Barner v. City of Novato

• Decision Date: 08 March 1994
• Docket Number: Nos. 92-16100,92-16129,93-15176,s. 92-16100
• Citation: 17 F.3d 1256
• Parties: , 127 Lab.Cas. P 33,069, 1 Wage & Hour Cas. 2d (BNA) 1505 Gary BARNER; Jerry Bennett; Brian Brady; Richard Rudy, Plaintiffs-Appellees, v. CITY OF NOVATO, Defendant-Appellant. Gary BARNER; Jerry Bennett; Brian Brady; Richard Rudy, Plaintiffs-Appellants, v. CITY OF NOVATO, Defendant-Appellee. Gary BARNER; Jerry Bennett; Brian Brady; Richard Rudy, Plaintiffs-Appellants, v. CITY OF NOVATO, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1256

17 F.3d 1256

62 USLW 2623, 127 Lab.Cas. P 33,069,

1 Wage & Hour Cas. 2d (BNA) 1505

Gary BARNER; Jerry Bennett; Brian Brady; Richard Rudy, Plaintiffs-Appellees, v. CITY OF NOVATO, Defendant-Appellant.

Gary BARNER; Jerry Bennett; Brian Brady; Richard Rudy, Plaintiffs-Appellants, v. CITY OF NOVATO, Defendant-Appellee.

Gary BARNER; Jerry Bennett; Brian Brady; Richard Rudy, Plaintiffs-Appellants, v. CITY OF NOVATO, Defendant-Appellee.

Nos. 92-16100, 92-16129, 93-15176.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 4, 1993.

Decided March 8, 1994.

Richard C. Bolanos, Kathryn J. Burke and Cynthia J. O'Neill, Whitmore, Johnson & Bolanos, Mountain View, California, for the defendant-appellant-appellee.

Christopher D. Burdick and Alison Berry-Wilkinson, Carroll, Burdick & McDonough, San Francisco, California, for the plaintiffs-appellees-appellants.

Duane W. Reno, Davis, Reno & Courtney, San Francisco, California, for the amicus International Union of Police Associations, et al.

Arthur A. Hartinger, Deputy City Attorney, San Francisco, California, for the amicus League of California Cities, et al.

Appeals from the United States District Court for the Northern District of California.

Before: ALARCON, LEAVY, and KLEINFELD, Circuit Judges.

LEAVY, Circuit Judge:

This case involves a dispute between a municipality and some of its employees concerning the treatment of employee absences for payroll purposes. The district court held that the municipality's policy of reducing certain employees' accumulated but unused paid leave for absences of less than a day did not violate federal labor law, but that the possible reduction of those employees' salaries for the same conduct did violate federal labor law. We affirm in part and reverse in part.

FACTS AND PRIOR PROCEEDINGS

The city of Novato, California ("City"), provides its employees with sick leave, vacation time, and other forms of compensated leave. During the time in question, informal City policy relating to employee absences of less than a full day had been either to deduct such absences from the employee's unused leave time or, if the employee had exhausted his or her available leave time, to leave to the discretion of the City Manager what to do.

Gary Barner, Jerry Bennett, Brian Brady, and Richard Rudy ("Plaintiffs") are permanent employees and members of the City's police department management team. Brady and Bennett hold the rank of captain, while Barner and Rudy are lieutenants. Under the terms of a series of collective bargaining agreements negotiated between the City and the Novato Police Managers' Association (the exclusive bargaining representative for City police captains and lieutenants), the Plaintiffs were deemed ineligible for contract overtime compensation because of their rank.

The Plaintiffs filed the instant action in federal district court, claiming that they were wage employees entitled to overtime compensation under the provisions of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. Secs. 201-219. The City argued that the Plaintiffs were not entitled to any such compensation because they were salaried workers who fell under the FLSA's overtime exemption for employees in executive or administrative positions. See 29 U.S.C. Sec. 213(a)(1). ¹

Following a trial on the merits, the district court held that absences of less than one day could properly be charged to the Plaintiffs' accumulated leave time without running afoul of the FLSA, but, because the Plaintiffs' pay was also subject to possible reduction for such absences (i.e., in the event their leave had been exhausted), they were not salaried employees subject to exemption. We find the second conclusion erroneous and hold that, in the absence of an express policy subjecting an executive or administrative employee's pay to reduction for absences of less than one day, deducting accrued leave time is not conduct which puts the employee outside the applicable exemption.

