FAIR LABOR STANDARDS ACT: “WHITE-COLLAR” EXEMPTIONS AS APPLICABLE TO FIRE DEPARTMENTS

FAIR LABOR STANDARDS ACT: “WHITE-COLLAR” EXEMPTIONS AS APPLICABLE TO FIRE DEPARTMENTS

BY RANDY K. CLARK

At first glance, it may appear that a fire chief needs a law degree to comply with the mandates of the Fair Labor Standards Act1 (FLSA); avoid litigation and the havoc it wreaks on a fire department; and, of course, continue to provide the public with a maximum level of protection and service. This article offers information on how to comply with the FLSA.

The fire service manager must take a proactive approach to the FLSA. As with most other aspects of the fire service, management problems with respect to FLSA compliance will generally be compounded when management proceeds with a reactionary approach.

Most litigation involving the fire service and the FLSA is avoidable. The progressive fire service professional must “preplan” FLSA compliance just as he would preplan response to local fire hazards.

DEVELOP A PLAN

The first step is to develop a plan. You can begin by obtaining a general list of the requirements of the FLSA and comparing this list with your own practices. Resources in this endeavor can include your own staff, the municipal or county attorney, the state attorney general`s office, professional chiefs and firefighters associations legal staffs, and the Department of Labor (DOL). Make a short list of areas in which you may have compliance problems and the steps necessary to achieve compliance.

Some of the most typical and frequently litigated topics are the following: (1) which fire service employees are subject to the overtime provisions of the FLSA; (2) who falls within the FLSA 7k partial overtime exemption, which allows for deduction of sleep time under certain circumstances; (3) which emergency medical services (EMS) personnel fall within the 7k partial overtime exemption; (4) how compensatory time can be used in lieu of overtime payments; (5) what records must be kept under the FLSA; and (6) what problems are associated with dual-role firefighters.

This article addresses the first topic: which fire department employees are subject to the overtime provisions of the FLSA.

EXECUTIVE-ADMINISTRATIVE EXEMPTIONS

The administrative/executive exemption is a contested issue. Why? Money is the driving factor–that is, the cost to a fire department in terms of overtime expenditures and the income received by employees in the form of overtime payments.

The FLSA`s overtime requirements do cover those employed in an “executive, administrative, or professional capacity … as such terms are defined and delimited by the Secretary of Labor.”2 Section 13(a) of the FLSA3 requires that the minimum wages and maximum hours provisions shall not be applicable with respect to any employee employed in a bona fide “executive” or “administrative” capacity. The practical effect of this provision is to exempt certain fire department personnel from the coverage of the overtime provisions of the FLSA if they can be classified as executive or administrative employees.

This exemption has generated a tremendous amount of litigation within the fire service. In addition to the obvious adverse consequences of the FLSA litigation itself, the working relationships between the officers who may be subject to the exemption and the fire department management may be seriously damaged. The personnel most affected by this provision are first-level managers–that is, those on the first tier in the chain of command within a given fire department structure. Depending on your local departmental structure, this may include lieutenants, captains, battalion chiefs, and district chiefs.

The FLSA does not define the scope of the executive and administrative exemptions. However, the DOL has adopted interpretive regulations defining both exemptions.4 A fire department employee will only qualify for the exemption if he or she meets all of the pertinent tests relating to duties, responsibilities, and salary. To qualify as an executive, the employer must prove that (1) the employee is on a salaried basis of not less than $250 per week (the “salary test”), (2) the employee is primarily responsible for management duties, and (3) the employee customarily and regularly directs the work of two or more employees (collectively the “duties test”).5

SALARY TEST

An executive or administrative employee is paid “on a salary basis” so as to be eligible for an overtime exemption “if under his employment agreement he regularly receives each pay period on a weekly or less frequent basis a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of work performed.”6 Further, the regulations explain that, “the employee must receive his full salary for any week in which he performs any work without regard to the number of days or hours worked … subject to the general rule that an employee need not be paid for any workweek in which he performs no work.”7 This is known as the “no docking rule.”

One problem that arose in applying the salary test to fire departments is that many fire department employees are paid according to a compensation scheme established by statute, ordinance, or regulation that requires pay to be deducted or docked for missed hours of work. Docking causes the pay scheme to fail the salary test. As a result, the exemption was unavailable for many fire departments. In response, the DOL issued a “Final Rule on FLSA Exemptions for Public Employees”8 in 1992. The final rule allows fire departments to make some deductions from pay under limited circumstances and still satisfy the salary test so as to preserve the exempt employee status. The new rule addresses the unique and varying pay schemes used to compensate many fire service employees.

