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Lessons in FLSA Wage and Overtime Laws

By Laura Kushner and Scott Lepak

The following is a hypothetical Buzz Olson and Scott Lepak cartoondiscussion between a real-life labor attorney who doubles as a city attorney and fictional Mayor Buzz Olson of the fictional city of Mosquito Heights. (The League has used Buzz and Mosquito Heights over the years to illustrate various city issues.) Buzz is worried about the city’s payroll practices for public safety employees. Scott Lepak, of the Barna, Guzy & Steffen law firm, is playing the part of the Mosquito Heights city attorney, albeit with a little bit of tongue in cheek.

Buzz: Hi, Scott. I’m calling because our payroll person went fishing and the bite is really hot so he’s staying until he runs out of minnows. Anyway, our intern Willie is doing the payroll and, well, let’s just say I’m a little worried. I want to run a few questions by you.

Scott: Remember at the Fire Department’s smelt fry, I told you that I like payroll issues almost better than tartar sauce? I wasn’t kidding. I have to warn you, though, I can’t remember ever coming across an employer that was doing everything right when it comes to wage and overtime laws. The federal Fair Labor Standards Act (what we in the business call the FLSA) is so detailed that it covers things like the minimum hourly wage rate for fish canning in American Samoa. I was going to open up a branch office in Samoa once to focus on fish canning overtime issues, but it was too hard to get back here for council meetings.

Buzz: Well, first thing is that Willie is adding all of these different kinds of pay to the base wage rate, and that is really making the overtime rate go sky high. That can’t be right, can it? Do we really have to add things like longevity pay to the police officer’s wage rate before we calculate the overtime?

Scott: You betcha. I have to hand it to Willie. A common mistake in calculating overtime is that employers forget to add in many different kinds of compensation that have to be counted. On-call pay, shift differentials—they all have to be included in the base rate before calculation matters, but there are a few things like call-back pay, meal expenses, and severance pay that don’t need to be counted.

Sometimes what’s included in the regular rate is in the city’s policy or union agreement, so you’d better get that out and take a look because if it’s in the union agreement, you’ll have to do it. On top of that, these added amounts have to be calculated each workweek. For most employees, that’s seven days, but for police and fire, it could be as much as 28 days.

Buzz: That sounds kind of hard. I prefer to count votes. Like when old man Merton said he was moving out of town, I told him he couldn’t because that would leave an even number of people and it would goof up voting. Well, anyway, next thing is that Willie isn’t counting paid time off when he calculates the overtime. So, if a police officer is out one day on sick leave, Willie doesn’t add those hours in to figure out whether the officer gets overtime or not. Willie says if you don’t actually work the hours, you don’t have to count them. That’s got to be wrong.

Scott: Actually, that’s the right way to do it under the FLSA—unless, of course, you have some police, fire cartoonunion contract language or personnel policy that says you will count those hours. That happens sometimes, and it’s okay to do that.

Back when I worked in a paper mill in Wisconsin, they used to count vacation and sick hours for union employees. It wasn’t written in the union contract, but they were just paying it. Then the payroll person found out and wanted to stop counting those hours, but the union said he couldn’t because it had been going on so long it became a past practice. Once a past practice exists, you have to keep doing it unless there is a change in circumstances making the past practice no longer applicable … or you have to deal with it in contract negotiations for the next contract. When that happens, you should call the labor lawyer.

Buzz: Scott, since we are paying you by the hour and I’m not from Wisconsin, can we get on to the next question? Our police sergeants don’t earn overtime; we pay them on a salary basis. Willie uses some term like “exempt,” I think. But the sergeants are telling me that’s wrong and they should get overtime.

Scott: Well, I’ve got some bad news here, Buzz. Paying your sergeants on a salary basis by itself doesn’t make them exempt. Exempt employees are exempt because of the nature of their job duties as well as being paid on a salary basis. And usually those job duties need to be at a management or professional level and involve decision making, independent judgment, and discretion.

On top of that, the Department of Labor has made it clear that sworn police officers who work on the street will usually be non-exempt and earn overtime. The more time the sergeant spends supervising employees and performing administrative work, the more likely he or she may be exempt. In the case of Mosquito Heights, I’m guessing they spend quite a bit of their time patrolling and are probably non-exempt, overtime-earning employees.

Buzz: Well, Willie was telling me that the public safety folks at the city could get some Special K, and it would be a lot better for the city. What’s he talking about? If we give them Special K cereal, do we have to include that in the regular rate?

Scott: Well, I have to tell you, the police chief and I never eat that Special K stuff. When we eat at the Outdoorsman Cafe, we have my all-time favorite buckwheat pancakes. That’ll put some meat on the bones, and coffee is included. Sometimes we even talk about business.

Buzz: Uh, Scott, can we get back to the Special K exemption?

Scott: Oh, yes. I bet he was talking about 7k, not Special K. Under the FLSA, 7k is an exemption for public safety employees. Remember a few minutes ago, I told you that public safety employees can have workweeks of up to 28 days? That’s called the 7k exemption. But a lot of cities use it without really going on record that they’re using it. That’s a problem.

The exemption works like this: most city employees get overtime after 40 hours in a seven-day workweek. Law enforcement staff only need to be paid overtime after 43 hours in a seven-day workweek, and firefighters after 53 hours in a seven-day workweek. The city can extend the workweeks up to 28 days. If you choose a 28-day workweek, you have more time to avoid overtime pay because you can schedule the employee for fewer hours prior to the end of the workweek.

Buzz: OK, Scott, got it. Last question. Remember when the governor told us we needed to get more efficient in government? We hired a maintenance worker that is also a firefighter. It is kind of like having two people in one body. We sent the governor a picture of the employee and said, “This is really two people.” Now the employee says we owe him overtime for the hours he works each week as a firefighter at night and on weekends.

Scott: Having city employees who are also firefighters is pretty common. First, you have to figure out whether they are really volunteer firefighters, or qualify as paid on-call employees. In our case, I think they make like $10 per hour so we would have a tough time calling them volunteers.

So if he’s an employee in both areas, we have to combine the hours worked and then calculate the appropriate overtime rate. Willie can go to the League of Minnesota Cities’ website at www.lmc.org/flsapf, and get an information memo called Fair Labor Standards Act: Police and Fire Employees. It has an example of how to compute overtime for these cases.

Shaking hands cartoon Buzz: Or I can just call those nice people in the HR Department at the League, right?

Scott: Yep, that’ll work, too. Willie seems to have a good handle on these things, but let me know if you have any more questions. See ya later!

Laura Kushner is human resources director with the League of Minnesota Cities. Contact: lkushner@lmc.org or (651) 281-1203. Scott Lepak is an attorney with Barna, Guzy & Steffen, Ltd. Contact: slepak@bgs.com or (763) 780-8500.

Read the May-June 2014 issue of Minnesota Cities magazine

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