# Amicus Curiae Brief — Malcolm Pirnie, Inc. v. Martin

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1992
- **Citation:** 506 U.S. 905

## Text

No. 91-1748 Drm
_— |
IN THE
Supreme Court of the United Sates
OCTOBER TERM, 1992 os

MALCOLM PIRNIE, INC.,
Petitioner,
Vv.
LYNN MARTIN, SECRETARY OF LABOR,
UNITED STATES DEPARTMENT OF LABOR,
Respondent.
On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Second Circuit

BRIEF OF THE
AMERICAN CONSULTING ENGINEERS COUNCIL,
AMERICAN INSTITUTE OF ARCHITECTS AND
NATIONAL SOCIETY OF PROFESSIONAL ENGINEERS
AS AMICUS CURIAE SUPPORTING PETITIONER

ARTHUR BERGMAN *
AMERICAN CONSULTING
ENGINEERS COUNCIL
1015 15th Street, N.W., Suite 802
Washington, D.C. 20005
(202) 347-7474
Of Counsel:

MARK A. CASSO

(American Consulting Engineers Council)

J. LAING BOWLES

(American Consulting Engineers Council)

JOHN A. DINARDO

(American Institute of Architects)

ELIZABETH A. DAVIS

(American Institute of Architects)

ARTHUR E, SCHWARTZ

(National Society of Professional Engineers)

* Counsel of Record

at its S368 et SV
WILSON - Epes PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C, 20001

TABLE OF CONTENTS

Page
TABLE OF AUTHORITIES .......... li
INTEREST OF THE AMICUS CURIAE ............. 1
SUMMARY OF ARGUMENT ......... 3
|) nee ee eee Le Seine 4
I. THE SALARY BASIS TEST HAS BEEN IN-
CONSISTENTLY INTERPRETED BY THE
COURTS LEAVING EMPLOYERS WITHOUT
CLEAR DIRECTION AS TO HOW THEIR
SALARY SYSTEMS SHOULD BE STRUC-
TURED ........... iaaeeieaaiss deatiatadcaenicuaana eae 4
A. Deductions in Pay for Absences of Less
UN alo els Pee te en 4
B. Overtime Compensation for Exempt Em-
dakota, ache eee a ae 5
C. Deductions from Leave Banks ............... 7
D. Recording of Time and Requiring Employees
to Work Set Hours... 8
E. Use of the Window of Correction 9
Il. TITERE IS AN URGENT NEED FOR JUDI-
CIAL CLARIFICATION OF THESE CRITI-
CAL ISSUES IN A MANNER WHICH WILL
NOT RESULT IN A DEVASTATING FINAN-
CIAL PENALTY TO EMPLOYERS AND A
WINDFALI. TO OTHERWISE EXEMPT PRO-
FESSIONAL AND MANAGERIAL EMPLOY-
EES ....... Sa uaebdekaeada cancion Wake oe aeaiceeeaadnacs 11

TEI is ic Aeconecticharcttccdcutame tte oe tort: 15

ii
TABLE OF AUTHORITIES
Cases Page

Abshire v. County of Kern, 908 F.2d 483 (9th Cir.

1990), cert. denied, 111 S. Ct. 785 (1991) _......... 4,6,8
Alex v. California, 30 Wage & Hour Cas. (BNA)

1388 (35.0. Gab. I006s coe 12
Atlanta Professional Firefighters Union, Local 184

v. City of Atlanta, 920 F.2d 800 (11th Cir.

1: i & WR ester ani atch s yc eee ea 5
Banks v. City of North Little Rock, 708 F. Supp.

1088 (3.0. Auk: M668) -cinc eee 4,6
Brock v. Claridge Hotel & Casino, 846 F.2d 180

(3rd Cir.), cert. denied, 488 U.S. 925 (1988)... 6

District of Columbia Nurses Ass’n v. District of
Columbia, 29 Wage & Hour Cas. (BNA) 868

CEA. BOE oiasnavacetndiccincicnntecee aaa 5
D’Camera v. District of Columbia, 693 F. Supp.
RBCS CDG. WOOGE wcciceniedaneeaeaee 4

Dole v. Malcolm Pirnie, Inc., 758 F. Supp. 899
(S.D.N.Y.), rev’d on other grounds, 949 F.2d

