the FLSA to state and local governments. (3)

[ILLUSTRATION OMITTED]

It is essential that a law enforcement administrator charged with scheduling employees has an understanding of the applicability of the FLSA's compensation provisions to public sector employees. Failure could lead to significant financial liability for unpaid wages and overtime. For example, the failure to properly credit employees one-half hour per day for time spent performing a government function could mushroom into millions of dollars of liability when that one-half hour is multiplied by the number of employees performing the function and by the number of days the function was performed over a period of 2 to 3 years. This is especially true when considering that in some instances, such employees would be entitled to liquidated damages in an amount equal to the lost wages, as well as court costs and attorneys' fees. (4) To fairly compensate employees and avoid the consequences that may flow from miscalculation of wages, administrators must have a working knowledge of who is covered by the FLSA, what activities of covered workers must be compensated, what constitutes overtime under the FLSA, how much a covered employee must be paid for any overtime, and when a police agency can give a covered employee compensatory hours off in lieu of paying overtime wages. This article addresses these issues.

At the time that this article was written, the U.S. Department of Labor was proposing a number of changes to the definitions of exemptions from FLSA coverage. For example, under the proposed changes, most salaried managers and supervisors no longer will be entitled to overtime pay under the FLSA if their most significant responsibility involves the supervision of other employees. Currently, the law generally requires that such individuals spend a majority of their time engaged in the actual supervision of other employees to be exempt from these provisions. (5) Commentators have argued exactly how much impact these changes actually will have on law enforcement. (6) On April 19, 2004, Secretary of Labor Elaine Chao announced modifications to the proposed changes. Among these modifications is language that clearly states that police officers generally are covered by the FLSA. (7) The original proposed changes did not make this distinction. All of the proposed changes, which are scheduled to take effect in August 2004, are detailed at the Department of Labor Web site at www.dol.gov.

[ILLUSTRATION OMITTED]

Coverage

The FLSA covers all public employees not specifically exempted by the law. However, there are a number of specific exemptions. First, elected officials and their appointed staffs specifically are exempted from coverage. (8) In a sheriff's department, that would include the sheriff and those policy-making officials directly appointed by the sheriff. One U.S. circuit court of appeals has expanded this exemption to sheriff's deputies. (9)

The most significant exemption to law enforcement agencies is the white-collar exemption. This provision exempts salaried executive, administrative, and professional personnel as long as the salary is greater than $8,060 per year. (10) Under this exemption, the salary may not fluctuate except for absences of more than 1 day. (11) In one case, the U.S. Supreme Court ruled that a salaried police sergeant still would fall within the white-collar exemption, even though the sergeant could be subject to discipline that could result in the loss of salary unless there was a "significant likelihood" such an event will occur. (12) Currently, the executive subgroup of the white-collar exemption encompasses the largest number of police personnel. As noted, under the current law, an executive or manager generally must spend a majority of work hours directly supervising the activities of other employees to qualify under this exemption. The Department of Labor's proposed change to the definition of an executive will exempt an individual who 1) is compensated on a salary basis in excess of $455 per week; 2) has the primary responsibility of managing the "enterprise" or managing a department or subdivision of the enterprise; 3) customarily or regularly directs the work of at least two or more full-time employees; and 4) has the authority to hire and fire or make suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees. (13) This change likely will result in a number of first-line police managers no longer being covered by the FLSA. For example, currently salaried sergeants who spend a majority of their time patrolling are covered by the FLSA. If the new executive definition takes effect, those same sergeants will not be covered by the FLSA if their most significant responsibility is the management of two or more employees and the sergeants evaluate those employees' job performance.

Currently, there is no maximum salary that exempts an employee from coverage under the FLSA. Instead, the responsibilities of a salaried employee determine whether that employee is exempt from coverage. Under the proposed Department of Labor changes to the definitions of exempt employees, most salaried employees who earn more than $100,000 per year in total compensation, not counting health and retirement benefits, will be exempt from coverage as a "highly compensated" white-collar worker as long as they have any duty identifiable as executive, administrative, or professional. (14) Most police officers have some duties that could qualify as administrative in nature under the new definitions. Therefore, a highly paid officer, even one who receives much compensation as a result of overtime, likely will be covered no longer by the FLSA once total compensation exceeds $100,000 per year. However, public employers who have a contractual or state statutory obligation to pay overtime will continue to be required to meet those contractual and statutory obligations.

