Chapter 11 - FAIR LABOR STANDARDS ACT
Article 11-7
KENTUCKY: FLSA –- CITIES MUST PAY FF OVERTIME BACK PAY & INTEREST (ESTIMATED TO BE $25 - $32 MILLION) – CITIES CAN’T CLAIM GOVERNMENTAL IMMUNITY EVEN THOUGH THEY FOLLOWED PRIOR INSTRUCTIONS OF KY LABOR CABINET ON CALCULATING OVERTIME
On Aug. 25, 2011 in Madison County Fiscal Court, et al. v. Kentucky Labor Cabinet, the Supreme Court of KY held (7 to 0) that cities must recalculate overtime do firefighters, using annual 2,080 hours (40 hour work week), instead of total hours worked in a 24/48 schedule (2,912 hours); cities do not have governmental immunity to avoid paying this back pay, even though they used the calculation formula (total hours worked) in the regulations of the KY Labor Cabinet. http://opinions.kycourts.net/sc/2010-SC-000322-TG.pdf.
The KY Supreme Court agreed with the KY Court of Appeals in Commonwealth of Kentucky, Labor Cabinet v. Michael R. Hasken, Jr. et al, 2007 KY App. LEXIS 244; 265 SW3d 215 (2007), which focused on the fact that a hearing officer found that the City of Louisville had used the 2,080 calculation in the past, and this calculation formula was therefore the “intent of the parties” when Louisville FD and Local 345 negotiated their Collective Bargaining Agreements.
http://www.lexisone.com/lx1/caselaw/freecaselaw?action=OCLGetCaseDetail&format=FULL&sourceID=bdihee&searchTerm=eQDY.IiYa.UYGU.bcSL&searchFlag=y&l1loc=FCLOW.
Press reports indicate the decision will cost millions. “Cities on hook for millions in fire OT,” Aug. 29, 2011; http://www.firehouse.com/news/top-headlines/court-ky-cities-owe-millions-firefighter-ot. “Court: Ky. Cities Owe Millions in Firefighter OT,” Aug. 28, 2011; http://news.cincinnati.com/article/20110829/NEWS0103/308290036/Cities-hook- millions-fire-OT?odyssey=mod|newswell|text|News|s.
Many cities in KY had previously settled with their FF / Locals based on 2007 KY Court of Appeals decision, which the KY Labor Cabinet agreed to follow.
Louisville firefighters $30,000,000
Bowling Green $1,000,000
Frankfurt $525,000
Henderson $330,000
Louisville Airport $270,000
Bluegrass / Lexington Airport $145,000
http://chaselaw.nku.edu/documents/kysctbriefs/oral/Madison%20County%20Fiscal%20Court%20v.%20Kentucky%20Labor%20Cab._2010-SC-322_applee_br.pdf.]
Since 1980, “professional” KY firefighters were eligible to receive an annual state education incentive for meeting continuing educational requirements (as of 2000, this was $3,100 a year). The issue in this litigation was how FDs should calculate the increase in each FF’s hourly rate of pay when receiving bonus payments.
The Kentucky Labor Cabinet has long published regulations on how to calculate increase hourly rate for employees who receive annual bonuses - by dividing the bonuses received by total hours worked. Many cities in KY have therefore calculated career FF overtime using total hours worked (2,912 based on 24/48 work scheduled), not 2,080 (FF did not work 40 hour work week).
803 KAR 1:060. Overtime pay requirements.
RELATES TO: KRS 337.285
STATUTORY AUTHORITY: KRS 337.295
NECESSITY, FUNCTION, AND CONFORMITY: This administrative regulation constitutes the official interpretations of the Office of Workplace Standards, Department of Labor, with respect to the meaning and application of the overtime pay requirements contained in KRS 337.285. It is the function of this administrative regulation to make available in one place the interpretations of these provisions which will guide the Office of Workplace Standards in the performance of its duties under the law unless and until it is otherwise directed by authoritative decisions of the courts or conclude, upon reexamination of an interpretation, that it is incorrect
Section 6.
The hourly rate of pay of an employee is determined by dividing his total remuneration for employment in any workweek by the total number of hours actually worked by him in that workweek for which such compensation was paid. The following section gives some examples of the proper method of determining the regular hourly rate of pay in particular instances.
http://www.lrc.ky.gov/kar/803/001/060.htm
KY Labor Cabinet provided the following example.
“If the employee receives, in addition to his earnings at the hourly rate, an additional production bonus, the overtime must be paid on the total hourly rate received by the employee. This would be computed by adding the additional pay to the regular hourly rate and dividing by the total number of hours worked.”
Louisville FF and Local 345 filed a complaint in 2000 about this calculation formula.
