Moreau v. Harris County

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 97-20796

LYNWOOD MOREAU; KENNETH O. ADAMS; DAVID W. ADDISON, JOSE A.
ALVARADO; ROBERT AMBOREE; BOBBY G. ANDREWS; RANDY ANDERWALD; GARY
R. ASHFORD, CRAIG L. BAILEY; RICHARD BAILEY; RICHARDO E. BALDERAZ;
HERBERT V. BARNARD; GERALD BARNETT; PAULETTE M. BARNETT; BRAD T.
BENNETT; BRIDGETT BLACKMON; FLYNT E. BLACKWELL; GARY F. BLAHUTA;
SCOTT P. BLANKENBURG; DEBORAH BLIESE; BRUCE H. BRECKENRIDGE; J.W.
BROOKS; BRIAN BUCHANAN; PATRICIA M. BUI; DON E. BYNUM; CLARENCE A.
CALLIS; WILLIAM M. CAMPBELL; HEATHER CARR; THOMAS J. CARR; PAUL E.
CARPENTER; ROBERT CASEY; MARK E. CEPIEL; ELADIO C. CHAVEZ; EDWARD
A. CHRISTENSEN; ROY CLARK; DENNY D. COKER; ALFORD A. COOK; GREGORY
P. COX; DONALD D. CRAYTON; RICHARD D. CROOK; DAVID A. DAVIS; GARY
W. DAVIS; CHRISTOPHER E. DEMPSEY; RUSSELL DUKES; LARRY A. EIKHOFF;
FRANK FAIRLEY; DAVID W. FINELY; JAMES P. FITZGERALD; ERINE R.
FOWLER; MICHAEL A. GARCIA; THOMAS M. GENTRY; JOHN GODEJOHANN;
ROBERT M. GOERLITZ; DAVID GONZALES; RAUL V. GONZALES; MIGUEL A.
GONZALEZ; BILLY GRAY; WILLIAM L. GRAY; LAWRENCE P. GRIES; THOMAS P.
GURNEY; PRESTON R. HALFIN; SAMMY HEAD; NEIL HINES; LARRY D. HOWELL;
MARSHALL P. ISOM; JAMES A. JOHNSON; DERRY L. JONES; DAVID E. KAUP;
WILLIAM C. KENISELL; HOWARD J. KIMBLE; STEVE KIRK; EDGAR D.
KNIGHTEN; FREDDY G. LAFUENTE; MICHAEL G. LAGRONE; AL LANFORD;
VERNON S. LEMONS; SHEMEI B. LEVI; JEANNE LONG; TIMOTHY LOYD; JOE S.
MAGALLON; DAVID B. MARTIN; PEDRO MARTINEZ; RUSSELL L. MAYFIELD;
TERRY MCGREGOR; ROBERT C. MEAUX; STEPHEN MELINDER; MARTY M. MINGO;
D.D. MONTGOMERY; JOSE L. MORIN; RICHARD O. NEWBY; ARTHUR W. NOLLEY;
WILLIAM R. NORWOOD; RICHARD C. NUNNERY; KAREN D. O’BANNION; RAYMOND
E. O’BANNION; GUADALUPE PALAFOX; WAYNE PARINELLO; DEBORAH PETRUSKA;
JAMES A. PHILLIPS; SIMON C. RAMIREZ; MICHAEL B. RANKIN; JAMES C.
REYNOLDS; WILLARD G. ROGERS; GERALD M. ROBINSON; JOE RUFFINO; LANCE
J. SCOTT; ROB R. SELF; DONALD SHAVER; JAMES K. SHIPLEY; JAMES
SMEDICK; GINA K. SPRIGGS; (GRAHMANN); JEFFREY M. STAUBER; LARRY L.
STRICKLAND; BILLY J. TAYLOR; KERRY TOWNSEND; RICHARD S. TRENSKI;
GORDON TROTT; ED TROTTI; RICHARD D. VALDEZ; DALTON E. VAN SLYKE;
FRANK L. VERNAGALLO; RUBEN VILLARREAL; JOHNNY F. WALLING; GERALD R.
WARREN; JAMES M. WATSON; THOMAS G. WELCH; JOHN H. WHEELER; JOSEPH
L. WILLIAMS; RWANDA WILTZ,

