January 3, 2007
Dear 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 minimum 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
January 3, 2007
Page 2
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:
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Page 3
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 work
overtime 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
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Page 4
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 Consultant
SDH/