“In May of 2000, Michael J. Kurtsinger, acting individually as a Louisville firefighter and as a representative of the Louisville Professional Firefighters Association, Local 345, filed a wage and hour complaint with the Kentucky Department of Labor challenging the methods used by the City of Louisville (the City) to calculate overtime pay. Specifically, he claimed that certain additional elements of pay including State Incentive Pay (or Educational Incentive Pay), Longevity Pay, a Salary Supplement, a ‘July Bonus,’ and a Clothing Allowance were wrongfully excluded from the firefighters' "total remuneration" used to calculate overtime pay.”
http://www.lexisone.com/lx1/caselaw/freecaselaw?action=OCLGetCaseDetail&format=F ULL&sourceID=bdihee&searchTerm=eQDY.IiYa.UYGU.bcSL&searchFlag=y&l1loc=F CLOW
KY Department of Labor management review – recommended 2,912.
“Larry Roberts, Director of the Division of Employment Standards, Apprenticeship and Training, of the Department of Labor, examined the claim initially. He prepared Tentative Findings of Fact concluding that all amounts received by the firefighters with the exception of the Clothing Allowance were indeed remuneration and should have been included in the calculation of the firefighters' hourly rate. The Clothing Allowance was determined to be reasonable reimbursement for clothing costs rather than additional compensation. He also determined that Kentucky Revised Statute (KRS) 413.120 prohibited claims for overtime pay older than five (5) years.
***
Mr. Roberts determined that a firefighter's annual compensation (which included all of the above additional elements of pay except the Clothing Allowance) should be divided by 2,912 (the number of scheduled hours) rather than 2,080 (the annual number of hours derived from a typical 40-hour work week). Simple principles of mathematics establish that the larger the divisor, the smaller the hourly rate of pay and, consequently, the smaller the amount of overtime pay owed by the City to the firefighters.”
http://www.lexisone.com/lx1/caselaw/freecaselaw?action=OCLGetCaseDetail&format=F ULL&sourceID=bdihee&searchTerm=eQDY.IiYa.UYGU.bcSL&searchFlag=y&l1loc=F CLOW
Hearing Officer, appointed by KY Attorney General’s Office, focused on past practice of City of Louisville which apparently used 2,080 in calculating overtime rate for FF bonus pay, and therefore this was the “intent of the parties” under their CBA.
“[T]he Hearing Officer found that the City of Louisville used a divisor of 2,080 on those previous occasions when it paid overtime to firefighters for additional elements of pay (Longevity Pay, Salary Supplement, etc.). These factors made it clear to Hearing Officer Jones that the intent of both parties was that the additional elements of pay were compensation for the forty-hour work week described in the CBA. Therefore, he concluded as a matter of law that ‘the divisor to be used to convert State Incentive Pay, Longevity Pay, Salary Supplement, and the July Bonus, to an hourly rate for purposes of calculating the firefighters' overtime rate was 2,080.’”
http://www.lexisone.com/lx1/caselaw/freecaselaw?action=OCLGetCaseDetail&format=F ULL&sourceID=bdihee&searchTerm=eQDY.IiYa.UYGU.bcSL&searchFlag=y&l1loc=F CLOW
The Secretary of the KY Labor Cabinet rejected Hearing Officer’s recommendation.
“The Secretary interpreted the regulation differently with respect to the calculation of the hourly rate. He concluded that no element of intent was included, either explicitly or implicitly, in 803 KAR 1:060, and all that was required was a simple mathematical calculation based on the number of hours an employee works in a particular week (usually either 48 or 72), or 2,912 hours per year.”
http://www.lexisone.com/lx1/caselaw/freecaselaw?action=OCLGetCaseDetail&format=F ULL&sourceID=bdihee&searchTerm=eQDY.IiYa.UYGU.bcSL&searchFlag=y&l1loc=F CLOW
The Louisville FF and Local appealed to Jefferson Circuit Court, where the trial judge held in their favor.
“The Jefferson Circuit Court found that the Secretary's interpretation of 803 KAR 1:060 was ‘sufficiently arbitrary and capricious to require reversal.’ Furthermore, the circuit court noted that the Secretary failed to comply with KRS 13B.120(3) which required the Secretary to include separate findings of fact justifying deviation from the recommended order. The circuit court then remanded the case to the Department of Labor for reinstatement of the Hearing Officer's Findings of Fact, Conclusions of Law, and Recommended Order as the Final Order of the Department of Labor. The circuit court also held that the Clothing Allowance was properly excluded from total remuneration….”
http://www.lexisone.com/lx1/caselaw/freecaselaw?action=OCLGetCaseDetail&format=F ULL&sourceID=bdihee&searchTerm=eQDY.IiYa.UYGU.bcSL&searchFlag=y&l1loc=F CLOW
KY Labor Cabinet and City of Louisville then appealed to the Kentucky Court of Appeals:
The Court of Appeals in Commonwealth of Kentucky, Labor Cabinet v. Michael R. Hasken, Jr. et al, 2007 KY App. LEXIS 244; 265 SW3d 215 (2007) upheld Circuit Court judge, ruling against the Labor Cabinet.