Plaintiffs-Appellees,
versus

HARRIS COUNTY; TOMMY B. THOMAS; JOHNNY KLEVENAGEN, Sheriff

Defendants,

HARRIS COUNTY; TOMMY B. THOMAS,
Defendants-Appellants

Appeal from the United States District Court
for the Southern District of Texas

October 19, 1998

Before HIGGINBOTHAM, PARKER and DENNIS, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Harris County appeals a grant of summary judgment in favor of

a certified class of employees, finding that the County’s policy

requiring the use of accrued compensatory time by its employees

contravened 29 U.S.C. § 207(o)(5) of the Fair Labor Standards Act

(FLSA). We are persuaded that the 1985 Amendments to the FLSA do

not grant public employees a right to choose when they will use

accrued comp time. We reverse.

I.

The members of the class are employees of the Sheriff’s

Department of Harris County. The class asserted claims for

2
wrongful refusal of compensatory time off, retaliation and

involuntary use of compensatory time.

The parties have stipulated to the essential facts. By County

policy the accrued comp time for non-exempt employees must be kept

below a predetermined level, set by each bureau commander. This

level is based on the personnel requirements of each bureau.

An employee reaching the maximum allowable hours of comp time

authorized by the FLSA is requested to take steps to reduce the

number of accrued hours. A supervisor is authorized to order the

employee to reduce accumulated comp time at a time suitable to the

bureau. An employee dissatisfied with his supervisor’s order may

informally complain to higher levels of supervisory authority

within the department.

Based upon the stipulation of facts, the district court

ordered the parties to move for summary judgment and to address

whether the County policy requiring the involuntary use of comp

time by its employees contravened 29 U.S.C. § 207(o)(5) of the

FLSA.

On November 26, 1996, the district court issued an “Opinion on

Summary Judgment” and an Interlocutory Declaratory Judgment that

“Harris County may not force employees to use their accumulated

comp time without violating the FLSA” and asked for briefing from

both parties on attorneys’ fees. Then, on July 28, 1997, the

district court issued an order entitled “Final Judgment” which

stated the following:

3
 Final Judgment

1. Harris County may not force employees to use their
accumulated compensatory time without violating the Fair
Labor Standards Act.

2. The parties plaintiff are awarded attorneys’ fees of
$21,360 from Harris County.
Plaintiffs did not ask the district court to rule on their claims

for wrongful refusal of the use of comp time and for retaliation

and it did not do so. This appeal followed.

II.

A.

First, there is our jurisdiction. The record on appeal

indicates that the claims for wrongful refusal of the use of comp

time and for retaliation have not been ruled on by the district

court. Responding to our question, Harris County agreed with the

class that we have jurisdiction since the district court intended

its order to be a final judgment.1

We have jurisdiction only over final decisions of the district

court, with limited exceptions that are not relevant here. 28

U.S.C. § 1291 (West 1993). A final judgment is one that “ends the

litigation on the merits and leaves nothing for the court to do but

execute the judgment.” Coopers & Lybrand v. Livesay, 437 U.S. 463,

467 (1978). We have advocated a practical approach in deciding

1
Plaintiffs did not address the jurisdictional issue in
their briefs. However, at oral argument plaintiffs’ counsel
acknowledged that this court had jurisdiction over this appeal.

4
issues of finality. A judgment reflecting an intent to dispose of

all issues before the district court is final. Vaughn v. Mobil Oil

Exploration and Producing Southeast, Inc., 891 F.2d 1195, 1197 (5th

Cir. 1990); Nat’l Ass’n of Gov’t Employees v. City Pub. Serv. Bd.

of San Antonio, Tex., 40 F.3d 698, 705 (5th Cir. 1994). If a party

abandons one of its claims, a judgment that disposes of all

remaining theories is final and appealable so long as it is

apparent that the district judge intended the judgment to dispose

of all claims. Chiari v. City of League City, 920 F.2d 311, 314

(5th Cir. 1991). When the district court hands down a judgment

couched in language calculated to conclude all claims before it,

that judgment is final. Armstrong v. Trico Marine, Inc., 923 F.2d

55, 58 (5th Cir. 1991).

Here, the district court in entering final judgment appeared

to decide all claims, although it did not explicitly address

plaintiffs’ wrongful refusal and retaliation claims. Nevertheless,

plaintiffs did not pursue any error by the district court and

acknowledged at oral argument that we have this jurisdiction over

this appeal. We conclude that the district court decided all

claims before it that were not abandoned. The order is a final

judgment for purposes of this appeal.