One last issue in the area of covered employees is that of volunteers. There must be an employment relationship before the FLSA applies to an individual and an employer. A volunteer is not covered by the FLSA. Whether an individual is an employee or volunteer is a question of state law or contract. This does not allow a public employer to permit an employee to "volunteer" to perform the work of the employer during off-duty time. Such an employer would be required to compensate under the FLSA if that employer "allows" the employee to "volunteer" such work, even if the employer is not factually aware that the work is occurring. (15) However, one U.S. circuit court of appeals has ruled that under the FLSA, a police agency is not required to compensate an employee who volunteers to work at a rescue squad during off-duty hours, even though the rescue squad is directed by the same governmental agency that oversees the police department. (16)

Compensated Activities

Once an employee is determined to be covered under the FLSA, the next issue is what activities of the covered employee must be counted toward determining the number of hours that employee has worked and for which the employee must be compensated. In general, a covered employee must be compensated for performing the work of the employer. In law enforcement, the issues of the compensability of time on-call, in travel, in training, caring for equipment or animals, and during meal breaks are frequent problems for the law enforcement administrator.

Generally, time spent on-call is not compensable under the FLSA unless the employees are required to remain at the employer's premises or are so restricted that they cannot engage in personal activities. (17) In Ingram v. County of Bucks, (18) a group of county sheriff's deputies were subject to on-call shifts when they were not required to stay at work or wear their uniforms. They were required, however, to wear pagers, respond to a summons back to duty within a particular period of time; refrain from doing anything that would leave them incapable of returning to duty, such as consuming alcohol; and remain within a geographical boundary. The deputies sued, claiming that they should have been compensated under the terms of the FLSA for their time spent on-call. The Third Circuit U.S. Court of Appeals held in favor of the department. The court noted that the deputies could trade their on-call shifts and agreed with the Pennsylvania U.S. District Court, which concluded that the deputies were not limited significantly in their personal activities while on-call and that the on-call shifts were not so numerous as to be unduly burdensome.

[ILLUSTRATION OMITTED]

Time spent commuting from home to work is not compensable under the FLSA. This is true even if the employee uses, or is required to use, a government vehicle in the commute. (19) In Imada v. City of Hercules, California, (20) a group of officers demanded compensation under the FLSA for time spent traveling directly from their home to training activities required for their law enforcement certification. They did not receive any such compensation unless such travel occurred during the normal work day. The officers noted that travel time from their station to the training site was compensated and that the training primarily benefitted the agency. The Ninth Circuit U.S. Court of Appeals upheld a lower federal court ruling that denied the compensation. The court noted that under the FLSA, employers are not required to compensate employees for "walking, riding, or traveling to and from the actual place of the performance of the principal activity or activities which such employee is required to perform." (21) The court also noted that training is a normal activity for a law enforcement officer and benefits both the officer and the agency. As such, travel time is not compensable under the FLSA. However, the statute only applies to the use of the employer's vehicle "within the normal commuting area for the employer's business or establishment." Therefore, an agency that requires an employee to use a government vehicle to travel to training outside the normal commuting area would have to compensate the employee driving the vehicle. However, the employer would not have to compensate other employees in the vehicle unless the travel occurs during the normal work day. (22)

While time spent traveling to and from training generally is not compensable under the FLSA, time actually spent engaged in training, which primarily benefits the employer or is done at the employer's direction, is compensable. (23) The FLSA rules apply to law enforcement trainees, in a training academy, as long as they are factually employed by a law enforcement agency. (24) However, not all time at the academy is compensable. In Banks v. City of Springfield, (25) an Illinois U.S. District Court ruled that time spent at an academy not in class or involved in mandatory training is not compensable under the FLSA.