The Court of Appeals was not persuaded that it should give great deference to the administrative expertise of the Labor Cabinet.
“Although a circuit court must show significant deference to an agency's ruling, the circuit court is allowed to substitute its judgment as to the proper interpretation of the agency's regulation where that agency's interpretation is arbitrary or capricious.”
http://www.lexisone.com/lx1/caselaw/freecaselaw?action=OCLGetCaseDetail&format=F ULL&sourceID=bdihee&searchTerm=eQDY.IiYa.UYGU.bcSL&searchFlag=y&l1loc=F CLOW
The Court of Appeals held that the proper divisor was 2.080, based on City of Louisville’s prior use of that formula.
A typical schedule for a firefighter is twenty-four (24) hours on and forty-eight (48) hours off. This leads to a typical work week of either forty-eight (48) hours or seventy-two (72) hours -- an average of fifty-six (56) hours per week - or 2,912 hours per year (56 hours/week x 52 weeks). Thus, the point of controversy is whether to use the total number of hours for which firefighters are scheduled as the divisor to convert firefighters' annual pay to an hourly rate, or to use the traditional forty (40) hour work week figure as the divisor.
***
In context, the analysis requires a determination of the number of hours for which the additional elements of pay were intended to constitute compensation. To make this determination, the Hearing Officer properly examined the CBA and the parties prior practices. We believe this is a valid and accurate source to determine the parties' intent. This led the Hearing Officer, the circuit court, and now this Court, to the reasonable conclusion that the parties intended to use the additional elements of pay as compensation for a regular forty-hour work week.
Court of Appeals in Hasken references their 2006 decision on paramedic annual bonuses:
“Our decision is not only proper as a matter of law, it is also consistent with this Court's prior decision in City of Frankfort v. Davenport, WL 2380792 (Ky. App. 2006) n2 in which we also interpreted 803 KAR 1:060, Sections 6 and 7. The facts of that case are strikingly similar to those of the case before us. In Davenport, the issue was whether to divide the weekly equivalent of the annual incentive bonus earned by paramedics by all hours actually worked in a week, or by forty (40). Paramedics of the City of Frankfort worked similar schedules to that of the Louisville firefighters - - 24-hours on, 48-hours off, leading to a typical work week of forty-eight (48) or seventy-two (72) hours. As with the firefighters, the paramedics were compensated based on an hourly rate. The City of Frankfort had passed an ordinance which provided an incentive bonus to all Paramedics who maintained active paramedic certification. The payment of the yearly incentive was spread out over the year in 26 bi-weekly paychecks.
***
Even though the City of Frankfort and the paramedics agreed that overtime was payable on the incentive over forty (40) hours, they disagreed on the formula for calculation of the paramedics' hourly rate. The City argued that total compensation should be divided by the total number of hours worked in a week. The paramedics contended that the formula for deriving the hourly rate should be total compensation divided by forty (40) hours. Not surprisingly, the Secretary agreed with the formula urged by the City of Frankfort. On appeal, the Franklin Circuit Court agreed with the paramedics' formula and reversed and remanded the Secretary's final order. The City of Frankfort and the Department of Labor appealed.” [The Court in Davenport agreed with the paramedics.]
The Court of Appeals in Hasken explained:
“Therefore, in addition to the independent reasoning of this opinion, principles of stare decisis support the determination that the firefighters' additional elements of pay -- State Incentive Pay, Longevity Pay, Salary Supplement and the July Bonus -- are compensation based on a forty (40) hour work week and, therefore, it is entirely appropriate to determine their hourly wage for purposes of overtime calculations by dividing the total additional elements of pay received on an annual basis by 2,080 hours.”
http://www.lexisone.com/lx1/caselaw/freecaselaw?action=OCLGetCaseDetail&format=F ULL&sourceID=bdihee&searchTerm=eQDY.IiYa.UYGU.bcSL&searchFlag=y&l1loc=F CLOW
Note: In 2009, the KY General Assembly amended KY code to more clearly define a professional firefighters’ “established work schedule” as 24 on / 48 off. http://www.lrc.ky.gov/krs/095A00/210.PDF.
Legal Lesson Learned: The calculation of increased hourly overtime is matter of Federal law under FLSA, and state law under state statutes; consult with experienced legal counsel, as well as U.S. Department of Labor (Wage & Hour Division), as well as state officials and document their advice.
