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DOL Publishes New FLSA Rules, Rejecting Pro-Employer Changes to Fluctuating Workweek and Comp Time, Clarifying Tip Credit Rules
On April 5, the Department of Labor (DOL) published its updates to its interpretative regulations regarding the Fair Labor Standards Act (FLSA) in the Federal Register. to go into effect 30 days later. The Updating Regulations, revise out of date CFR regulations. Specifically, these revisions conform the regulations to FLSA amendments passed in 1974, 1977, 1996, 1997, 1998, 1999, 2000, and 2007, and Portal Act amendments passed in 1996.
As noted by several commentators, the final regulations are noteworthy for what was not included as much as for what was. Below is a brief description of the most significant changes and those changes originally proposed, that were not adopted:
Fluctuating Workweek Under 29 C.F.R. §778.114
The proposed regulations issued by DOL in 2008 under the Bush administration (73 Fed. Reg. 43654) would have amended regulations on the “fluctuating workweek” method of calculating overtime pay for nonexempt employees who have agreed to received pay in the form of fixed weekly payments rather than in the form of an hourly wage. The proposed regulations would have amended 29 C.F.R. §778.114 to permit payments of non-overtime bonuses and incentives (such as shift differentials) “without invalidating the guaranteed salary criterion required for the half-time overtime pay computation.” The DOL left out this proposed change from the final rules however, saying it had “concluded that unless such payments are overtime premiums, they are incompatible with the fluctuating workweek method of computing overtime.” Explaining the decision not to amend the FWW reg, the DOL noted that “several commenters … noted that the proposal would permit employers to reduce employees’ fixed weekly salaries and shift the bulk of the employees’ wages to bonus and premium pay” contra to the FLSA’s intent. The DOL’s decision to decline the proposed amendment is consistent with virtually all case law on this issue, as discussed here and here.
The DOL has also decided to revise the proposed regulations’ interpretation of Congress’ 1974 amendment, section 3(m) of the FLSA, to require advance notice to tipped employees of information about the tip credit the employer is permitted to take based on its employees’ tips. The final rule combines existing regulatory provisions to assure such employees are notified of the employer’s use of the tip credit, and how the employer calculates it. This regulation too is consistent with case law on the subject, requiring advanced notice of the tip credit.
The final rules also do not include a proposed change that would have allowed public-sector employers to grant employees compensatory time requested “within a reasonable period” of the request, instead of on the specific dates requested. Instead, the final rule will leave the regulations unchanged, “consistent with [DOL’s] longstanding position that employees are entitled to use compensatory time on the date requested absent undue disruption to the agency.”
The new CFR regulations go into effect on May 5, 2011.
Lewallen v. Scott County, Tennessee
This case was before the Court, following a bench trial. The issue before the Court revolved around whether time spent by a K-9 officer training and caring for a narcotics detection dog assigned to him was compensable under the FLSA. For the reasons discussed below, the Court held that such time was indeed compensable and awarded Plaintiff damages in accordance with his off-duty time spent performing these duties.
The Court recited the following facts as relevant to the inquiry regarding the compensability of the hours at issue:
Kristofer Lewallen began his duties as a K-9 officer on July 1, 2006, when Sheriff Jim Carson ordered him to pick up a black Labrador dog named “J.J.” Sheriff Carson told Lewallen to begin working with the dog and eventually J.J. would be trained as a narcotics detection dog. J.J. lived with Lewallen and Lewallen fed, trained and cared for him. These activities with J.J. were “off the clock,” that is, they were performed in addition to Lewallen’s regularly scheduled work.
In September 2006, Sheriff Anthony Lay took office, and Lewallen’s immediate supervisor became Chief Deputy Bobby Ellis. Lewallen continued to feed, train and care for J.J. under Sheriff Lay. In October 2006, J.J. received training in narcotics detection and was certified as a narcotics detection dog. In addition to the previous care, Lewallen now needed to perform maintenance training with J.J. to keep him certified. Lewallen was not compensated for any of the time he cared for and trained J.J., although Scott County paid for food, veterinary care, and other necessary items for the dog.
Lewallen was trained as a K-9 officer in January 2007. At that training Lewallen learned for the first time that K-9 officers should receive extra pay for the time they spent with their dogs off the clock. Lewallen researched the requirements and submitted the information to Chief Ellis, who gave it to the Scott County finance director. The information included a statement that the Department of Labor requires that the time spent with police dogs is compensable time and, if the hours spent with the dog exceed the 40-hour work week, time and one-half compensation must be paid.