GE Ce Ca RO ED vesctresctececein eee 10, 13
Harris v. District of Columbia, 709 F. Supp. 238

CEDIA, TOD savsccivc incinerate 5
Harrison v. District of Columbia, 30 Wage & Hour

Cas. (BNA) S67 (D.D.C. BOGE) noccciievnd cece... 5

Hartman v. Arlington County, Va., 720 F. Supp.
1227 (E.D. Va. 1989), aff’d, 908 F.2d 290 (4th

SAR, SOD: oncvicauctésnncscecnasctseienctenadnesaaeamaeieare 7
Hawks v. City of Newport News, Virginia, 707 F.

Seem. SER (SD. Ve. TGR) 6c 4
Hilbert v. District of Columbia, 784 F. Supp. 922

CES. | BRR ree ee 6

International Ass’n of Fire Fighters, Alexandria
Local 2141 v. City of Alexandria, Va., 720 F.
Supp. 1230 (E.D. Va. 1989), aff’d, 912 F.2d 463

Ct Gar. TIO oaksiack eee 7
Keller v. City of Columbus, Ind., 778 F. Supp. 1480

Ce. SOM BORE) nncc.ccccccneienent eee 11
Knecht v. City of Redwood City, 683 F. Supp. 1307

tS Ee | ; 4 MeCN A oe Fete ny 5,6

Martin v. Malcolm Pirni@*Inc., 949 F.2d 611 (2d

sod |

ae

la

APPENDIX A
{Mar. 16, 84]
84.195C/OLIR 3722
Dear

This is in reply to your correspondence of February 22
enclosing a copy of a letter from Mr. Gordon L. Rosby
of the Engineers-Architects, Professional Corporation in
Grand Forks, North Dakota. Your constituent requests
information as to whether there are rules or regulations
which govern the handling of overtime hours worked by
salaried professional employees who are exempt under
section 13(a)(1) of the Fair Labor Standards Act
(FLSA). Mr. Rosby asks, for example, whether such
employees should be given compensatory time-off for over-
time hours worked.

Section 13(a) (1) of FLSA provides a complete minimum
wage and overtime pay exemption for any employee em-
ployed in a bona fide executive, administrative, or pro-
fessional capacity, as those terms are defined and de-
limited in 29 CFR Part 541, a copy enclosed. An employee
may qualify for exemption as a bona fide professional
employee if all the tests relating to duties, responsibilities,
and salary, as discussed in section 541.3 of the regula-
tions, are met.

In a telephone conversation with a member of my staff,
Mr. Rosby was advised that employees who meet the re-
quirements for the exemption for bona fide professional
employees need not receive any additional form of compen-
sation beyond the guaranteed salary required by the regu-
lations for hours worked in excess of 40 in a workweek.
Mr. Rosby was also advised that although it is not re-
quired by FLSA, an employer may provide additional
benefits, such as compensatory time-off, bank credit hours,
or monetary compensation, to such exempt employees
when they work in excess of 40 hours in a workweek.

Since no additional form of compensation is required by
FLSA for such exempt employees, there are no rules or

2a

regulations which address the matter of your constitu-
ent’s concern. We wish to point out, however, that where
an employee does not qualify for this exemption, the
employee must be paid in accordance with the monetary
provisions of FLSA, including the payment of overtime
premium pay for hours worked in excess of 40 in a work-
week, unless exempt under some other section of the Act.

We ‘rust that the above satisfactorily responds to your
inquiry. Please let us know if you have further questions.

Sincere!y

WILLIAM M. OTTER
Administretor

JAMES L. VALIN
Assistant Administrator
Wage and Hour Division

83.367

3a
[Jan. 18, 1983]

Dear

This is in reply to your letter of December 24, 1982, con-
cerning the salary basis of payment requirement under
section 13(a)(1) of the Fair Labor Standards Act
(FLSA).

Your letter describes a proposed compensation plan your
client wishes to adopt for certain professionals. Your
letter asks us to presume that all other requirements for
the professional exemption in section 541.3 of Regulations,
29 CFR Part 541 are met.

