O'Brien v. Town of Agawam

United States Court of Appeals
For the First Circuit

No. 03-1685

GARY O'BRIEN, DONALD GALLERANI, ANTHONY CICHETTI, GERALD O'KEEFE,
RALPH GRADY, RICHARD CURRY, MARK CECCARINI, JAMES DONOVAN, ERIC
GILLIS, ERIC FAIRCHILD, PAUL CHENEVERT, ANTHONY MALONE, JOHN
KONASEK, JENNIFER BLANCHETTE, CHRISTOPHER BRUNELLE, WILLIAM
SLIECH, ANTHONY GRASSO, BRIAN STRONG, ERIC LOTTERMOSER, JAMES
WHEELER, ANDREW PARRELLI, RONALD BROWN, THERESA MOCCIO, RICHARD
CONLON, DANIEL CIAK, KEITH BOPKO, ROBERT MARSH, RICHARD LIGHT,
KAREN LANGEVIN, ERIC CAMERLIN, GARY NARDI, STEVEN DRAGHETTI, JOHN
FIELD, THOMAS MARMO, ROBERT BURKE, RICHARD RICCIO, PETER BERTERA,
EDWARD MCGOVERN, RICHARD NILES, EDWARD CONNOR, RICHARD MCDONNELL,
PAUL MURPHY, JOHN MOCCIO, STANLEY CHMIELEWSKI, ROLAND DYMON, MARK
PFAU, STEVEN GRASSO, WAYNE MACEY, MICHAEL GRUSKA, DONALD LONCTO,
MARK POGGI, JOSEPH SANTORE,

Plaintiffs, Appellants,

v.

TOWN OF AGAWAM; AGAWAM POLICE DEPARTMENT,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Michael A. Ponsor, U.S. District Judge]

Before

Lynch, Circuit Judge,
Lipez, Circuit Judge,
and Oberdorfer, Senior District Judge.*

*
Of the United States District Court for the District of
Columbia, sitting by designation.
John Connor for appellants.

David A. Robinson for appellees.

December 2, 2003
 LYNCH, Circuit Judge. Current and former police officers

of the Town of Agawam, Massachusetts brought suit under the Fair

Labor Standards Act (FLSA), 29 U.S.C. §§ 201 et seq., alleging that

the Town's compensation scheme for police officers violates the

FLSA by omitting certain wage augments from the calculation of the

officers' overtime rate.1 The district court granted summary

judgment for the Town, holding that the officers were required to

exhaust the binding grievance and arbitration procedures in their

collective bargaining agreements, and that in any event the Town

had paid the officers in accordance with the FLSA. We hold that

arbitration was not required, but we affirm summary judgment as to

the officers of supervisory rank, whom we conclude are not covered

by the FLSA. As to the remaining officers, we reverse and remand.

I.

A. Factual Background

On review of an order for summary judgment, we describe

the facts in the light most favorable to the non-moving party

(here, the officers). Rocafort v. IBM Corp., 334 F.3d 115, 119

(1st Cir. 2003).

1
Although the FLSA did not originally apply to state and
local governments, Congress extended the Act in 1974 to reach
virtually all state and local employees. The Supreme Court
ultimately upheld this assertion of federal power in Garcia v. San
Antonio Metro. Transit Auth., 469 U.S. 528, 555-56 (1985). See
also Blackie v. Maine, 75 F.3d 716, 719 (1st Cir. 1996).

-2-
 Appellants are current and retired police officers who

are, or were at relevant times, employed by the Town of Agawam.2

The majority are patrol officers in the Agawam police force. The

remainder are supervisory officers, a category that includes those

holding the rank of special sergeant, sergeant, lieutenant, or

captain.

Employment terms for both patrol and supervisory officers

in the Agawam Police Department are established through collective

bargaining. Appellants are members of the International

Brotherhood of Teamsters, Local Union No. 404, which acts as their

exclusive bargaining agent. On May 14, 1999, the Union and the

Town negotiated two collective bargaining agreements (CBAs), one

for the patrol officers and another for the supervisors,

establishing the pay rates, hours of work, and other terms of

employment for Agawam police officers. Both CBAs were effective

from July 1, 1998 through June 30, 2001. Although no successor

contract has been negotiated, it is undisputed that the officers

continue to work and receive pay under the terms of the CBAs.

2
For simplicity, appellants are described herein as though
they are all current police officers. The retired officers' FLSA
claims are identical to those of current officers for purposes of
this appeal, although the relief to which each group may be
entitled on remand, if any, may differ.

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Apart from differences in pay rates, the two agreements are

essentially identical for purposes of this appeal.3

Under the CBAs, all officers work 1950 straight-time

hours per year, or an average of 37.5 such hours per week. They do

so on a standard "four days on, two days off" work schedule -- that

is, a repeating cycle of four consecutive days on duty followed by

two consecutive days off duty.4 Each scheduled day on duty

involves an eight-hour shift, plus ten additional minutes to attend

roll-call. Due to the officers' six-day shift rotation, the number

of hours each officer is scheduled to work varies from week to

week.5

The CBAs also anticipate that officers will be called

upon to work outside of their scheduled hours, as threats to the

public health and safety do not necessarily coincide with shift

rotations. If an officer works longer than a single shift on any

3
To the extent that differences between the CBAs exist, they
are irrelevant in light of our conclusion that the supervisory
officers are not protected by the FLSA.
4
Notwithstanding the CBAs, it appears that at least some
officers work on a seven-day cycle of five days on duty followed by
two days off duty. These officers receive additional time off
during the year so that their total straight-time hours do not
exceed 1950.
5
For example, in a given calendar week an officer might be
on-duty from Sunday to Wednesday, off-duty on Thursday and Friday,
and then on-duty again on Saturday, for a total of 40 hours plus 50
minutes of roll-call time. In a different week, the same officer
might be off-duty Sunday and Monday, on-duty from Tuesday to
Friday, and then off-duty again on Saturday, for a total of 32
hours plus 40 minutes of roll-call time.

-4-
given day, or otherwise must be on-duty when he was scheduled to be

off-duty, he is entitled by contract to "overtime" pay at the rate

of "time and one-half."6 In addition, various minimum levels of

compensation apply to such extra work -- for example, any officer

who is called to work on an off-duty day is guaranteed at least

four hours of overtime pay, regardless whether he actually does

four hours of labor.

The CBAs also establish the amounts of the officers'

wages. The agreements set annual "salary" figures for officers of

each grade and rank. Each officer receives exactly 1/52 of that

salary each week as base pay, regardless of the number of hours

actually worked during that week. In addition, the CBAs guarantee

certain additional compensation to the officers, including shift-

differential compensation,7 longevity pay,8 and career-incentive pay

6
As the discussion below makes clear, contractual overtime
pay is distinct from statutory overtime compensation, which is due
only for work beyond the applicable maximum number of hours per
week under the FLSA (usually forty). See generally 29 U.S.C.
§ 207. An Agawam patrol officer who works three eight-hour shifts
and one ten-hour shift in a given week is entitled to two hours of
contractual overtime pay under the CBA, but because the officer has
not worked more than forty hours in total, no FLSA overtime is due.
7
Shift-differential pay is an additional $10/week for
officers who work either of the two nighttime shifts.
8
Longevity pay is an annual lump-sum payment for length of
service in the police force. The amount varies from $150 for
officers with between five and ten years of service to $900 for
officers with thirty or more years of experience.

