Title: Colburn v. Dept. of Corrections

State: maryland

Issuer: Maryland Supreme Court

Document:

Joseph Colburn, et al.  v. Department of Public Safety and Correctional Services
No. 41, September Term, 2007
OVERTIME COMPENSATION - SECTIONS 8-303 AND 8-305 OF THE STATE
PERSONNEL AND PENSIONS ARTICLE:  The Court was asked to determine whether
correctional supervisors are entitled to additional overtime compensation when they are
required by their employer to perform non-supervisory correctional duties in an overtime
capacity.  The correctional supervisors received compensatory time for the additional hours
worked.  The Court held that the correctional supervisors were exempt administrative
employees under the Fair Labor Standards Act, and, therefore, they were not entitled to
receive overtime compensation at a rate of one and one half times their regular hourly rate
of pay.
In the Circuit Court for Somerset County
No. 19-C-06-010988
IN THE COURT OF APPEAL
OF MARYLAND
No. 41
September Term, 2007
_______________________________
JOSEPH COLBURN, et al.
v.
DEPARTMENT OF PUBLIC SAFETY &
CORRECTIONAL SERVICES
_______________________________
Bell, C.J.
Raker
Harrell
Battaglia
Greene
Wilner, Alan M. (Retired, Specially
Assigned)
Cathell, Dale R. (Retired, Specially
Assigned),
JJ.
_______________________________
Opinion by Greene, J.
_______________________________
Filed:   January 14, 2008
1 29 U.S.C. § 201, et seq.  The Act establishes minimum wage, overtime pay, and child
labor standards affecting full-time and part-time employees in the United States.  In addition,
the Act exempts specified employees from the application of its provisions.
2 At the beginning of oral argument, counsel for appellants conceded that those
correctional supervisors who served as Majors were exempt employees under the FLSA and,
thereafter, limited the appeal only to those employees serving as Lieutenants or Captains. 
We are asked in this appeal to determine whether correctional supervisors are entitled
to overtime compensation under the Fair Labor Standards Act (FLSA),1 when their
employer– the Eastern Correctional Institute (ECI), a correctional facility within the Division
of Corrections of the Maryland Department of Public Safety and Correctional Services
(DPSCS)– required them to work overtime and perform tasks in their overtime capacity that
were normally assigned to correctional officers who would receive overtime compensation
if they were required to work more than forty hours per workweek.  
Joseph Colburn and the thirty-nine other appellants2 are correctional supervisors at
ECI.  In March 2003, appellants filed a grievance with their employer seeking overtime
compensation at a rate of one and one-half times their regular hourly rate of pay for their
overtime performance of non-supervisory correctional duties.  Appellants claimed that in
performing these duties outside their regular forty-hours-a-week schedule, they became non-
exempt employees under the FLSA and were, therefore, entitled to overtime compensation
at a rate of one and one-half times their regular hourly rate of pay under Md. Code (1993,
1997 Repl. Vol.), §§ 8-303 and 8-305 of the State Personnel and Pensions Article.  DPSCS,
instead, gave appellants straight compensatory time, on an hour-for-hour basis, for the
3 In considering an appeal on bypass of the Court of Special Appeals, we consider only
“those issues that would have been cognizable by the Court of Special Appeals.”  Md. Rule
8-131 (b)(2); accord Converge Servs. Group, LLC v. Curran, 383 Md. 462, 467 n. 1, 860
A.2d 871, 874 n. 1 (2004). 
2
additional hours worked.  The grievance was considered by ECI’s warden, a designated
representative of DPSCS, and the Maryland Office of Administrative Hearings.  After a
hearing on the merits of the grievance, the Administrative Law Judge (ALJ) assigned to hear
the case denied appellants’ grievance, concluding that appellants were exempt employees for