Your client’s professionals would be guaranteed a salary
of $500 per week, and in addition, $10 to $15 per hour
extra pay for work performed over 40 hours in one
workweek, or after 80 hours in a two-week period, or
everi after 160 hours in a month. If the professional
works less than 40 hours in a workweek, such employee
will receive the full salary of $500. Your client intends
to take the permissible deductions from the professional’s
Salaries as provided in section 541.118(a) (2)-(5) of 29
CFR Part 541.

We agree with your conclusion that the extra compensa-
tion that your client proposes to pay in addition to the
salary is not inconsistent with the salary basis of pay-
ment and is in accordance with section 541.118(b). Fur-
ther, we believe that your client’s proposed compensation
plan generally appears to meet the requirements in sec-
tion 541.118.

However, we have some reservations concerning the pro-
vision in the “Compensation Agreement” allowing the
employer to adjust the salary and extra compensation as
determined by the employer. If, for example, such pro-
viso were used to make frequent adjustments in com-
pensation, it would raise a serious question as to whether
these professionals were being paid “on a salary basis”
within the meaning of the Regulations.

4a
[Mar. 8, 1970]

Dear

This is in further reply to your letter of February 12,
1970, concerning whether additional payments for work
in excess of 44 hours per week to otherwise bona fide
exempt employees is in accordance with the requirement
that such employees be paid “on a salary basis” under
section 13(a) (1) of the Fair Labor Standards Act.

The information you have provided assumes that the em-
ployees concerned meet all the duty requirements for
exemption as bona fide executive, administrative, or pro-
fessional employees, as set forth in the appropriate sec-
tion of Regulations, Part 541. Each employee is paid a
predetermined salary of at least $140 a week which is
not subject to reduction because of variations in the
quality or quantity of the work performed and without
regard to the number of hours or days worked. His
salary is not reduced for working less than 44 hours in
a workweek, except for certain allowable deductions set
forth in section 541.118(a) of the regulations. You ask
if payment on an hourly basis generally at straight-time
rates for time worked in excess of 44 hours in a work-
week would defeat the requirement that such an otherwise
exempt employee is paid “on a salary basis.”

Although employers are not required under the act to
compensate bona fide exempt employees for overtime
work, they may pay them for overtime if they wish. As
you correctly pointed out in your letter, section 541.118 (b)
of the regulations indicates that additional compensation
besides the required predetermined salary is not incon-
sistent with the salary basis of payment. Thus, the em-
ployer may pay for overtime work on an hourly basis,
and this may be at straight time, at time and one-half,
or some other multiple.

Your letter does not describe the type of work the exempt
employees perform during their overtime hours. It should

ee

5a

be pointed out in this connection that the exemption will
be defeated in any workweek in which the employee ex-
ceeds the percentage limitation on nonexempt work.

It should also be noted that where an employee’s employ-
ment situation differs from that described in your letter,
it will be necessary to consider his exemption status in
the light of the facts and circumstances in his individual
case.

Enclosed for your information are copies of Federal Reg-
ister reprints concerning the effective date of the recently
enacted increases in the minimum salary levels necessary
for exemption as an executive, administrative, or pro-
fessional employee.

If you have any additional questions in this or any other
matter concerning the application of the Fair Labor Stand-
ards Act, you may find it more convenient to get in touch
with our Regional Office at 907 U. S. Parcel Post Build-
ing, 341 Ninth Avenue, New York, New York 10001.
That office will be pleased to offer every possible assist-
ance.

Sincerely,

JOSEPH F. MCAULIFFE

Director

Division of Minimum Wage
and Hour Standards

6a
APPENDIX B

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. CV 91-0401 JGD

WILLIAM B. Morscu,

Plaintiff,

V.

CITY OF Los ANGELES,
Defendant.

ORDER DENYING THE DEFENDANT’S MOTION
FOR SUMMARY JUDGMENT AND GRANTING
THE PLAINTIFFS’ CROSS-MOTION FOR
PARTIAL SUMMARY JUDGMENT

[Filed May 4, 1992]

On March 30, 1992, the defendant’s motion for sum-
mary judgment, and plaintiffs’ cross-motion for partial
summary judgment came on for hearing. The Court has
considered the papers filed, and the oral argument of
counsel. The defendant’s motion for summary judgment
is DENIED; the plaintiff’s cross-motion for partial sum-
mary judgment is GRANTED. This order is CERTI-
FIED for interlocutory appeal. The action is STAYED
pending the outcome of the appeal.