ANALYSIS

Standard of Review

The City cites Abshire v. County of Kern, 908 F.2d 483 (9th Cir.1990), cert. denied, 498 U.S. 1068, 111 S.Ct. 785, 112 L.Ed.2d 848 (1991), as support for the proposition that our standard of review is de novo. See Abshire, 908 F.2d at 486 (citing Icicle Seafoods Inc. v. Worthington, 475 U.S. 709, 714, 106 S.Ct. 1527, 1530, 89 L.Ed.2d 739 (1986)). However, in Icicle Seafoods, the Supreme Court held that "the facts necessary to a proper determination of the legal question whether an exemption to the FLSA applies in a particular case should be reviewed by the courts of appeals pursuant to [Federal] Rule [of Civil Procedure] 52(a) [the clearly erroneous standard]...." Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 713, 106 S.Ct. 1527, 1529, 89 L.Ed.2d 739 (1986). We review the district court's findings of fact for clear error. Fed.R.Civ.P. 52(a). Its application of law to the facts is reviewed de novo. Boone v. United States, 944 F.2d 1489, 1492 (9th Cir.1991).

Discussion

The Plaintiffs filed this action shortly after we decided Abshire, in which we held that the FLSA's exemption from overtime pay for administrative or executive employees was inapplicable to a situation in which a local government had an express policy of deducting from its employees' pay for absences of less than one day. ² Abshire, 908 F.2d at 487. We also hinted in Abshire that an express policy of deducting from employees' accrued paid leave for absences of less than one day could violate the exemption. Id. at 487 n. 3.

The City has no express policy for reducing pay for absences of less than one day. It did, however, reduce accrued paid leave for absences of less than one day. (The question of whether actually to deduct from the Plaintiffs' pay never came up because the Plaintiffs never exhausted their accrued paid leave.) Here, the district court found that reducing accrued paid leave for these absences did not make Plaintiffs hourly employees. For the reasons which follow, we hold that that portion of the decision is correct.

I

Under the FLSA, all employees must ordinarily be paid one and one-half times their normal hourly wage for all hours exceeding forty hours worked in one week. 29 U.S.C. Sec. 207(a)(1). ³ The FLSA provides limited exemptions from its overtime rule, however. The parties agree that the exemption at issue here is that for any worker "employed in a bona fide executive, administrative or professional capacity." 29 U.S.C. Sec. 213(a)(1). The gist of this appeal, therefore, turns on the correct definition of "executive" or "administrative." For the answer to that we must look to the applicable Department of Labor ("DOL") regulations. See, 29 C.F.R. Secs. 541.1, 541.2. ⁴

To fit within the overtime-exempt category for administrative or executive employees, an

employee must meet both parts of a two-part test. 29 C.F.R. Secs. 541.1, 541.2. The first part is a "duties test." 29 C.F.R. Secs. 541.1(a)-(e) or 541.2(a)-(d). The second part is a "salary test." 29 C.F.R. Secs. 541.1(f) or 541.2(e); see 29 C.F.R. Sec. 541.118 (defining "salary basis").

A. The Duties Test

The duties test requires that the Plaintiffs meet either of two standards as set out under 29 C.F.R. Secs. 541.119(a) or 541.214(a). ⁵ Specifically, and for our purposes, the Plaintiffs must (1) be paid on a salary basis (2) of not less than $250 per week (3) for the primary duty of managing a recognized department or subdivision and (4) regularly direct two or more employees.

The Plaintiffs do not dispute the district court's finding that they meet the second and forth portions of this test. The Plaintiffs contend, however, that they do not meet the third ("managing a subdivision") portion of this test because they perform many of the same tasks as their subordinates.

The district court found that Captain Bennett's primary duty was to manage and operate the Police Department Operations Division; Captain Brady's primary duty was to manage and operate the Police Department Services Division; Lieutenant Rudy's primary duty was to manage and operate the Police Department's Patrol Bureau; and Lieutenant Barner's primary duty was to manage and operate the Police Department's Investigations and Youth Services Bureaus, and the Drug Abuse Resistance Education Program.

Contrary to the Plaintiffs' vigorous assertions, the record supports the district court's findings; indeed, even the Plaintiffs' testimony supports these findings. Plaintiff Lt. Barner testified: "[A]s leads come in, as we have a briefing on the case, I actually list out on a board under the title of 'to do' everything that has to be done.... I prioritize these [leads] and I assign these out to investigators." Plaintiff Lt. Ruby also testified (in answer to the question: "[W]hat kind of work would you do when you are called into the street as an acting sergeant?"): "I would be the supervisor in charge of whatever detail that I was sent to."

Lt. Barner then testified that he performs some of the same tasks as his subordinates.

Lt. Ruby also testified that he, too, must perform the same duties as his subordinates, including occasionally those of crossing guard. However, we have held that "[T]he plaintiff should be classified as an executive although he engaged, to some extent, in ordinary work performed by employees subordinate to him, which work was a part of his supervisory duties." Wainscoat v. Reynolds Electrical & Engineering Co., Inc., 471 F.2d 1157, 1161 (9th Cir.1973). Accordingly, the third element of the short duties test is met. We now turn our attention to the salary test. ⁶

B. The Salary Test

To fit within the overtime exemption, the City must also show that the Plaintiffs are paid on a salary basis.

An employee will be considered to be paid "on a salary basis" within the meaning of the regulations if under his employment agreement he regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount...