Fair Labor Standards Act Overtime
The majority of federal employees are entitled to receive Fair Labor Standards Act (FLSA) overtime compensation. FLSA overtime is overtime paid at one and one-half times an employee’s regular rate of pay. There are a few differences between how the FLSA is applied in the federal sector and private sector. For the most part, however, the law is the same. Some of the differences are described below.
Differences Between Title 5 & FLSA Overtime Pay
FLSA overtime compensation is overtime paid to “FLSA non-exempt” employees at the time and one-half overtime rate. Many agencies permit local facilities and offices to treat all employees at the GS-9, GS-10, GS-11 and GS-12 pay grades and above as exempt from the FLSA, regardless of the employee’s job duties. This is legally incorrect and has significant financial consequences for the wronged employees. Employees treated as exempt from the FLSA do not receive time and one-half overtime pay. Instead, most of these employees are paid lesser overtime under a different statute – Title 5 – at the GS-10, step one rate.
There are six primary differences between FLSA overtime and overtime paid under Title 5:
- Weekend Travel– Employees covered by the FLSA are entitled to be paid for travel on weekends if the travel cuts across their administrative work hours. In contrast, except in very limited circumstances, FLSA exempt employees receive no pay for weekend travel.
- Maximum Earnings Limitation– There is no maximum earnings limitation under the FLSA. Under Title 5, employees cannot earn more money than the maximum level of a GS-15 overtime in a particular pay period.
- Pay Rate– FLSA exemptemployees used to receive overtime at the rate of time and one-half the GS-10, step one pay rate, or their hourly overtime rate, whichever was lower. Now exempt employees receive their hourly rate, if it is above the GS-10 step one rate. FLSA non-exempt employees receive overtime pay at one and one-half times their true hourly rate. Moreover, under the FLSA, the overtime rate includes other types of premiums, such as Sunday or night shift premium pay that the employee has received that pay period. Under Title 5, the overtime rate does not include these premiums.
- Compensatory Time– Under the FLSA, employees cannot be forced to receive compensatory time off or credit hours in lieu of cash overtime pay. FLSA exempt employees, however, can be required to accept compensatory time at the straight time rate (one hour of comp. time for each overtime hour worked). FLSA non-exempt employees can choose between being paid in cash at the time and one-half rate or receiving comp. time.
- Liquidated Damages– Employees can recover double damages (called liquidated damages), back pay and attorney’s fees and costs in a FLSA case. In a Title 5 pay case, employees can obtain back pay, interest and attorney’s fees and costs.
- Statute of Limitations– The statute of limitations in FLSA cases is two years which is extended to three years in cases in which the law is willfully violated. The statute of limitations in Title 5 cases is six years.
OPM’s Administration of the FLSA
The Office of Personnel Management’s (OPM) administration of the FLSA is required to be consistent with the rulings, regulations, interpretations, and opinions of the Secretary of Labor that are applicable to other sectors of the economy. OPM has issued regulations set forth at Part 551 of Title 5 of the Code of Federal Regulations. If OPM’s regulations deviate from the Department of Labor’s application of the FLSA, OPM’s interpretation is incorrect and should be overturned.
OPM has a homepage on the internet that addresses the FLSA as well as other pay issues at www.opm.gov/flsa.
Improper Denial of Overtime Through Abuse of Exemptions
Many agencies have in the past and continue to improperly deny FLSA overtime compensation to federal employees. Employees are misclassified as being “exempt” from the FLSA, and the agency employers improperly save on millions of dollars of overtime compensation that is owed to the employees.
Grade Cutoffs Are Not Permitted
The most common error agencies use is to automatically consider all employees at a particular pay grade to be exempt from the FLSA. Many agencies and their facilities will automatically exempt all GS-9, GS-11 and GS-12 employees from receiving FLSA overtime compensation. This is generally incorrect.
A determination as to whether an employee is exempt from the FLSA must be based on the actual job duties of the employee. The Agency-Employer bears the burden of proving that an employee meets the test for the claimed exemption. OPM’s regulations are, for the most part, similar to the Department of Labor’s rules. One exception is that OPM does not apply the salaried basis test to determine employees’ entitlement to overtime compensation. Otherwise, OPM appears to intend that the same tests to determine employee’s coverage under the FLSA that are applied in the private sector also apply to federal employees.
In 1985, OPM attempted to permit federal agencies to use automatic grade cut-offs to determine whether employees are entitled to FLSA overtime compensation. A court struck this down and invalidated OPM’s regulations. Nonetheless, many agencies and their activities appear to continue to use automatic grade level cutoffs so that all employees above the GS-9 or GS-11 level are improperly automatically denied overtime compensation.