Facts

On January 23, 1991, the plaintiffs filed their Com-
plaint for Overtime Pay and Liquidated Damages Under
the Fair Labor Standards Act (“Complaint”). The plain-
tiffs are, or within the three years prior to the filing of
the Complaint, 88 fire protection employees of the City
of Los Angeles, and bring this action on behalf of them-
selves and others similarly situated. The complaint al-
leges that the City violated the Fair Labor Standards

oO

7a

Act (“FLSA”), 29 U.S.C. § 201-219, as described below.
There is no dispute between the parties on the essential
facts.

During the period commencing August 15, 1986, until
the present, the City employed plaintiffs and others simi-
larly situated. The plaintiffs are Battalion Chiefs and
Assistant Chiefs in the Los Angeles Fire Department
whose primary duties involve the prevention of, prepara-
tion for, response to, and control of emergencies. Decla-
ration of John C. Ware in Support of Plaintiffs’ Cross-
Motion for Partial Summary Judgment at 37.’ The plain-
tiffs are not involved in the formation of department
policy, and do not have the authority to hire or fire
employees or make hiring or promotion recommendations.
Id. The hours worked by the plaintiffs are controlled by
the City. Plaintiffs may not absent themselves from work
during the day without the permission of higher author-
ity. Absence without excuse is subject to discipline. When
plaintiffs are absent from work for a period of less than
one day, such absences are deducted from accumulated
leave or overtime in six minute increments. Plaintiffs
must record on departmental time sheets all time spent on
duty and all leaves of absence. Plaintiffs are compen-
sated for overtime on a hourly basis, not on a time-and-
one-half basis. Jd. at 38. Plaintiffs may be suspended
from duty without pay as a disciplinary measure.

The City is required to pay them time-and-one-half
overtime compensation pursuant to 29 U.S.C. § 207(a)
and (k) and regulations of the United States Depart-
ment of Labor. The City has failed to do 80.

1This declaration is unsigned. Presumably, this was merely an
oversight. Defendants have not objected.

8a
Discussion

I. The Standard for Summary Judgment

Rule 56(c) of the Federal Rules of Civil Procedure
provides that a court shall grant a motion for summary
judgment if “the pleadings, depositions, answers to in-
terrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as
to any material fact and that the moving party is entitled
to judgment as a matter of law.” Fed. R. Civ. P. Rule
56(c). Whether a fact is material is determined by look-
ing to the substantive law. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). Facts are deemed ‘“mate-
rial” if a dispute over them “might affect the outcome
of the suit under the governing law... .” Id.

The moving party has the burden of demonstrating
the absence of a genuine issue of fact for trial. Jd. at
256. Rule 56(e) provides that “[w]hen a motion for
summary judgment is made and supported as provided
for in this rule, an adverse party may not rest upon the
mere allegations or denials of the adverse party’s plead-
ings, but the adverse party’s response, by affidavits or as
otherwise provided in this rule, must set forth specific
facts showing that there is a genuine issue for trial. If
the adverse party does not so respond, summary judg-
ment, if appropriate, shall be entered against the adverse
party.” Fed. R. Civ. P. Rule 56(e).

As the Supreme Court explained in Matsushita Elec-
trical Industry Co. v. Zenith Radio Corp., 477 U.S. 574
(1986) :

When the moving party has carried its burden under
Rule 56(c), its opponent must do more than simply
show that there is some metaphysical doubt as to
the material facts .... Where the record taken as a
whole could not lead a rational trier of fact to find
for the nonmoving party, there is no “genuine issue
for trial.”

9a

477 U.S. at 586-87. A “genuine issue” of material fact
exists only when the nonmoving party makes a sufficient
showing to establish an essential element to that party’s
case, and on which that party would bear the burden
of proof at trial. Celotex Corporation v. Catrett, 477
U.S. 317, 322-23 (1986). The evidence of the non-
movant is to be believed, and all justifiable inferences are
to be drawn in his favor. Anderson, 477 U.S. at 255
(citing Adickes v. S. H. Kress and Company, 398 U.S.
144 (1970) ).

