Honorable Charles D. Houston Opinion No. JM-733
District Attorney
One East Main Re: Payment of overtime compensa-
Bellville, Texas 77418 tion to county employees, and
related questions
Dear Mr. Houston:
You ask several questions about the impact of the federal Fair
Labor Standards Act of 1938, 29 U.S.C. section 201 et seq. (herein-
after FLSA). as emended, on overtime compensatory ‘time accrued by
county employees. You ask (1) whether the county must pay the
employee for accrued overtime compensatory time when the employee
resigns or his employment is otherwise terminated, (2) whether the
county may have the employee “nominally” on the payroll until the
employee receives payment for accrued overtime compensatory time, (3)
whether, if payment is due, payment should be made from the budget of
the department in which the employee worked, and (4) whether, if a
budget line item exists for the pay-men= of overtime compensation, the
county commissioners court may nevertheless direct that the overtime
compensation be paid out of the regular salary line item. The FLSA
affects only the first two questions.
Section 7(a)(l) of the FLSA prohibits employers from requiring or
allowing employees to work more than 40 hours per workweek without
compensating the employees fey the overtime at 1 l/2 times the
employee’s regular rate of pay. 29 U.S.C. 1207(a)(l); see Attorney
General Opinion JM-680 (1987). The FLSA applies to publicemployers.
See Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528
(1985); see also Attorney General Opinion JM-475 (1986) (for history
of applicability of the FLSA to public employers). Prior to amendment
in 1985, the FLSA required employers either to pay employees at 1 l/2
1. It should be noted that the FLSA applies only to hours
actually worked in excess of forty hours per workweek. If an employee
works on a county holiday, the employee may be entitled, depending on
county policy, to hour-for-hour compensatory time off. The FLSA will
apply only if the total number of hours worked during the workweek
exceeds forty. For similar reasons, a paid holiday on which an
employee does not work does not count toward hours worked under the
FLSA. This opinion addresses only compensatory time off due under the
FLSA.
Honorable Charles D. Houston - Page 2 (JM-733)
times their regular rate of pay for overtime or to allow employees to
take time off at 1 l/2 times their accrued overtime hours during the
same pay period in which the overtime accrued. Because of the burden
this placed on public employers, Congress amended the FLSA in 1985 to
allow public employers to provide this compensatory time off under
more liberal terms. See Fair Labor Standards Amendments of 1985, Pub.
L. 99-150, §2(a)(l) (1985) (amending 29 U.S.C. 5207).
The FLSA authorizes public employers to give employees compensa-
tory time off in lieu of overtime compensation if the public employer
meets certain requirements:
(1) Employees of a public agency which is a State,
a political subdivision of a State, or an inter-
state governmental agency may receive, in accor-
dance with this subsection and in lieu of overtime
compensation. compensatory time off at a rate not
less than one and one-half hours for each hour of
employment for which overtime compensation is
required by this section.
(2) A public agency may provide compensatory time
under paragraph (1) only --
(A) pursuant to -
(1) applicable provisions of a collec-
tive bargaining agreement. memorandum of
understanding, or any other agreement
between the public agency and representa-
tives of such employees; or
(ii) in the case of employees not covered
by subclause (i). an agreement or under-
standing arrived at between the employer
and employee before the performance of the
work; and
(B) if the employee has not accrued compensa-
tory time in excess of the limit applicable to
the employee prescribed by paragraph (3):
In the case of employees described in clause
(A)(ii) hired prior to April 15, 1986, the regular
practice in effect on April 15, 1986, with respect
to compensatory time off for such employees in lieu
of the receipt of overtime compensation, shall
constitute an agreement or understanding under such
clause (A)(ii). Except as provided in the previous
sentence, the provision of compensatory time off to
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Honorable Charles D. Houston - Page 3 (m-733)
such employees for hours worked after April 14,
1986, shall be in accordance with this subsection.
(Emphasis added).
