Cannon v. D.C.

• Decision Date: 04 June 2013
• Docket Number: No. 12–7064.,12–7064.
• Parties: Louis P. CANNON, et al., Appellants v. DISTRICT OF COLUMBIA, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

717 F.3d 200

Louis P. CANNON, et al., Appellants

v.DISTRICT OF COLUMBIA, Appellee.

No. 12–7064.

United States Court of Appeals,District of Columbia Circuit.

Argued March 14, 2013.

Decided June 4, 2013.

Appeal from the United States District Court for the District of Columbia (No. 1:12–cv–00133).

Matthew August LeFande argued the cause and filed the briefs for appellants.

Richard S. Love, Senior Assistant Attorney General, Office of the Attorney General for the District of Columbia, argued the cause for appellee. With him on the brief were Irvin B. Nathan, Attorney General, Todd S. Kim, Solicitor General, and Donna M. Murasky, Deputy Solicitor General.

Before: HENDERSON, GRIFFITH and KAVANAUGH, Circuit Judges.

Opinion for the Court filed by Circuit Judge GRIFFITH.

GRIFFITH, Circuit Judge:

Like many state and local governments, the District of Columbia has passed laws against “double-dipping”: the simultaneous drawing of both a pension and a salary by a retired employee who has been rehired by the District. The District enforced a law aimed at curbing double-dipping against the six plaintiffs, sharply reducing their salaries by the amount of their pension payments. We hold that the plaintiffs' federal challenges to this action are meritless except in one respect. In slashing three of the plaintiffs' salaries, the District overstepped the boundaries of the Fair Labor Standards Act.

I

The plaintiffs are retired from the Metropolitan Police Department (MPD). During their time with the MPD, they contributed portions of their salaries to the Police Officers' and Firefighters' Retirement Plan (Retirement Plan), which provides retirement and disability benefits to employees of the MPD and the District of Columbia Fire Department. Upon retirement, each of the plaintiffs began receiving annuities from the Retirement Plan.

Under § 5–723(e) of the D.C.Code, the salary of a retired MPD employee drawing on a Retirement Plan pension, who has been rehired by the District, is offset by the amount of the pension payments:

Notwithstanding any other provision of law, the salary of any annuitant who first becomes entitled to [a Retirement Plan pension], after November 17, 1979, and who is subsequently employed by the government of the District of Columbia shall be reduced by such amount as is necessary to provide that the sum of such annuitant's annuity under this subchapter and compensation for such employment is equal to the salary otherwise payable for the position held by such annuitant.

D.C.Code § 5–723(e). In other words, the statute requires the District to reduce the salary of employees who simultaneously draw money from the Retirement Plan. Other state and local governments across the nation also forbid double-dipping by employees. See, e.g., Connolly v. McCall, 254 F.3d 36, 43 (2d Cir.2001) (per curiam) (New York's “policy of preventing receipt of a public pension while also receiving a public salary reflects the notion that such simultaneous income streams could constitute an abuse of the public fisc.” (internal quotation marks omitted)); Mascio v. Pub. Employees Ret. Sys. of Ohio, 160 F.3d 310, 312 (6th Cir.1998) (describing an Ohio statute preventing double-dipping by state elected officials).

Between 2008 and 2011, the District rehired the plaintiffs to work in its Protective Services Police Department (Protective Services), a local law enforcement agency that protects government agencies and property. Notwithstanding § 5–723(e), through the end of 2011, the District paid the plaintiffs their full salaries while they continued to receive Retirement Plan annuities. On October 12, 2011, however, the District sent the plaintiffs letters notifying them that in November it would begin reducing their salaries by the amount of their pension payments. The plaintiffs were told that they could choose to suspend those payments as an alternative to the salary offset. None did. November passed, and the double-dipping continued.

With the coming of the new year, however, the District followed through on its warning and enforced § 5–723(e) against the plaintiffs. The effect was dramatic. One of the plaintiffs, Harry Weeks, received no pay for the first pay period of 2012 after the District deducted the amount he received in pension payments from his Protective Services salary.

When the plaintiffs learned that the District had reduced their salaries, they immediately filed suit on January 26, 2012, claiming numerous violations of federal and D.C. law arising out of the salary offset. Two weeks after the plaintiffs sued, the District fired plaintiff Louis Cannon from his position as chief of Protective Services. At the same time, the plaintiffs discovered that the District had not paid them by direct deposit for the preceding pay period. Instead, they were issued paper paychecks. The plaintiffs amended their complaint on February 14 to allege that the firing and the missed payday were retaliatory.