Article 11-6
FLSA: HOSPITAL AUTHORIZED NURSES TO SWITCH FROM 8-HOUR SHIFTS TO 12-HOUR SHIFTS, IF THEY AGREED TO NO INCREASE IN WEEKLY PAY – NURSES AGREED TO SMALL REDUCTION IN HOURLY RATE OF PAY – TWO YEARS LATER NURSES AND UNION FILED LAWSUIT - CASE DISMISSED, RELYING ON PRECEDENCE OF A MONTGOMERY, ALABAMA FD CASE
On Dec. 13, 2010, in Louise Parth v. Pomona Valley Hospital, the U.S. Court of Appeals for the 9th Circuit (San Francisco), 2010 U.S. App. LEXIS 25581, upheld the dismissal of a lawsuit by nurses against their hospital. Louise Parth worked in the Emergency Room. She and the other ER nurses had sought the option of switching from 8-hour shifts, to 12-hour shifts. The hospital agreed, but only if nurses and their union agreed that the 12-hour nurses would make same weekly pay, by reducing their hourly rate of pay from $22.83 to $19.57.
Two years after the deal was made, the nurses and union filed a lawsuit claiming violation of the FLSA. The U.S. District Court judge granted summary judgment to the hospital, and the Court of Appeals (3 to 0) agreed:
“To us, [the hospital’s] actions seem perfectly reasonable, were requested by the nurses (who work the schedules), and are the result of a bargained-for exchange between the hospital administration and Local 121.” In a footnote, the Court wrote: “ The employee's consent to the reduced regular rate is a factor in determining whether a reduced rate was bona fide. However, an employee may not waive his or her rights under the FLSA, and agree to a pay plan that violates the FLSA. See Barrentine v. Arkansas- Best Freight Sys., Inc., 450 U.S. 728, 740-41 (1981).”
The Court also held:
“Parth also argues that PVHMC's pay plan is unlawful, because nurses working both the 8-hour and 12-hour shifts perform the same work, but are paid at different rates. We find no authority that suggests employees cannot be paid different rates for different shifts, and Parth fails to present any authority to the contrary.”
FLSA ENACTED IN 1938; APPLIED TO FDs AND OTHER MUNICIPAL EMPLOYEES IN 1986
“Soon after Congress enacted the FLSA, but before it became effective, many employers altered their compensation schemes--by lowering base hourly rates--to ensure that they paid employees the same overall wages after complying with the FLSA's overtime requirements. See, e.g., Walling v. A. H. Belo Corp., 316 U.S. 624, 628-30 (1942). In Belo, the Supreme Court examined these compensation practices and held that, even when the employer's purpose in lowering hourly base rates ‘was to permit as far as possible the payment of the same total weekly wage after the [FLSA] as before. . . . [N]othing in the [FLSA] bars an employer from contracting with his employees to pay them the same wages that they received previously, so long as the new rate equals or exceeds the minimum required by the [FLSA].’ Id. at 630.
***
Congress expanded the FLSA's definition of ‘employer’ in 1974 to include municipalities. [Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528, 533 (1985).] In Garcia, the Supreme Court reversed its previously-established precedent and held that state and local governments could be liable for FLSA violations. Given the potential for sudden liability, Congress delayed application of the FLSA to municipal employers until April 15, 1986. Fair Labor Standards Amendments of 1985, Pub. L. No. 99-150, § 2(c), 99 Stat. 787, 788). Accordingly, municipal employers became subject to the FLSA as of April 15, 1986. [Case citations deleted.]
CITY OF MONTGOMERY, ALABAMA FIRE DEPARTMENT
In Wethington v. City of Montgomery, 935 F.2d 222 (11th Cir. 1991), the City also created a plan that kept firefighters weekly wage the same when they went to new shifts.
“The City endeavored to create and implement a ‘budget-neutral’ plan that would ensure FLSA compliance before April 15, 1986. Wethington, 935 F.2d at 225. Prior to Garcia, the City paid its fire fighters on a salary basis, which covered ‘a cycle of three pay periods, each involving varied hours over 14 days: one 104-hour period, one 112-hour period, and one 120-hour period. For this 42-day, 336-hour cycle, a typical fire fighter would receive $2,208.45. The actual working time within these periods consisted of rotations of duty in which the fire fighters worked 24 hours, were off duty for 48 hours, worked another 24 hours, and so on." Id. This scheme did not provide for overtime, so in June 1985, the City adopted a new hourly wage scale to comply with the FLSA. Id.
