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Millions of dollars at stake in FLSA ruling.

Decisions by a federal panel and a federal circuit court are casting doubt on the classification of municipal employees under the Fair Labor Standards Act (FLSA). Millions of dollars may be at stake as the implications of these decisions work their way through courts, Labor Department examinations and grievance procedures around the country.

A decision by the U.S. Circuit Court of Appeals for the Fifth Circuit in December of 1991 upheld the U.S. Labor Department in its view that advisory opinion letters (in which cities may ask for guidance on the proper classification of employees under the FLSA) are a guide to the Department in its operations but are not to be considered as final or binding on employers, employees or even the Labor Department.

Thus, no particular deference will be given to the existence of an opinion letter. Labor Department regulations are the statements which establish employee rights under the law. This ruling is expected to be very troublesome for municipal employers who have relied upon opinion letters issues to their city. It will be even more troubling to cities which have looked to Department of Labor (DOL) letter rulings issued to other jurisdictions for guidance on the treatment of similar classes of their own employees.

While concurring with the decision reached by the court, Fifth Circuit Judge J. Jones stated that, "I am concerned that DOL's position which has shifted with the tides of National League of Cities and Garcia, abrogates any notion of federalism in a situation implicating an integral operation in areas of traditional government function."

The federal government is facing costs of millions of dollars in back pay and overtime due to a Fair Labor Standards Act ruling making certain employees of the Social Security Administration eligible for overtime pay. While this ruling was made by a special federal panel essentially the same criteria are likely to be employed by judges and the U.S. Labor Department when reviewing city pay classification plans.

The ruling was on the question of whether certain claims examiners and claims authorizers within the Social Security Administration were eligible for overtime pay. In the mid 1970's the Federal Civil Service Commission had classified these employees as administrative and therefore ineligible for overtime pay.

NLC along with other state and local government groups has met with Labor Department personnel during the past month to discuss the extremely restrictive standard which is apparently increasingly being applied to define management and administrative personnel and thus impose the requirement to pay overtime. City governments should have their personnel departments and legal counsel review their current classification of employees with reference to overtime.
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Title Annotation:Fair Labor Standards Act
Author:Peterson, Doug
Publication:Nation's Cities Weekly
Date:Apr 27, 1992
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