The rule provides that overtime exemption status is preserved for fire department employees who are paid according to a compensation scheme established by statute, ordinance, regulation, policy, or practice under which personal leave and sick leave are accrued and pay is docked for partial-day absences necessitated by injury, by illness, or for personal reasons when accrued leave is not used either because it has been exhausted, permission to use accrued leave has been denied or not requested, or the employee chooses to use leave without pay.9

It is critical to note here, however, that courts continue to disagree on whether the docking of pay and/or leave for absences of less than one day (partial-day absences) defeat the salary basis test.10

DUTIES TEST

The “duties test” varies with the type of exemption claimed. To qualify for an “administrative” employee exemption for an employee earning more than $250 per week, the department must apply a “short test,” which requires that the employee must have as his primary duty “the performance of office or non-manual work directly related to management policies or general business operations of his employer or his employer`s customers … which includes work requiring the exercise of discretion and independent judgment.”11

Where an employee earns less than $250 per week, the duties test requires more, and one must then apply a “long test,” which can be satisfied only if the employer can show that the employee (1) customarily and regularly exercises discretion and independent judgment; (2) either (a) regularly and directly assists a proprietor or another bona fide executive or administrative employee or (b) performs special assignments or specialized or technical work requiring special training, experience, or knowledge under only general supervision; and (3) devotes less than 20 percent of his time to activities that are not directly or closely related to his administrative duties.12 A fire department employee who earns less than $155 per week is not eligible for the administrative exemption.13 This should not surface as a problem too often, as it should be rare for a “management”-level fire professional to make less than $155 per week.

To qualify for the “executive” employee exemption, if the employee is paid more than $250 per week, one again must apply the “short test” for duties, which requires that the employee must have as his primary duty the management of a business or enterprise or one of its components or departments, including “the customary and regular direction of the work of two or more other employees.14 As with the administrative exemption cited earlier, when an employer seeks to exempt an employee who makes less than $250 per week, it is required to be shown, and the proper test is the “long test.”

In such cases, not only must the employer show that the employee`s primary duty involves management responsibilities and that he customarily and regularly directs the work of two or more other employees as set out in the short test above, but the employer must also show that the employee in question (1) has the authority to hire or fire or that his hiring and firing recommendations are given “particular weight”; (2) customarily and regularly exercises discretion; and (3) devotes less than 20 percent of his working time to activities which are not directly or closely related to his executive-type tasks.15 The executive exemption, like the administrative exemption, is inapplicable to employees earning less than $155 per week.16 Again, there appear to be few “executives” within the fire service earning less than $155 per week.

Numerous court cases have construed these provisions and applied them to various fire department schemes, as will be seen in the following sections. As with many federal laws, the court decisions vary somewhat, depending on the federal circuit in which the fire department is located. The following two sections provide a sample of how some of the courts have addressed this topic. By no means are these cases exclusive. New decisions are regularly handed down by the courts. The prudent manager will need to access the most current case law in his own federal circuit.

CASES FINDING EXEMPTION FROM THE FLSA

In Hartman v. Arlington County,17 the court held fire shift commanders were employed in an executive capacity and thus exempt from the overtime requirements of the FLSA. The court based its decision on the fire officers` status of being salaried, of directing the activity of two or more firefighters on shift, and the fact that their primary duty was managing the fire station.

In Keller v. Columbus,18 the court decided that fire captains and lieutenants were exempt executives because the city had stopped deducting hourly increments from their pay for military leaves, they did not receive additional pay for other time spent on duty in excess of their shifts, and the magnitude of these officers` main responsibilities made their manual tasks secondary.

In International Association of Firefighters, Alexandria Local 2141 v. Alexandria,19 the court delivered a split decision and held that engine company captains who manage entire station houses during their shifts were exempt from the FLSA under the Act`s executive exemption. However, the same court held that truck lieutenants and swing lieutenants were not managerial employees so as to come within the executive or administrative exemptions. The court stated that although these officers supervised employees, which is an important aspect of management, this is not the equivalent of management. Here the officers exercised a lesser degree of discretion and autonomy than the exempt engine company officers.

In Simmons v. Ft. Worth,20 the court deemed district and deputy chiefs to be bonafide executives and exempt from the overtime provisions of the FLSA. There the chiefs were salaried and regularly directed the work of two or more firefighters.