The City determined that under the FLSA, 316 of the 336 hours in the 42-day cycle would be considered regular hours, while 20 would be considered overtime. Id. In order to create a new, yet ‘budget-neutral,’ pay plan that incorporated time-and-a-half overtime pay, the City, ‘for the purpose of calculation, increased the [20] overtime hours by 50%. [It] then took the fictitious total hours of 346 (316 regular plus 30 adjusted overtime) and divided them into the fire fighters' total pay for that period to produce a per-hour wage of $6.3828.’ Id. The revised system ensured that City fire fighters would work the same hours and shifts as before, but would receive $6.3828 per hour for 316 regular hours, and $9.5742 ($6.3828 multiplied by 1.5 as required by the FLSA) per hour for 20 hours of overtime, totaling $2,208.4488. Id. "Therefore the total salary and total hours did not change. The payment system and the equivalent hourly rates of pay, however, did change. Under the prior, salary system, the converted hourly rate amounted to $6.57. Under the revised system, the effective rate was decreased to $6.38.’ Id. The fire fighters sued the City, making an argument similar to Parth's.
Citing Belo, the Eleventh Circuit held that, if a new pay plan ‘actually employed is valid under the [FLSA], the fact that the regular rate adopted prior to the [FLSA's] effective date produces a total pay no greater than the total pay under a prior system is not enough to establish a violation of the FLSA.’ Id. at 229. The court ‘read the Belo language to support the City's argument that it is not a violation of the [FLSA] to reduce, prior to the effective date of the [FLSA], the hourly rate paid employees in order to avoid greater payments upon application of the FLSA.’ Id.”
U.S. DEPARTMENT OF LABOR – FILED AMICUS BRIEF AT REQUEST OF 9th CIRCUIT
“In its amicus briefing, the Department of Labor recommended that courts review agreements (such as this one) to determine whether the rates are artificial by resolving whether the reduced rate was ‘bona fide.’ The Department then argued that a reduced rate was bona fide if it was ‘(1) agreed to by the employee; (2) in place for a substantial period of time; and (3) equal to or in excess of the Act's minimum wage.’ Applying these factors, the [Hospital] reduced rate was bona fide. First, the reduced rate was agreed to by the employees through the collective bargaining agreement, in which there appears no evidence of improper influence or inequality of bargaining position. The plan provides employees more scheduling flexibility, allows them to spend less time commuting to work (because they spend fewer days at work), and ensures that [the Hosp[ital] does not retain an incentive to ask the nurses to work longer hours. Second, the rate has been in place since 1989 or 1990 (and applied to Parth since 1993). Third, the rate paid nurses working the 12-hour shift far exceeds the Act's minimum wage.”
Legal Lessons Learned: FLSA is very complicated area of law; consultation with experienced legal counsel and also with U.S. Department of Labor is often well advised.
Article 11-5
ALABAMA: FLSA - ON CALL TIME - MAINTENANCE EMPLOYEES AT PLASTICS COMPANY LOSE CASE – JUDGE REFERENCES FIRE SERVICE REGS
On July 30, 2010, in JAMES TAUNTON, et al., Plaintiffs, v. GENPAK LLC, Defendant, CASE NO. 2:09-CV-883-WKW[WO], 2010 U.S. Dist. LEXIS 77528, a U.S. District Court Judge in Alabama dismissed the lawsuit by maintenance employees at a two plastics manufacturing plants. While this is not directly related to the fire service, the judge relied on U.S. Department of Labor regulations referencing firefighters.
Federal judge dismisses lawsuit by the Maintenance employees:
“While on call, the employee wears a pager issued by GenPak. If there is a maintenance problem during the night shift or on the weekend, the supervisor on duty typically will contact Maintenance Manager James Hughes ("Hughes") or the lead maintenance supervisor to discuss the problem. If it is determined that a repair is needed, the maintenance employee on call is telephoned or paged… The on-call employee has one hour to return a page. When the employee calls in, there is further discussion about whether he actually needs to report to the plant…. If the on-call employee is needed onsite, he has an hour and a half from the time he is paged to report to work. For example, if an on-call employee is paged at 9:00 p.m., he has until 10:00 p.m. to return the page, and until 10:30 p.m. to report to the plant, if necessary.”
****
“In sum, all of the circumstances of this case weigh in favor of GenPak. As a matter of law, the court finds that Plaintiffs' on-call waiting time is spent predominantly for the employee's benefit. In other words, they are ‘wait[ing] to be engaged,’ rather than ‘engaged to wait.’” [Footnotes and case references deleted.]
The federal judge referenced U.S. Department of Labor regulations concerning firefighters, 29 C.F.R. § 553.221(d):
“An employee who is not required to remain on the employer's premises but is merely required to leave word at home or with company officials where he or she may be reached is not working while on call. Time spent at home on call may or may not be compensable depending on whether the restrictions placed on the employee preclude using the time for personal pursuits. Where, for example, a firefighter has returned home after the shift, with the understanding that he or she is expected to return to work in the event of an emergency in the night, such time spent at home is normally not compensable. On the other hand, where the conditions placed on the employee's activities are so restrictive that the employee cannot use the time effectively for personal pursuits, such time spent on call is compensable.” Emphasis added.]
