City of Hous. v. Bates

• Decision Date: 28 June 2013
• Docket Number: No. 11–0778.,11–0778.
• Citation: 56 Tex. Sup. Ct. J. 795,406 S.W.3d 539
• Parties: The CITY OF HOUSTON, Texas, Petitioner, v. Roger BATES, Michael L. Spratt and Douglas Springer, Respondents.
• Court: Texas Supreme Court

406 S.W.3d 539

56 Tex. Sup. Ct. J. 795

The CITY OF HOUSTON, Texas, Petitioner,

v.Roger BATES, Michael L. Spratt and Douglas Springer, Respondents.

No. 11–0778.

Supreme Court of Texas.

June 28, 2013.

E. Troy Blakeney, Jr., Richard C. Mumey, Blakeney, Flynn & Mumey PLLC, Houston, TX, Vincent L. Marable III, Paul Webb PC, Wharton, TX, for Respondent Roger Bates.

David M. Feldman, Donald J. Fleming, Timothy J. Higley, City of Houston Legal Department, Reagan Douglas Pratt, The Pratt Law Firm PLLC, Houston, TX, for Petitioner The City of Houston.

Justice GREEN delivered the opinion of the Court, in which Chief Justice JEFFERSON, Justice JOHNSON, Justice WILLETT, and Justice DEVINE joined; in which Justice HECHT and Justice LEHRMANN joined as to Parts I and II.A; and in which Justice GUZMAN and Justice BOYD joined as to Parts I and II.B.

This appeal involves a pay dispute between the City of Houston and three retired fire fighters previously employed by the Houston Fire Department (HFD). The retired fire fighters sued the City to recover allegedly unauthorized deductions from their termination pay upon retirement.The retired fire fighters asserted two distinct claims. First, two of the retired fire fighters claimed that the City wrongfully deducted pay for overtime hours that HFD required fire fighters to work after the implementation of a new shift schedule in November 2001. Second, the retired fire fighters alleged that the City improperly calculated each fire fighter's “salary” for purposes of paying termination pay upon their retirement. The trial court found in favor of the retired fire fighters on both claims. The court of appeals affirmed the trial court's judgment, which awarded two of the retired fire fighters reimbursement for overtime pay and all of the retired fire fighters additional termination pay for accrued and unused sick and vacation leave. 406 S.W.3d 555, 2011 WL 3585612 (Tex.App.–Houston [14th Dist.] 2011, pet. granted) (mem.op.). We reverse the court of appeals' judgment as to the first claim related to the overtime pay, affirm its judgment as to the second claim related to additional termination pay, and render judgment consistent with this opinion.

I. Background

Prior to their retirements, Roger Bates, Michael L. Spratt, and Douglas Springer (collectively, the retired fire fighters) spent their careers as fire fighters with HFD. Spratt and Springer retired in 2004, and Bates retired in 2005. Upon retirement, the City paid the retired fire fighters termination pay pursuant to sections 143.115 and 143.116 of the Texas Local Government Code. SeeTex. Loc. Gov't CodeE §§ 143.115–.116. The retired fire fighters ultimately sued the City, seeking reimbursement for (1) overtime pay that the City docked from their termination pay (the “debit dock” claim), and (2) additional termination pay based on the City's exclusion of premium pay from the calculation of their salaries for purposes of paying out the termination pay.

A. Debit Dock Claim

In many urban areas, fire fighters are often required to work 24–hour shifts. Due to the demands of the job, the Legislature has enacted various statutes governing fire fighters' pay and hours. For example, section 142.0017 of the Local Government Code requires a City to compensate a fire fighter for overtime pay if the fire fighter works more than an average of 46.7 hours per week calculated over a 72–day work cycle. Tex. Loc. Gov't CodeE § 142.0017(b). Utilizing a 72–day work cycle, HFD scheduled fire fighters to work one of four shift schedules. In any one shift schedule, a fire fighter would work eighteen 24–hour shifts throughout the 72–day work cycle. Because the shift schedules did not reach the 46.7–hour weekly average, HFD required fire fighters to work two additional 24–hour shifts, called “debit days,” each work cycle. On a debit day, HFD assigned a fire fighter to work on a different shift schedule and many times at a different fire station. As a result, debit days were unpopular and had a high rate of absenteeism. Nevertheless, debit days remained a part of the regularly scheduled work shift for fire fighters. Fire fighters were required to show up on a debit day and work just like any other day in their shift schedules.