-5-
under the Quinn Bill, Mass. Gen. Laws ch. 41, § 108L.9 The Town

does not include these wage "augments" in the calculation of the

officers' "time and one-half" overtime rate. Instead, the Town

calculates each officer's overtime rate simply by dividing the

officer's annual salary by 1950, which is the expected number of

regular shift hours during the calendar year, and then multiplying

the resulting hourly rate by 1.5. This is the only overtime

calculation method that the Town employs; it does not use a

different formula or pay a different rate for hours worked in

excess of forty in a week. In addition to straight-time pay,

overtime pay, and the contractual wage "augments," the officers

receive a fixed lump-sum payment each December to compensate them

for the time spent at roll-call before each shift.10

Both of the CBAs provide binding grievance and

arbitration procedures. These procedures are the exclusive avenue

of redress for any claim that the Town violated an obligation under

the agreement. Neither arbitration provision refers to statutory

9
The Quinn Bill provides base salary increases to police
officers in Massachusetts "as a reward for furthering their
education in the field of policework." Mass. Gen. Laws ch. 41,
§ 108L. The amounts vary depending on the number of credit hours
of education completed. Id. Under the CBAs, Quinn Bill "career-
incentive" pay is given to officers in a single lump-sum each
January.
10
The CBAs also guarantee the officers other wage augments,
such as firearms-qualification pay and outside-detail pay.
Although appellants argued in the district court that their
overtime rate should reflect these additional augments as well,
they have abandoned those arguments on appeal.

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claims, and neither CBA contains any other arbitration provision.

None of the appellants filed a grievance or sought arbitration

concerning any of the issues in this case

B. Procedural History

On July 3, 2001, three days after the expiration of the

CBAs, appellants filed this action against the Town. The complaint

alleged that the Town's method of calculating overtime wages

violates the FLSA because it fails to include the officers'

contractually guaranteed wage augments in their "regular rate" of

pay -- that is, the rate to which the FLSA's time-and-a-half

overtime multiplier is applied.11 See 29 U.S.C. § 207(a) (overtime

compensation must be paid "at a rate not less than one and one-half

times the regular rate at which [the employee] is employed"). In

addition, appellants claimed that the Town violates the FLSA by

compensating officers for roll-call attendance in an annual lump-

sum payment, rather than as weekly overtime.

After discovery, the parties filed cross-motions for

summary judgment. On January 7, 2003, the district court granted

summary judgment for the Town. On May 1, the court issued a

memorandum declaring that the officers' FLSA claim failed for three

reasons, each sufficient to support summary judgment. First, the

11
The complaint avers that the Town "wilfully and
intentionally" violated the FLSA, but counsel for appellants
conceded at oral argument that the record, at least at this stage,
does not support the allegation of willfulness.

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district court held that despite the officers' invocation of the

FLSA, they had in fact pleaded "a classic contract-anchored dispute

over calculation of overtime, gussied up as a statutory claim."

Accordingly, the court held that appellants were obligated to

exhaust their grievance and arbitration remedies under the CBAs.

Second, the court held that the Town adequately compensates --

indeed, overpays -- the officers under the FLSA because it properly

employs the "fluctuating workweek" calculation method in 29 C.F.R.

§ 778.114, which requires only half-time (rather than time-and-one-

half) overtime premiums. Finally, the district court held that the

Town was entitled to summary judgment because the officers are

subject to the partial overtime exemption for law enforcement

officers in 29 U.S.C. § 207(k), and given that partial exemption,

the officers were adequately compensated under the FLSA. The

officers timely appealed.

II.

We review the district court's grant of summary judgment

de novo. V. Suarez & Co., Inc. v. Dow Brands, Inc., 337 F.3d 1, 4

(1st Cir. 2003).

Because the legal issues in this case are both numerous

and complex, a brief preview of the analysis may be helpful.

First, we examine the district court's three grounds for summary

judgment in turn and conclude that each was in error. Second, we

consider whether the district court's decision may be affirmed on

-8-
any alternative basis that is manifest in the record. See Torres-

Rosado v. Rotger-Sabat, 335 F.3d 1, 13 (1st Cir. 2003). We hold

that summary judgment was proper as to the supervisory officers

because they are exempt from the overtime requirements of the FLSA.

Finally, we reach the merits of the non-supervisory officers' FLSA

claims and conclude that shift-differential pay, longevity pay, and

career-incentive pay must all be included in the calculation of the

officers' "regular rate" under the FLSA. We also conclude that

roll-call time must be included in the officers' weekly hours-

worked under the FLSA and be compensated accordingly.

A. The District Court's Grounds for Summary Judgment

1. Arbitration under the CBA

The district court held that the officers' FLSA claims

are barred from federal court because they are essentially

contract claims for unpaid overtime, and contract claims are

subject to the CBA's mandatory grievance and arbitration

procedures. On appeal, the officers argue that their statutory and

contractual rights are distinct, and that nothing in the CBAs

waives their statutory right to a judicial forum for their FLSA

claims. They also contend that even if such a waiver were present,

it would be unenforceable under the Supreme Court's decision in

Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 737-

46 (1981) (holding that a collective bargaining agreement cannot

prospectively bind employees to arbitrate FLSA claims).

-9-
 The officers' first contention suffices to resolve this

issue. Rights conferred by Congress are conceptually distinct from

those created by private agreement, and there is no authority for

the proposition that rights under the FLSA merge into contractual

ones whenever the two overlap.12 "The distinctly separate nature

of these contractual and statutory rights is not vitiated merely

because both were violated as a result of the same factual

occurrence." Alexander v. Gardner-Denver Co., 415 U.S. 36, 50

(1974) (involving rights under Title VII); see Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20, 34-35 (1991)

(reiterating that statutory rights are independent of rights

created under CBAs); Morales-Vallellanes v. Potter, 339 F.3d 9, 17

(1st Cir. 2003) (remedies under Title VII and CBAs are

independent); LaChance v. Northeast Publ'g, Inc., 965 F. Supp. 177,

184 (D. Mass. 1997).

12
The district court cited Collins v. Lobdell, 188 F.3d 1124
(9th Cir. 1999), for the proposition that "a claim couched as a
statutory claim is still subject to exhaustion requirements if the
claim is in reality 'essentially on the contract.'" Id. at 1127
(quoting Wren v. Sletten Constr. Co., 654 F.2d 529, 535 (9th Cir.
1981)). But the Collins court stated unequivocally that FLSA
rights do not merge into overlapping contractual rights: "Where
employers and employees reach an agreement that expressly violates
the FLSA . . . , employees may still bring actions to protect
rights provided for in the FLSA without exhausting remedies
established in the agreement." Id. at 1127-28. Moreover, Wren,
the case on which Collins relied for its dictum that statutory
claims can be subject to exhaustion if "essentially on the
contract," was decided prior to the Supreme Court's decision in
Barrentine. Accordingly, we doubt that the dictum quoted by the
district court is still good law, if indeed it ever was.

-10-
 This leaves the question whether the officers were

required to submit their FLSA claims to arbitration under either of

the collective bargaining agreements. They were not. Neither CBA

contained a "clear and unmistakable waiver" of the officers' right

to a judicial forum for FLSA claims. Wright v. Universal Mar.