The FLSA does not require compensation for short periods of time spent caring for equipment. However, if the total period of time spent in such an activity is determined to be more than de minimis, then the employee must receive compensation. An employee who spends 30 minutes once a month cleaning a weapon need not be compensated for that activity. However, the same employee who spends 30 minutes every day caring for a dog that the employee uses as a canine officer must be compensated. (26) This is true regardless of who pays for the animal's food, equipment, and veterinary expenses. (27) Agencies may reach agreement with their employees on how they will be compensated for such activities. Any such agreement, however, must compensate the employee at least as generously as they would be compensated under the FLSA. (28)

The FLSA does not mandate the compensation of employees for time spent during meal breaks provided certain criteria are met. First, the break must be at least 30 minutes long. (29) Second, the employee must be relieved of work responsibilities during the break. (30) However, a law enforcement employee may be subject to recall during a break and may be required to receive permission before taking a break without requiring compensation under the FLSA. (31) If an employee is called back to duty during the first 30 minutes of the meal break, that employee must be compensated for all time actually spent on the break.

Overtime Considerations

For most employers, a covered employee must be paid overtime for all hours over 40 worked in a given week. This requires that an employer know how many hours an employee is working. This includes salaried employees who are not exempt from FLSA coverage. The FLSA does not permit most employers to "average" work hours (i.e., 60 hours one week and 20 the next) to avoid having hours count as overtime. However, there are special rules governing law enforcement employees that, in effect, permit a certain amount of averaging. For employees who perform law enforcement duties, as opposed to support positions, an agency may base compensation on a work schedule that bases overtime entitlement on how many hours the employee works in a period of up to 28 days. (32) If the agency elects to use this so-called "7k method" of overtime, the agency does not have to start paying overtime, until after the employee works 171 hours during the 28-day period. As an example, Police Officer Smith works 50 hours a week for 4 consecutive weeks, or 28 days. She has worked a total of 200 hours and normally would have to be paid 10 hours of overtime each week for 40 hours total. Under Section 7k, she would not be paid any overtime until she has worked 171 hours (during the fourth week) and then will be entitled to only 29 hours of overtime pay. Agencies may use a shorter period and prorate the number of hours. For example, an agency which elects a 2-week, or 14-day, period would not have to begin paying overtime until the law enforcement employee has worked 85.5 hours.

This method allows the law enforcement administrator some flexibility when confronted with significant staffing requirements over a short period of time. More commonly, it allows agencies to use rotating shifts where employees routinely work one number of shifts one week and a different number of shifts the next. For example, an agency could work officers three 12-hour shifts the first week and four 12-hour shifts the second. Over a 28-day period, such a method would result in an officer working a total of 168 hours without any entitlement to overtime compensation under the FLSA. In the same situation, other nonlaw enforcement employers would be required to pay 8 hours of overtime for each of the 2 weeks the employee worked the four shifts.

[ILLUSTRATION OMITTED]

Overtime Pay

The FLSA requires that covered employees be compensated for overtime at the rate of one and one-half times their regular hourly wage. For hourly wage employees, this is computable by simply multiplying the hourly wage times 1.5 and that result by the number of overtime hours. For nonexempt salaried personnel, there are several methods of computing the rate of overtime pay. The simplest is to figure the regular weekly wage (yearly salary divided by 52); divide that number by 40; multiply the result times 1.5; and then multiply that result times the number of hours worked over 40 in a given week. (33) If the Section 7k method is used for a 28-day period, the computation would be as follows: divide the yearly salary by 13 (the number of 28-day periods in a year); divide that number by 171 (the number of hours a law enforcement officer must work in a 28 day period before being entitled to overtime); multiply the result times 1.5; and then multiply that result times the number of hours worked over 171. The FLSA allows for another method of computing overtime for nonexempt salaried employees who work a fluctuating amount of overtime. Under this method, the employee must be paid a salary designed to compensate the employee for all hours worked, and the employee must work a fluctuating number of hours of overtime every week. The employer and employee must agree that this method of compensation will be used. This method requires a new computation every week based upon the number of hours actually worked. Payment under this method results in the employee generally receiving only one-half of their regular hourly wage for hours worked over 40. This method of compensation is rarely available to law enforcement in that such employees are typically scheduled for specific shifts, and, as such, the employer cannot argue that the employee works a "fluctuating" schedule depending upon the amount of work in a given week. (34)

Compensatory Time 

The FLSA allows another method of overtime compensation for public employees--compensatory time. A public employee may be given one and one-half hours compensatory time off for every hour of overtime worked. (35) A public safety employee may only be allowed to accumulate 480 hours of compensatory time before that employee must be paid overtime. (36) When an agency has a collective bargaining agreement with employees, it is required to negotiate if and how the agency will use compensatory time in lieu of overtime pay. Any such agreement must be in conformity with the FLSA. (37)

