DiGiore v. Ryan

Decision Date25 March 1999
Docket NumberNo. 98-1021,98-1021
Citation172 F.3d 454
Parties137 Lab.Cas. P 33,835, 5 Wage & Hour Cas.2d (BNA) 321 Dennis DiGIORE, Robert Dufkis, Ken Easterly, Joe Gabuzzi, William E. Johns, et al., Plaintiffs-Appellants, v. George H. RYAN, Giacomo A. Pecoraro, and Tina Prose, Defendants-Appellees.
CourtU.S. Court of Appeals — Seventh Circuit

Jac A. Cotiguala (argued), Chicago, IL, Gregory R. Sun, Chicago, IL, for Plaintiffs-Appellants.

Brian F. Barov (argued), Office of the Attorney General, Criminal Appeals Division, Chicago, IL, for Defendants-Appellees.

Before COFFEY, KANNE, and DIANE P. WOOD, Circuit Judges.

KANNE, Circuit Judge.

This case presents the issue of whether police lieutenants and sergeants working for the state of Illinois were due overtime pay under the Fair Labor Standards Act ("FLSA"). The district court found they were not so entitled because they fall within the executive exemption of the FLSA. Defendants' motion for summary judgment was granted. We affirm.

I. History

The Illinois Secretary of State ("SOS") employs Plaintiffs as police officers ("Plaintiffs" or "Officers"). 1 They are not covered by a union contract and are classified as "Merit Compensation" employees. The Secretary pays them an annual salary through bi-monthly paychecks. They do not receive overtime pay for hours worked beyond their normal shifts.

Defendants are or were officials with SOS ("Defendants" or "SOS officials"). 2 George Ryan served as the Illinois Secretary of State from January 1991 through December 1998 (he is now Governor of Illinois). Giacomo Pecoraro was Director of the Police Department from 1991 through 1995. Tina Prose has served as the Director of the Department of Personnel since 1991. These individuals oversaw the disciplinary procedures to which SOS subjects police officers.

Plaintiffs contend that the policies and practices implemented by these three SOS officials subjected them to actual and potential salary deductions. They claim that prior to December 1993, but within the three year statute of limitations for willful violations of the FLSA, the policies and practices found in the Police Department's Accident Policy and Physical Fitness Policy and the SOS's pre-1993 Progressive Disciplinary Policy enabled the SOS officials to suspend Plaintiffs without pay, which to them constituted a salary deduction. They contend that these salary deductions negate their status as salary basis employees and, accordingly, entitles them to overtime pay. This result flows from the conclusion that if the officers cannot be classified as salary basis employees, the SOS officials cannot claim the officers qualify for the exemption. If not within the exemption, the officers should receive overtime pay under the FLSA.

The three policies and how the SOS officials enforced them form the core of this case. The Police Department adopted its Accident Policy ("Accident Policy") in August 1990. This policy governs the disciplinary procedures regarding "chargeable accidents" for police officers of all ranks. Three levels of penalties exist under this policy. For the first offense within twenty-four months, an officer may be suspended from one to three days without pay or required to work one to three days without compensation. For the second offense within twenty-four months, an officer may be suspended without pay for two to five days or required to work the same number of days without compensation. For the third offense within twenty-four months, an officer's amount of suspension or uncompensated work time may range from three to ten days. The penalties are not mandatory; rather the Accident Review Board recommends to the Director of Police the appropriate amount of discipline based, in part, upon this list of suggested penalties.

The Police Department's Physical Fitness Policy ("Fitness Policy"), which was in effect from June 1992 3 until October 1996, also permitted the use of unpaid suspensions as a disciplinary action. Similarly applicable to all ranks of police officers, the Fitness Policy provided for various levels of punishment including verbal warnings, written warnings, and suspensions. Unlike the Accident Policy, however, the Fitness Policy did not specify the type of penalty warranted for specific violations. It did, however, specify that suspensions had to be administered in an incremental process ranging from two-day to twelve-day periods.

