519 U.S. 452 (1997), 95-897, Auer v. Robbins

Docket Nº:Case No. 95-897
Citation:519 U.S. 452, 117 S.Ct. 905, 137 L.Ed.2d 79, 65 U.S.L.W. 4136
Party Name:AUER et al. v. ROBBINS et al.
Case Date:February 19, 1997
Court:United States Supreme Court
 
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Page 452

519 U.S. 452 (1997)

117 S.Ct. 905, 137 L.Ed.2d 79, 65 U.S.L.W. 4136

AUER et al.

v.

ROBBINS et al.

Case No. 95-897

United States Supreme Court

February 19, 1997

Argued December 10, 1996

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Syllabus

Petitioners, St. Louis police sergeants and a lieutenant, sued respondent police commissioners for overtime pay under the Fair Labor Standards Act of 1938 (FLSA). Respondents argued that petitioners were "bona fide executive, administrative, or professional" employees exempted from overtime pay requirements by 29 U.S.C. § 213(a)(1). Under the Secretary of Labor's regulations, that exemption applies to employees paid a specified minimum amount on a "salary basis, " which requires that the "compensation. . . not [be] subject to reduction because of variations in the quality or quantity of the work performed." Petitioners claimed that they did not meet this test because, under the terms of the Police Department Manual, their compensation could theoretically be reduced (though this was not the department's general practice) for a variety of disciplinary infractions related to the "quality or quantity" of their work. Both the District Court and the Eighth Circuit disagreed with that assertion, holding that the salary-basis test was satisfied as to all petitioners.

Held:

1. The "no disciplinary deductions" element of the salary-basis test reflects a permissible reading of the FLSA as it applies to public-sector employees. It is not apparent that the Secretary's interpretation of § 213(a)(1) is rendered unreasonable, as applied to public-sector employees, by the absence of other (non-salary-reduction) means of discipline, or by the peculiar needs of "quasi military" law enforcement organizations. The Secretary's approach must therefore be sustained, given § 213(a)(1)'s grant of broad authority to the Secretary to "defin[e] and delimi[t]" the statutory exemption's scope. See Chevron U.S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-843. Respondents' procedural objection to the Secretary's failure to amend the disciplinary-deduction rule in the wake of Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528, cannot be raised in the first instance in this lawsuit, but must be presented initially in a petition to the Secretary for amendatory rulemaking under the Administrative Procedure Act, 5 U.S.C. § 553(e). Pp. 456-459.

2. The Secretary has reasonably interpreted the salary-basis test to be met when an employee's compensation may not "as a practical matter"

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be adjusted in ways inconsistent with the test. The standard is violated, the Secretary says, if there is either an actual practice of making deductions or an employment policy that creates a "significant likelihood" of them. Because the regulation's critical phrase "subject to" comfortably bears the meaning the Secretary assigns, his interpretation of his own test is not "plainly erroneous, " and thus is controlling. Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 359. The Secretary's interpretation is not rendered unworthy of deference by the fact that it is set forth in an amicus brief; it is not a position adopted in response to litigation, and there is no reason to suspect that it does not reflect the Secretary's fair and considered judgment. Nor does the rule requiring that FLSA exemptions be narrowly construed against employers apply here; that rule governs judicial interpretation of statutes and regulations, and does not limit the Secretary's power to resolve ambiguities in his own regulations. Pp. 459-463.

3. The regulations entitle employers to preserve the exempt status of employees who have been subjected to pay deductions inconsistent with the salary-basis test by reimbursing those employees and promising to comply with the test in the future, so long as the deductions in question were either inadvertent or made for reasons other than lack of work. Pp. 463-464.

65 F.3d 702, affirmed.

Michael T. Leibig argued the cause and filed briefs for petitioners.

Irving L. Gornstein argued the cause for the United States as amicus curiae urging affirmance. With him on the brief were Acting Solicitor General Dellinger, Deputy Solicitor General Kneedler, J. Davitt McAteer, Allen H. Feldman, Nathaniel I. Spiller, and Mark S. Flynn.

John B. Renick argued the cause for respondents. With him on the brief were James N. Foster, Jr., and Judith Anne Ronzio. [*]

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Justice Scalia delivered the opinion of the Court.

