Pay Administration Under the Fair Labor Standards Act

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 551

RIN 3206-AA40

Pay Administration Under the Fair Labor Standards Act

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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SUMMARY: The U.S. Office of Personnel Management (OPM) is publishing a

proposed rule to amend regulations on the Fair Labor Standards Act

(FLSA or the ``Act''). This rule supersedes instructions contained in

Federal Personnel Manual Letter 551-9, Civil Service Commission System

for Administering the Fair Labor Standards Act (FLSA) Compliance and

Complaint System (March 30, 1976), provisionally retained through

December 31, 1994; and provides for OPM compliance authority regarding

FLSA matters.

DATES: Comments must be received on or before February 9, 1995.

ADDRESSES: Written comments may be sent to Bruce Oland, Chief, Program

Development Division, Office of Agency Compliance and Evaluation, Room

7661, U.S. Office of Personnel Management, 1900 E Street NW.,

Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT:

Jeffery Miller, (202) 606-2530.

SUPPLEMENTARY INFORMATION: In 1974, Congress amended the FLSA to

authorize the former Civil Service Commission (CSC) to administer the

Act for Federal employees. OPM has since taken over this responsibility

and issued substantive regulations at part 551 of title 5, Code of

Federal Regulations, prescribing the criteria and conditions for

administration of the Act. These regulations have, from time to time,

been supplemented by issuances under the Federal Personnel Manual

System (FPM). FPM Letter 551-9 describes the complaint and compliance

system for FLSA complaints. One of the key features of this system is

that OPM served as an adjudicator of individual (and group) FLSA

complaints. This role remained essentially unchanged until 1990.

On March 30, 1990, a Federal court in Carter v. Gibbs, 909 F.2d

1452 (Fed. Cir. 1990), cert. denied, 111 S. Ct. 46 (1990), ruled that

the rights of certain employees to seek review of FLSA complaints were

limited by the Civil Service Reform Act of 1978 (CSRA). In this regard,

the court determined that employees covered by negotiated grievance

procedures (NGP's) established under Section 7121 of title 5, United

States Code, could not seek judicial review of matters under the Act

and that their only forum in which to seek relief is through the NGP up

to and including the arbitration process. A subsequent decision by the

Federal Circuit in Muniz v. U.S., 972 F. 2d 1304 (Fed. Cir. 1992),

expanded on Carter by holding that its principles also applied to

former employees of agencies (including retirees) and employees

promoted out of bargaining unit positions.

On October 1, 1990, the Supreme Court denied certiorari of the

Federal Circuit's en banc decision in Carter. As a result, OPM informed

agencies by memorandum dated November 29, 1990, that, in view of

Carter, OPM would no longer adjudicate complaints from employees

covered by NGP's when those NGP's did not exclude grievances over FLSA

matters, but would continue to accept complaints from other employees.

On April 23, 1992, the General Accounting Office (GAO), in Cecil E.

Riggs, et al., B-222926.3, announced that, in view of Carter and other

judicial decisions, it too would no longer accept complaints from

employees covered by NGP's. The GAO subsequently amended (57 FR 31272,

July 14, 1992) its regulations at 4 CFR parts 22 and 30 to reflect this

policy change. The GAO noted that it would continue to accept claims

from Federal employees not subject to an NGP.

With judicial and GAO decisions placing most FLSA-covered employees

under the exclusive jurisdiction of the NGP for the purpose of FLSA

complaints, OPM has reviewed its FLSA compliance program to determine

whether the program could be changed in a manner that would facilitate

efficient governmentwide administration of the Act. Specifically, OPM

believes that FLSA complaint adjudication at the agency level, now

provided to most FLSA-covered employees under the above decisions, can

and should be extended to all employees. In this event, OPM would no

longer adjudicate FLSA complaints. In the case of bargaining unit

employees, the procedure would be the NGP (unless FLSA complaints are

excluded), with the possibility of invoking binding arbitration. All

other employees would seek redress through and agency-based review or

grievance system. Such employees also would have access to GAO and the

courts if they are not satisfied with the agency decision, thus

providing them with a third-party review opportunity. OPM believes this

change, as well as other provisions of this proposed subpart, will make

administration of the Act more efficient and consistent. The subpart

more clearly defines the various FLSA complaint resolution forums and

explains which employees have access to which forum at a particular

time; i.e. negotiated grievance procedures, or other agency-based

review or grievance systems, the GAO, and the judiciary.