Serv. Corp., 525 U.S. 70, 79-80 (1998). In Wright, the Supreme

Court noted the "obvious[] . . . tension" in its arbitration

jurisprudence between older cases holding that CBAs can never

prospectively bind employees to arbitrate federal statutory claims,

see Barrentine, 450 U.S. at 745-46 (FLSA claims); Gardner-Denver,

415 U.S. at 51-52 (Title VII claims), and more recent cases

holding that employees can be compelled to submit some federal

statutory claims to arbitration pursuant to a valid arbitration

clause in a bilateral employment contract, see, e.g., Circuit City

Stores, Inc. v. Adams, 532 U.S. 105, 122-24 (2001); Gilmer, 500

U.S. at 27-29. See 525 U.S. at 76. The Wright Court declined to

resolve this tension, holding that even assuming a CBA can waive an

employee's right to a federal forum, any such waiver must at a

minimum be "clear and unmistakable." Id. at 79-81; see also id. at

80 ("[W]hether or not Gardner-Denver's seemingly absolute

prohibition of union waiver of employees' federal forum rights

survives Gilmer, Gardner-Denver at least stands for the proposition

that the right to a federal judicial forum is of sufficient

-11-
importance to be protected against less-than-explicit union waiver

in a CBA.").

No such clear and unmistakable waiver appears in the CBAs

in this case. The arbitration provision in each agreement applies

only to "grievances," which in turn are defined as allegations that

the Town violated the CBA. Not a single reference appears to

arbitration of statutory claims, let alone a clear and unmistakable

waiver of a judicial forum for such claims. Indeed, the patrol

officers' CBA affirmatively suggests that union members can bring

statutory claims in a judicial forum. In contrast to the

arbitration section of the agreement, which makes no reference to

statutory claims, the paragraph governing workplace discrimination

bars the Town from discharging or discriminating against any

officer because he or she "filed or processed any grievance under

this agreement or instituted any proceeding under the State or

Federal statutes relating to wages, hours, or conditions of

employment" (emphasis added). The CBA juxtaposes "grievances,"

which are subject to arbitration, with claims under "[f]ederal

statutes relating to wages, hours, or conditions of employment," of

which the FLSA is among the most prominent. This is a far cry from

a "clear and unmistakable" waiver of the officers' right under the

FLSA to a judicial forum. See Wright, 525 U.S. at 81 (finding no

clear and unmistakable waiver of a federal forum in language in the

CBA purporting to cover "all matters affecting wages, hours, and

-12-
other terms and conditions of employment"); Quint v. A.E. Staley

Mfg. Co., 172 F.3d 1, 8-9 (1st Cir. 1999) (CBA lacking any express

reference to federal anti-discrimination statutes did not include

a "clear and unmistakable waiver" of an employee's right to bring

a statutory discrimination claim in federal court).13

We conclude that the grievance and arbitration procedures

in the CBAs did not bar the officers from filing their FLSA claims

directly in federal court.14

13
In holding that arbitration was required, the district court
relied on the "presumption favoring arbitration" under the Federal
Arbitration Act (FAA), 9 U.S.C. § 1 et seq. But as the Supreme
Court made clear in Wright, the presumption favoring arbitration in
collective bargaining agreements "does not extend beyond the reach
of the principal rationale that justifies it, which is that
arbitrators are in a better position than courts to interpret the
terms of a CBA." 525 U.S. at 78 (emphasis in original). So the
presumption on which the district court relied is inapplicable to
the question whether the officers must arbitrate their FLSA claim.
That is because "the ultimate question for the arbitrator would be
not what the parties have agreed to, but what federal law requires;
and that is not a question which should be presumed to be included
within the arbitration requirement." Id. at 79 (emphasis in
original).
14
Because Wright disposes of the arbitration issue in this
case, we need not address whether Barrentine survives Gilmer and
its progeny. Most courts to reach the issue have held that the
Barrentine/Gardner-Denver line of cases remains valid. See, e.g.,
Albertson's, Inc. v. United Food & Commercial Workers Union, 157
F.3d 758, 761-62 (9th Cir. 1998) (FLSA); Pryner v. Tractor Supply
Co., 109 F.3d 354, 364-65 (7th Cir. 1997) (Title VII, ADEA, and
ADA); Tran v. Tran, 54 F.3d 115, 117 (2d Cir. 1995) (FLSA). The
notable exception is Austin v. Owens-Brockway Glass Container,
Inc., 78 F.3d 875, 882-86 & n.2 (4th Cir. 1996) (requiring
arbitration of individual employee's ADA and Title VII claims based
on a mandatory grievance procedure in a CBA, but distinguishing
FLSA claims on the grounds that Title VII and the ADA, unlike the
FLSA, expressly encourage arbitration). This court has suggested
on at least one occasion that aspects of Barrentine do survive.

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 2. Overpayment I: Fluctuating Workweek Method

As an alternative basis for summary judgment, the

district court held that the Town properly calculates police

overtime in accordance with the "fluctuating workweek" method set

forth in 29 C.F.R. § 778.114. Where that interpretative regulation

applies, the minimum overtime rate required by the FLSA is only

half-time (i.e., 50% of the regular rate), rather than time-and-a-

half (150%). Relying on § 778.114, the district court concluded

that the Town paid the officers more generously than the FLSA

requires. See Valerio v. Putnam Assocs., 173 F.3d 35, 40 (1st Cir.

1999) (summary judgment is appropriate if the employee ultimately

received more compensation than the FLSA overtime rules require).

On appeal, the officers contend that the compensation scheme

embodied in the CBAs is inconsistent with the requirements of §

778.114.15

See Plumley v. S. Container, Inc., 303 F.3d 364, 373-74 (1st Cir.
2002) (holding that a collective bargaining agreement cannot
prospectively bind workers to arbitrate FMLA claims).
15
Section 778.114 is an interpretative regulation, and such
agency interpretations normally do not bind courts. See Batterton
v. Francis, 432 U.S. 416, 425 n.9 (1977). But because § 778.114
represents the Secretary of Labor's implementation of the Supreme
Court's holding in Overnight Motor Transp. Co. v. Missel, 316 U.S.
572, 580 (1942), this court has previously indicated that the
regulation has binding effect. See Martin v. Tango's Restaurant,
Inc., 969 F.2d 1319, 1324 (1st Cir. 1992). In any event, the
parties limit their arguments to whether the compensation scheme
embodied in the CBAs comports with the regulation, and we confine
ourselves to the same question.

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 The fluctuating workweek method is one of two approved

methods in the Department of Labor's FLSA regulations for

calculating the "regular rate at which [an employee] is employed"

for overtime purposes. 29 U.S.C. § 207(a); see Valerio, 173 F.3d

at 39. The first is the "fixed weekly salary" method, which

governs employees who receive a fixed salary that is intended to

compensate a specific number of hours of labor (e.g., $400 for 40

hours). 29 C.F.R. § 778.113(a). The other is the fluctuating

workweek method, which applies when an employee "is paid a fixed

weekly salary regardless of how many hours the employee may work in

a given week." Valerio, 173 F.3d at 39. This method is intended

to cover cases in which "a salaried employee whose hours of work

fluctuate from week to week [reaches] a mutual understanding with

his employer that he will receive a fixed amount as straight-time

pay for whatever hours he is called upon to work in a workweek,

whether few or many . . . ." Condo v. Sysco Corp., 1 F.3d 599, 601

(7th Cir. 1993).

When the fluctuating workweek method applies, the

employee's "regular rate" for FLSA purposes is calculated anew each

week by dividing the actual number of hours worked that week into

the fixed salary amount. This calculation produces a straight-time

hourly rate, which is then multiplied by 50% to produce the

overtime rate that must be paid for every hour worked beyond 40

-15-
that week.16 The interpretative regulations explain why the

overtime rate is only half-time, rather than the usual

time-and-a-half: "Payment for overtime hours at one-half [the

regular] rate in addition to the salary satisfies the overtime pay

requirement because such hours have already been compensated at the

straight time regular rate, under the salary arrangement."

