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.
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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
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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
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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.
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