The Fair Labor Standards Act of 1938 (FLSA), 52 Stat. 1060, as amended, 29 U.S.C. §§ 201 et seq., exempts "bona fide executive, administrative, or professional" employees from overtime pay requirements. This case presents the question whether the Secretary of Labor's "salary-basis" test for determining an employee's exempt status reflects a permissible reading of the statute as it applies to public-sector employees. We also consider whether the Secretary has reasonably interpreted the salary-basis test to deny an

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employee salaried status (and thus grant him overtime pay) when his compensation may "as a practical matter" be adjusted in ways inconsistent with the test.

I

Petitioners are sergeants and a lieutenant employed by the St. Louis Police Department. They brought suit in 1988 against respondents, members of the St. Louis Board of Police Commissioners, seeking payment of overtime pay that they claimed was owed under § 7(a)(1) of the FLSA, 29 U.S.C. § 207(a)(1). Respondents argued that petitioners were not entitled to such pay because they came within the exemption provided by § 213(a)(1) for "bona fide executive, administrative, or professional" employees.

Under regulations promulgated by the Secretary, one requirement for exempt status under § 213(a)(1) is that the employee earn a specified minimum amount on a "salary basis." 29 CFR §§ 541.1(f), 541.2(e), 541.3(e) (1996). According to the regulations, "[a]n employee will be considered to be 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." § 541.118(a). Petitioners contended that the salary-basis test was not met in their case because, under the terms of the St. Louis Metropolitan Police Department Manual, their compensation could be reduced for a variety of disciplinary infractions related to the "quality or quantity" of work performed. Petitioners also claimed that they did not meet the other requirement for exempt status under § 213(a)(1): that their duties be of an executive, administrative, or professional nature. See §§ 541.1(a)-(e), 541.2(a)-(d), 541.3(a)-(d). The District Court found that petitioners were paid on a salary basis and that most, though not all, also satisfied the

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duties criterion. The Court of Appeals affirmed in part and reversed in part, holding that both the salary-basis test and the duties test were satisfied as to all petitioners. 65 F.3d 702 (CA8 1995). We granted certiorari. 518 U.S. 1016(1996).[1]

II

The FLSA grants the Secretary broad authority to "defin[e] and delimi[t]" the scope of the exemption for executive, administrative, and professional employees. § 213(a)(1). Under the Secretary's chosen approach, exempt status requires that the employee be paid on a salary basis, which in turn requires that his compensation not be subject to reduction because of variations in the "quality or quantity of the work performed, " 29 CFR § 541.118(a) (1996). Because the regulation goes on to carve out an exception from this rule for "[p]enalties imposed. . . for infractions of safety rules of major significance, " § 541.118(a)(5), it is clear that the rule embraces reductions in pay for disciplinary violations. The Secretary is of the view that employees whose pay is adjusted for disciplinary reasons do not deserve exempt status because as a general matter true "executive, administrative, or professional" employees are not "disciplined" by piecemeal deductions from their pay, but are terminated, demoted, or given restricted assignments.

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A

The FLSA did not apply to state and local employees when the salary-basis test was adopted in 1940. See 29 U.S.C. § 203(d) (1940 ed.); 5 Fed. Reg. 4077 (1940) (salary-basis test). In 1974 Congress extended FLSA coverage to virtually all public-sector employees, Pub. L. 93-259, § 6, 88 Stat. 58-62, and in 1985 we held that this exercise of power was consistent with the Tenth Amendment, Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528 (1985) (overruling National League of Cities v. Usery, 426 U.S. 833(1976)). The salary-basis test has existed largely in its present form since 1954, see 19 Fed. Reg. 4405 (1954), and is expressly applicable to public-sector employees, see 29 CFR §§ 553.2(b), 553.32(c) (1996).

Respondents concede that the FLSA may validly be applied to the public sector, and they also do not raise any general challenge to the Secretary's reliance on the salary-basis test. They contend, however, that the "no disciplinary deductions" element of the salary-basis test is invalid for public-sector employees because as applied to them it reflects an unreasonable interpretation of the statutory exemption. That is so, they say, because the ability to adjust public-sector employees' pay—even executive, administrative or professional employees' pay—as a means of enforcing compliance with work rules is a necessary component of effective government. In the public-sector...

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