§ 778.114(a). In other words, the fixed sum represents the

employee's entire straight-time pay for the week, no matter how

many hours the employee worked; the employer need only pay the 50%

overtime premium required by the FLSA for hours after 40.

16
The following example, which appears in the regulations, is
helpful to understanding how § 778.114 operates in practice:

The [fluctuating workweek method] may be illustrated
by the case of an employee whose hours of work do not
customarily follow a regular schedule but vary from week
to week, whose overtime work is never in excess of 50
hours in a workweek, and whose salary of $250 a week is
paid with the understanding that it constitutes his
compensation, except for overtime premiums, for whatever
hours are worked in the workweek. If during the course
of 4 weeks this employee works 40, 44, 50, and 48 hours,
his regular hourly rate of pay in each of these weeks is
approximately $6.25, $5.68, $5, and $5.21, respectively.
Since the employee has already received straight-time
compensation on a salary basis for all hours worked, only
additional half-time pay is due. For the first week the
employee is entitled to be paid $250; for the second week
$261.36 ($250 plus 4 hours at $2.84, or 40 hours at $5.68
plus 4 hours at $8.52); for the third week $275 ($250
plus 10 hours at $2.50, or 40 hours at $5 plus 10 hours
at $7.50); for the fourth week approximately $270.88
($250 plus 8 hours at $2.61 or 40 hours at $5.21 plus 8
hours at $7.82).

§ 778.114(b).

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 For obvious reasons, an employer may not simply elect to

pay the lower overtime rate under § 778.114. The regulation

requires that four conditions be satisfied before an employer may

do so:

(1) the employee's hours must fluctuate from week to
week;
(2) the employee must receive a fixed salary that does
not vary with the number of hours worked during the
week (excluding overtime premiums);
(3) the fixed amount must be sufficient to provide
compensation every week at a regular rate that is
at least equal to the minimum wage; and
(4) the employer and employee must share a "clear
mutual understanding" that the employer will pay
that fixed salary regardless of the number of hours
worked.

§ 778.114(a), (c); see also Flood v. New Hanover County, 125 F.3d

249, 252 (4th Cir. 1997).17 In this case, the officers dispute the

second and fourth conditions: they contend that their compensation

does vary under the CBAs with the number of hours worked, and that

no "clear mutual understanding" existed that they would be paid

according to the fluctuating workweek method. In considering these

contentions, we follow the district court's example in relying on

17
The circuits are split on the question whether the employee
or the employer bears the burden of proof under § 778.114. Compare
Davis v. Friendly Express, Inc., 2003 WL 21488682, at *3 (11th Cir.
Feb. 6, 2003) (employee bears the burden); Samson v. Apollo
Resources, Inc., 242 F.3d 629, 636-37 (5th Cir. 2001) (same), with
Monahan v. County of Chesterfield, 95 F.3d 1263, 1275 n.12 (4th
Cir. 1996) (employer bears the burden). We do not decide this
issue. Given the undisputed terms of the CBAs, our conclusion is
the same regardless of who bears the burden of proof.

-17-
the CBAs, as neither party disputes that the Town in fact paid the

officers according to the terms of those agreements.

After carefully reviewing the CBAs, we are persuaded that

the officers are correct. This case does not fit the § 778.114

mold. It is true, as the district court emphasized, that each week

the officers receive 1/52 of their annual base salary, irrespective

of the number of shifts worked that week. But under the CBAs, that

sum does not constitute all of the straight-time compensation that

the officers may receive for the week. This is significant because

by the plain text of § 778.114, it is not enough that the officers

receive a fixed minimum sum each week; rather, to comply with the

regulation, the Town must pay each officer a "fixed amount as

straight time pay for whatever hours he is called upon to work in

a workweek, whether few or many." (emphasis added).

The undisputed evidence indicates that the Town does not

satisfy this requirement. The officers' compensation varies from

week to week even without reference to the number of hours worked.

Any officer required to work a nighttime shift receives money --

expressly termed "additional compensation" under the CBA -- in the

form of a $10 shift-differential payment added to his check for the

week. The Supreme Court has specifically held that such shift

differentials, when paid, are part of the worker's regular rate of

pay. Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, 468-69

(1948). So while the shift differential itself may be small, it

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requires the larger conclusion that most officers do not receive a

"fixed amount" for their straight-time labor each week.

The officers' weekly straight-time compensation also

varies under the CBAs depending on the number of hours worked.

This is because the officers receive extra pay for every hour

worked beyond eight hours in a day, and for every hour worked on

otherwise off-duty time, regardless whether their total number of

hours worked for the week exceeds forty. The CBAs label such extra

pay "overtime," but that does not control. For purposes of the

FLSA, all hours worked under the statutory maximum are non-overtime

labor. See 29 C.F.R. § 778.101 ("[A] workweek no longer than the

prescribed maximum is a nonovertime workweek under the Act . . .

."); Reich v. John Alden Life Ins. Co., 126 F.3d 1, 7 (1st Cir.

1997) (under FLSA, "overtime" means "employment in excess of 40

hours in a single workweek"). That the parties have by contract

designated certain compensation for labor under the forty-hour

threshold "overtime" does not affect the characterization of those

payments under the FLSA. Cf. Walling v. Youngerman-Reynolds

Hardwood Co., 325 U.S. 419, 424-25 (1945) ("Once the parties have

decided upon the amount of wages and the mode of payment the

determination of the regular rate becomes a matter of mathematical

computation, the result of which is unaffected by any designation

of a contrary 'regular rate' in the wage contracts."). The

regulations specifically explain how to treat such mid-workweek

-19-
contractual overtime payments under the Act: only the premium

portion of the contractual overtime rate (that is, the amount in

excess of the employee's regular rate) is deemed "overtime" pay and

may be offset against any statutory overtime liability in the same

week.18 See 29 C.F.R. §§ 778.201(a), 202(a); see also 29 U.S.C.

§ 207(e)(5) (excluding from the definition of "regular rate" all

"extra compensation provided by a premium rate paid for certain

hours worked . . . in excess of eight in a day"); id. § 207(h)

(permitting employers to offset such extra compensation against

FLSA overtime liability). The remainder is simply considered

straight-time compensation under the Act.

For this reason, the officers in this case do not receive

a "fixed amount as straight time pay for whatever hours [they are]

called upon to work in a workweek, whether few or many." On the

contrary, the officers receive more or less straight-time pay

depending on how many contractual overtime hours they work each

week. The CBAs require the Town to track each officer's hours for

each day during the workweek and compensate him accordingly. This

belies the Town's claim that it uses the fluctuating workweek

method. The Seventh Circuit recently considered a similar

18
For example, if an employee is paid $5/hour for handling
cargo during an eight-hour workday and time-and-a-half ($7.50/hour)
for work outside of that eight-hour day, the extra $2.50/hour is
considered "overtime" compensation and may be credited towards any
statutory overtime liability due in the same week. See 29 C.F.R.
§ 778.206.

-20-
arrangement and held that it did not comport with § 778.114:

"Every extra hour is calculated and paid for. That is incompatible

with treating the base wage as covering any number of hours at

straight time." Heder v. City of Two Rivers, 295 F.3d 777, 780

(7th Cir. 2002).19 We agree.

The Town contends that it is simply paying the officers

more generously than the FLSA requires. We are unpersuaded.