Initially, it is the moving party’s burden to establish
that there is “no genuine issue of material fact and that
the moving party is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(c); British Airways Board
v. Boeing Co., 585 F. 2d 946, 951 (9th Cir. 1978) ;
Schwarzer, Tashima & Wagstaffe, Federal Civil Proce-
dure Before Trial § 14:123 [hereinafter Schwarzer].
“The moving party must show there are no triable issues
of fact as to matters upon which it has the burden of
proof at trial.” Schwarzer at § 14:124. It is the oppos-
ing party’s burden to show a triable issue of fact as to
matters on which it will bear the burden of proof at
trial, id. at § 14:131; further, ‘a complete failure of proof
concerning an essential element of the nonmoving party’s
case renders all other facts immaterial.” Celotex Corp.
v. Catrett, 477 U.S. 317 (1986); Schwarzer at § 14:131.

II. Genuine Issues of Material Fact

The moving party has the burden of showing the lack
of any genuine issue of material fact. Some minor facts
are disputed. But just because the parties do not agree
on one version of the facts does not mean that a court
cannot dispose of the matter on summary judgment.
Rule 56(c) of the Federal Rules of Civil Procedure pro-
vides that a court shall grant a motion for summary
judgment if “the pleadings, depositions, answers to inter-
rogatories, and admissions on file, together with the affi-
davits, if any, show that there is no genuine issue as to

10a

any material fact and that the moving party is entitled
to judgment as a matter of law.” Fed. R. Civ. P. Rule
56(c). See also Anderson, 477 U.S. at 257 (“The mere
existence of some alleged factual dispute between the par-
ties will not defeat an otherwise properly supported mo-
tion for summary judgment; the requirement is that
there be a genuine issue of material fact.”) (emphasis
omitted).

In this case, the defendant has made a motion for
summary judgment, and the plaintiffs have made a mo-
tion for partial summary judgment. The parties agree
that generally, there are no genuine issues of material
fact pertaining to the issue of liability. The plaintiffs do
object to the City’s characterization of the plaintiffs as
salaried employees. This concern, however, relates not
to a factual dispute, but to legal interpretation. Thus,
summary judgment is appropriate.

III. The FLSA and the Salary Basis Exemption

Generally, the FLSA bars the employment of any em-
ployee for a work week longer than 40 hours unless such
employee receives compensation at a rate of one and one-
half times his regular rate for those hours which exceed
the 40 hour workweek. See 29 U.S.C. § 207(a) (1). How-
ever, any employee employed in a bona fide executive,
administrative or professional capacity is exempt from the
40 hour workweek limitation. See 29 U.S.C. § 213(a) (1).

In order to qualify for this exemption the employee
must be compensated on a “salary basis.” 29 C.F.R.
§ 541.2. Compensation on a salary basis means that the
employee receives a predetermined amount for each pay
period, which amount is not subject to reduction because
of variation in quantity or quality of the employee’s work
performance. 29 C.F.R. § 541.118. Subject to some ex-
ceptions not relevant here, the employee must receive his
full salary for any week without regard to the number
of days or hours worked. /d.

lla

Plaintiffs do not dispute that they are employed in a
bona fide, administrative or professional capacity. Thus,
they would be exempt from the FLSA if they are com-
pensated on a salary basis. The plaintiffs argue that
they are not paid on a salary basis, and as developed
below, this question is indeed the touchstone of the
dispute.

IV. Fire Protection Partial Exemption: The § 207(k)
Provision

29 U.S.C. § 207(k) created a partial exemption to the
overtime requirements of the FLSA to accommodate the
unique schedules of public safety employees such as fire-
fighters. In lieu of the 40 hour work week approach,
§ 207(k) provides:

No public agency shall be deemed to have violated
subsection (a) of this section with respect to the
employment of any employee in fire protection activi-
ties or any employee in law enforcement activities
..- if—

(1) in a work period of 28 consecutive days
the employee receives for tours of duty which
in the aggregate exceed the lesser of (A) 216
hours, or (B) the average number of hours (as
determined by the Secretary pursuant to section
6(¢c) (3) of the Fair Labor Standards Amend-
ments of 1974) in tours of duty of employees
engaged in such activities in work periods of
28 consecutive days in calendar year 1975; or

(2) in the case of such an employee to whom
a work period of at least 7 but less than 28 days
applies, in his work period the employee receives
for tours of duty which in the aggregate exceed
a number of hours which bears the same ratio
to the number of hours referred to in clause
(B) of paragraph (1) bears to 28 days,

12a

compensation at a rate not less than one and one-
half times the regular rate at which he is employed.