OPM’s Application of the Exemptions to Temporary Assignments
Employees who receive temporary assignments in which they work at a job that is different than their regular job may have their status under the FLSA changed. As with the application of any exemption to the FLSA’s overtime requirements, an employee’s entitlement to FLSA overtime pay during a temporary assignment is based on the employee’s primary job duties, not the employee’s job title or rate of pay.
The period of time that the Department of Labor uses to determine an employee’s primary job duty has historically been a week. OPM, however, has determined that the period of time federal agencies should use to determining an employee’s FLSA status if the employee is working on a temporary detail is thirty (30) days. This works to the advantage of an FLSA covered employee who is temporarily working in a position that is at a higher grade and is a position treated by the agency as exempt from the FLSA. It works to the disadvantage of employees in FLSA exempt positions who are detailed to work lots of overtime performing work that would normally be FLSA covered, but whose detail performing this type of work is shorter than thirty days.
Foreign Workplace Rule
Work outside the United States and its territories may be excluded from the FLSA overtime rules. OPM has enacted a bright line rule to determine whether the protections of the FLSA apply to work by federal employees that occurs in a foreign country. OPM has determined that an employee who performs any work in the United States during the workweek is entitled to coverage regardless of how much work he or she has performed that week. According to OPM, the FLSA does not apply to employees who have performed all of their work hours in a workweek in a foreign country if they are on temporary duty or permanent assignment to that country.
Law Enforcement Availability Pay
In 1994, Congress enacted a special exemption to the FLSA for federal criminal investigators who receive Law Enforcement Availability Pay (LEAP). To qualify for LEAP pay, an employee must be properly classified as a criminal investigator in the GS-1811, GS-1812 or FP-2501 series. Employees who receive LEAP pay must be available to perform unscheduled overtime work or actually perform unscheduled overtime work an average of two hours a day.
Employees who receive LEAP pay are entitled to Title 5 overtime compensation in addition to LEAP pay if they work outside their regular workdays or if they work regularly scheduled overtime. The LEAP pay statute, however, does not provide for regularly scheduled overtime unless the investigator works more than 10 hours on one of the investigator’s regularly scheduled workdays or the investigator works on a day outside of the investigator’s basic 40-hour work week.
Calculation of the Rate at Which FLSA Overtime is Paid
With one exception – compensatory time – the principles used to compute the rate at which FLSA overtime is paid are the same for federal employees as any other employees: Federal employees who are covered by the FLSA are entitled to receive one and one-half times their regular rate of pay. The “regular rate” is different than the hourly rate in that it includes most types of premium pay.
In the federal sector, to compute an employee’s regular rate of pay, the employee’s annual GS salary is first divided by 2087, the number of regular work hours in a year. This figure is then multiplied by 40 to yield a weekly amount. Then, any Title 5 premium pay earned that week, such as Sunday premium pay, night shift differential and hazardous duty pay, is added to the weekly amount. This figure is then divided by 40 hours to obtain the regular rate of pay. Federal employees are then entitled to receive 1.5 times the regular rate of pay for each overtime hour worked that week.
The rules are different for employees who receive administratively uncontrollable overtime. There are also different hourly standards for law enforcement and fire protection employees.
Compensatory Time Permitted Under FLSA
In the federal sector, unlike the private sector, employees may receive compensatory time off under the FLSA as payment for working overtime. However, compensatory time can only be paid in lieu of cash if it is at the request of the employee, and it must be for irregular or occasional overtime work.
OPM’s regulation, 5 CFR § 551.531(c), specifically prohibits agencies from requiring that employees be compensated with compensatory time for working overtime. In addition, compensatory time paid under the FLSA does not evaporate or disappear if it is not used within a particular time period. If the compensatory time is not used within the time limits established by an agency, FLSA compensatory time must be cashed out.
Remedies Available in FLSA Overtime Pay Cases
Federal employees who are found to have been wrongly denied FLSA overtime compensation are entitled to recover their back pay in an amount equal to the difference between what they were paid for overtime work and what they would have been paid if they had been properly paid FLSA overtime compensation. In addition, employees are entitled to recover liquidated (double) damages or interest. Finally, employees can recover attorneys’ fees and costs associated with pursuing the case.