Section 778.114 applies only if there is a "clear mutual

understanding" that the employee's fixed salary is compensation for

however many hours the employee works during the week. Admittedly,

this does not require that the employee understand or give actual

consent to the employer's method of calculating overtime. Valerio,

173 F.3d at 40. In this case, however, the Town's method of

calculating overtime is premised on assumptions inconsistent with

§ 778.114. Neither the CBAs nor the Town's methods of calculating

pay rates indicate that the parties reached a clear mutual

19
The Town argues that Heder is inapposite because the
plaintiff firefighters in that case had their pay docked if they
failed to work a minimum number of hours. The officers in this
case, the Town urges, never have their pay docked; they receive
1/52 of their annual salary each week regardless how many hours
they work. But that does not mean the officers' straight-time
compensation is fixed irrespective of how many hours they work.
The CBAs in this case, like the CBA in Heder, anticipate that the
employer will count and compensate every hour worked, so that the
employees' weekly straight-time pay will vary according to the
number of hours worked. See 295 F.3d at 780. That arrangement is
sufficient to preclude compliance with § 778.114.

-21-
understanding that the officers would work varying numbers of hours

each week in exchange for a fixed sum.

We hold that the compensation scheme embodied in the CBAs

does not comply with § 778.114.

3. Overpayment II: The Law Enforcement Exemption

The district court's third alternative ground for summary

judgment was that the officers have received all of the overtime

payments due to them because they are covered by the FLSA's partial

exemption for law enforcement personnel. Under 29 U.S.C. § 207(k),

as interpreted by the Secretary of Labor, no overtime compensation

is required for law enforcement personnel until the number of hours

worked exceeds 171 hours in a 28-day work period, or a proportional

number of hours in a shorter work period -- in the case of a 7-day

work period, that proportion works out to 43 hours.20 See id.; 29

C.F.R. §§ 553.230(b), (c). The effect of the § 207(k) partial

exemption is to soften the impact of the FLSA's overtime provisions

on public employers in two ways: it raises the average number of

hours the employer can require law enforcement and fire protection

personnel to work without triggering the overtime requirement, and

it accommodates the inherently unpredictable nature of firefighting

20
Congress initially set the maximum number of hours under
§ 207(k) at 216, but granted the Secretary of Labor the authority
to promulgate regulations setting a lower ceiling. See
§ 207(k)(1). The Secretary has done so in 29 C.F.R. § 553.230(b),
which sets the ceiling for law enforcement personnel at 171 hours
in a 28-day work period, or a proportional number of hours in a
shorter work period.

-22-
and police work by permitting public employers to adopt work

periods longer than one week. See Wethington v. City of

Montgomery, 935 F.2d 222, 224 (11th Cir. 1991); Maldonado v.

Administracion de Correccion, 1993 WL 269650, at *1 (D.P.R. Jul. 1,

1993). The longer the work period, the more likely it is that days

of calm will offset the inevitable emergencies, resulting in

decreased overtime liability.

The § 207(k) exemption applies, however, only if the

employees are engaged in "fire protection . . . [or] law

enforcement activities" within the meaning of § 207(k), and only if

the employer has adopted a qualifying "work period." The employer

bears the burden of proving that these conditions are satisfied.

Barefield v. Village of Winnetka, 81 F.3d 704, 710 (7th Cir. 1996);

Birdwell v. City of Gadsden, 970 F.2d 802, 805 (11th Cir. 1992).

Once the factual criteria are established, the employer can simply

start paying its employees under § 207(k); the employees' approval

is not required. Barefield, 81 F.3d at 710. In this case, the

parties agree that the officers are engaged in law enforcement

activities as defined by 29 C.F.R. § 553.211. The sole question is

whether the Town has adopted a qualifying work period, which is

"any established and regularly recurring period of work which,

under the terms of the Act and the legislative history, cannot be

less than 7 consecutive days nor more than 28 consecutive days."

§ 553.224(a).

-23-
 On this record, the Town has not established a qualifying

work period under § 207(k).21 All of the evidence in the record

indicates that the Town employed the officers on repeating six-day

cycles of four days on-duty followed by two days off-duty. The

CBAs state this schedule explicitly. And while the Town could in

theory employ a work period for purposes of § 207(k) that differs

from the terms of the CBAs, see Franklin v. City of Kettering, 246

F.3d 531, 536 (6th Cir. 2001), nothing in the record shows that it

has done so. The Town does not point to a single statement or

document indicating that it adopted a work period longer than six

days. Instead, it offers only the argument that the officers' work

period is longer than seven days because it is a repeated cycle of

six days, and that the work period is inevitably shorter than 28

days because the officers disrupt their own schedules with sick

days, vacation days, and holidays. This argument fails as a matter

of logic. It is also inconsistent with § 553.224(a), which

21
The work period requirement is ordinarily not a high hurdle.
Virtually any bona fide, fixed, recurring period of between 7 and
28 days will suffice. See § 553.224(a) (defining "work period").
Within that range, "the work period can be of any length, and it
need not coincide with [the officers'] duty cycle or pay period or
with a particular day of the week or hour of the day." Id.
Indeed, the work period need not even reflect the actual practice
of overtime calculation between the parties, if the employer
announces a qualifying work period but chooses to pay its employees
more generously. Lamon v. City of Shawnee, 972 F.2d 1145, 1154
(10th Cir. 1992). Nevertheless, if the employer fails to announce
and take bona fide steps to implement a qualifying work period, the
ordinary overtime provisions of § 201(a) will apply. See Birdwell
v. City of Gadsden, 970 F.2d 802, 806 (11th Cir. 1992).

-24-
requires that the work period must be "established and regularly

recurring" (emphasis added).22

We hold that the Town is not entitled to the § 207(k)

exemption. But we add a caveat: The officers acknowledge in their

brief that notwithstanding the CBAs, a few officers worked

repeating cycles of five days on-duty followed by two-days off-

duty. We cannot determine from the record whether the Town in fact

adopted a seven-day work period as to these individual officers.

Cf. 29 C.F.R. § 553.224(b) (employer may have different work

22
At oral argument, the Town suggested for the first time that
29 C.F.R. § 553.224, the Department of Labor's regulation defining
"work period" for purposes of § 207(k), misinterprets the statute
by requiring that the work period cannot exceed 28 days. See
§ 553.224(a) (work period "cannot be less than 7 consecutive days
nor more than 28 consecutive days"). Properly interpreted, the
Town argues, the statute imposes no upper limit on the length of
the work period.
We doubt that this argument is properly before us. See
Carreiro v. Rhodes Gill & Co., 68 F.3d 1443, 1449 (1st Cir. 1995)
(arguments raised for the first time at oral argument are waived).
Even if it is, we see no basis to overturn the agency's
interpretation of § 207(k). Subparagraph (1) of § 207(k)
specifically addresses work periods "of 28 consecutive days," and
subparagraph (2) addresses work periods "of at least 7 but less
than 28 days." Nothing in the text of the statute contemplates
work periods longer than 28 days. To the extent the statute is
ambiguous, moreover, this court is bound by the agency's reasonable
interpretation. See Chevron U.S.A. v. Natural Res. Def. Council,
Inc., 467 U.S. 837, 843-44 (1984); Reich v. Newspapers of New
England, Inc., 44 F.3d 1060, 1070 (1st Cir. 1995) (Secretary of
Labor's regulations under the FLSA are entitled to Chevron
deference). Given that Congress appears to have modeled the
§ 207(k) exemption after the 28-day work cycles commonly employed
by police and fire departments, see H.R. Conf. Rep. No. 93-913
(1974); Barefield v. Village of Winnetka, 81 F.3d 704, 710 (7th
Cir. 1996), it was reasonable of the Department of Labor to
regulate that under § 207(k), a work period may not exceed 28 days.