29 U.S.C. 5207(o).
Thus, public employers may allow employees to accrue a certain
amount of compensatory time off for overtime worked so long as the
public employer meets two basic requirements. Cf. Attorney General
Opinions JM-49 1, JM-475 (1986) (state agencies covered by this
Appropriations Act also subject to one-year limit). First, the
employee must agree that he will receive compensatory time-off in lieu
of overtime compensation before the overtime is worked. Second, an
employee cannot accrue more than the number of compensatory hours
specified in the FLSA. If the employee is engaged in a public safety
activity, an emergency response activity, or a seasonal activity, the
employee may accrue no more than 480 hours of compensatory time for
hours worked after April 15, 1986. 29 U.S.C. 9207(o)(3) (A). If the
employee is engaged in any other work, the employee may accrue no more
than 240 hours of compensatory time for hours worked after April 15,
1986. Id. It should be noted that these maximum amounts refer to
accrued;ertime compensatory time, not to actual hours of overtime
worked. As indicated, compensatory time must be provided at 1 l/2
times the number of overtime hours worked. If an employee accrues
more than the maximum amounts allowed, the employee must be paid
overtime compensation. 29 U.S.C. 5207(o) (3) (A), (B).
Consequently, the county must provide county employees with
either overtime compensation or compensatory time off, as provided in
the FLSA. You ask whether the county may leave an employee
“nominally” on the payroll until the employee receives “payment” for
accrued overtime compensatory time off. In essence, you wish to know
whether an employee who resigns must receive lump sum payment of
accrued overtime compensatory time, or whether the employee may remain
on the payroll, receiving salary and other employment benefits until
the employee receives full overtime compensatory time off. The FLSA
requires that
An employee who has accrued compensatory time
off authorized to be provided under paragraph (1)
shall, upon termination of employment, be paid for
the unused compensatory time at a rate of com-
pensation not less than --
(A) the average regular rate received by
such employee during the last 3 years of the
employee’s employment, or
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Honorable Charles D. Houston - Page 4 (JM-733)
(B) the final regular rate received by such
employee, whichever is higher. (Emphasis
added).
29 U.S.C. 5207(o) (4). See Attorney General Opinion JM-680 (how to
determine the regular rareof pay). Once the employment relationship
ends, the county must pay overtime compensation. On the other hand,
the county and the employee may agree , within the PLSA guidelines set
forth above, that the employee will be allowed to take accrued
compensatory time off just prior to leaving the employ of the county.
Your remaining questions relate to the manner in which the county
budget is determined. Article 689a-9, V.T.C.S., provides that county
budgets shall be prepared “to cover all proposed expenditures of the
county government for the succeeding year.” Article 689a-11,
V.T.C.S., provides:
The Commissioners’ Court in each county shall
each year provide for a public hearing on the
county budget -- which hearing shall take place on
some date to be named by the Commissioners’ Court
subsequent to August 15th and prior to the levy of
taxes by said Commissioners’ Court. Public notice
shall be given that on said date of hearing the
budget as prepared by the County Judge will be
considered by the Commissioners’ Court. Said
notice shall name the hour, the date and the place
where the hearing shall be conducted. Any tax-
payer of such county shall have the right to be
present and participate in said hearing. At the
conclusion of the hearing, the budget as prepared
by the County Judge shall be acted upon by the
Commissioners’ Court. The Court shall have
authority to make such changes in the budget as in
their iudement the law warrants and the interest
of the taxpayers demand. When the budget has been
finally approved by the Commissioners’ Court, the
budget, as approved by the Court shall be filed
with the Clerk of the County Court, and taxes
levied only in accordance therewith, and no
expenditure of the funds of the county shall
thereafter be made except in strict compliance
with the budget as adopted by the Court. Except
that emergency expenditures, in case of grave
public necessity, to meet unusual and unforeseen
conditions which could not, by reasonably diligent
thought and attention, have been included in
the original budget, may from time to time be
authorized by the Court as amendments to the
original budget. In all cases where such
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Honorable Charles D. Houston - Page 5 (JM-733)
amendments to the original budget is made, a copy
of the order of the Court amending the budget
shall be filed with the Clerk of the County Court,
and attached to the budget originally adopted.