B.

This dispute centers around Harris County’s policy of not

permitting accrued comp time for non-exempt employees to rise above

5
a predetermined level by directing employees to reduce the number

of hours of accrued comp time. The district court held that

accumulated comp time and salary must be treated the same way and

that employees have a right to use comp time when they choose.

Granting summary judgment for the class, the district concluded

that Harris County’s policy of controlling the amount of accrued

comp time violated the FLSA. More precisely put, we must decide

whether Harris County violates 29 U.S.C. § 207(o)(5) of the FLSA

when it involuntarily shortens an employee’s workweek with pay.

The relevant FLSA statute states:

(5) An employee of a public agency which is a State,
political subdivision of a State, or an interstate
governmental agency -
(A) who has accrued compensatory time off authorized to
be provided under paragraph (1), and
(B) who has requested the use of such compensatory time,
shall be permitted by the employee’s employer to use such
time within a reasonable period after making the request
if the use of the compensatory time does not unduly
disrupt the operations of the public agency.

29 U.S.C. § 207(o)(5) (West Supp. 1998).

Harris County contends that the 1985 Amendments to the Fair

Labor Act of 1938, reflected above, were enacted to alleviate the

economic burden upon state and local governments imposed by the

Act’s cash overtime requirements, see Garcia v. San Antonio

Metropolitan Transit Authority, 469 U.S. 528 (1985) (holding, in a

5-4 decision, that the FLSA could constitutionally apply to states

and their political subdivisions), as were the implementing

Department of Labor regulations. The County urges that Congress

6
must have intended for public employers to control the accrual of

comp time because Congress contemplated a circumstance in which a

public employer may elect to reduce or eliminate accrued comp time

by making a cash payment. They point to 29 U.S.C. §207(o)(3)(B)

which states that “if compensation is paid to an employee for

accrued compensatory time off, such compensation shall be paid at

the regular rate earned by the employee at the time the employee

receives such payment.” Since this statute permits a public

employer to reduce accrued comp time with cash payments, Harris

County asserts that reductions in comp time must be at the

employer’s option.

The class contends that Congress vested the employee, rather

than the employer, with the right to determine the use of accrued

comp time off. They urge that 29 U.S.C. § 207(o)(5) imposes only

one limitation on this right —— that the use of the comp time not

unduly disrupt the operations of the public agency. The plaintiffs

maintain since no other limitation on this right was imposed by

Congress, they could choose to use or to bank their comp time as

they see fit. In their view, employers do not have the right to

control employees’ use of their accrued comp time, so long as their

use does not unduly disrupt their operations.

The economic incentives at stake are clear. In an era of

tight public budgets, state employers like Harris County wish to

control the accrual of comp time in order to avoid paying cash

overtime wages when the amount of accrued comp time for any

7
employee reaches the statutory maximum of 240 or 480 hours. The

state employees, on the other hand, want to accumulate accrued comp

time up to the statutory maximum in order to receive cash payments

at an overtime rate of time and one-half or at least retain the

ability to “bank” comp time for later use at their behest.

Section 207(o)(5) does not address the Harris County policy.

This statute is triggered only when the employee first requests the

use of her accrued compensatory time and does not address whether

a public employer may control an employee’s accrual of comp time.

See Heaton v. Moore, 43 F.3d 1176, 1181 (8th Cir. 1994). On its

face then the statute is inapplicable to the present dispute. The

class counters that the statute evidences Congress’ belief that the

use of accrued comp time must reside only with the employee and not

the employer. The statute recognizing public employers’ ability to

pay down accrued comp time, 29 U.S.C. § 207(o)(3)(B), equally

reflects Congressional intent to permit public employers to control

the accrual of comp time.2 Congress wanted to balance competing

interests and intended for both public employers or employees to

retain some control over accrued comp time.

Congress amended the FLSA in 1985 to ease the cost to

state and local governments of complying with the FLSA,

2
Along the same lines, 29 C.F.R. § 553.27(a) states that
“[p]ayments for accrued compensatory time earned after April 14,
1986, may be made at any time and shall be paid at the regular rate
earned by the employee at the time the employee receives such
payment.”