The use of compensatory time creates a potential financial liability for an agency. Employees who leave an agency must be paid for accumulated compensatory time based upon their salary when they leave the agency or their average salary over the last 3 years, whichever is higher. (38) As such, an agency may wish to "force" employees to take compensatory time when it is advantageous to the department. In Christensen v. Harris County, (39) the U.S. Supreme Court ruled that the FLSA permits a public employer to order an employee to take compensatory time off whenever the employer chooses to do so. This raises another issue. Can an employee demand to be allowed to take compensatory time off whenever the employee wants to take the time off? The law on this issue is less clear. The FLSA provides that an employee who has earned compensatory time by working overtime must be allowed to take such time off within a reasonable time of the request unless doing so would cause an "undue disruption" to the agency's operations. (40) In 1994, the Department of Labor wrote an opinion letter on this issue wherein it stated that a police agency could not turn down a request to use compensatory time as an undue disruption because the agency would have to pay overtime to another employee. (41) Two U.S. circuit courts of appeals have interpreted the justification for denying compensatory time off less restrictively. In Houston Police Officer's Union v. City of Houston, (42) the Fifth Circuit U.S. Court of Appeals addressed a Houston Police Department policy that placed an inflexible cap prohibiting more than 10 percent of the force being scheduled off on a particular day for such things as annual leave and compensatory leave. Thus, an officer who requested to use compensatory time on a day when 10 percent already had scheduled off would have that request denied. The court found this policy in compliance with the FLSA, stating that the statute only requires that an agency permit an employee to take compensatory time within a "reasonable" period after the request. This court interpreted the Department of Labor's opinion letter as prohibiting the denial of compensatory time because of the requirement to pay another employee overtime when there was no period within a reasonable time after the request when the agency could avoid paying overtime and allow the employee to use compensatory time. In Aiken v. City of Memphis, (43) the Sixth Circuit U.S. Court of Appeals reviewed a challenge to a Memphis Police Department policy that required officers to sign a log book for the shift during which they wished to use compensatory time. Shift commanders decided how many time-off spaces were available in the log book for a given shift based upon anticipated staffing requirements. Once those spaces were filled, no other officer would be allowed to use compensatory time during the shift. The court ruled that this policy was in compliance with the FLSA as long as an officer would be permitted compensatory time off within a reasonable time of the request. However, in DeBraska v. City of Milwaukee, (45) a Wisconsin U.S. District Court ruled that a denial of compensatory time may not be based solely on the fact that another officer would have to be paid overtime even when the officer requesting compensatory time could be given another shift off within a reasonable time. The Debraska ruling is not binding on any other court, whereas the Aiken and Houston Police Officer's Union cases are binding in those circuits.

[ILLUSTRATION OMITTED]

Conclusion

The rules contained in the FLSA are complex. The cost to a police department for failure to adhere to the rules can be astronomical. In addition, the police administrator involved in such scheduling and finance issues must understand and comply with contract terms and state statutes that deal with these same issues. Fortunately, there is a resource available. The Department of Labor will respond through its Web site, at http://www.dol.gov, to requests for interpretation of the FLSA. Good-faith reliance on such interpretations will allow a police department to avoid some of the damages caused by violation of the statute. (45) In large departments, a professional support staff should be employed to conform to these requirements.

Law enforcement officers of other than federal jurisdiction who are interested in this article should consult their legal advisors. Some police procedures ruled permissible under federal constitutional law are of questionable legality under state law or are not permitted at all.

Endnotes

(1) Title 29 U.S.C. [section][section] 201 et seq.

(2) 426 U.S. 833 (1976).

(3) Garcia v. SAMTA, 469 U.S. 528 (1985).

(4) Title 29 U.S.C. [section] 216(b). Unpaid employees are only denied such damages when the employer can establish that it acted in good faith upon a written opinion from the U.S. Department of Labor. See Title 29 U.S.C. [section] 259. An employer who can establish that it objectively acted in good faith and had no reason to know it was in nonconformity with the FLSA can avoid the liquidated damages. See Title 29 U.S.C. [section] 260. However, ignorance of the law is never good faith. See Thomas v. Howard University Hospital, 39 F.3d 370 (D.C. Cir., 1994).

