Shockley v. City of Newport News
| Decision Date | 22 June 1993 |
| Docket Number | Nos. 92-1790,92-1800,s. 92-1790 |
| Citation | 997 F.2d 18 |
| Parties | 125 Lab.Cas. P 35,834, 1 Wage & Hour Cas.2d (BNA) 788 Howard E. SHOCKLEY; Ray V. Ballard, Jr.; Michael L. Brewer; Clifford T. Bowen; David E. Burgess; William T. Cordle; David C. Dorner; Thomas L. Duggan; Henry Marvin Evans; Joseph R. George; Milton B. Hallet; James L. Hogan, Jr.; Joe McKinley Johnson; Carl S. Morgan, III; Leola A. Mowry; Arthur D. Nolan; Lynn M. Pearson; Thomas L. Penny; James E. Quail; Davis Alberts Seals, Sr.; Wayne Wright Smith; Donald E. Spitzer; Joseph R. Storms; Ronald K. Suttle; Jimmy Sutton; David P. Wescott; Linda Scott Wescott; Daniel E. Wickline; Raymond E. Wilson, Sr.; Roy Sorrell; Harry Cleveland West; Ronald T. Conley, Plaintiffs-Appellees, v. CITY OF NEWPORT NEWS, Defendant-Appellant, and City of Newport News Police Department, Defendant. Howard E. SHOCKLEY; Ray V. Ballard, Jr.; Michael L. Brewer; Clifford T. Bowen; David E. Burgess; William T. Cordle; David C. Dorner; Thomas L. Duggan; Henry Marvin Evans; Joseph R. George; Milton B. Hallet; James L. Hogan, Jr.; Joe McKinley Johnson; Carl S. Morgan, III; Leola A. Mowry; Arthur D. Nolan; Lynn M. Pearson; Thomas L. Penny; James E. Quail; Davis Alberts Seals, Sr.; Wayne Wright Smith; Donald E. Spitzer; Joseph R. Storms; Ronald K. Suttle; Jimmy Sutton; David P. Wescott; Linda Scott Wescott; Daniel E. Wickline; Raymond E. Wilson, Sr.; Roy Sorrell; Harry Cleveland West; Ronald T. Conley, Plaintiffs-Appellants, v. CITY OF NEWPORT NEWS, Defendant-Appellee, and City of Newport News Police Department, Defendant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Allen Link Jackson, Deputy City Atty., City Atty.'s Office, Newport News, VA, for appellant.
Michael Tarcissius Leibig, Zwerdling, Paul, Leibig, Kahn, Thompson & Driesen, Washington, DC (Stephen M. Smith, Joseph Smith, Ltd., Hampton, VA, on brief), for appellees.
Before PHILLIPS, WILKINS, and WILLIAMS, Circuit Judges.
Thirty-two current or former officers in the Newport News, Virginia, Police Department brought this action against the City of Newport News under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201-19 (1988 & Supp. III 1991), seeking overtime pay for the period September 1987 to the present. The City argued that the Officers were exempt from the FLSA overtime requirements because they qualified as executive or administrative employees. The Officers argued that they were not exempt for two reasons. First, they urged that they were not paid on a salary basis because City policies required reductions in pay for part-day absences, unreported absences, and attendance as a party at trial. Second, they argued that their primary duty was neither management nor administration.
The case was tried on a stipulated record. The district court found that the Officers' primary duty was either management, administration, or a combination of both. 1 The court also determined that City policies requiring reductions in pay for unreported absences and for attendance as a party at trial were consistent with payment on a salary basis. However, the court found that City policy required reductions in pay for part-day absences and that FLSA regulations prior to September 6, 1991, did not allow such reductions. Accordingly, the court ordered payment of overtime for the period September 1987 to September 6, 1991. For the period September 6, 1991, to the present, the court found that reductions in pay for part-day absences did not disqualify the Officers from FLSA exemption because the Department of Labor had promulgated a new regulation allowing such reductions. The court concluded that the Officers were not entitled to overtime pay during this period because they were exempt from FLSA regulation. Both the City and the Officers appealed.
We disagree with several of the district court's conclusions. First, the evidence does not support the court's finding that the City had a policy of reducing employees' pay for part-day absences. Second, prior to the promulgation of the September 6, 1991, regulation, the City's policy of reducing pay for unreported absences was not consistent with payment on a salary basis. Third, while we agree with many of the district court's conclusions regarding the primary duties of the individual Officers, the evidence does not support the court's conclusion that administration was the primary duty of the Media Relations Sergeants. Finally, the district court did not apply the correct test in determining whether Patrol Lieutenants and Crime Analysis Sergeants qualified for exemption based upon a combination of administrative and managerial duties.