8
particularly its overtime payment provisions. During the debates,

Congress considered proposals for an amendment exempting

governmental agencies from the FLSA. Rather than completely

excluding agencies from the reach of the FLSA, Congress balanced

the burden of complying with the FLSA’s overtime provisions with

protection for the worker. See Todd D. Steenson, Note, The Public

Sector Compensatory Time Exception to the Fair Labor Standards Act:

Trying to Compensate for Congress’ Lack of Clarity, 75 Minn. L.

Rev. 1807, 1812, 1828 (1991). The 1985 Amendments accomplished

this dual purpose by allowing public employers to agree with

employees to award comp time in lieu of monetary payments at a rate

not lower than one and one-half hour for every overtime hour an

employee works. Id. at 1812. Under this scheme, employees working

overtime would receive additional time off from the job with pay

but not cash at the higher overtime rates. In sum, Congress did

not consider or resolve the question that we face here. Because

the legislation reflected a compromise, it is impossible to

determine how Congress would have legislated had it confronted the

question. Before devising our own solution, we must of course look

to precedent.

C.

Relying on the Eighth Circuit’s opinion in Heaton, the class

urges that since “banked compensatory time is the property of the

employee,” they have the right to “bank” comp time in “what amounts

to an employee-owned savings account of compensatory time.” See

9
Heaton, 43 F.3d at 1180. We have recently held that the 1985

Amendments to the FLSA, and section 207(o) in particular, do not

reflect Congressional intent to create a property right in accrued

comp time for employees. See Alford v. Louisiana, __ F.3d __,

draft op. at p. 12 (5th Cir. 1998). Alford, however, sought to

distinguish Heaton. In Alford, the employees merely sought to

require employees to use comp time before dipping into annual

leave, while in Heaton, the employer sought to require use of comp

time before the use of annual leave. This case squarely presents

the Heaton issue, and we must thus decide whether to extend Alford

or to follow Heaton.

We choose to extend Alford. The reasoning in Heaton is

flawed. The Heaton court rested on the principle of construction

that “[w]hen a statute limits a thing to be done in a particular

mode, it includes a negative of any other mode.” Id. at 1180

(internal quotation marks omitted). Because employees may choose

to use their compensatory time within certain limits, the argument

continues, employers cannot make the employees use the compensatory

time sooner than the employees prefer.

This seems to be a misapplication of the relevant rule of

construction. The question here is whether the statute “limits”

the the “thing to be done,” and thus application of the rule begs

the question. Compare, for example, the Supreme Court case Heaton

cites as originally invoking this rule of construction, Raleigh &

Gaston Ry. v. Reid, 80 U.S. (13 Wall.) 269, 270 (1871). In that

10
case, a railroad company’s charter provided that it should not be

taxed for 15 years, and the Court held that by implication it could

be taxed thereafter. That seems straightforward enough, but the

same principle cannot mean that because an employee with comp time

available can choose to use this comp time, an employer can never

require an employee to reduce accumulated comp time. One simply

does not relate to the other.

It is perhaps understandable that Heaton’s reasoning should be

strained, because this is a situation in which Congress has not

spoken clearly in the text of the statute itself or in the

legislative history. Of course, we could still follow Heaton on

prudential grounds, or simply to avoid an intercircuit conflict.

This, however, would be a mistake, for it would leave the

jurisprudence in this circuit unnecessarily confused. There seems

no reason to allow our rule to turn on the issue of whether an

employer conditions its requirement that an employee use comp time

on the employee’s attempt to take annual leave. We are bound by

Alford, and if we were to follow Heaton, employers and employees

through the Circuit would need to brace themselves for expensive

litigation over what conditions an employer could place on an

employee’s annual leave.

The lack of uniformity occasioned by our decision to deviate

from the Eighth Circuit is not a substantial concern in this

context. Even in the absence of further congressional or

regulatory action, neither Heaton, nor Alford, nor our extension of

11
it today represents the final word in any workplace. In the

absence of a mandatory rule governing the situation, the parties

remain free to reach a contractual solution to the problem.

Provisions of an agreement between a covered employer and employees

with regard to compensatory time are valid so long as they do not

contradict the FLSA itself. See 29 C.F.R. § 553.23(a)(1). In this

case, however, the parties have not identified any controlling

provisions, and our obligation is to fashion a background rule,

which the parties remain free to displace in future negotiations.