In November 2001, HFD added an extra 24–hour debit day to each 72–day work cycle due to staffing shortages. This extra debit day pushed the fire fighters' weekly average of hours worked to forty-nine—entitling them to 2.3 hours of overtime pay each week (or twenty-four hours over the course of the 72–day work cycle). To encourage attendance on debit days, HFD designated the last eight hours of each debit day as the portion eligible for overtimepay. HFD required a fire fighter to be physically present to get overtime pay for that time period. Under HFD's accounting procedures, if a fire fighter was on authorized leave on a debit day, then HFD paid the fire fighter for sixteen hours, charged his leave account for those sixteen hours, but did not pay overtime pay for the remaining eight hours and did not charge his leave account for those hours. This schedule consisting of an average of forty-nine hours a week lasted for approximately two years.

When Springer and Spratt retired from HFD, the City deducted previously paid overtime from Springer's and Spratt's termination checks. The City claimed that Springer and Spratt were overpaid for “Debit Day Overtime,” which, according to the City, was generated from the City paying overtime for debit days Springer and Spratt did not physically work. The overtime pay that the City deducted from Springer's termination check related to 8–hour shifts on debit days that the City allowed Springer to “ride out” prior to retirement. ¹ The overtime pay that the City deducted from Spratt's termination check related to vacation leave he took on a scheduled debit day. Springer and Spratt do not dispute that they did not physically work the debit days for which the City previously paid them for overtime. Instead, they argued in the trial court that they were on authorized leave during those debit days. And, because section 142.0017 requires that time spent on “authorized leave” be included in calculating the number of hours a fire fighter worked during a 72–day work cycle, they claimed that they were entitled to overtime pay regardless of whether they were physically present for the designated overtime period. After a bench trial, the trial court rendered judgment for Springer and Spratt on their debit dock claims and awarded them $610.15 and $152.20, respectively. The court of appeals affirmed. 406 S.W.3d at 560.

B. Termination Pay Claim

The Local Government Code and the City's ordinances allow fire fighters to accumulate unused sick and vacation leave. See, e.g.,Tex. Loc. Gov't CodeE §§ 143.045–.046; Houston, Tex., Code of Ordinances ch. 34, art. I, § 34–3. When a fire fighter leaves HFD's employment, sections 143.115 and 143.116 of the Local Government Code entitle a fire fighter to a lump-sum payment for accumulated but unused vacation and sick leave. SeeTex. Loc. Gov't CodeE §§ 143.115 (vacation leave), .116 (sick leave). In most cases, sections 143.115 and 143.116 require accumulated vacation and sick leave to be valued at the fire fighter's “salary” at the time the fire fighter accumulated the leave. See id. §§ 143.115(b), .116(b). This lump-sum payment is often referred to as termination pay.

The City enacted ordinances that excluded certain types of premium pay, including educational incentive pay and assignment pay, from the definition of “salary” for purposes of calculating accumulated benefit leave for termination pay. SeeHouston, Tex., Code of Ordinances ch. 34, art. I, § 34–3(c); see also id. ch. 14, art. III, §§ 14–243, 14–244 (requiring sick leave to be valued at a fire fighter's “daily average rate of base pay plus longevity”). The ordinances create a financial disparity between the amount of pay a fire fighter received when he utilized his sick and vacation leave during his employment and when he received accumulated sick and vacation leave as termination pay. For instance, an HFD fire fighter that used sick or vacation leave to miss a shift received his base pay plus all other forms of premium pay that the fire fighter was entitled to at that time, which could include longevity pay, educational incentive pay, and assignment pay. In other words, if an HFD fire fighter took a day of paid leave, the City paid the fire fighter the same as if he had physically worked that day. On the other hand, the City paid a fire fighter his base pay and only longevity pay as termination pay for all accumulated sick and vacation leave. Under this “long-term City policy,” an HFD fire fighter was financially better off utilizing all of his paid leave during his employment than accumulating it for purposes of termination pay upon retirement.

Upon retirement, the City issued checks to the retired fire fighters for their termination pay, which did not include the premium pay. The retired fire fighters challenged the ordinances on the grounds that they were preempted by the statutory scheme promulgated by the Legislature and codified in the Local Government Code. The trial court found that the retired fire fighters were entitled to the full amount of their salaries for unused and accrued sick and vacation leave, which required inclusion of educational incentive pay and assignment pay. The court of appeals affirmed. 406 S.W.3d at 559.

II. Analysis

The City challenges the court of appeals' judgment on the debit dock claim and the termination pay claim. First, the City argues that Springer and Spratt were not entitled to be reimbursed for overtime pay because section 142.0017(e)(2) of the Local Government Code does not require the City to count hours a fire fighter is on unpaid leave for purposes of computing a fire fighter's eligibility for overtime compensation. Second, the City argues that its...