In Atlanta Professional Firefighters Union, Local 134 v. Atlanta,21 the Court addressed the administrative employee exemption. The court found that the evidence established that the “primary duty” of fire captains was administrative and captains, therefore, were exempt from FLSA overtime requirements. The court noted that the captains were paid on a salary basis and had general discretion in implementing the directions of the battalion chiefs. Moreover, the captains could make changes in the daily activity agenda of the fire stations and also directed emergency operations, company building inspections, and fire hydrant maintenance operations. Also, the court held that the captains` role was not performing manual work associated with the traditional role of firefighting but involved making strategic decisions that help fight fires and that captains performed manual work only when necessary.

In Smith v. Jackson,22 another case addressing the administrative employee exemption, the court said that district and battalion chiefs were administrative employees exempt from the FLSA because they regularly engaged in managerial and supervisory activities and were immediately involved in the training and discipline of subordinate personnel.

In Masters v. Huntington,23 the court held that deputy chiefs and captains of a municipal fire department were executive employees exempt from the overtime provisions of the FLSA where management was the captains` primary significant duty and deputy chiefs were officers to whom the captains reported and both were paid on an annual salary basis. However, that same court said that lieutenants, who worked as substitutes for captains only sporadically, were not executive employees within the meaning of the FLSA.

In a case arising under the 1992 regulations applicable to public sector employees,24 one city`s practices, policies, and procedures were found to comply with the new regulations. In Stewart v. City and County of San Francisco, the court held that where (1) the city pays exempt employees a predetermined salary that is not subject to reduction due to the quality of work performed, (2) the exempt employees know how much they will earn each week, and (3) their salaries will be reduced if they take off personal time not accounted for by accumulated leave time, such deductions are permitted by the regulations even though these employees are subject to salary deductions based on hours not worked and violations of major safety rules,

In McDonnell v. City of Omaha,25 the court addressed the “no docking rule” and held that contingent deductions did not defeat the salaried status of the city`s fire chiefs who were paid a predetermined amount regardless of hours worked, with no deductions for partial days missed unless they have no accumulated leave time.

In Amos v. Winston-Salem,26 the court held that fire platoon supervisors were executive employees where they had the responsibility of managing fire scenes, determining whether additional companies and equipment were needed, implementing management programs, inspecting and allocating workloads, and evaluating the performance of employees.

The FLSA is still a body of evolving law. Thus, not all courts have interpreted the Act in the same way. The following section contains some recent illustrative cases in which the court found no exemption from the FLSA.

CASES FINDING NO EXEMPTION FROM THE FLSA

In Persons v. Gresham,27 the court held that city firefighter officers were not executive or administrative employees because they were not salaried but were paid on an hourly pay scale and deductions were made on an hour-for-hour basis if an officer was absent during part of the work day and had no remaining leave or compensation time.

In a case addressing the weekly earnings requirement, Hill v. Greenville,28 the court held that fire captains were not exempt employees under the FLSA if it could not be shown that they earned a salary of more than $250 per week. In Abshire v. County of Kern29 the court held that county battalion chiefs were not salaried employees within the meaning of the FLSA because their pay was subject to deduction for absences of less than a day even though no such deductions had been taken.30

In Thomas v. Fairfax,31 the court held that county fire and rescue department lieutenants were not executives for purposes of exemption from the overtime provisions of the FLSA. In that case, they were paid in two biweekly periods per month with a causal relationship in the second period between hours worked and pay. Thus, the lieutenants were not paid on salary basis as required for the exemption.

In Kneith v. Redwood City,32 the court held that fire captains were not exempt as executive employees from the overtime provisions of the FLSA where they were not paid on a salary basis in that the captains` biweekly pay was subject to deduction for noncompensable absences of less than one day.

Worth noting is that the court specifically stated that the fact that no fire captain actually had his pay reduced as a result of such short-term absence did not alter the undisputed fact that captains` paychecks were subject to reduction for such absences.33 Also, captains were paid to be available for a number of specified shifts, overtime pay was calculated by determining the fire captain`s hourly rate and multiplying it by one and one-half, and charges against sick leave and vacation were made on an hourly basis. These factors also weighed against finding the captains to be salaried.

In Aaron v. Wichita,34 the court held that fire captains, fire battalion chiefs, and fire division chiefs were not paid on a salary basis for purposes of the executive exemption under the FLSA, where evidence showed that these employees` pay varied by number of hours worked per pay period, that premium pay was received for overtime hours and holidays, and that absences of one day or less were charged against compensatory time.