the purposes of the FLSA and, therefore, were not eligible for overtime compensation.
Appellants, thereafter, filed a Petition for Judicial Review in the Circuit Court for Somerset
County.  The Circuit Court affirmed the decision of the ALJ.  Appellants then filed a timely
appeal to the Court of Special Appeals.  We granted certiorari, Colburn v. Dep’t of Public
Safety and Correctional Servs., 400 Md. 646, 929 A.2d 889 (2007), on our initiative, while
the appeal was pending in the intermediate appellate court, in order to consider the following
question:3
Whether [appellants] are entitled to be compensated at the overtime
rate for all hours worked in excess of 40, plus any appropriate fees
and liquidated damages, for overtime hours worked?
We hold that appellants are not entitled to overtime compensation for time worked on non-
supervisory activities in excess of forty hours per workweek.  Therefore, we affirm the
judgment of the Circuit Court.
4 Specifically, the memorandum was issued to Assistant Wardens, Facility
Administrators, Security Chiefs, Department Heads, and Shift Commanders.
3
BACKGROUND
On February 4, 2003, the state Commissioner of Corrections issued a memorandum
to all wardens within the Maryland Division of Corrections advising them to implement a
staffing plan which would reduce overtime expenditures at all Maryland correctional
facilities.  On February 13, 2003, Robert J. Kupec, then Warden of ECI, issued a
memorandum to ECI staff4 detailing ECI’s Overtime Reduction Measures.  The
memorandum read in relevant part:
[B]y [an earlier] memorandum, I outlined specific cost saving
measures that were needed to reduce overtime cost. We have now
received additional saving mandates that will necessitate  reducing our
overtime expenditures by $127,000. With the recent military call-up
of fourteen of our co-workers, this will be a challenge. The following
steps will be implemented:
* * *
2. Correctional Officer Supervisors below the rank of Major will fill
Officer I, II, and III overtime posts on their assigned shifts.
3. Supervisors may volunteer to work on “other” shifts and
compounds to reduce overtime cost.  Shift Commanders will
determine how best to utilize supervisory resources.  They will also be
responsible for entitlement issues, and minimum staffing levels for
supervisors. 
* * *
9. Supervisors, and correctional officers who have special
assignments, Trainings, ARPs, Search Team, will be available one day
per week to fill overtime needs.
5 On August 30, 2004, the Deputy Commissioner of the Division of Corrections issued
a memorandum to wardens within the Maryland Division of Corrections advising them to
“review the percentage of time their supervisors are working in non-exempt status,” that is
in posts typically assigned to non-supervisory correctional officers.  Deputy Commissioner
Bobby Shearin stated: “Please ensure that supervisors are not working more than 20% in non-
exempt status.  This standard is part of the Fair Labor Standards Act (FLSA) and must be
followed.”
6 Originally, the Appeal and Grievance Form listed forty-five correctional supervisors
as the grievants (appellants and four other correctional supervisors).  Soon after the grievance
was filed, however, four individuals requested the removal of their names from the
grievance, leaving forty-one individuals participating.
4
Under the plan, correctional supervisors, including the appellants, would be required to work
extra hours in posts typically staffed by non-supervisory correctional officers.5  Correctional
supervisors working overtime shifts were given straight compensatory time, on an hour-by-
hour basis for hours worked in excess of 40 hours per workweek.
Thereafter, on or about March 3, 2003, appellants filed a grievance claiming Warden
Kupec’s Overtime Reduction Measures require ECI’s correctional supervisors to work
overtime without the required overtime rate of compensation.6  The grievance read in
relevant part:
Issue of Employee’s Grievance:
 