The City asserts that it “has applied the ‘7(k) partial
exemption’ to its sworn firefighters, and has adopted a
27-day work period for them.” Defendant’s Memorandum
of Points and Authorities at 5. The City asserts that
under this provision, time-and-one-half overtime is not
required until 204 hours have been completed in the 27-
day work period. Although 28/216 is a similar ratio to
27/204, a closer approximation is 27/208.

However, the amount of hours actually worked by the
plaintiff firefighters in a 27-day period is 216. See De-
fendant’s Memorandum of Points and Authorities at 20.
The firefighters routinely work 4 to 12 hours of overtime
per 27-day period, and are paid at their normal hourly
rate. Therefore the plaintiffs do qualify for overtime
pay under § 207(k).

V. Salary Basis and the Abshire Decision
A. Defining Salaried Status

The plaintiffs argue that they are not paid on a salary
basis for the following reasons: (1) plaintiffs were re-
quired to maintain detailed accounts of their time; (2)
they were compensated for overtime work on a _ hourly
basis; (3) they were required to use compensable leave
time; and (4) for less than one day’s absence, they were
docked accumulated leave or overtime in six minute in-
crements.

The Department of Labor has recognized that certain
privileges and benefits are uttendant to the status of a
salaried employee. In particular, payment on a salary
basis carries with it the privilege that an employee has
some latitude to vary his hours of work. The Department
of Labor regulations describe a salaried employee as he
who “receives each pay period on a weekly, or less fre-
quent basis, a predetermined amount constituting all or

13a

part of his compensation, which amount is not subject to
reduction because of variations in the quality or quantity
of the work performed.” 29 C.F.R. § 541.118(a). But this
docking test is only one aspect of the salary basis char-
acterization. The Department of Labor regulations also
provide that an employee is not paid on a salary basis if
the employee is subject to disciplinary suspensions with-
out pay for reasons other than infractions of safety rules
of major significance. 29 C.F.R. § 541.118(a) (5). See
also United States Department of Labor Opinion Letter
No. 1614, January 15, 1986, CCH Labor Law Reports,
para. 31,741 at 43,143.

Additionally, courts have held that employees are not
paid on a salary basis when the employees’ pay fluctuates
from pay period to pay period in relation to the number
of hours worked, Hodgson v. Baker, 544 F.2d 429, 434
(9th Cir. 1976), and when the employee accrues and uses
sick leave and vacation benefits by the hour. Knecht v.
City of Redwood City, 688 F.Supp. 1307, 1312 (N.D.Cal.
1987). An employer’s requirement that employees work
a fixed schedule and for a minimum number of hours is
also inconsistent with salaried status. Martin v. Malcolm
Pirnie, Inc., 949 F.2d 611 (2d Cir. 1991).

The hours worked by plaintiffs are controlled by the
City. Plaintiffs may not absent themselves from work
during the day without the permission of higher authority.
Absence without excuse is subject to discipline. When
plaintiffs are absent from work for a period of less than
one day, such absences are deducted from accumulated
leave or overtime in six minute increments. Plaintiffs
must record all time spent on duty and all leaves of ab-
sence on departmental time sheets. They are compensated
for overtime on a hourly basis, not on a time-and-one-half
basis. They may be suspended from duty without pay as
a disciplinary measure. These characteristics are plainly
inconsistent with salaried status,

l4a

B. Docking Pay and Abshire

In Abshire v. County of Kern, 908 F.2d 483 (9th Cir.
1990), cert. denied, 111 S. Ct. 785 (1991), the Ninth
Circuit considered the issue of whether an employee whose
compensation was subject to deduction for an absence of
less than one day was considered as being paid on a
salary basis for purposes of the FLSA. The court held
that such an employee was not exempt from the FLSA.
The .emptions to the FLSA are to be narrowly construed
and employers who claim that an exemption applies to
their employees must show that the employees fit “ ‘plainly
and unmistakenly within [the exemption’s] terms.’ ”’
Abshire, 908 F.2d at 486 (quoting Arnold v. Ben Kanow-
sky, Inc., 361 U.S. 388 (1960)). Clearly, the burden is
on defendants to establish that the plaintiffs fall within
the salaried basis exemption. Id. at 485.

