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Reviewed Date: June 21, 2017
Personnel--Fair Labor Standards Act
Overtime Compensation for Police Chief under FLSA
MTAS was asked whether the police chief was entitled to overtime compensation under the FLSA and the city's personnel policies.
Knowledgebase-Overtime Compensation for Police Chief under FLSA January 3, 2007Dear Madam: You have the following question: Is the police chief entitled to either overtime pay or compensatory overtime for his hours worked in excess of 40 per week? As I understand the facts, he claims to have accrued a year of overtime compensation.The Question Under the Fair Labor Standards Act Under the Fair Labor Standards Act (FLSA) the police chief is an exempt employee who is not entitled to overtime pay or compensatory overtime. In addition, as I read the city’s present personnel policy, he is not entitled to accumulate overtime. Even if he were so entitled, those policies put a limit of 80 hours on such compensation. Under the FLSA, the police chief is undoubtedly an executive employee exempt for the overtime provisions of that act. Since 2004, the test for whether the executive exemption is met is that the person meets all of the following requirements: - Pay of not less than $455 per week. - Paid on a salary basis. - Primary duties that primarily consist of managing an enterprise or a customarily recognized department or subdivision. - Customarily and regularly supervise the work of two or more employees. - Has the authority to hire or fire employees, or his or her suggestions and recommendations for personnel actions must be given particular weight. [ 29 CFR § 541.100] I understand that there might be a question of whether the police chief is paid on a “salary basis.” Generally, that means that he is not paid on an hourly basis. Under the 2004 rule changes governing exempt employees, the salary basis means that the minium of $455 per week (or greater amounts reflecting pay periods of longer than a week), he must be paid cannot be subject to reduction due to variations in the quality or quantity of work performed. [29 CFR § 541.602] However, there are numerous exceptions to the general rule against the reduction of pay connected with the quality and quantity of work that allow certain deductions without those deductions violating the salary basis test. I will not go into those exceptions here unless it appears they may be an issue. If the city either does not pay the police chief $455 per week or pays him that amount based on an hourly rate, the chief of police is not paid on a salary basis, and we need not even reach the question of what deductions can be made from his pay for various reasons without violating the salary basis test. If the police chief meets all of the above tests. he is an exempt employee under the FLSA, the significance of which is that he cannot rely on that Act to claim overtime compensation. The Question Under the City’s Personnel Policies It is probably the law that a city can, under its own personnel policies, treat employees who would otherwise be exempt employees under the FLSA as non-exempt employees. The city’s personnel policies may have done that, even with respect to department heads, including the police chief. Section I.C. of what I understand to be the city’s present Personnel Policies and Procedures creates a classified and an exempt service. The exempt service consists of all elected officials, city recorder, members of appointed boards and commissions, consultants, advisers, and legal counsel rendering temporary professional service, city attorney, independent contractors, persons employed by the municipality for not more than three months during a fiscal year, part time employees paid by the hour or the day, and not considered regularly, and the city judge. Note that Section I.C. also provides that “These rules and regulations shall cover all employees specifically designated exempt by this document, the City Charter and /or ordinance of the municipality....” That sentence undoubtedly reflects a serious error on the part of whoever drafted the policy. That sentence should undoubtedly read “These rules and regulations shall cover all employees specifically designated as in the classified service....” It surely could not have been the intent of the drafter of the policy, or the City which adopted the policy, to make the members of the exempt service subject to all the rules and regulations contained in the policy that are clearly designed for the classified service. Because the police chief (and department heads generally) are not in the exempt service, they are in the classified service. Section IV of the Personnel Policies and Procedures entitled “Employment,” contains various rules governing employment by the city. Subsection N, entitled Overtime Pay, says: Overtime is given at employees hourly rate for work performed before or after the regular work day begins; however, this work must be approved in advance by the department head and Mayor for hours over a 40 hour week....Overtime work will be compensated in accordance with the provisions of the Fair Labor Standards Act at a rate of one and one-half times the employees regular rate. Overtime work may also be paid with compensatory time at a rate of one and one-half times the hours worked in accordance with the Fair Labor Standard Act. Overtime hours on the time card must be initialed by the department head and approved by the mayor before they are given to the payroll clerk for payment. The department head is accountable to certify the hours employees have worked. Employees may build up to 80 hours of comp. Time. No compensation will be given for salary employees working overtime unless approved by the Mayor in writing prior to work performed. In addition, Subsection O entitled Call Back Pay, provides that: Any town employee eligible to receive overtime compensation under this chapter will be guaranteed a minimum payment of two (2) hours wages for being called back to work outside of normal working hours. The employee has to be called back by the Mayor or Dept. Head. The Dept. Head will not receive any comp. time unless he is out with is [sic.] employees. Most of Subsection N appears to contemplate overtime worked by hourly employees because, with the exception contained in the last sentence, in order to accrue overtime, an employee must obtain the advance approval of the department head and the mayor, and the overtime reflected on the time card must be initialed by the department head and the mayor. There is no “department head” from whom the police chief can obtain advance approval to workovertime or to initial the police chief’s time card before it goes to the payroll clerk, because the police chief is undoubtedly a department head, and because the police chief is probably a salaried employee who does not punch a time clock. But the last two sentences of Subsection N shift gears. The first of those sentences provides that, “Employees may build up to 80 hours of comp. time.” That sentence does not distinguish between salaried and hourly employees. For that reason, it appears to limit to 80 hours the overtime compensation that either category of employee can accrue. The second sentence provides that, “No compensation will be given for salary employees working overtime unless approved by the Mayor in writing prior to work performed.” Under Subsection N, then, in order for the police chief to claim overtime he would have to show that the mayor signed off on his overtime, and he could not claim more than 80 hours of overtime. But Subsection O appears to permit department heads to accrue overtime for call backs, in cases where they go out on call back with their employees. But the question is whether the limitations contained in Subsection N apply to Subsection O. If Subsections N and O are separate, the police chief can argue that Subsection O: (1) permits him to make the call backs, (2) join his officers in the call backs, without the approval of the mayor, and (3) accrue overtime outside of the 80 hour limitation on overtime contained in Subsection N. But Subsection O says, “Any town employee eligible to receive overtime compensation under this chapter....” An employee’s entitlement to overtime commensurate with the overtime provided in the FLSA depends upon subsection N. For that reason, the city has an argument that under the rules of statutory construction, Subsections N and O must be read together in order to resolve the ambiguity of who is entitled to overtime, and to what overtime they are entitled to receive, “under this chapter.” It seems likely to me that is how the courts would handle Subsections O and N. I think they would hold that at most the chief of police is limited to 80 hours of overtime compensation under Subsection O. Needless to say, I encourage the city to immediately repeal both Subsections N and O, of the city’s Personnel Policies and Procedures, and let the FLSA govern the payment of overtime compensation. Sincerely, Sidney D. Hemsley Senior Law ConsultantSDH/