Accordingly, we reverse the district court's finding that the Media Relations Sergeants qualified for exemption as administrative employees from the period of September 6, 1991, to the present. We remand for further fact-finding regarding whether the Patrol Lieutenants and Crime Analysis Sergeants qualify for exemption. We affirm the remainder of the district court's judgment, albeit for different reasons than those stated by the district court.
Section 7(a)(1) of the FLSA, 29 U.S.C. § 207(a)(1), requires that employees be paid time and a half for work over forty hours a week. Section 13(a)(1) of the FLSA, 29 U.S.C. § 213(a)(1), however, provides an exemption from the overtime pay requirement for persons "employed in a bona fide executive, administrative, or professional capacity." Employers must prove by clear and convincing evidence that an employee qualifies for exemption. Clark v. J.M. Benson Co., 789 F.2d 282, 286 (4th Cir.1986).
Department of Labor regulations define what constitutes employment in an executive or administrative capacity. Two requirements are pertinent here. First, to qualify for the exemption, an employee must be paid "on a salary basis." 29 C.F.R. §§ 541.1(f), 541.2(e) (1992). 2 Second, an employee's primary duty must be either management, administration, or a combination of the two. Id. §§ 541.1(f), 541.2(e), 541.600(a) (1992). The Officers contend that neither of these requirements was satisfied.
The Officers contend that they were not paid "on a salary basis" because City policy required that their pay be reduced based on the quality or quantity of work performed. Their argument derives from 29 C.F.R. § 541.118(a) (1992), which provides that:
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 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. Subject to the exceptions provided below, the employee must receive his full salary for any week in which he performs any work without regard to the number of days or hours worked. This policy is also subject to the general rule that an employee need not be paid for any workweek in which he performs no work.
(Emphasis added.); see id. § 541.212 (). The Officers urge that City policy requires reductions in pay for part-day absences, for attendance as a party at trial, and for unreported absences, and that these reductions are not permitted under the regulations. We address each of these arguments in turn.
The Officers contend that City policy required reductions in their salaries for part-day absences. Although the regulations allow employers to reduce a salaried employee's pay "when the employee absents himself from work for a day or more for personal reasons, other than sickness or accident," 29 C.F.R. § 541.118(a)(2), they do not allow reductions for part-day absences. Such reductions defeat any claim that the employee was paid on a salary basis. Abshire v. County of Kern, 908 F.2d 483, 487 (9th Cir.1990), cert. denied, 498 U.S. 1068, 111 S.Ct. 785, 112 L.Ed.2d 848 (1991); Hawks v. City of Newport News, 707 F.Supp. 212, 214-15 (E.D.Va.1988).
The Department of Labor created an exception to this principle on September 6, 1991, when it promulgated 29 C.F.R. § 541.5d (1992), amended, 57 Fed.Reg. 37,666, 37,677 (Aug. 19, 1992). Under § 541.5d, public employees are not disqualified from exemption merely because a pay system established by statute, ordinance, regulation, or public policy requires that the employee's pay be reduced for part-day absences. Id. Therefore, to the extent that City policy in fact required such reductions, the policy only affects whether the Officers were paid on a salary basis prior to September 6, 1991. 3
The district court agreed with the Officers that under City policy their pay could be reduced for part-day absences. The primary evidence supporting this conclusion was a set of letters sent by Jay A. Carey, Jr., the Chief of Police, to each of the Officers. The letters were the same in substance. For example, Carey wrote to Sergeant D.P. Wescott that "[a]s a plaintiff in this case you must take annual, personal leave, or leave without pay for any period of time you are not at your work assignment as a result of the court case." (J.A. at 152.) Carey attached to each letter a copy of § 705 of the City Personnel-Administrative Manual. Section 705 provided that vacation or personal leave must be used when an employee appears as a party in a case but is not represented by the City Attorney. Section 705 implemented § 2-98(c) of the City Code, which provided that "[e]mployees appearing as a party in a case shall not be entitled to civil leave with pay during such court appearances." (J.A. 149.) In addition, § 608 of the Manual specified that leave was "computed in 15 minute increments with the exception that employees who are exempt from overtime and who have exhausted all accumulated leave...
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