While Alford did not make explicit that its rule is only a

default, it is worth noting that the default it selected was almost

certainly the correct one. In fashioning a default rule, we are

mindful of the academic consensus that the court’s task is not

simply to construct the rule that the parties would have bargained

for if they had been fully informed and bargaining had been

costless. See generally Symposium on Default Rules and Contractual

Consent, 3 S. Cal. Interdisciplinary L.J. 1 (1993). Moreover, we

recognize that a default rule should not always be tailored to

achieve the most efficient or most just result for the parties to

the lawsuit. In many situations, an “untailored default,” a

“single, off-the-rack standard” that provides a satisfactory

contractual solution in the run of cases may be preferable. Ian

Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An

Economic Theory of Default Rules, 99 Yale L.J. 87, 91 (1989).

12
 This is such a case. A holding that employees by default may

bank their comp time would be as clear as the holding that we reach

today. But a default rule should be selected at a higher level of

abstraction, to ensure clear answers in other FLSA scenarios where

neither Congress nor the parties in an agreement have resolved a

particular issue. See, e.g., Ayres & Gertner, supra, at 96 (noting

the importance of minimizing future litigation costs in

establishing a default rule). In general, allowing an employer to

establish uniform employment policies with respect to questions not

previously negotiated seems preferable to allowing each employee to

establish his or her own policy, and it is certainly preferable to

a regime in which the courts determine which default rule is best

to apply one policy at a time.

Our holding here and in Alford is thus merely an application

of the general principle that the employer can set workplace rules

in the absence of a negotiated agreement to the contrary.3 While

this default may not achieve the optimal solution in every case, it

promotes justice writ large. In establishing this approach, we

3
There may be situations in which an employer is required to
negotiate before establishing a workplace rule. See,e.g., National
Labor Relations Bd. v. Katz, 369 U.S. 736, 747 (1962). The
employees here, however, have not alleged a violation of the
National Labor Relations Act. This opinion’s analysis is consistent
with any limitations on unilateral action that may exist. While an
employer in certain circumstances may not be able to set forth a
uniform policy, the rule that employers may require employees to
use comp time applies even if that rule has not been duly enacted
as a workplace policy, in the absence of an agreement to the
contrary.

13
expect to promote the interests of employers and employees alike

by minimizing the need for future litigation concerning policies

not addressed by Congress or employer-employee agreements. And, of

course, this general interpretive approach is itself a default, and

the parties may select a different rule governing the construal of

their agreements if they choose.

III.

We REVERSE the district court’s grant of summary judgment in

favor of the class and enter judgment for Harris County and all

other defendants.

REVERSED.

14
DENNIS, Circuit Judge, Concurring in part and dissenting in part.

In my opinion neither the plaintiffs nor the defendants have

demonstrated that they are entitled to judgment as a matter of law

on the present record. Accordingly, I agree that the district

court’s judgment must be reversed. I disagree, however, with the

majority’s decision to grant summary judgment for the county at the

appellate level. The majority incorrectly applies its own common

law type “default rule” rather than following the Secretary’s

authoritative interpretation of the FLSA. Consequently, the

majority erroneously fails to remand the case to the district court

for trial or other proceedings as is required by the correct legal

principles.

The FLSA does not directly address the precise question at

issue in this case, viz., whether a public agency may, absent an

employee’s request or agreement, unilaterally compel the employee

to use accrued compensatory time off rather than receiving cash

compensation for the accrued compensatory time off in accordance

with § 207(o)(3)(B). Because the statute is silent or ambiguous

with respect to the specific issue, the questions for this court

are whether the administrative agency has addressed the issue, and,

if so, whether the agency’s answer is based on a permissible

construction of the statute. Chevron U.S.A., Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984); see