The final policy relevant to this case is the SOS Progressive Disciplinary Policy ("Disciplinary Policy"). This policy governs misconduct by all SOS employees, not only police officers. Under this policy, police officers could be suspended without pay. In 1993, SOS amended the Disciplinary Policy to state that Merit Compensation employees can be suspended only in five-day or equivalent work week increments. The Personnel Director, Tina Prose, testified that SOS made the 1993 amendments to reflect a practice that had been in place since 1990. The Chief Labor Negotiator, William Rolando, confirmed Prose's statement. In addition, Prose testified that the Disciplinary Policy trumps all other policies affecting Merit Compensation employees, including the Accident Policy and Fitness Policy of the Police Department. The SOS manual, however, does not specifically reflect this overarching nature of the Disciplinary Policy.

In applying these policies to specific employees, SOS adopted a mechanism to ensure it complies with the FLSA requirements. First, the Director of Police recommends a course of discipline. The Personnel Department, then, approves or denies the recommendation after the Technical Services Division of SOS's Personnel Department reviews personnel actions specifically for FLSA compliance issues.

These safeguards are not fool-proof, however; SOS has subjected salary basis officers to disciplinary procedures that are inconsistent with the requirements of a salary basis employee. In 1989, SOS suspended Easterly for eighteen days--three full work weeks, plus a partial work week. In 1990, SOS suspended Juliano, a sergeant at the time, without pay for a five-day period that spanned two work weeks under the Disciplinary Policy. SOS has issued no other split-week suspension since that time. SOS issued unpaid suspension to four sergeants in 1991 under the Accident Policy. 4 No evidence suggests any SOS police officer with a rank of sergeant or higher has been suspended without pay under the Fitness Policy. As the district court noted, these five cases (Plaintiffs do not address Easterly's 1989 suspension without pay) are the only instances of unpaid suspensions of police offices with the rank of sergeant or higher. The other plaintiffs do not allege to have been subjected to unpaid suspensions, but rather allege that potentially being subjected to the improper salary deductions removes them from the status of salary basis employees. In November 1997, SOS notified the officers of the improper disciplinary actions and compensated them for the suspension or uncompensated work time.

SOS also failed to compensate Sergeant Serafini for the overtime he worked. Serafini's situation differs from that of the other officers, however, because his claim rests not only upon his status as a salary basis employee, but also upon his supervisory role. Since April 1997 as part of a cooperative venture with the United States Secret Service, Serafini has been on a temporary assignment during which he had no supervisory duties. This assignment, by SOS's own admission, enabled Serafini to receive overtime compensation. It agreed to pay Serafini for any past or future overtime compensation associated with that assignment.

Plaintiffs sued SOS under the FLSA alleging that the Accident, Fitness, and Disciplinary Policies and SOS's practices constituted salary deductions that made it impossible for the SOS officials to claim the officers were exempt from the overtime pay requirements because they fell within the statute's executive exemption. After granting Defendants' motion to dismiss the claims against the State of Illinois and Ryan and Pecoraro in their official capacities on Eleventh Amendment immunity grounds, the district court dismissed the officers' claims and granted the SOS officials' motion for summary judgment on the claims raised against them in their individual capacities. It concluded that the SOS policies did not satisfy the test set forth in Auer v. Robbins, 519 U.S. 452, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997), regarding whether employees are subject to impermissible salary deductions that remove them from any of the FLSA exemptions. Specifically, it found that the SOS policies failed to create a "significant likelihood" of improper salary deductions and that Plaintiffs failed to demonstrate that SOS engaged in an "actual practice" of disciplinary deductions under that test. In addition, the district court concluded that the SOS officials had complied with the Department of Labor regulations' "window of correction" doctrine.

With regard to Serafini's claim, the district court found it moot because SOS had recognized its improper denial of overtime pay and had agreed to compensate him. This decision places Serafini in the position of a non-prevailing party and makes him potentially liable for Defendants' costs. The SOS officials filed a motion for bill of costs totaling $8,864.20 against all Plaintiffs, but later withdrew it voluntarily.

Plaintiffs argue on appeal that the district court should not have granted the SOS officials' motion for summary judgment because SOS failed to establish that Plaintiffs meet the duties and salary tests for the executive exemption under FLSA. With respect to Serafini specifically, Plaintiffs claim that the district court should have granted their motion for summary judgment because he does not qualify for the exemption, as SOS has noted by its attempt to compensate him under the "window of correction." To...

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