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CHAPTER 11 – FAIR LABOR STANDARDS ACT

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. "(1) Compensated on a salary or fee basis at a rate not less that $455 per week...."
2. " Whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer….;
3. " 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.

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