In March 2007, Sheriff Lay called a mandatory meeting of the Sheriff’s Department employees where he announced the suspension of the County K-9 program. Nevertheless, Lewallen still had to care for and train J.J. since he still had possession of the dog. During this time, Lewallen kept training logs for J.J., which were given to Chief Ellis. The training logs showed the amount of time Lewallen was training J.J. during his off-duty hours-45 minutes to six hours a day on his days off and after his shifts.
Sheriff Lay allowed the K-9 officers to begin working with their dogs again in September 2007, and the Scott County K-9 officers were scheduled and sent for training and certification at that time. Lewallen asked Chief Ellis about compensation for his off-duty care and training of his dog, and Ellis said that the Sheriff knew about his request for overtime compensation. Other Scott County K-9 officers also asked Chief Ellis about getting paid for their overtime. Lewallen prepared a proposed schedule that gave each K-9 officer two hours of paid time per scheduled work day as compensation for the care and training of the dogs, and he submitted the plan to Chief Ellis. He never received any response to his proposal…
Lewallen claims one and one-half hours per day of overtime related to his responsibilities of caring for and training his narcotics dog for 874 days. Specifically, on a daily basis Lewallen provided food and water for his dog; brushed the dog and its teeth; administered arthritis medication; and cleaned the kennel area. In addition, the training log examples submitted as evidence show that he often trained his dog for several hours after his shift or on his days off. While Lewallen admits that one and one half hours is an estimate, Scott County has not produced any proof that this estimate is too high or unreasonable.”
Holding that such time was compensable the Court said:
“The first issue to be decided is whether the off-duty time Lewallen spent caring for and training his narcotics dog qualifies as work. The Supreme Court has defined “work” as “physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business.” Tenn. Coal, Iron & R.R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 598 (1944). This definition includes work performed off-duty. Steiner v. Mitchell, 350 U.S. 247, 256 (1956) (holding that employees must be compensated for activities performed for the employer before or after a regular work shift if the activities are an “integral and indispensable” part of the employees’ principal activities). The definition even applies when the work is not requested but is “suffered or permitted.” 29 C.F.R. § 785.11. “If the employer knows or has reason to believe that the work is being performed, he must count the time as hours worked.” 29 C.F.R. § 785.12.
To determine whether the care and training of the narcotics dog was compensable work, there are three questions to be considered: (1) Did Scott County require or suffer Lewallen to care and train J.J.? (2) Was the care and training of the dog necessarily and primarily for the benefit of the County? and (3) Was the off-duty work an integral and indispensable part of Lewallen’s principal activities? Brock v. City of Cincinnati, 236 F.3d 793, 801 (6th Cir.2001). The court concludes that the answer to all three questions is “yes.”
Sheriff Carson ordered Lewallen to pick up a black Labrador dog named J.J. and to begin working with the dog in the hope that J.J. eventually would be trained as a narcotics detection dog. J.J. was to live with and to be taken care of by Lewallen, but he was not Lewallen’s dog as evidenced by the fact that the Sheriff had the dog picked up from Lewallen when he was demoted. Sheriff Carson wanted Scott County to have a certified narcotics dog and K-9 officer, as did Sheriff Lay, and the sheriffs were certainly aware that keeping a dog at home would require taking care of it beyond Lewallen’s scheduled shifts. Even if Sheriffs Carson and Lay were not aware of the exact amount of time needed to care for and train a narcotics dog, they required Lewallen to perform these activities with J.J. Sheriff Lay was informed that Lewallen thought he should get paid for taking care of and training J.J. when he was off duty, but he did nothing to curtail Lewallen’s time spent with the dog, other than suspending the K-9 program for a few months. Sheriff Lay scheduled the training of J.J. and Lewallen in narcotics detection, and Scott County paid for J.J.’s food, veterinary bills, and other necessities. As the Sixth Circuit held in Brock, Scott County “required the officers to take the canines home with them, look after them at all times, keep them well-nourished and in good health, and have them ready for recall to active service at a moment’s notice.” Brock, 236 F.3d at 804.
The court finds that the care and training of J.J. was for the benefit of Scott County, and an integral and indispensable part of the County’s K’9 program. After he was certified, Lewallen’s principal activity for the Sheriff’s Department was working as a K-9 officer. Thus, the time Lewallen spent caring for and training his canine is compensable work.”
Not discussed here, the Court rejected Defendant’s assertions that such time was properly compensated by $1,000.00 per year and/or “comp time.”
To read the entire Memorandum Opinion, click here.