OPM also believes that the complaints adjudication process is

likely to work better if the parties to the dispute are better aware of

their respective responsibilities. Therefore, the proposed rule

contains sections discussing the responsibilities of both the employee

and the agency. Another section describes the responsibilities of OPM.

In this regard, while OPM proposes to discontinue accepting complaints,

OPM [[Page 2550]] also proposes to provide guidance and information to

agencies and employees on request. OPM would provide legal

interpretations on technical FLSA issues (binding on decision-makers in

relevant causes) and also would provide general technical assistance

(non-binding). OPM's regional offices would be available to provide

general assistance but not legal interpretations.

The authority of GAO to settle claims against the United States is

contained in 31 U.S.C. 3702 (b)(1) which provides that a claim filed

with the Office must be received within 6 years after the date the

claim accrues ``except * * * as provided by * * * another law.'' In a

decison rendered on May 23, 1994 (Joseph M. Ford, B-250051), GAO

announced that the 2-year statute of limitations (3 years for willful

violations) as provided in the Portal-to-Portal Act of 1947, as

amended, 29 U.S.C. Sec. 255(a), would apply to all FLSA claims with GAO

that have not been settled prior to that date and all claims filed with

GAO after that date. Section 640 of Public Law 103-329, signed

September 30, 1994, provides for a 6-year statute of limitations to any

claim of a Federal employee under the Fair Labor Standards Act of 1938

(29 U.S.C. 201 et seq.) for claims filed before June 30, 1994. Under

this provision, claims filed on or after June 30, 1994, are subject to

a 2-year statute of limitations, based on the May 23 Comptroller

General decision. The 2-year statute of limitations would now apply to

employees covered by NGP's when those NGP's do not exclude grievances

over FLSA matters; and to employees not covered by an NGP whose pay

claims are reviewable under other agency-based review or grievance

systems. The GAO decision would not apply to claims that arise solely

out of the title 5 overtime provisions; that is, the 6-year limitation

period still applies to title 5 claims.

The proposed rule provides for agency maintenance of records of

compliance adjudication and would require agencies to forward to OPM

copies of final administrative decisions on FLSA adjudication

activities. OPM would utilize this information to help ensure that the

requirements of the Act are being met by agencies and employees and to

help evaluate how well the adjudication system is working.

The proposed rule explains that complaints covered by OPM

regulations do not include matters pertaining to equal pay under 29

U.S.C. 206(d). Equal pay matters are resolved by procedures established

by the Equal Employment Opportunity Commission.

Regulatory Flexibility Act

I certify that this regulation will not have a significant economic

impact on a substantial number of small entities because it applies

only to Federal employees.

List of Subjects in 5 CFR Part 551

Government employees, Wages.

Office of Personnel Management.

James B. King,

Director.

Accordingly, OPM is proposing to amend part 551 as follows:

1. The title and authority citation for part 551 is revised to read

as follows:

PART 551--PAY ADMINISTRATION UNDER THE FAIR LABOR STANDARDS ACT

Authority: Sec. 4(f) of the Fair Labor Standards Act of 1938, as

amended by Pub. L. 93-259, 88 Stat. 55 (29 U.S.C. 204f); Sec. 210 of

the Federal Employees Pay Comparability Act of 1990, Pub. L. 101-

509, 104 Stat. 1460.

2. Subpart F is added to read as follows:

Subpart F--Complaints and Compliance

551.601 Purpose.

551.602 Administrative complaint forums.

551.603 Time limits.

551.604 Employee responsibilities.

551.605 Agency responsibilities.

551.606 OPM responsibilities.

551.607 Judicial review.

551.608 OPM addresses.

Subpart F--Complaints and Compliance

Sec. 551.601 Purpose.

This subpart constitutes OPM's complaint and compliance program for

the resolution of matters arising under the Act. This subpart,

established under OPM's authority to administer the Act as noted in

Sec. 551.101, sets forth administrative complaint systems available to

Federal employees. The subpart also describes OPM's role in assisting

agencies to comply with the Act.