DETERMINING WHO IS EXEMPT

In determining whether a particular employee within a department is an exempt executive within the meaning of the FLSA, apply the short test as promulgated by the Secretary of Labor35 if the employee is deemed salaried and earns more than $250 per week. Under this test, an employee will be deemed employed in an executive capacity if (1) the employee is compensated on a salary basis, (2) the employee`s primary duty consists of the management of the enterprise in which he or she is employed or a customarily recognized department or subdivision thereof, and (3) the employee customarily directs the work of two or more other employees. If the employee is not salaried, the exemption is inapplicable. If the employee is salaried but makes under $250 per week, apply the long test as previously set out.

For the administrative exemption, if the employee in question is salaried and makes more than $250 per week, apply the short test which requires that the employer`s primary duty be the performance of officer or nonmanual work directly related to management policies or general business operations of his employer or his employer`s customers, which includes work requiring the exercise of discretion and independent judgment. If he is not salaried, the exemption is inapplicable. If he is not salaried but makes less than $250 per week, you must apply the long test set out earlier and look at the additional factors.

Look at the structure of your department and the duties, functions, and responsibilities of the employees in question. It is also important to look at employee job descriptions. Modifying, even if just slightly, a job description and/or the job itself can be an effective method for obtaining the proper classification of an employee as exempt or nonexempt. Keep in mind that the precise application of the law will vary with each individual departmental scheme and the specific application of the law may vary somewhat depending on the particular federal circuit in which you reside. n

Endnotes

1. Fair Labor Standards Act of 1938, as amended (53 Stat. 1060, as amended; 29 U.S.C 201-219).

2. 29 U.S.C. § 213 (a)(1).

3. 29 U.S.C. § 213 (a).

4. See 29 C.F.R §§ 541.1-541.315 (1992).

5. 29 C.F.R. § 541.1 (1991) Abshire v. County of Kern, 908 F.2d 483 (9th Cir. 1990), cert. denied, III S.Ct 785 (1991).

6. 29 C.F.R. § 541.118(a) (1991).

7. Id.

8. 57 Fed. Reg. 37, 677 (1992).

9. Id.

10. York v. City of Wichita Falls, 944 F.2d 236, 242 (5th Cir. 1991); McDonnell v. City of Omaha, 999 F.2d 293, 297 (8th Cir. 1993); Int`l Ass`n of Firefighters v. City of Alexandria, 720 F.Supp. 1230 (E.D. Va. 1989), aff`d, 912 F.2d 463 (4th Cir. 1990); Abshire v. County of Kern, 908 F.2d 483 (9th Cir. 1990); and Aaron v. Wichita, 797 F.Supp 898 (D. Kan. 1992).

11. 29 C.F.R. §§ 541.2(a)(l), (e)(2) (1991).

12. Id. at §§ 541.2(a)-(d).

13. Id. at § 541.2(e).

14. Id. at § 541.1(f).

15. Id. at § 541. l(a)(e).

16. Id. at 䅲 1. l(f).

17. 903 F.2d 290 (4th Cir. 1990).

18. 778 F. Supp. 1480 (S.D. Ind. 1991).

19. 720 F.Supp. 1230 (E.D. Va 1989), aff`d, 903 F.2d 290 (Th Cir. 1990).

20. 805 F.Supp. 419 (N.D. Tex. 1992).

21. 920 F.2d 800 (11th Cir. 1991).

22. 954 F.2d 296 (5th Cir. 1992).

23. 800 F.Supp. 363 (S.D.W. Va. 1992), later proceeding 800 F.Supp. 369 (S.D. W. Va 1992).

24. See generally, Department of Labor Final Rule on FLSA Exemptions for Public Employees, 57 Fed. Reg. 37,677 (1992).

25. 999 F.2d 293 (8th Cir. 1994), cert. denied, 1994 U.S. LEXIS 1927 (1994).

26. 1 Wage & Hour Cas.2d (BNA) 578 (M.D.N.C. 1993).

27. 704 F.Supp. 191 (D.C. Or. 1988).

28. 696 F.Supp. 1123 (N.D. Tex. 1988).

29. 908 F.2d 483 (9th Cir. 1990).

30. This case was decided just before the DOL issued the Final Rule that expressly allows for this type deduction under certain circumstances.

31. 803 F.Supp. 1142 (E.D. Va. 1992).

32. 638 F.Supp. 1307 (N.D. Cal. 1987).

33. Note that this case, too, was decided prior to the DOL Final Rule, which may have resulted in a different outcome in this case.

34. 797 F.Supp. 898 (D.Kan. 1992).

35. 29 C.F.R. 541. l(f) (1991).

RANDY K. CLARK is a trial lawyer and former fire officer who practices civil law including civil rights and employment issues. He writes and consults on fire service legal issues and is currently working on the first edition of the Fire Chief`s Guide to Avoiding Litigation.

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