also Auer v. Robbins, 117 S.Ct. 905, 909 (1997)(quoting Chevron,

15
467 U.S. at 842-843). A court does not simply impose its own

construction on the statute when an administrative interpretation

based on a permissible construction of the statute exists. Chevron,

U.S.A., Inc., 467 U.S. at 843; Fort Hood Barbers Assn. v. Herman,

137 F.3d 302, 307 (5th Cir. 1998)(Summary Calendar).

The deference owed by this court to administrative regulations

issued to interpret and implement a federal statute depends on

whether the regulation is “legislative” or “interpretative.” Fort

Hood Barbers Assn., 137 F.3d at 307; Snap-Drape, Inc. v. Comm’r, 98

F.3d 194, 197 (5th Cir. 1996); Dresser Industries, Inc. v. Comm’r,

911 F.2d 1128 (5th Cir. 1990)(internal citations omitted). If

legislative, that is “issued under a specific grant of authority to

prescribe a method of executing a statutory provision,” the

regulation is controlling unless it is “arbitrary, capricious, or

manifestly contrary to the statute.” Snap-Drape, Inc., 98 F.3d at

197-98 (internal citations omitted); see also Chevron, U.S.A.,

Inc., 467 U.S. at 843. An “interpretative” regulation is one

promulgated pursuant to a “general grant of authority to prescribe

regulations.” Interpretative regulations are accorded less

deference, but are valid if they are “reasonable and ‘harmonize[]

with the plain language of the statute, its origin, and purpose.’”

Fort Hood Barbers Assn., 137 F.3d at 307 (quoting Snap-Drape, Inc.,

98 F.3d at 197).

The FLSA is administered and enforced by the Secretary of

Labor. 29 U.S.C. §205; Skidmore v. Swift & Co., 323 U.S. 134, 137

16
(1944); Condo v. Sysco Corp., 1 F.3d 599, 604 (7th Cir. 1993); 1

ROTHSTEIN, ET AL., EMPLOYMENT LAW § 4.10 pp. 368-69 (1994). The 1984

amendments to the FLSA expressly authorize the Secretary to

promulgate regulations as are necessary to implement the

amendments. 99 Stat. 787, §6, 29 U.S.C. § 203 (note). Pursuant to

this authorization, the Secretary has promulgated regulations

interpreting and applying pertinent provisions of the FLSA

regarding compensatory time off. See 29 C.F.R. §553.2(b), §§553.20-

553.28. I believe the Secretary’s regulations by clear implication

address the issue in the present case.

The regulations reiterate that in compensating employees for

overtime work, a public agency may not substitute compensatory time

off for overtime cash pay unless there was an agreement or

understanding to do so between the employer and the employee (or

the employee’s representative) prior to the performance of the

work. §553.23(a)(1). With respect to employees not covered by a

bargaining or representative’s agreement, but hired before April

15, 1986, the regular practice in effect on that date constitutes

an agreement which satisfies the statute. Id. Further, a notice to

an unrepresented individual employee that compensatory time will be

awarded in lieu of overtime pay can evidence an agreement as

required by the FLSA. §553.23(c)(1). Although an agreement as

required by the statute is presumed to exist if such notice is

given with respect to any employee who does not communicate his

17
unwillingness to accept compensatory time rather than overtime pay

to his employer, the employee’s decision to accept compensatory

time “must be made freely and without coercion or pressure.” Id.

Finally, the agreement may take the form of an express condition of

employment, if the employee knowingly and voluntarily agrees to it

as a condition of employment and is informed that the compensatory

time received may be preserved, used, or cashed out consistent with

the provisions of section 7(o) of the Act. Id.

The agreement may include provisions restricting compensatory

time off to certain hours of work only. §553.23(a)(2). Provisions

governing the preservation, use, or cashing out of compensatory

time also may be included; however, to the extent that any

provision of an agreement is in violation of section 7(o), it is

superseded by the requirements of section 7(o). Id.

The employer may discharge its obligation to honor accrued

compensatory time earned after April 14, 1986, at any time by

paying for it the regular rate earned by the employee at the time

the employee receives payment. §553.27(a). Upon termination of

employment, the employer must pay the employee for unused

compensatory time earned after April 14, 1986, at a rate of

compensation not less than the average regular rate received by

such employee during the last 3 years of the employee’s employment,

or the final regular rate received by such employee, whichever is

higher. §553.27(b).

18
 Compensatory time cannot be used to avoid statutory overtime

compensation. §553.25(b). “An employee has the right to use the

compensatory time earned and must not be coerced to accept more

compensatory time than an employer can realistically and in good

faith expect to be able to grant within a reasonable time of the

employee’s request for use of such time.” Id.