Sec. 551.602 Administrative complaint forums.

(a) Negotiated grievance procedures. An individual covered by a

negotiated grievance procedure (NGP) established under section 7121 of

title 5, United States Code must utilize that procedure to seek review

of FLSA complaints provided the NGP does not exclude such matters.

(b) Agency-based review or grievance systems. An individual not

covered by an NGP described in paragraph (a) of this section may file a

request for review of an agency's FLSA determination under an agency-

based review or grievance system. Decisions under such agency-based

systems must be in accordance with the Act and the conditions and

criteria prescribed by this part for administration of the Act as well

as any legal interpretations issued under Sec. 551.606. These

procedures do not cover matters concerning ``equal pay'' under section

206(d) of title 29, United States Code (which are subject to

consideration by the Equal Employment Opportunity Commission under its

regulations at part 1620 of title 29, Code of Federal Regulations).

(c) General Accounting Office. An individual not covered by an NGP

described in paragraph (a) of this section may file a claim concerning

a dispute under the Act with the GAO under procedures described by GAO

at part 30 of title 4, Code of Federal Regulations. Such a complaint

may be filed after receiving an agency decision under paragraph (b) of

this section or in lieu of requesting a review under paragraph (b).

Sec. 551.603 Time limits.

(a) Administrative review. Complaints involving pay claims under

the Act and filed under Secs. 551.602 (a) and (b) of this subpart must

meet the time limits and procedural requirements of the complaint

system used.

(b) Statute of limitations. Notwithstanding any time limitations

contained in the system being used, pay claims under the Act are

subject to the 2-year statute of limitations provided in section 255(a)

of title 29, United States Code for claims filed on or after June 30,

1994. This statutory limit is satisfied (or tolled) when:

(1) A claim is received by the agency out of whose activities the

claim arose within 2 years from the date the claim or any portion of

the claim accrued; or

(2) A claim is filed directly with GAO within 2 years from the date

the claim or any portion of the claim accrued.

Sec. 551.604 Employee responsibilities.

(a) Filing of claims. The employee has the burden of proving

compliance with Sec. 551.603(b) by providing documentation showing the

date when the agency received his or her claim. Absent such

documentation, any back payments on the claim can be made only to cover

a period up to 2 years prior to the date of actual payment.

(b) Hours-of-work complaints. The employee has the burden to

provide evidence from which a reasonable inference can be drawn that he

or she was improperly compensated for a certain amount and extent of

work performed. A reasonable inference may [[Page 2551]] be rebutted by

the agency as described in Sec. 551.605(b).

(c) Waiver of rights. An employee who will accept payment in

connection with an administrative decision on a claim must first agree

in binding written form that, by accepting the award, the employee

waives the right to pursue the matter in the courts or in any

administrative forum. This requirement does not apply to payments made

in connection with administrative adjudication of claims under

Sec. 551.602(a).

(d) Reprisal. An employee alleging reprisal for filing a complaint

or causing one to be filed may file a request for review of the

allegation under the procedures described in Secs. 551.602 (a) or (b)

whichever applies to the employee.

Sec. 551.605 Agency responsibilities.

(a) Processing complaints. Each agency, after providing the

complainant written acknowledgement of receipt of the complaint, must

process complaints under the Act that are filed under the procedures

described in Secs. 551.602 (a) and (b). Complaint decisions must apply

the requirements of the Act and part 551 and adhere to any relevant

legal interpretations issued under Sec. 551.606(a).

(b) Hours-of-work complaints. When an employee has established

under Sec. 551.604(b) that he or she has been improperly compensated,

the agency has the burden to provide evidence of either the precise

amount of work performed or evidence to negate the reasonableness of

the inference to be drawn from the employee's evidence.

(c) Records. Each agency must maintain the following records:

(1) Hours of work. Complete and accurate records of all hours

worked by an agency's employees are required by section 11(c) of the

Act and Sec. 551.402. The agency must keep such records for a minimum

period of 6 years or after GAO audit, whichever is sooner.

(2) Administrative complaint processes. Records of these processes

include, at a minimum, any decisions issued under Sec. 551.602. These

records are maintained within an agency's established system of

records.