There is a two year statute of limitations applicable to FLSA cases, which is extended to three years if the government is found to have willfully violated the FLSA. The statute of limitations begins to run on the day in which the employee would normally have been paid his overtime pay. Significantly, filing a claim with OPM does not toll the statute of limitations. This means that the statute of limitations continues to run while an employee’s claim is pending at OPM.
Pursuing a FLSA Overtime Claim
Employees who are represented by unions whose negotiated grievance procedures do not exclude FLSA overtime pay claims have two options for pursuing a claim against their agency-employer to recover FLSA overtime backpay. They can either file a grievance and/or they can pursue the issue in the U.S Court of Federal Claims.
Employees who are not represented by a union, or employees who are represented by a union whose grievance procedure excludes FLSA claims, have two options as well. They can either pursue a claim in the U.S Court of Federal Claims or with OPM.
Claims for more than $10,000 in damages must be pursued in the U.S. Court of Federal Claims if they are pursued in court. In other words, local U.S. District courts do not have jurisdiction to hear employee claims seeking damages in excess of $10,000.
Employees should be aware that if they file a claim with OPM, the statute of limitations will continue to run while their claim is pending with OPM. In other words, filing a claim with OPM does not toll or stop the statute of limitations.
What Hours Are Counted As Work Under Title 6 And The FLSA
As a general rule of thumb, hours that count as work hours under Title 5 for purposes of computing overtime compensation also count as work hours under the FLSA. The general rules for counting work hours described for the private sector apply to federal employees’ in computing their Title 5 and FLSA overtime compensation. How the rules for computing federal employees’ work time differ from other employees is explained below.
Under the FLSA, time spent traveling on weekends in which the travel cuts across the employee’s regular work hours count as hours of work. For example, an employee whose work schedule is 7:00 a.m. to 4:00 p.m., Monday through Friday, and who travels between the hours of 7:00 a.m. and 4:00 p.m. on a weekend is entitled to FLSA overtime compensation.
General Schedule federal employees who are exempt from the FLSA are entitled to Title 5 overtime compensation. Weekend travel under Title 5 overtime, however, does not count as hours of work unless the employee is actually performing work.
Paid Leave Hours
OPM has determined that paid leave hours (e.g., annual leave, sick leave, comp time, etc.) are counted as hours of work for purposes of computing federal employees’ overtime under both the FLSA and Title 5.
On-Call Time & Waiting Time
Generally, the rules regarding on-call time and waiting time that apply to federal employees are the same as those that apply to private sector and non-federal public sector employees. In some respects, however, OPM’s rules concerning on-call time and waiting time are more specific to circumstances that apply to federal employees.
Types of Federal Sector On-Call Cases
The majority of federal sector work situations in which on-call or waiting time issues arise involve employees who are required to work through a meal period by remaining on-call or compelled to eat at their work site, such as a desk, guard station, etc. In addition, technicians in the Navy are compelled to remain onboard naval vessels at sea for days at a time. The Navy has inconsistently applied its policies on compensating these technicians. Many technicians are paid a minimum of 16 hours a day for time spent at sea. For reasons unknown, other technicians doing the same thing are paid fewer than 16 hours a day.
Definitions of On-Call And Waiting Time Under The FLSA And Title 5 Overtime
The law concerning the compensability of Title 5 overtime tracks the FLSA closely with regard to on-call time. Thus, for purposes of the FLSA, OPM defines “work time” under 5 C.F.R. §551.401 as:
All time spent by an employee performing an activity for the benefit of an agency and under the control or direction of the agency is ‘hours of work.’ Such time includes:
- Time during which an employee is required to be on-duty;
- Time during which an employee is suffered or permitted to work; and
- Waiting time or idle time which is under the control of an agency and which is for the benefit of an agency.
OPM has set forth a separate regulation for time spent on standby duty or in an on-call status. Under 5 C.F.R. §551.431, OPM defines time as being spent on standby duty as:
- The employee is restricted to an agency’s premises, or so close thereto that the employee cannot use the time effectively for his or her own purposes; or
- The employee, although not restricted to the agency’s premises:
- Is restricted to his or her living quarters or designated post of duty; and
- Is required to remain in a state of readiness to perform work.
The case law under the FLSA primarily concerns factual situations in which employees are permitted to go home or to leave word where they may be contacted while on-call. Nonetheless, in these cases, some of the factors that the courts to assess to determine whether the standby time is compensable are set forth below:
- Whether the time is spent on the employer’s premises;
- Any geographic restrictions on the employees;
- The frequency of the calls received during the standby time;
- How quickly the employees must respond to the calls;
- Whether the employee may use a pager;
- The degree to which the employees’ personal activities are restricted during the on-call shift.