If an employee has accrued compensatory time and requests use

of this compensatory time, the employer must permit the use of such

time off within a “reasonable period” after the employee’s request

as long as such use will not “unduly disrupt” the operations of the

agency. §553.25(a). A “reasonable period” will be determined by

considering the customary work practices within the agency based on

the circumstances, including the normal schedule of work,

anticipated peak workloads based on past experience, emergency

requirements for staff and services, and the availability of

qualified substitute staff. §553.25(c)(1). If applicable

provisions are included within the agreement or understanding

between the employer and employee, they will govern the meaning of

“reasonable period.” §553.25(c)(2). An “unduly disruptive” use of

accrued compensatory time off is one which the agency reasonably

and in good faith anticipates “would impose an unreasonable burden

on the agency’s ability to provide services of acceptable quality

and quantity for the public.” §553.25(d).

The Secretary’s approach rejects the wooden proposition that

the FLSA grants control over the use of accrued compensatory time

19
either exclusively to the employee or to the employer independently

for its own unilateral purposes. Rather, it requires an agreement

and understanding between the employer and the employee prior to

the performance of the work to initiate compensation with, and

accrual of, compensatory time off. As part of this agreement, the

Secretary’s construction also permits the employer and the employee

to include other provisions governing the preservation, use, or

cashing out of compensatory time so long as they are consistent

with section 7(o) of the FLSA. These regulations indicate that the

Secretary did not interpret the FLSA to allow an employer to

require an employee involuntarily to use accrued compensatory time

off in the absence of a lawful agreement providing such

authorization.

In deciding whether the Secretary’s approach qualifies as a

permissible construction of the FLSA, it is not necessary to decide

whether the Secretary’s regulations issued pursuant to authority

granted by the 1985 amendments are legislative or interpretative.

Even if the regulations are properly classified as interpretative,

they clearly are reasonable and in harmony with the language of the

statute, its origin, and purpose. In enacting the 1985 amendments

to the FLSA, Congress clearly sought to balance the needs and

interests of both public employees and employers subject to the

FLSA. The Secretary’s approach accomplishes this Congressional

directive by requiring employers desiring authorization to order

employees to use accrued compensatory time whenever the employer

20
deems such consumption appropriate to include applicable

provisions, consistent with the statute, in their agreements made

with the employee.

With respect to employee requests for use of accrued

compensatory time, the regulations specifically authorize the

employer and employee in their agreement or understanding to state

terms and conditions governing the meaning of “reasonable period.”

In addition, the Secretary sets forth a non-exclusive list of

underlying considerations for use in determining the ”reasonable

period” within which a compensatory time off request must be

granted and whether doing so would be “unduly disruptive” in a

particular case. These regulations lead naturally and logically to

the inference that the factors for evaluating the reasonableness

and legality of any consensual limitations upon the employee’s

right to use and preserve compensatory time earned should be

similar to those suggested for determining or defining a

“reasonable period” within which an employer must grant a

compensatory time off request, a use of compensatory time off that

is “unduly disruptive” to the employer’s operations, and a

“realistic” and “good faith” utilization of compensatory time off

in lieu of overtime cash pay by an employer.

Applying the provisions of the statute and the regulations to

the present case, it is apparent that neither the plaintiffs nor

the defendants have demonstrated that they are entitled to judgment

as a mater of law under the FLSA as interpreted by the Secretary.

21
Moreover, we should take notice that agreements between the County

and each individual employee incorporating the County’s regulations

providing for compensatory time in lieu of monetary overtime

compensation apparently exist. See Moreau v. Klevenhagen, 508 U.S.

22, 29 (1993). The record before us, however, is not sufficiently

complete to afford an adequate basis for determining whether

provisions governing the preservation, use, or cashing out of

compensatory time are included within these agreements, by

incorporation or otherwise; or if so, whether these other

provisions are consistent with or in violation of section 7(o) of

the Act. If no controlling agreement exists, the district court

should consider retaining jurisdiction while permitting the parties

to enter such agreements. A court of appeal may vacate, set aside,

or reverse a district court’s judgment and may remand the cause and

require such further proceedings to be had as may be just under the

circumstances. 28 U.S.C. § 2106. See Youngstown Sheet and Tube

Co. v. Lucey Products Co., 403 F.2d 135, 139-41 (5th Cir. 1968)

(Remanded to allow submission of proof to insure that substantial

justice be done). See also Hormel v. Helvering, 312 U.S. 552, 557,

61 S.Ct. 719, 721 (1941) (“Orderly rules of procedure do not

require sacrifice of the rules of fundamental justice.”).