(Etaphasis added).
See also V.T.C.S. art. 3912k. §2. Article 689a-11 requires that
county salary payments comply with the county budget. See
- Attorney
General Opinion JM-192 (1984).
You ask whether payments of overtime compensation to an employee
should be wade from the budget of the department in which the employee
worked. Article 689a-11 provides that “no expenditure of the funds of
the county shall . . . be made except in strict compliance with the
budget as adopted by the [Commissioners] Court.” Consequently, if the
county budget provides that the expenditures for a particular county
department are to come out of that department’s budget, overtime
compensation for that department’s employees should come from that
department’s budget. On the other hand, article 689a-11 provides
for budget amendments for emergency expenditures in unforeseeable
emergency situations. See Attorney General Opinion Nos. h-777 (1976);
H-12, H-11 (1973); cf.7T.C.S. art. 1666a (applies to counties of
over 225,000 populats, does not apply to Austin or Wailer county).
If the need for overtime compensation stemmed from an unforeseeable
emergency situation as defined in article 689a-11, a budget amendment
would be warranted. Article 689a-11 cannot be used as a shield to
avoid compliance with the PLSA. In other words, the fact that a
particular department’s budget lacks sufficient funds to cover PLSA
overtine compensation will not relieve the county of its responsi-
bility to pay the compensation.
You also ask whether, if a budget line item exists for the
payment of overtime compensation, the county commissioners court may
nevertheless direct that the overtime compensation be paid out of the
regular salary line item. Article 689a-11 requires that counties
comply with their budgets. Consequently, the terms of the particular
budget in question govern the disposition of county funds. As a
general rule, if the county budget contains a line item for general
overtime compensation and the funds available for that line item are
sufficient to cover the overtime compensation due, the county must pay
the overtime compensation from the overtime compensation line item.
If the overtime compensation line item lacks the funds for the
overtime compensation legally due under the PLSA, the compensation
could be paid from the line item for salaries. Counties must comply
with the PLSA. As indicated, if an unforeseeable emergency caused the
need for overtime work and therefore overtime compensation, an
emergency amendment to the budget would be warranted. Moreover, a
potential violation of federal law could be deemed an emergency
situation.
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Honorable Charles D. Houston - Page 6 (JM-733)
SUMMARY
The federal Fair Labor Standards Act of 1938,
29 U.S.C. 1201 et seq., as amended, prohibits
public employers, such as counties, from requiring
or allowing employees to work more than 40 hours
per workweek without compensating the employees
for the overtime at 1 l/2 times the employee's
regular rate of pay. The act authorizes public
employers to give employees compensatory time off
in lieu of overtime if (1) the employee agrees
that he will receive compensatory time off in lieu
of overtime compensation before the overtime is
worked, and (2) the maximum number of overtime
compensatory hours set forth in the act has not
already accrued. Although the county and an
employee may agree that the employee will be
allowed to take accrued compensatory time off just
prior to leaving the employ of the county, the
employee may not be "nominally" on the payroll.
Under the FLSA, an employee is either employed or
not employed.
Article 689a-11 provides that expenditures of
county funds must be made in strict compliance
with the budget adopted by the commissioners
court. Thus, the line items in particular budgets
govern the funds from which overtime compensation
will be paid. Article 689a-11 authorizes budget
amendments. Moreover, the fact that a particular
line item lacks sufficient funds to cover overtime
compensation due under the FLSA will not relieve
the county of its legal responsibility to comply
with the FLSA.
JIM MATTOX
Attorney General of Texas
MARY KELLER
Executive Assistant Attorney General
JUDGE ZOLLIE STEAXLEY
Special Assistant Attorney General
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Honorable Charles D. Houston - Page 7 (JM-733)
RICK GILPIN
Chairman, Opinion Committee
Prepared by Jennifer Riggs
Assistant Attorney General
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