- Any discipline to which the employee is subject if he misses or ignores a call; and
- The nature of the employment involved.
No one of these factors is dispositive and this list of factors is illustrative, not exhaustive. As the courts have repeatedly stressed, all of the facts and circumstances must be examined in each case to determine whether or not on-call time is compensable.
The case law regarding employees who are restricted to their employer’s premises is strong. In 1994 and 1995 decisions issued by the U.S. Court of Appeals for the Ninth Circuit, the court held that on-call/standby time spent by assistant probation officers and by nurses was compensable under the FLSA. The employees were rarely called out. SEIU, Local 102 v. County of San Diego, 35 F.3d 483 (9th Cir. 1994); SEIU, Local 102 v. County of San Diego, 60 F.3d 1346 (9th Cir.), cert. denied, 3 WH Cases2d 64 (1995). However, they had to remain on the employer’s premises during their standby time; they had to notify their supervisors of their whereabouts at all times; they could not drink alcohol and they had to respond immediately if they were called. The employees were permitted to exchange shifts. They also had access to weight lifting facilities, a pool table, a satellite TV and a staff lounge. Interestingly, the court ruled against the employees who permanently resided at the employer’s work sites and ruled in favor of the employees who resided elsewhere, but who were required to remain at the employer’s premises during the on-call shift.
Lastly, OPM’s regulations expressly provide that sleep time on the agency’s premises is not compensable if the employee’s shift is 24 hours or longer. 5 C.F.R. §551.432. Sleep time may be excluded, however, only if the employee receives a total of 5 hours or more of sleep. In addition, only a maximum of 8 hours may be excluded as work hours.
Title 5 Overtime
As noted above, for the most part, the rules defining work time with regard to on-call or waiting time are the same under Title 5 and FLSA.
The Overtime Rate of Pay
Nearly all General Schedule employees who are exempt from the FLSA are entitled to receive Title 5 overtime pay. To compute Title 5 overtime pay, an employee’s annual general schedule salary is divided by 2087 – which is the number of hours the annual salary is intended to compensate employees for in a year. The employee is entitled to receive one and one-half times that rate of pay or the rate of a GS-10, step one, whichever rate is lower. In other words, the maximum rate at which Title 5 overtime is paid for most employees is the GS-10, step one rate. (Air traffic controllers at the GS-14 pay grade and below are entitled to time and one-half overtime pay, and some law enforcement employees are entitled to receive their true straight time rate of pay for overtime work regardless of their pay grade).
Administratively Uncontrollable Overtime
Employees who work large amounts of irregular overtime that can not be scheduled in advance are eligible to receive a certain percentage of their salaries as administratively uncontrollable overtime (AUO). The percentages vary between 10%-25% depending on the number of irregular hours worked. AUO is received each pay period regardless of the number of hours that the employee works in a particular pay period. However, over a three month period, the employee must work a certain number of hours to qualify for AUO.
Agencies are not obligated to pay employees AUO. They can pay Title 5 overtime pay instead at the employee’s overtime rate of pay or the rate for a GS-10, step one, whichever is lower. However, OPM’s regulations can be construed to mean that the decision to pay AUO must be made on an annual basis, meaning that it can not be arbitrarily revoked.
Agencies may pay standby pay to employees who are regularly required to remain at their station during longer than ordinary periods of duty, and a substantial part of the duty time is spent on-call rather than performing work. Standby pay, like AUO, is a certain percentage of the employee’s basic pay up to a maximum of 25%. Standby pay is paid in lieu of other forms of premium pay available under Title 5, except for irregular overtime in excess of the employee’s regular tour of duty.
For fire fighters to whom the 1998 federal fire fighter pay law, at 5 U.S.C. § 5545b, applies, standby pay no longer is paid.
Maximum Earnings Limitation
Under Title 5, the maximum amount of basic pay and premium pay that an employee can earn in a biweekly pay period is the maximum rate of a GS-15. This includes locality pay.
This maximum earnings limitation does not apply to –
- law enforcement employees (For law enforcement employees, the maximum earnings limitation is the lesser of 15% of the rate of a GS-15, step one including locality pay or the rate payable for Level V of the Executive Schedule;
- certain employees at the FAA who are paid premium pay; and
- employees who are performing certain types of emergency work
Snider & Associates has handled hundreds of federal and private sector wage and hour claims and have recovered in excess of $300,000,000.00 on behalf of more than 100,000 employees. If you believe that your employer is not paying you properly please call or email the firm today.