-25-
periods applicable to different employees). This issue remains

open to the Town on remand.

B. Alternative Grounds for Summary Judgment

Although we conclude that each of the district court's

three grounds for summary judgment was incorrect, this court may

affirm on any alternative basis that is manifest in the record.

Torres-Rosado, 335 F.3d at 13. The Town urges us to uphold summary

judgment as to the supervisory officers23 on the alternative ground

that such officers are executive employees exempt from the overtime

protections of the FLSA under 29 U.S.C. § 213(a)(1).

Section 213(a)(1) of the FLSA exempts from the overtime

rules any employee who works in "a bona fide executive,

administrative, or professional capacity." The statute further

delegates to the Secretary of Labor broad authority to "defin[e]

and delimi[t]" that exemption. Id.; Auer v. Robbins, 519 U.S. 452,

456 (1997). With respect to "executive" employees, the Secretary

has done so in 29 C.F.R. § 541.1. That regulation requires, inter

alia, that the employee be compensated for his services on a

"salary basis."24 § 541.1(f). The burden is on the Town to

23
The Town makes this argument only with regard to police
officers who hold "supervisory" rank -- that is, Special Sergeant,
Sergeant, Lieutenant, or Captain. The Town concedes that ordinary
patrol officers are not exempt -- that is, that they are covered by
the FLSA.
24
The regulation also limits the executive exemption to
employees with certain supervisory or managerial duties. See
§ 541.1(a)-(e). The supervisory officers do not seriously contest

-26-
establish that the supervisory officers satisfy this test. See

Corning Glass Works v. Brennan, 417 U.S. 188, 196-97 (1974); John

Alden Life Ins., 126 F.3d at 7.

We hold that the supervisory officers in the Agawam

Police Department are paid on a "salary basis." An employee is

paid on a salary basis "if under his employment agreement he

regularly receives each pay period on a weekly, or less frequent

basis, a predetermined amount constituting all or part of his

compensation, which amount is not subject to reduction because of

variations in the quality or quantity of the work performed." 29

C.F.R. § 541.118 (emphasis added). This is the so-called "no

docking" rule, which was recently interpreted by the Supreme Court

in Auer v. Robbins.

Auer was factually akin to the instant case. A group of

police sergeants and a lieutenant sued their city government under

the FLSA to recover overtime wages, and the city defended by

asserting the § 213(a)(1) exemption. The plaintiffs responded that

they were not paid on a "salary basis" because under the terms of

their police employment manual, they were theoretically subject to

reductions in pay for disciplinary infractions (that is, for the

"quality or quantity" of their work). Auer, 519 U.S. at 455. The

that their responsibilities in the Agawam Police Department satisfy
these requirements (e.g., that they customarily direct the work of
two or more employees, § 541.1(b)). Nor do they contest that they
meet the other requirements of § 541.1(f), such as the minimum
salary received. Any arguments to the contrary are waived.

-27-
Supreme Court unanimously rejected this argument, holding that a

mere "theoretical possibility" of disciplinary or other pay

deductions will not defeat salary-basis status. Id. at 459, 461.

Rather, adopting the view of the Secretary of Labor as amicus

curiae, the Court held that the salary-basis test will be met

unless the employees are subject to "disciplinary or other

deductions in pay 'as a practical matter.'" Id. at 461 (emphasis

added). This standard is met (1) if the employer has an "actual

practice" of making such deductions; or (2) if the employer's

disciplinary policy indicates a "significant likelihood" that an

employee in the plaintiff's position may actually face such

deductions. Id.

In light of Auer, it is clear that the supervisory

officers in this case were paid on a salary basis. The district

court found that the officers "receiv[ed] 1/52 of their annual pay

each week, regardless of the number of hours that they happened to

work in any particular week." In this context (and unlike under

§ 778.114), it does not matter that the supervisory officers

received varying amounts of contractual overtime payments in

addition to their salary; the relevant question is simply whether

the officers received "a predetermined amount constituting all or

part of [their] compensation" on a weekly basis. See § 541.118(a)

(emphasis added). It is undisputed that they did.

-28-
 Furthermore, the supervisory officers did not face a

"significant likelihood" of disciplinary reductions in pay. It is

true that the Agawam Police Department Manual specifies a range of

possible disciplinary steps, and that the manual incorporates by

reference the provisions of Mass. Gen. Laws ch. 31, § 41, which

permit disciplinary suspensions of police officers without pay.

But both the manual and the statute are directed to "officers and

employees" generally; neither indicates any real likelihood that

supervisory officers face such discipline. The Supreme Court in

Auer considered a similarly broad reference to pay deductions in a

police manual and refused to infer that the petitioners, who were

supervisory officers, faced a significant likelihood of such

discipline:

This is so because the manual does not "effectively
communicate" that pay deductions are an anticipated form
of punishment for employees in petitioners' category,
since it is perfectly possible to give full effect to
every aspect of the manual without drawing any inference
of that sort. If the statement of available penalties
applied solely to petitioners, matters would be
different; but since it applies both to petitioners and
to employees who are unquestionably not paid on a salary
basis, the expressed availability of disciplinary
deductions may have reference only to the latter.

519 U.S. at 462 (emphasis in original). After Auer, the courts of

appeals have consistently rejected challenges to "salary status"

based only on nonspecific references to disciplinary pay

deductions. See, e.g., Spradling v. City of Tulsa, 198 F.3d 1219,

1223-24 (10th Cir. 2000) (fire chiefs exempt from FLSA even though

-29-
theoretically subject to disciplinary pay deductions); Aiken v.

City of Memphis, 190 F.3d 753, 761-62 (6th Cir. 1999) (similar,

police captains); Kelley v. City of Mount Vernon, 162 F.3d 765,

768-69 (2d Cir. 1998) (similar, police lieutenants and sergeants).

The evidence in this case is no different.

Likewise unconvincing is the officers' argument that the

Town implemented an "actual practice" of such disciplinary pay

deductions. The only evidence in the record of disciplinary pay

deductions against supervisory officers is the affidavit of

Sergeant Donald Gallerani, which describes "at least four separate

instances in recent years" in which fellow supervisors were

subjected to pay deductions for violations of non-safety rules.25

Even taking this evidence in the light most favorable to the

officers, four isolated incidents are not sufficient to show an

"actual practice" of reducing supervisory officers' compensation to

punish variations in the quality of the work performed. "The

actual instances of pay reduction must amount to an actual practice

of making such deductions." Spradling, 198 F.3d at 1224; see

DiGiore v. Ryan, 172 F.3d 454, 464-65 (7th Cir. 1999) (five

isolated incidents insufficient to show "actual practice"),

overruled on other grounds, 246 F.3d 897 (7th Cir. 2001); Davis v.

City of Hollywood, 120 F.3d 1178, 1180 (11th Cir. 1997) (six

25
The Town disputes both the significance and the veracity
of the Gallerani affidavit.

-30-
incidents insufficient); cf. Block v. City of Los Angeles, 253 F.3d

410, 419 (9th Cir. 2001) (holding that a pattern of nineteen

disciplinary suspensions without pay was sufficient to establish an

"actual practice").