7th Cir.: In Order To Pay Proper “Comp Time” Under 553.25(d), A Worker Proposes A Date And Time For Leave. In The Absence Of Undue Disruption The Employer Must Grant Such Leave Or Violate 207(o)
Heitmann v. City of Chicago, Ill.
State and local governments are entitled to offer compensatory time off in lieu of overtime pay, if employees agree to this procedure. 29 U.S.C. § 207( o ). See Christensen v. Harris County, 529 U.S. 576 (2000). With the assent of the police officers’ union, Chicago has implemented a comp-time program. In this suit, some of the officers who have accumulated credits under the program contend that Chicago has made the leave too hard to use. A magistrate judge, presiding by the parties’ consent, agreed with plaintiffs and entered a detailed injunction specifying how Chicago must handle all future applications for compensatory leave. 2007 U.S. Dist. Lexis 67684 (N.D.Ill. Sept. 11, 2007) (decision on merits); 2008 U.S. Dist. Lexis 12983 (N.D.Ill. Feb. 21, 2008) (injunction).
An employee of a public agency which is a State, political subdivision of a State, or an interstate governmental agency-
(A) who has accrued compensatory time off authorized to be provided under paragraph (1), and
(B) who has requested the use of such compensatory time,
shall be permitted by the employee’s employer to use such time within a reasonable period after making the request if the use of the compensatory time does not unduly disrupt the operations of the public agency.
Plaintiffs say that a need to consider “undue disruption” supposes a particular time, so that employees are entitled to leave on a date and time of their own choosing, unless this would mean that too few police officers remained available for service. Chicago reads the language to mean that the Police Department, rather than the officer, gets to name the date and time for leave. Officers may submit requests; all the Department need do is offer some leave within a “reasonable time” of the request. The only effective restraint, in the City’s view, is that officers may not accumulate more than 480 hours of leave. Compensatory time is granted whenever an officer works more than 171 hours in any 28-day period. (Ninety minutes of comp time are awarded for each extra hour worked.) Once any given officer accumulates more than 480 hours, future overtime must be paid in cash. As long as it keeps the balance below 480 hours per officer, the City submits, it gets to call the shots about when the leave may be used.
After the parties collected extensive evidence, the magistrate judge found it undisputed that the Police Department does not have any policy about how and when leave may be used; decisions are left to each watch commander or shift supervisor. Most commanders or supervisors, most of the time, grant or reject applications for leave on a specific day without giving reasons. They do not attempt to get a substitute for a person who wants time off; instead they ask whether the shift or unit still would have enough personnel if leave were granted and no other change were made. If an application is granted, the supervisor or commander may or may not give the officer the date and time requested. If the application is denied, it is not put in a queue for use at the next time when leave would not “unduly disrupt” operations; instead the application is returned to the officer, who is told to apply again-but without any guidance about when leave could be made available without undue disruption. The Department does not keep records of requests for compensatory leave, so we do not know how often officers get to take time off on the dates they request, or even how many times they must apply (on average) to have any leave granted.
The magistrate judge concluded that these informal procedures fail to ensure that each worker gets to use leave within a reasonable time, and do no ensure that officers get their choice of dates for leave unless undue disruption would ensue. He issued an injunction to supply the rules he thought needed. The 7th Circuit determined that the Magistrate below made a misstep by ordering injunctive rather than monetary relief.
The 7th Circuit agreed, holding, “[u]nder § 553.25(d), a worker proposes a date and time for leave. The employer decides whether time off then would cause undue disruption, and if it would the employer has a reasonable time to grant leave on some other date. On Chicago’s view, the employee cannot ask for a particular date or time, but only for some leave; and if any time off within a reasonable time after the request would cause undue disruption, then the employee must wait longer-must wait, by definition, for an un reasonable time. That can’t be right. Chicago’s view produces an implausible relation between the “reasonable time” and “undue disruption” clauses. The regulation makes sense when specifying that the employer must ask whether leave on the date and time requested would produce undue disruption, and only if the answer is yes may the employer defer the leave-and then only for a “reasonable time.””
Noting that their were amendments to 553.25(d) pending which may change the outcome of the case, the Court stated, “[b]ecause § 207( o )(5) is ambiguous, the agency enjoys leeway in crafting regulations. Last year the Department of Labor proposed to amend 29 C.F.R. § 553.25(c) and (d) so that employees could no longer designate the date and time for leave. 73 Fed.Reg. 43654, 43660-62, 43668 (July 28, 2008). That rulemaking remains open, however. As long as the current version of § 553.25 remains in force, the plaintiffs are entitled to prevail.”