Accordingly, under these authorities and the summary judgment

rules, I would vacate the district court’s judgment and remand the

case to it for further proceedings including a trial or the taking

22
of additional evidence necessary to an informed decision of these

questions.

Harris County argues that the FLSA authorizes public agencies

to unilaterally force employees to reduce periodically their

accrued compensatory time by taking off regular work days to

prevent employees from demanding monetary compensation for any

overtime hours worked after the statutory maximums are reached or

cashing in large amounts of compensatory time upon their retirement

or termination. The FLSA does not expressly give public agencies

this right. The County, however, contends that because it has the

right under §207(o)(3)(B), at any time, to reduce or eliminate an

employee’s accrued compensatory time, by paying the employee for

that time at the employee’s current regular rate of pay, the

statute clearly implies that it may also reduce it by requiring an

employee to use accrued compensatory time involuntarily (i.e., by

not working hours for which the employee is compensated at the

employee’s regular rate. §207(o)(7)). The majority embraces and

rearticulates the County’s argument as follows:

The statute recognizing public employers’ ability to pay
down accrued comp time, 29 U.S.C. § 207(o)(3)(B), equally
reflects Congressional intent to permit employers to
control the accrual of comp time.
Maj.Op.p.8 (footnote omitted).

In addition to not being persuasive, this approach fails to

give proper deference to the Secretary’s interpretation of the

statute. The provision relied upon, §207(o)(3)(B), provides: “If

23
compensation is paid to an employee for accrued compensatory time

off, such compensation shall be paid at the regular rate earned by

the employee at the time the employee receives such payment.”

Although an agency can reduce an employee’s accrued compensatory

time by paying for that time in cash, it does not necessarily

follow that an employer can unilaterally require an employee to

reduce accrued compensatory time by taking time off at regular pay.

Recognizing the unique fiscal burden that compliance with the

FLSA would present to public agencies, the 1985 amendments to the

FLSA permit only public agencies to compensate employees for

overtime with compensatory time instead of cash payments.

Congress did not intend, however, to allow public agencies to

indefinitely replace monetary overtime compensation with

compensatory time, undoubtedly an inferior substitute for cash.

The statute clearly requires that any employee who has accrued 480

or 240 hours, as the case may be according to the category of

employment, of compensatory time be paid overtime compensation in

cash for additional overtime hours of work. §207(o)(3)(A). If

Congress had intended to allow employers to permanently avoid the

obligation of providing monetary compensation for overtime hours,

it would not have imposed these statutory maximums on the amount of

compensatory time the employer may award. The provision allowing

employers to reduce the amount of accrued compensatory hours by

paying monetary compensation does not reflect an intent to allow

employers to unilaterally force employees to consume accrued

24
compensatory time without any concession to the employees’ desires;

instead, it simply provides employers with the option to decrease

compensatory time balances by paying cash--the usual and superior

form of overtime compensation.

Moreover, the FLSA expressly provides that an employee of a

public agency who has accrued compensatory time off and has

requested the use of such compensatory time shall be permitted by

the agency to use such time within a reasonable period after making

the request if the use of the compensatory time does not unduly

disrupt the operations of the agency. § 207(o)(5). Accordingly,

even if an agency can on its own initiative redeem compensatory

time commitments for cash (the preferred form of compensation) at

the employee’s current regular rate of pay, it simply does not

follow that an agency can also unilaterally make the employee’s

compensatory time an even less desirable substitute for cash

overtime pay by depriving the employee of the choice of when and

how to use it, but instead dictating the manner of its usage

without regard to the desires or convenience of the employee.

Construing the statute in accordance with the Secretary’s

regulations does not deprive employers of all control of employee

compensatory time balances. Employers may enter into an agreement

with employees (or their representatives) concerning the

preservation, use, and cashing out of compensatory time provided

that these such agreements are consistent with section 7(o) of the

FLSA. In addition, the regulations specifically allow employers to

25
reduce these balances by paying cash for the accrued compensatory

hours. Finally, as the Eighth Circuit noted in Heaton v. Moore, 43

F.3d 1176, 1181 (8th Cir. 1994), employers can always schedule less

overtime or hire additional workers to decrease the rate of accrual

of compensatory time.

26