We conclude that the supervisory officers are employed

"in a bona fide executive . . . capacity," § 213(a)(1), and

consequently are exempt from the overtime protections of the FLSA.

C. Salary Augments and the FLSA "Regular Rate"

At last we reach the question at the heart of the

officers' FLSA claim: whether the FLSA obligates the Town to

include the officers' contractually guaranteed shift-differential

pay, longevity pay, and career-incentive (Quinn Bill) pay in the

officers' "regular rate" for purposes of overtime calculation under

the FLSA. The officers say it does; the Town denies this

proposition.

Calculation of the correct "regular rate" is the linchpin

of the FLSA overtime requirement. The term is significant because

under 29 U.S.C. § 207(a)(1), an employee who works overtime is

entitled to be paid "at a rate not less than one and one-half times

the regular rate at which he is employed" (emphasis added). The

statute defines the term "regular rate" in § 207(e). Under that

provision and the relevant case law and interpretative regulations,

the regular rate cannot be stipulated by the parties; instead, the

rate must be discerned from what actually happens under the

-31-
governing employment contract. See 29 C.F.R. § 778.108; Bay Ridge

Operating Co. v. Aaron, 334 U.S. 446, 462-63 (1948). The general

rule, per the plain text of the FLSA, is that the regular rate

"shall be deemed to include all remuneration for employment paid

to, or on behalf of, the employee." § 207(e). The statute

includes a list of exceptions to this rule, see § 207(e)(1)-(e)(8),

but the list of exceptions is exhaustive, see § 778.207(a), the

exceptions are to be interpreted narrowly against the employer, see

Mitchell v. Kentucky Fin. Co., 359 U.S. 290, 295-96 (1959), and the

employer bears the burden of showing that an exception applies, see

Idaho Sheet Metal Workers, Inc. v. Wirtz, 383 U.S. 190, 209 (1966).

For the reasons that follow, we hold that the Town is

obligated to include shift-differential pay, longevity pay, and

career-incentive pay in the officers' "regular rate" under the

FLSA.

1. Shift-Differential Pay

The case law is unequivocal that shift-differential pay

must be included in an employee's FLSA "regular rate." The Supreme

Court has specifically interpreted § 207(e) of the FLSA to include

such payments:

Where an employee receives a higher wage or rate because
of undesirable hours or disagreeable work, such wage
represents a shift differential or higher wages because
of the character of the work done or the time at which he
is required to labor rather than an overtime premium.
Such payments enter into the determination of the regular
rate of pay.

-32-
Aaron, 334 U.S. at 468-69 (emphasis added). The Secretary of Labor

has also clearly adopted this view. See § 778.207(b) ("The Act

requires the inclusion in the regular rate of such extra premiums

as nightshift differentials . . . .").

The Town argues that the shift differentials are properly

excluded from the officers' regular rate under 29 C.F.R. § 778.206,

which is entitled "Premiums for work outside basic workday or

workweek." That regulation is flatly inapplicable to shift

differential payments. Section § 778.206 addresses the calculation

of excludable contract overtime premiums under § 207(e)(7), and in

the paragraph quoted above, the Supreme Court in Aaron held that

shift-differential pay is not "an overtime premium." The officers

are entitled to have their shift-differentials included in their

regular rate.

2. Longevity Pay

The officers are also entitled to have their contractual

longevity pay included in their regular rate. Such longevity

payments do not appear to fall within the literal terms of any of

the statutory exclusions in § 207(e); if that is so, they must be

included. See 29 C.F.R. § 778.200(c) ("[A]ll remuneration for

employment paid to employees which does not fall within one of

these seven exclusionary clauses must be added into the total

compensation received by the employee before his regular hourly

rate of pay is determined."). Indeed, the annual longevity payment

-33-
is essentially a form of bonus. See § 778.208 (bonus payments, for

purposes of the FLSA, are "payments made in addition to the regular

earnings of an employee"). Bonuses that are explicitly promised to

employees -- as the longevity payments are in the CBA -- must be

included in the employees' regular rate. § 207(e)(3); § 778.211

(any bonus paid pursuant to a contract must be included in the

regular rate).

In a closely analogous case, the Sixth Circuit held that

police officers' longevity payments must be included in their FLSA

regular rate because they are by definition compensation for the

length of service. See Featsent v. City of Youngstown, 70 F.3d

900, 905 (6th Cir. 1995). The Fifth Circuit has rejected this

argument on the ground that longevity pay may constitute a

discretionary gift excludable under § 207(e)(2), but in so holding,

the court distinguished longevity payments that are promised to

employees in a collective bargaining agreement. See Moreau v.

Klevenhagen, 956 F.2d 516, 521 (5th Cir. 1992). Either way, the

longevity payments here must be included in appellants' regular

rate.

The Town argues that longevity pay is properly excluded

for two reasons: (1) because it is only paid on an annual basis;

and (2) because it does not constitute compensation for "hours

worked." The first argument is without merit: the regulations

expressly contemplate retroactive calculation of overtime to

-34-
accommodate compensation not given on a weekly basis, see, e.g.,

§ 778.209 (methods of including bonuses in regular rate), and

courts have had little difficulty handling such calculations when

they arise, see, e.g., Reich v. Interstate Brands Corp., 57 F.3d

574, 575-76 (7th Cir. 1995) (explaining how to incorporate an

annual lump-sum payment into an employee's regular rate).

The Town's second argument is more problematic in light

of this court's suggestion in Plumley v. Southern Container, Inc.,

303 F.3d 364 (1st Cir. 2002), that § 207(e) reflects Congress's

focus on "hours actually worked in the service and at the gain of

the employer." Id. at 370. Plumley, however, should not be read

for the proposition that § 207(e)'s definition of "regular rate"

incorporates only compensation that is literally paid on an hourly

basis. The regulations provide to the contrary, see, e.g.,

§ 778.207(b) (providing that under § 207(e), "lump sum premiums

which are paid without regard to the number of hours worked . . .

must be included in the regular rate"), and courts have

consistently rejected such a hard rule, see, e.g., Interstate

Brands, 57 F.3d at 578 (not all lump-sum payments can be excluded

from the regular rate calculation). Accordingly, we hold that the

Town must include the officers' contractually guaranteed longevity

pay in their FLSA regular rate.

-35-
 3. Career Incentive (Quinn Bill) Pay

The most difficult question concerns whether the

"career-incentive" pay available to police under the Quinn Bill,

Mass Gen. Laws ch. 41, § 108L, must be included in the officers'

FLSA regular rate. Quinn Bill payments are nondiscretionary sums

paid to police officers based on accumulated educational credits.

See id. The Town relies on Bienkowski v. Northeastern Univ., 285

F.3d 138 (1st Cir. 2002), in which this court concluded that the

Portal-to-Portal Act relieves employers of any need to pay FLSA

overtime for the time that officers spend receiving education (in

that case, EMT training) covered by the Quinn Bill. See id. at

141-42. Because employers are not obligated to pay overtime for

Quinn-Bill-eligible education, the Town argues, any compensation

the officers receive under the corresponding "career incentive"

provisions of the CBA should not be included in the officers' FLSA

regular rate.

Though initially appealing, the Town's argument fails.

The question in Bienkowski -- whether the FLSA requires an employer

to pay overtime for hours spent in education off-site -- is

logically distinct from the question in this case, which is whether

the increased pay that the officers receive once that education is

completed should be included in their FLSA regular rate.