(5) Title 29 Code of Federal Regulations [section] 541.103. There are other methods by which an employee will be exempt as a manager/executive under the FLSA white-collar exemption without spending a majority of time managing other employees. These require that the exempt employee perform such tasks as hiring and firing. See Title 29 Code of Federal Regulations [section] 541.1.

(6) The International Union of Police Associations, AFL-CIO, has claimed that the new rules would result in a minimum of 200,000 law enforcement officers becoming exempt from FLSA coverage. See Michael Leibig, "Report on Proposed DOL Rules Changes"; retrieved from http://www.iupa.org.newsroom/DOLRulesChanges.html.

(7) See http://www.dol.gov/esa/regs/compliance/whd/fairpay/fs17i_first_responders.htm.

(8) Title 29 U.S.C. [section] 203(e)(C)(ii).

(9) Nichols v. Hurley, 921 F.2d 1101 (10th Cir., 1991).

(10) Title 29 Code of Federal Regulations Section 541.1. Under the Department of Labor's proposed changes, this will increase to $23,600 per year.

(11) Title 29 Code of Federal Regulations [section] 541.118.

(12) Auer v. Robbins, 519 U.S. 452 (1995).

(13) See http://www.dol.gov/esa/regs/compliance/whd/fairpay/fs17b_executive.htm.

(14) See http://www.dol.gov/esa/regs/compliance/whd/fairpay/fs17h_highly_comp.htm.

(15) Title 29 U.S.C. [section] 203(e)(4)(A)(ii).

(16) See Benshoff v. City of Virginia Beach, 180 F.3d 136 (4th Cir., 1999).

(17) Armour and Co. v. Wantock, 323 U.S. 126 (1944). Title 29 Code of Federal Regulations [section] 785.17.

(18) 144 F.3d 265 (3rd Cir., 1998).

(19) Title 29 U.S.C. [section][section] 251-262.

(20) 138 F.3d 1294 (9th Cir., 1998).

(21) Title 29 U.S.C. [section] 254(a)(1).

(22) Id.

(23) Title 29 Code of Federal Regulations Sections 785.27 - 785.32. In Dade County v. Alvarez, 124 F.3d 1380 (11th Cir., 1997); cert. denied 523 U.S. 1122 (1998). Voluntary, off-duty training as part of a general physical fitness program was ruled not compensable under the FLSA.

(24) Title 29 Code of Federal Regulations [section] 553.226(c).

(25) 959 F.Supp. 972 (C.D. Ill., 1997).

(26) See Reich v. New York City Transit, 45 F.3d 646 (2d Cir., 1995).

(27) See Albanese v. Bergen County, 991 F.Supp. 410 (D.N.J., 1997).

(28) See Leever v. Carson City,_F.3d_(9th Cir., 2004); 2004 WL 396269.

(29) Title 29 Code of Federal Regulations, [section][section] 785.18 - 785.19, 790.6(b).

(30) Title 29 Code of Federal Regulations [section] 785.19.

(31) See Henson v. Pulaski County Sheriff, 6 F.3d 531 (8th Cir., 1993).

(32) Title 29 U.S.C. [section] 207(k).

(33) Title 29 Code of Federal Regulations, [section] 778.113.

(34) Title 29 Code of Federal Regulations, [section] 778.114.

(35) Title 29 U.S.C. [section] 207(o).

(36) Title 29 U.S.C. [section] 207(o)(3)(A).

(37) Title 29 U.S.C. [section] 207(o)(2)(A)(i).

(38) Title 29 U.S.C. [section] 207(o)(4).

(39) 529 U.S. 576 (2000).

(40) Title 29 U.S.C. [section] 207(o)(5).

(41) 1994 WL 1004861.

(42) 330 F.3d 298 (5th Cir., 2003).

(43) 190 F.3d 753 (6th Cir., 1999).

(44) 131 F.Supp.2d 1032 (E.D.Wis., 2000).

(45) Title 29 U.S.C. [section] 259. See Supra note 4.

By MICHAEL E. BROOKS, J.D.

Special Agent Brooks is a legal instructor at the FBI Academy.