The federal judge also referenced the “WAITING TO BE ENGAGED” doctrine in two U.S. Supreme Court cases (1944) involving the fire service.
“The FLSA was enacted in 1938 to ‘guarantee either regular or overtime compensation for all actual work or employment.’ Under the FLSA, employers must pay employees at an increased rate of at least time and a half when their workweek exceeds forty hours:
Except as otherwise provided in this section, no employer shall employ any of his employees . . . for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.
§ 207(a)(1). Section 207(a)(1) does not define when on-call time is compensable as work under the FLSA. … Early on, however, two Supreme Court decisions interpreted § 207(a) in the context of on call compensation, and from those decisions the ‘waiting to be engaged’ doctrine has emerged. See Armour & Co. v. Wantock, 323 U.S. 126 (1944); Skidmore v. Swift & Co., 323 U.S. 134 (1944). In Armour and Skidmore, the plaintiffs were firefighters employed by private companies. A component of their jobs included being on call.
The Armour firefighters were on call for fifteen of every forty-eight hours. They were paid a fixed weekly rate, regardless of the number of hours spent on regular or on-call duty…. When on call, they were required to remain on the company's premises, except if they obtained permission to eat dinner at a nearby restaurant, ‘to respond to any alarms, to make any temporary repairs of fire apparatus, and take care of the sprinkler system if defective or set off by mischance….’ On average, while on call, the firefighters performed actual work less than a half hour a week. Id. To otherwise occupy the firefighters, the company provided a kitchen, beds, radios and facilities for recreational activities, such as card playing, and the firefighters could entertain themselves on the premises "pretty much as they chose…..’ [Footnote: ‘The firefighters worked an 8:00 a.m. to 5:00 p.m. shift. At 5:00 p.m, they were off the clock, but remained on call for twenty-four hours to respond to fire alarms or to repair firefighting equipment… The following twenty-four hours, the firefighters were ‘off duty entirely”]
The Armour Court did not create a bright-line test, but focused on ‘whether time is spent predominantly for the employer's benefit or for the employee's,’ a question which, it said, was ‘dependent upon all the circumstances of the case….’ The Supreme Court affirmed the judgment that the firefighters' on-call time spent on the company's premises, excluding time spent sleeping and eating, was work time compensable under the FLSA, in large part because the firefighters were not at liberty to leave the fire hall while remaining in a standby capacity….
The facts in Skidmore share some similarities with those in Armour. While on call for three and a half to four nights a week, the firefighters stayed in the company's fire hall, which had comfortable amenities, or ‘within hailing distance’ of the fire hall. Skidmore, 323 U.S. at 136. But, as the Skidmore Court observed, the arrangement between the firefighters and the employer was not exactly like that in Armour. In Skidmore, for example, time was compensated at an agreed rate for each alarm call…. The factual differences underscored that ‘[e]ach case must stand on its own facts….’ If the facts show that the employee was ‘engaged to wait,’ the time is compensable, but if the facts show that the employee was ‘wait[ing] to be engaged,’ the time is not compensable…. ‘His compensation may cover both waiting and task, or only performance of the task itself," depending on the circumstances. Id. The Court declined to ‘lay down a legal formula to resolve cases,’ given the endless variation of situations in which employment involves ‘waiting time….. ‘Whether in a concrete case such time falls within or without the [FLSA] is a question of fact to be resolved by appropriate findings of the trial court.’ Id. In Skidmore, the judgment was reversed for further proceedings because the lower courts erroneously had concluded that ‘waiting time’ can never constitute compensable work time under the FLSA…”
Legal Lessons Learned: There is continuing FLSA litigation in fire service; when in doubt consult with U.S. Department of Labor, Wage & Hour Division, and knowledgeable legal counsel.
Article 11-4
NEB: FLSA - CITY SETTLES AND AGREES TO PAY FIREFIGHTER BACK PAY, INTEREST, AND LIQUIDATED DAMAGES – COURT ALSO ORDERS CITY TO ALSO PAY ALL ATTORNEYS’ FEES FOR THE FF’s THREE LAWYERS
On Nov. 17, 2009, in James P. Olsen v. City of Omaha, 2009 U.S. Dist. Lexis 11210, the U.S. Magistrate Judge, ordered the city to pay the firefighter’s three attorneys $21,992 in attorneys’ fees. Mr. Olsen had filed this lawsuit in 2008 [court did not discuss the basis of the lawsuit]. The day before trial the city finally agreed to settle, paying not only back pay and interest, but also “liquidated damages” of the same amount, as provided under the Fair Labor Standards Act:
$29,843.58 in back pay and interest;
Liquidated damages – another $29,843.58.
After the Omaha City Council approved this settlement, and the judgment was filed in court against the city, the firefighter’s attorneys then filed a Motion for Attorneys Fees and Costs. This is also provided under the FLSA, 29 U.S.C. 216(b):
“[t]he court …shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.”