Bienkowski did not address the $850 lump-sum payment that the

officers in that case received as career-incentive pay pursuant to

-36-
their CBA. See 285 F.3d at 140. Similarly, the career-incentive

pay in this case is nondiscretionary compensation guaranteed to the

officers under their CBA.26 Accordingly, it must be included in the

officers' regular rate because it is part of the "remuneration for

employment" paid to the officers. § 207(e). As the Sixth Circuit

held on closely analogous facts:

The [CBA] does not provide for increased wages based on
the police officers' educational levels. Educational
advancement, however, enhances the quality of an
employee's job performance . . . . Therefore, to the
extent that the police officer's salaries do not
[otherwise] account for their educational background, the
bonuses attributable to educational degrees compensate
the plaintiffs for their services and cannot be excluded
from the regular rate under Section 7(e)(2).

Featsent, 70 F.3d at 904-05. Accordingly, the Town is obligated to

include the officers' career-incentive pay in the calculation of

their FLSA regular rate.

D. Roll-Call Pay

The only remaining liability issue is the matter of roll-

call pay. The officers challenge the roll-call pay scheme in the

CBA on two grounds. First, the officers argue that the FLSA

obligates the Town to include the time required for roll-call

26
We note parenthetically that compensation under the Quinn
Bill is considered part of the officers' base salary under
Massachusetts law. Mass Gen. Laws ch. 41, § 108L. We do not rely
on this point for our decision, however, because to do so would
oblige us to decide a difficult and unnecessary question of federal
law: whether a state statute treating certain payments as "salary"
binds a federal court interpreting the FLSA. It is sufficient for
our decision that the officers' contract with the Town entitles
them to receive Quinn Bill pay as remuneration for employment.

-37-
attendance (ten minutes per shift, according to the CBAs) in the

officers' hours worked each week, rather than compensate it

separately in the annual lump-sum provided under the CBA. Second,

the officers contend that the Town does not compensate them

adequately for roll-call attendance because roll-call time often

pushes the officers' weekly hours worked over forty. When divided

by the total number of hours spent at roll-call during the year,

the lump-sum payment under the CBA works out to less than one-and-

one-half times the officers' regular rate of pay.

The latter issue is easier. The Town does not dispute

that the time officers spend at roll-call is compensable "work"

under the FLSA.27 Cf. Anderson v. Mt. Clemens Pottery Co., 328 U.S.

680, 690-91 (1946) (under the FLSA, the compensable workweek

ordinarily includes "all time during which an employee is

necessarily required to be on the employer's premises, on duty or

at a prescribed work place"). The time that the officers spend at

roll-call is fully subject to the overtime rules of the FLSA. So

if an officer works five eight-hour shifts in a week and, in

addition, attends roll-call for ten minutes before each shift, the

27
In particular, the Town does not argue that roll-call
attendance is a "preliminary" activity for which the Portal-to-
Portal Act precludes liability. Certainly that Act does not bar
compensation for roll-call time expressly made compensable by the
CBA. See 29 U.S.C. § 254(b)(1); 29 C.F.R. § 785.9. We do not
consider what effect, if any, the Portal-to-Portal Act would have
on the compensability of roll-call time in excess of the ten
minutes per shift anticipated by the CBA. Cf. § 785.9.

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Town owes that officer overtime pay for the fifty minutes worked in

excess of forty hours. This scheme has the effect that in a given

week, some officers will be paid for roll-call attendance at their

regular rate, while others will receive time-and-a-half, depending

how many shifts they happened to work in that week. But this

result is not unfair; it simply reflects Congress's judgment that

an employer must pay more for every hour of labor it demands of an

employee beyond forty in a week. § 207(a)(1).

The more difficult question is whether the FLSA precludes

the parties from agreeing by contract that payments for roll-call

time shall be made on an annual rather than a weekly basis. There

is no requirement in the FLSA that overtime compensation be paid

weekly, see 29 C.F.R. § 778.106, and in some circumstances a CBA

may provide for a different rule, see Interstate Brands, 57 F.3d at

576. The Town thus urges the court to uphold the parties'

contractual agreement that roll-call pay shall be disbursed in an

annual lump-sum. But under the Secretary of Labor's interpretative

regulations, "[t]he general rule is that overtime compensation must

be paid on the regular pay day for the period in which such

workweek ends." § 778.106. Where practical considerations require

departure from that rule, the Secretary has interpreted the Act to

mandate prompt payment once the amount can be calculated and the

mechanics of the payment arranged:

Payment may not be delayed for a period longer than is
reasonably necessary for the employer to compute and

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 arrange for payment of the amount due and in no event may
payment be delayed beyond the next payday after such
computation can be made.

Id. (emphasis added). Because § 778.106 is an interpretative

bulletin, it does not command formal deference from this court.

Batterton v. Francis, 432 U.S. 416, 425 n.9 (1977); Reich v.

Newspapers of New England, Inc., 44 F.3d 1060, 1070 (1st Cir.

1995); Interstate Brands, 57 F.3d at 577. Nevertheless, the

Secretary's interpretations "have the power to persuade, if lacking

power to control, as they constitute a body of experience and

informed judgment to which courts and litigants may properly resort

for guidance." John Alden Life Ins., 126 F.3d at 8 (quoting

Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)) (internal

quotation marks omitted).

We will not depart from the Secretary's guidance on this

issue. As the Third Circuit recently observed in a factually

similar case, the Secretary's rule that overtime payments must be

made as soon as practicable provides a clear and useful test for

when wages become "unpaid" under the statute. See Brooks v. Vill.

of Ridgefield Park, 185 F.3d 130, 135-36 (3d Cir. 1999) (concluding

that § 778.106 "embodies an important aspect of the FLSA" and

requiring prompt payment of overtime wages notwithstanding the

parties' contractual agreement to defer compensation). Section

778.106 is also consistent with the FLSA's focus on the workweek as

its basic unit, cf. 29 C.F.R. §§ 776.4(a) ("The workweek is to be

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taken as the standard in determining the applicability of the

act."); 778.104 ("The Act takes a single workweek as its standard

. . . ."), as well as with the FLSA's purpose to protect workers

from "the evil of overwork as well as underpay." Barrentine, 450

U.S. at 739 (quoting Overnight Motor Transp. Co. v. Missel, 316

U.S. 572, 578 (1942)) (internal quotation marks omitted).

We hold that the Town must include the time required for

officers to attend roll-call in the officers' weekly hours worked,

that it must compensate the officers accordingly (including

overtime premiums when applicable), and that such compensation

shall not be delayed longer than the first pay day after the amount

can practicably be determined.

E. Damages and Offsets

The officers have asked the court to enter judgment in

their favor, award damages, and consider injunctive relief; the

Town requests that we determine the extent, if any, to which it may

offset contractual overtime payments against its FLSA overtime

liability. We decline to reach these issues at this time. The

district court is the proper forum for litigation of damages and

related remedy issues in the first instance.

III.

The court is not unsympathetic to the fiscal bind in

which many towns in Massachusetts find themselves today. And in

this era of heightened security, cities and towns across the

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Commonwealth have little choice but to require law enforcement

officers to work longer hours and take extra shifts to ensure the

public safety. This case, in broad terms, is about who must bear

the financial burden of those increased hours. Congress has made

its choice plain: the FLSA protects police, as it does nearly all

public employees. See Auer, 519 U.S. at 457. This is the better

rule: the public, rather than police officers individually, must

pay the price of increased protection.

The judgment below is affirmed as to the officers of

supervisory rank. As to the remaining officers, the decision of

the district court is reversed and the case is remanded for

proceedings not inconsistent with this opinion.

So ordered.

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