The Abshire court held that employees whose pay is
subject to deduction for absences of less than a day are
not paid on a salary basis according to the regulations
implementing the FLSA. The City admits that it is
possible for the salary of the plaintiffs to be reduced by
reason of an absence of jess than one day if all available
paid leave categories were exhausted. See Defendant’s
Motion at 24. Furthermore, the Abshire court noted that
additional compensation for additional hours worked is
generally not consistent with salaried status. 908 F.2d at
486. The City pays the plaintiffs straight overtime for
additional hours worked. }

Although the City has conceded that the employees’ pay
could theoretically have been subject to deduction for an
absence of less than one day, the City contends that there
is no evidence that such a deduction occurred.*, The County
of Kern in Abshire presented a similar argument that

2 Given that the statute of limitations for violations of the FLSA
is two years, or three years if the violation is willful, there is
potential liability dating back to as early January 23, 1989 or 1988.
See 29 U.S.C. § 255(a).

ee

15a

there was no evidence of any employee having ever been
docked for partial days missed. The court noted that this
argument was irrelevant because the dispositive factor
was whether the employee’s pay was “subject to” deduc-
tion for absences of less than a day. 908 F.2d at 487.
Similarly, here, the City’s argument that there is no.
evidence of actual docking is irrelevant because the em-
ployees were subject to having their pay reduced for par-
tial absences. The plaintiffs’ motion for partial summary
judgment is concerned with liability, not damages. The
issue of whether plaintiffs’ pay was subject to deduction
goes to liability. The issue of whether there were actually
any deductions goes to damages. The City’s argument is
directed at damages, and in the process the City has con-
ceded liability under Abshire.

The City concedes that plaintiffs’ pay was subject to
deduction for a part-day absence. Thus, the City has not
carried its burden of proof and is liable under § 207.
Under Abshire, plaintiffs are entitled to summary judg-
ment on the liability issue. .

V. Department of Labor’s Proposed Regulations

A. Relationship to Abshire

The City argues that recently promulgated proposed
regulations from the Department of Labor overrule the
result in Abshire for public employees. On September 6,
1991, the Department of Labor published an Interim Final
Rule which provides that an otherwise exempt public
sector employee would not be disqualified from exemption
if the employee’s compensation was subject to reduction
for absences of less than one day. See 56 Fed. Reg. 45,826
(1991) (to be codified at 29 C.F.R. § 451.5d).

Furthermore, the Department of Labor issued another
Interim Final Rule which provides that the exemption will
not be lost if either (1) the public employer did not make
a deduction for a part-day absence prior to September 6,

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1991 or (2) the employer reimburses the employee for any
deduction made prior to September 6, 1991. See 56 Fed.
Red, 45,830 (1991) (to be codified at 29 C.F.R. § 541.118
(a) (6) (ii) ).

Defendant has filed the Declaration of John Hardy, the
Chief Administrative Analyst in the Employee Relations
Division of the Office of the City Administrative Officer,
in which Hardy states that he knows of no plaintiff in the
Morsch class action whose pay was reduced for a part-day
absence. Furthermore, he states that the City is com-
mitted to reimburse any deductions in the event such de-
ductiopns are found to have occurred. See Declaration of
John Hardy at paras. 44 and 45.

Thus, the question is whether the proposed regulations
should override the Abshire decision. If the regulations
were effective, the answer would be straightforward: the
regulations would override Abshire. However, here we are
dealing with proposed regulations that have yet to be
formally enacted. Moreover, at least two district courts
have recently held that the regulations are invalid.

B. Validity of the Regulations

In Service Employees Int'l. v. County of San Diego,
92 Daily Journal D.A.R. 2824 (S.D. Cal. Feb. 13, 1992),
the court found that the regulation to be codified at
§ 451.5d was invalid because it was promulgated without
a notice and comment period. Jd. at 2830. Further, the
court refused to stay its decision pending formal enact-
ment of the proposed regulations, which is anticipated to
occur in June 1992. The court noted that the County
submitted no evidence to show that there were no deduc-
tions or that the County reimbursed plaintiffs for any
deductions. /d.