(d) Legal basis for pay. An agency cannot voluntarily apply the pay

provisions of the Act to an employee not covered by it, or to an

employee that has been determined to be exempt from the Act. In such

circumstances, no legal basis exists for making payment under the Act.

(e) Service of administrative adjudication decisions. Agencies are

required to send one copy of each final agency administrative decision

issued under Secs. 551.602 (a) or (b) to the following address: United

States Office of Personnel Management, Office of Agency Compliance and

Evaluation, 1900 E Street NW., Washington, DC 20415.

(f) Prohibition against reprisal. Section 15(a)(3) of the Act

prohibits discharge of an employee, or discrimination against an

employee, in reprisal for filing a complaint under the Act or causing

one to be filed.

Sec. 551.606 OPM responsibilities.

(a) Legal interpretations. OPM may issue legal interpretations on

FLSA matters on its own initiative or at the request of others,

including agency officials, individuals, representatives of individuals

(or groups), and arbitrators. Legal interpretations are meant to convey

official interpretations of the Act and this part and do not constitute

findings of fact for individual (or group) complaints. They are,

however, binding with respect to policy issues arising in the context

of FLSA complaints adjudicated within an agency. Legal interpretations

may be requested by writing to the address designated in Sec. 551.608.

(b) Technical assistance. OPM provides technical assistance

regarding employee or agency obligations under the Act in response to

requests from all sources. Such assistance does not have the force and

effect of official legal interpretations issued under paragraph (a) of

this section.

(c) Corrective action. OPM will require agency action to correct

violations of the Act except when the same issues affecting the same

employees are under consideration in an agency complaint forum that can

also lead to corrective action. Corrective actions may include

designation of FLSA exemption status, orders to compute back pay,

assurance from the agency of future compliance, or other appropriate

action.

Sec. 551.607 Judicial review.

An employee may seek judicial review of a complaint in a manner

prescribed by law.

Sec. 551.608 OPM addresses.

Requests for legal interpretations and technical assistance under

Sec. 551.606 (a) or (b) involving an FLSA matter in the Washington, DC

Metropolitan Area or anywhere outside the 50 States, Puerto Rico, the

Virgin Islands, and the Pacific Ocean area must be sent to: United

States Office of Personnel Management, Office of Agency Compliance and

Evaluation, 1900 E Street NW., Washington, DC 20415. Requests for legal

interpretations involving matters in other geographical areas also must

be sent to the above address while requests for technical assistance

must be sent to the appropriate OPM regional office as follows:

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OPM Regional Office Areas covered

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Atlanta Region, OPM, Richard B. Russell Fed. Building, Alabama, Florida, Georgia, Mississippi, North Carolina,

75 Spring Street SW., Atlanta, GA 30303, Telephone: South Carolina, Tennessee, and Virginia.

(404) 331-3451.

Chicago Region, OPM, John C. Kluczynski Fed. Building, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan,

230 South Dearborn Street, Chicago, IL 60604, Minnesota, Missouri, Nebraska, North Dakota, Ohio,

Telephone: (312) 353-0387. South Dakota, West Virginia, and Wisconsin.

Dallas Region, OPM, 1100 Commerce Street, Dallas, TX Arkansas, Arizona, Colorado, Louisiana, Montana, New

75242, Telephone: (214) 767-0561. Mexico, Oklahoma, Texas, Utah, and Wyoming.

Philadelphia Region, OPM, Wm. J. Green, Jr., Fed. Connecticut, Delaware, Maine, Maryland, Massachusetts,

Bldg., 600 Arch Street, Philadelphia, PA 19106, New Hampshire, New Jersey, New York, Pennsylvania,

Telephone: (215) 597-9797. Puerto Rico, Rhode Island, Vermont, and Virgin

Islands.

San Francisco Region, OPM, 120 Howard Street, 7th Alaska, California, Hawaii, Idaho, Nevada, Oregon,

Floor, San Francisco, CA 94105, Telephone: (415) 281- Pacific Ocean Area, and Washington.

7050.

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[FR Doc. 95-486 Filed 1-9-95; 8:45 am]

BILLING CODE 6325-01-M