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The accrual of large amounts of compensatory time off can cause a
big financial liability for public employers. The Supreme Court may
have helped solve this problem by ruling that employers can require
employees to use the banked time.
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Public employers scored a victory
when the Supreme Court ruled in their favor regarding the
use of compensatory time off. Under a 1985 amendment to the
Fair
Labor Standards Act (FLSA), state and local government employers may
give nonexempt employees (those employees subject to the FLSA
minimum wage and overtime requirements) compensatory time off (or
"comp time") instead of paying overtime as long as the covered
employees agree to this arrangement. To ensure that employees who
earn this time off are compensated appropriately, the FLSA also
contains several provisions regulating the accumulation and use of
the banked time. However, according to the Court, employers still
have some discretion to determine when the comp time must be used.
Specifically, the Court found in Christensen v. Harris County, No.
98-1167 (5/1/00), that public employers can require employees to use
the accrued comp time, without having an agreement that addresses
this requirement.
County
Required Use of Comp Time; Employees Sued
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In this case, the municipal employer, Harris County, implemented a
comp time program as permitted by the FLSA. The FLSA allows state
and local employers to compensate nonexempt employees for overtime
by giving them time off at a rate of one and one-half hours for
every hour worked over 40 in a single workweek. For employers to
implement this type of plan, employees must agree to the program. In
addition, the FLSA includes several safeguards to protect employees,
including caps on the amount of time off that can be accrued and a
requirement that all unused time be paid out at termination. In
addition, the Act requires the employer to grant a request to use
the accrued leave within a "reasonable period" of time following the
request, as long as the time off would not "unduly disrupt" the
employer's operations.
After adopting the plan, the County became concerned about its
financial liability for the unused, accrued comp time and its
ability to pay overtime wages once employees reached the caps or at
termination. To reduce the accumulated time, the County considered
adopting a plan that would require its nonexempt deputy sheriffs to
take their comp time. The County consulted the federal Department of
Labor (DOL) Wage and Hour Division for an opinion on this practice
and was informed in an advisory opinion letter that employers cannot
require the use of compensatory time unless there is a prior
agreement stipulating this requirement. In spite of this letter, the
County implemented a policy authorizing supervisors to require
employees to use their accumulated comp time in order to reduce the
banked hours.
The County's deputy sheriffs sued, claiming that the policy violated
the FLSA because there was no agreement regarding the mandatory use
of comp time. The lower court agreed, and the County appealed. The
Fifth Circuit Court of Appeals reversed the lower court's decision
and found in favor of the employer. The Supreme Court agreed to
review the case in order to resolve the disagreement over this issue
that exists in the different Courts of Appeals. The Ninth Circuit
(like the Fifth), in Collins v. Lobdell, 188 F.3d 1124 (9th Cir.
1999), upheld an employer's policy compelling comp time use, while
the Eighth Circuit, in Heaton v. Moore, 43 F.3d 1176 (8th Cir.
1994), struck down a similar policy.
DOL Opinion Letter
Not Persuasive
The Court began its analysis by looking at the language of section
207(o) of the FLSA, which allows the accrual of comp time, and its
implementing regulations. The Court noted that neither the statute
nor the regulations specifically requires an employer to have an
agreement regarding the mandatory use of comp time. While they
contain provisions protecting an employee's right to use the time,
they do not prohibit the employer from specifying when the time must
be taken. Rather, the Court pointed out that the statute instead
"ensures liquidation" of the comp time by allowing the employer to
limit the accrual of comp time by decreasing the number of hours an
employee works and allows it to cash out the comp time by paying
employees instead of giving them the leave time.
The Court also discounted the value of the DOL opinion letter
indicating an agreement was necessary. According to the Court, these
types of advisory letters are "entitled to respect" only to the
extent that they have "the power to persuade." The Court indicated
that a letter may be persuasive if it attempts to interpret language
in the statute or regulation that was ambiguous. Since the statute
and regulations in question were clear, the letter should not be
given any deference or legal weight. Based on these issues, the
Court upheld the Fifth Circuit's decision.
Ruling Is Good
News for Public Employers
This decision is good news to state and local employers that are
concerned about accumulating too much comp time on their books. The
Court gives the green light to policies requiring employees to use
the time so that it does not become a financial liability. However,
employers using comp time in lieu of overtime still must comply with
the many other restrictions specifically imposed by statute and
regulations on the accrual and use of comp time.
Private employers should note that the use of comp time is only
available to state and local employers. As a general rule, private
employers cannot substitute comp time for
overtime pay and must
pay
nonexempt employees time and one-half for all hours worked over 40
in a single workweek. |
Personnel
Policy Service, Inc.