The three plaintiff attorneys attached their billing summaries, with affidavits confirming the work performed.
Lead attorney - 82.20 hours, at $175 per hour;
Second attorney - 29.80 hours at $100 per hour, plus 33.60 hours at $220 per hour (must have raised his rates during the course of this case);
Third attorney – 7.0 hours at $85 per hour.
The City did not challenge the hourly rates, but instead objected to the lack of specificity in the activities performed. For example, instead of just “legal research” they wanted to know the specific topics being researched. The City also objected to paying for two attorneys attending the same Court pre-trial conferences, and for two attorneys taking four depositions together, and performing other dual tasks. The City also objected to paying for the time the attorneys spent responding to their objects.
The Magistrate not only rejected these challenges, he confirmed that the City should also pay for the time the attorneys took at the Court’s hearing on their objections. Total attorney fees due: $21,992.
Note: The Court has the discretion under the FLSA and the U.S. Supreme Court decisions to enhance or reduce the fee award. If the Court finds, for example, that plaintiff’s attorneys had a particularly strenuous case, involving novel issues of law, they can be awarded a “lodestar” bonus beyond their normal hourly rate.
“The lodestar is calculated by determining the number of hours reasonably expended on the case and multiplying them by the applicable hourly rate for the relevant legal services.”
Fortunately for the City in this case, the Court did not award a “lodestar” enhancement./p>
Legal Lessons Learned: The FLSA is designed to “incentivize” employers to get it right the first time; when in doubt consult with attorneys knowledgeable about the FLSA, and also contact the Wage & Hour Division of the U.S. Department of Labor.
Article 11-3
OHIO: FAIR LABOR STANDARDS ACT – BUSINESS MANAGER AT COMMUNITY COLLEGE IS EXEMPT FROM OVERTIME – HOLDS A "BONA FIDA ADMINISTRATIVE POSITION"
On June 12, 2009, the Court of Claims of Ohio in Tod v. Cincinnati State Technical And Community College, 2009-Ohio-3700, held that Bethany Tod was not entitled to be paid time and one half for he estimated 1,300 overtime hours she worked since she was employed in a "bona fide administrative capacity." [Note: there were other issues also litigated in this case.]
She was hired in March, 2005 as a business manager in the College’s "Workforce Development Center." The Center provides training for businesses in the Greater Cincinnati area. He job was to market training programs and to coordinate any programs she sold. She was one of five business managers, reporting to the Director, Sherry Marshall. The volume of the work often required her to work beyond 40 hours a week.
The Ohio Revised Code, 4111.03(A) requires Ohio employers to pay overtime in accordance with the federal Fair Labor Standards Act. The FLSA exempts from overtime employees work work in a "bona fide administrative capacity." U.S. Department of Labor has issued regulations that define that exemption (29 CFR 541.200):
"(1) Compensated on a salary or fee basis at a rate not less that $455 per week...."
" Whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer….;
" Whose primary duty includes the exercise of discretion and independent judgment with respects to matters of significance."
The Ohio Court of Claims, Judge Clark B. Weaver, Sr., found that Ms. Tod was exempt from overtime compensation. "Practically speaking, as a business manager plaintiff marketed WDC’s [Workforce Development Center] services, cultivated potential relationships with potential and existing clients, and investigated the training needs potential and existing clients in order to develop proposals for customized training for them."
Ms. Tod also exercised discretion. "Plaintiff exercised discretion in both researching and identifying potential clients and in developing customized training proposals for them."
Legal Lessons Learned: Overtime exemptions to the FLSA are narrowly construed. When in doubt, consult with the local office of the U.S. Department of Labor, Wage & Hour Division.
Article 11-2
KENTUCKY – OVERTIME PAY – PARAMEDICS’ ANNUAL INCENTIVE PAY MUST BE INCLUDED IN OVERTIME PAY - METHOD CITY USED TO CALCULATE HOURLY RATE WAS IMPROPER
On January 18, 2007, the Kentucky Supreme Court (Case #2006-SC-000691) declined to hear the city’s appeal, and numerous paramedics will receive “significant” back pay, pursuant to the August 18, 2006 decision of the Kentucky Court of Appeals in City of Frankfort v. James Davenport, et al, No. 2005-CA-000036-MR [unpublished opinion – can not be cited or used as authority in any other case in any court in Kentucky], http://apps.kycourts.net/Supreme/SC_Opinions.shtm .
The Court of Appeals held that this incentive pay “is a akin to additional compensation (rather than in the nature of a bonus), and as such, the paramedics are entitled to overtime calculated at time and a half on the incentive pay based on an hourly rate of a forty-hour week.”