Only the plaintiffs' federal claims are at issue in this appeal. Three of the plaintiffs assert that they did not receive the minimum wage required by the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., and all of them claim that: the salary offset violated the Fifth Amendment, the manner in which the District administered the offset violated the Equal Protection Clause, and the District violated the First Amendment by retaliating against them for filing their suit. On February 23, 2012, the District moved to dismiss the plaintiffs' suit, or, in the alternative, for summary judgment. The plaintiffs also moved for summary judgment on the FLSA claim. On July 6, 2012, the district court entered summary judgment for the District on the FLSA and First Amendment claims, and dismissed the plaintiffs' Fifth Amendment claims under Fed.R.Civ.P. 12(b)(6). The district court declined to exercise supplemental jurisdiction over the plaintiffs' remaining D.C. law claims. See Cannon v. District of Columbia, 873 F.Supp.2d 272, 287–88 (D.D.C.2012).

The plaintiffs timely appealed, and we have jurisdiction pursuant to 28 U.S.C. § 1291. Summary judgment is appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Our review is de novo. Figueroa v. D.C. Metro. Police Dep't, 633 F.3d 1129, 1131 (D.C.Cir.2011). We also review a Rule 12(b)(6) dismissal de novo and affirm if, accepting all allegations in the plaintiffs' complaint as true, they have nevertheless failed to state plausible grounds for relief. Winder v. Erste, 566 F.3d 209, 213 (D.C.Cir.2009).

II

We first address the FLSA claim brought by plaintiffs Sheila Ford–Haynes, Gerald Neill, and Weeks. They allege that the District has failed to pay them the federal minimum wage required by the FLSA since January 2012, when the District began applying the salary offset. Weeks also claims that the FLSA entitles him to overtime. In response, the District asserts that these employees are not covered by the FLSA, and that the District had no obligation to pay them minimum wage and overtime.

An employee is entitled to the federal minimum wage and overtime unless specifically exempted by the FLSA. See Smith v. Gov't Emp. Ins. Co., 590 F.3d 886, 892 (D.C.Cir.2010). The employer bears the burden of demonstrating that its employee is exempt, and exemptions are “narrowly construed.” Havey v. Homebound Mortg., Inc., 547 F.3d 158, 163 (2d Cir.2008) (citation omitted).

The District contends that Ford–Haynes, Neill, and Weeks are exempt under the terms of § 13(a)(1) of the FLSA because they are employed in a “bona fide executive, administrative, or professional capacity,” as those terms are defined by Department of Labor (DOL) regulations. 29 U.S.C. § 213(a)(1). One such regulation requires that employees exempted under § 13(a)(1) be “compensated on a salary basis at a rate of not less than $455 per week ..., exclusive of board, lodging or other facilities.” 29 C.F.R. § 541.600(a); see also Orton v. Johnny's Lunch Franchise, LLC, 668 F.3d 843, 847–51 (6th Cir.2012) (describing the “salary basis test”); Hilbert v. District of Columbia, 23 F.3d 429, 431 (D.C.Cir.1994) (same).¹ To be “compensated on a salary basis,” an employee must “regularly receive[ ] each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee's compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.” 29 C.F.R. § 541.602(a).

The crux of the dispute is whether Ford–Haynes, Neill, and Weeks receive less than $455 per week in compensation; if so, the District fails the salary basis test and they are covered by the FLSA's minimum wage and overtime requirements. Both parties agree that the amount each of these plaintiffs receives in their paychecks has fallen below $455 per week since January2012. There is likewise no disagreement that if these plaintiffs' annuities are counted as compensation, they are paid well above $455 per week, and the District is entitled to summary judgment.

We hold that the District may not count these plaintiffs' annuities as compensation for purposes of the salary basis test. Under no reasonable reading of the term can the pension payments be considered “compensation” for these plaintiffs' current work. Rather, the money they receive from their pensions is a retirement benefit, earned over the course of their past employment with the MPD, not their present work for the District. The pensions were funded in part by the plaintiffs' own required contributions, which were automatically deducted from their MPD paychecks. See District of Columbia Retirement Board, District of Columbia Police Officers' and Firefighters' Retirement Plan, Summary Plan Description—2007, at 9 (2007), available at http:// dcrb. dc. gov/ publication/ police- officers- and- firefighters- summary- plan- description (last...