On March 20, 1992, in Alea v. California, Eastern Dis-
trict of California, CV S-89-0032 LKK, Judge Lawrence
Karlton issued an order discussing this issue and reached

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the same conclusion: the Department of Labor’s proposed
regulations are invalid because they were promulgated
without a notice and comment period. In fact, it appears
that the regulations are invalid for our present purposes.

Under the “informal rulemaking” provisions of the
Administrative Procedure Act, an agency must provide
the public with notice and the opportunity to comment on
the proposed rules. 5 U.S.C. § 553(b) & (ce). After con-
sideration of relevant comr.ents, the agency may then
adopt a final rule, along with a concise general statement
of its basis and purpose. Jd. § 553(¢e); San Diege Air
Sports Center, Inc. v. FAA, 887 F.2d 966 (9th Cir. 1989).
A substantive rule is invalid if the agency has failed to
comply with the notice and comment procedures or if
cood cause has not been articulated or does not exist.
Linoz v. Heckler, 800 F.2d 871, 878 (9th Cir. 1986).

In promulgating the Interim Rule, the Department of
Labor determined that because “prior notice and com-
ment are contrary to the public interest,” good cause
existed for dispensing with the notice and comment pe-
riod. 56 Fed. Reg. 45,825. Exceptions to 5 U.S.C. § 553
are “narrowly construed and only reluctantly counte-
nanced.” San Diego Air Sports, 887 F.2d at 969. The
good cause exception is “emergency procedure.” Busch-
mann v. Schweiker, 676 F.2d 352, 357 (9th Cir. 1982).
The Department of Labor’s effort to sidestep the notice
and comment period is particularly egregious since the
interests of thousands of employees were directly affected.

The Service Employees Int'l. v. County of San Diego
and Alex v. California cases have correctly analyzed the
validity of the Interim Rule. This Court considers the
regulation invalid.

C. Impact of the Regulations

Even if this Court were to consider the regulations,
the impact on the analysis is narrow. The Interim Rule
limits itself to situations where the plaintiff is ‘other-

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wise exempt.” The docking of pay is not the only char-
acteristic of a salary basis. As discussed above, other
characteristics can also indicate a salary basis. In this
case, the plaintiffs were paid overtime, and had little con-
tro] over their schedule. These and other characteristics
suggest that the plaintiffs were not salaried employees.

The City has not met its Abshire burden of proof of
establishing that the plaintiffs are salaried employees.
The plaintiffs are nonsalaried employees, and the City
must pay them time-and-one-half overtime compensation.

VI. Interlocutory Appeal
28 U.S.C. § 1292(b) (emphasis omitted) provides:

When a district judge, in making in a civil action
an order not otherwise appealable under this section,
shall be of the opinion that such order involves a
controlling question of law as to which there is sub-
stantial ground for difference of opinion and that an
immediate appeal from the order may materially ad-
vance the ultimate termination of the litigation, he
shall so state in writing in such order. The Court of
Appeals may thereupon, in its discretion, permit an
appeal to be taken from such order, if application is
made to it within ten days after entry of the order:
Provided however, That application for an appeal
hereunder shall not stay proceedings in the district
court unless the district judge or the Court of Ap-
peals or a judge thereof shall so order.

Defendant argues that the Abshire decision is contrary
to the intent of Congress in the sense that Congress surely
did not intend that almost every public employee be com-
pensated time-and-one-half for overtime. This position
is debatable, but supported to a degree by the Labor
Department’s attempt to interpret the FLSA. As noted
above, this issue has become a focus for other litigation
as well as the present case. This Court is of the opin-

a

19a

ion that the order granting the plaintiffs’ cross-motion
for partial summary judgment involves a controlling
question of law as to which there is substantial ground
for difference of opinion, and that an immediate appeal
from the order may materially advance the ultimate
termination of this litigation. Therefore, the order is
CERTIFIED for appeal.

Conclusion

For the reasons discussed above, the defendant’s mo-
tion for summary judgment is HEREBY DENIED. The
plaintiff's motion for partial summary judgment is
HEREBY GRANTED. The order is CERTIFIED for
interlocutory appeal. The action is STAYED pending
the appeal.

IT ISSO ORDERED.

Dated: May 4, 1992

/3/ John G. Davies
JOHN G. DAVIES
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_0581%3A4. Public record. Not legal advice.