The paramedics work a 24-hours on, 48-hours off schedule. A typical work-week is either 48-hours, or 72-hours. Under KY law, they earn overtime after 40 hours in a work-week. The $3000 incentive pay (raised to $4000 in 2002) is paid out over the course of the year, equivalent of $57.69 a week. The paramedics receive the additional money in their pay checks, which are issued every two weeks.
In 1998, the paramedics filed an administrative complaint with the Kentucky Secretary of Labor, the administrative agency responsible for administering overtime regulations. On September 3, 1999, the Secretary of Labor directed the city to include the $3000 incentive in the paramedics pay. The city complied, and calculated it as follows: (a) when paramedic works a 48 hour week, their hourly rate would be increased by $1.20 ($57.69, divided by 48 hours worked); (b) when paramedic works a 72 hour week, their hourly rate would be increased by $0.80 ($57.69, divided by 72 hours worked). The Secretary of Labor agreed with this approach.
The 14-paramedics filed this suit, arguing it should be calculated as follows: $57.69, divided by 40 hours straight time, or $1.44 increase for every overtime hour worked – whether it is worked in 48-hour work week, or the 72-hour work week.
Kentucky Circuit Court judge Roger Crittenden agreed with the paramedics, and the city appealed. The 3-judge Court of Appeals also agreed with the paramedics. The court said that while courts normally give “substantial deference” to a state agency’s interpretation of their own regulations, but in this matter the Secretary of Labor is contrary to the “plain language” of the regulations – which requires overtime be calculated on an employee’s straight-time hourly pay, plus “a sum determined by multiplying one-half (1/2) the hourly rate by the number of hours worked in excess of forty (40) in the workweek.”
The paramedics are therefore entitled to back pay, plus interest. As to how far back this should go, the Court of Appeals said that should be up to the KY Secretary of Labor (setting aside the lower court’s decision that it should go back to the KY Secretary of Labor’s decision of September 3, 1999). The paramedics also sought “liquidated damages” of an equal amount (or double back pay), and also attorneys’ fees, but the Court of Appeals said this only applies when you file a lawsuit against the employer – in this case they filed an administrative complaint with the KY Secretary of State.
Legal Lessons Learned: Include paramedic incentive pay in overtime pay; consult both experienced legal counsel and your state agency to confirm the method of calculation.
Article 11-1
FAIR LABOR STANDARDS ACT – U.S. DEPARTMENT OF LABOR CLARIFIES THAT “VOLUNTEERS” ARE NOT EMPLOYEES OF PUBLIC AGENCY IF NOMINAL COMPENSATION DOES NOT EXCEED 20% OF FULL TIME PAY
On August 7, 2006, the Wage and Hour Division of the U.S. Department of Labor issued an opinion letter to the International Association of Fire Chiefs that gives helpful guidance on the amount of nominal run money and other reimbursements a public agency may pay a “volunteer” and still not be considered an “employee” eligible for overtime and minimum wage. The full opinion letter can be read at:
http://www.iafc.org/displayindustryarticle.cfm?articlenbr=31257 .
The opinion letter applies a 20% rule they previously used for volunteer coaches for public school: “the Department will presume the fee paid is nominal as long as the fee does not exceed 20 percent of what that public agency would otherwise pay to hire a full time coach extracurricular advisor.” Applying this standard to fire departments, the opinion letter states, “Applying the recent interpretation of ‘nominal fee’ in Wage and Hour Opinion Letter FLSA2005-51, generally an amount not exceeding 20 percent of the total compensation that the employer would pay to employ a full-time firefighter for performing comparable services would be deemed nominal.”
Caution: this opinion does not allow a firefighter, already on the payroll as a full-time firefighter, to respond on his off-duty time as a volunteer. The opinion letter states, “a firefighter may not volunteer as a firefighter for the same public agency.” His off-duty response time is on the clock, at the same rate of pay. The opinion letter cites FLSA regulations, 29 CFR 553.103(a), which prohibit an employee of the same public agency to provide the “same type of service” as a volunteer.
There are several interesting scenarios in the opinion letter, such as a civilian mechanic for a County Parks Department, who is also a volunteer for the same County’s Fire & Rescue Department. The Park Department allows him to respond during his working hours, by putting him on paid leave. Question: when the mechanic is off-duty and responds at night to a fire run, is he a “volunteer” or he is a county employee? Answer: No Clear Answer - it depends on whether the Parks Department and the Fire Department are considered separate entities, and whether he is considered both a paid “mechanic” and a paid firefighter. .
Legal Lesson Learned: Read the opinion letter carefully; when in doubt under FLSA, talk to Wage & Hour Division representative in your state, or seek a written opinion from the Division.
NEWSLETTER IS NOT PROVIDING LEGAL ADVICE;
Posted by UC solely as information and for the benefit of students.