An order from Warden Kupec dated February 13, 2003,
requires that Grievants, Lieutenants, Captains and Majors, to expend
substantial portion of the work week performing non-exempt work,
e.g. manning standard correctional posts, traditionally manned by
non-exempt personnel. The specific reason for this is to reduce
overtime costs through the use of exempt personnel to do work of
non-exempt employees.  Grievants may be required to work an excess
of 40 hours per week and are to be paid for only 40 hours per week
7 Prior to the evidentiary hearing in January 2006, the grievance made its way through
DPSCS’s administrative process for grievances.  On or about March 13, 2003, Warden
Kupec declined to consider the grievance and waived the matter to an administrative appeals
hearing, stating: “This action was taken under the direction of the Governor of the State of
Maryland, therefore I am unable to make a decision at this level.  I, therefore, waive this
matter to the next step.”  Thereafter, on or about March 21, 2003, the Maryland Classified
Employees Association, Inc., on behalf of appellants, requested an Appeal Hearing on the
filed grievance.  Donn Garvey, Jr., Manager of Employee Relations for the Division of
(continued...)
5
under current orders from the Warden. Grievants could be denied
leave or drafted to work as a result of staffing shortages.
Grievants will be required to do these duties for the indefinite
future.
Grievants conten[d] that their current duties under the order of
February 13, 2003, and their duties prior to that date demonstrate that
they are and have been non-exempt employees under Federal and
State Wage and Hour laws.
Grievants are being required to perform duties and
responsibilities that are clearly applicable to a different class, in
violation § 7-102(e) of the State Personnel and Pensions Article, Md.
Annotated Code.
* * *
Employee’s Requested Remedy
Overtime at one and one[-]half the normal rate for all hours in
excess of 40, attorneys fees and liquidated damages per Maryland and
Federal law.
Grievants be required to perform only those duties which are
consistent with the duties and responsibilities of their assigned class.
On January 9, 2006, Administrative Law Judge Mary Seely Klair held an evidentiary
hearing on the merits of the grievance.7  At the start of the hearing, counsel for appellants
(...continued)
Correctional Services, held a conference with appellants on  May 16, 2003.  Garvey issued
a written decision denying the grievance on May 20, 2003.  Garvey stated: “Appellants have
not shown by a preponderance of the evidence that they have lost some item restorable
through the employee grievance process caused by Management’s misapplication of some
policy or regulation.”  Notably, the “Departmental Grievance Decision” listed only 29
Correctional Supervisors as the grievants.  There is no indication in Garvey’s written
decision or in the record as presented to this Court why twelve Correctional Officers were
not included in the listing of participating grievants.
 It is unclear from the record when and what specific actions were taken after
Garvey’s denial of the grievance.  We surmise that appellants appealed the hearing officer’s
decision to the Department of Management and Budget, Office of Personnel Services and
Benefits, Employee Relations Division, which forwarded the matter to the Office of
Administrative Hearings (OAH).  On or about April 2, 2004, Garvey submitted a Motion to
Dismiss on behalf of ECI.  Appellants submitted a written response to Garvey’s motion and
a hearing on the motion before an ALJ followed.  On or about June 24, 2004, an ALJ granted
ECI’s motion to dismiss.  Appellants, thereafter, filed a Petition for Judicial Review in the
Circuit Court for Somerset County.  By Order dated February 16, 2005, the Circuit Court
remanded the case  to the OAH for a hearing “on the merits of the [ ] grievance, to include
the resolution of any motions which may be appropriately brought by either party prior to a
merits hearing.”
6
began by noting that the number of correctional supervisors participating in the grievance
had been pared down to “28 named individuals.”  Counsel for appellants, however, did not
provide an explanation for the loss of thirteen correctional supervisors’ participation in the
grievance.  The ALJ then heard oral argument from Counsel, received exhibits into evidence,
and considered testimony from Captain Colburn and Ronald Dryden, the Security Chief at
ECI.  Upon conclusion of the hearing, the ALJ took the matter under advisement pending
written memoranda submitted by the parties.  On or about April 6, 2006, the ALJ issued a
written opinion and order denying appellants’ grievance.  In her opinion, the ALJ made the
following factual findings:
7
1. At all times relevant to this matter the Grievants were
employed as Lieutenants, Captains, or Majors at ECI, and were
exempt employees not entitled to overtime under FLSA.
2. The Grievants were required to perform duties of non-
exempt correctional officers pursuant to a Modified Staffing Plan
authorized by the Governor to reduce overtime expenditures.
3. All of the employees in this case earn in excess of $250.00
per week; minimum annual salary for Lieutenants is $35,660; for
Captains, $38,007; and for Majors, $40,518; and are salaried
employees within the meaning of FLSA. 
4. Although the Grievants performed some duties normally
performed by non-exempt officers; at least 50% of their time was
spent performing their normal supervisory duties: managing
personnel, instructing and evaluating subordinates, performing
administrative tasks relative to management, preparing reports,
making recommendations to improve the overall operation and safety
of ECI, a recognized subdivision of the Division of Corrections; and
they customarily and regularly direct the work of two or more
employees.
5. The Grievants perform duties directly related to the
operation of ECI and are essential to the management of the facility.
6. Lieutenants, Captains, and Majors exercise independent
judgment and discretion in the performance of their primary
supervisory duties including making judgments and recommendations
regarding: proper staffing and security, changing/modifying post
orders, improving the overall operation and safety of the facility,
briefing/instructing subordinates, investigating employee infractions,
coordinating inmate and cell searches, inspecting prison and grounds
daily, and drafting institutional policy on security matters.
Thereafter, the ALJ explained the rules governing overtime compensation found in the Fair
Labor Standards Act.  The ALJ then applied the applicable rule-based tests to her findings
of facts.  First utilizing the “salary-based test,” the ALJ concluded that the grievants were
8
exempt employees because they were “salaried employees within the meaning of the FLSA.”
The ALJ noted:
There is no dispute that all of the employees in this case earn in excess
of $250.00 per week; minimum salary for Lieutenants is $35,660; for
Captains $38,007; and for Majors, $40,518 . . . . [T]here was no
evidence that those salaries are subject to, “ . . . reduction because of
variation in the quality or quantity of work performed.” . . .  Here,
there is no claim that the Grievants are subject to a policy that permits
disciplinary deductions in pay.
The ALJ then applied the “Primary Duties Test” and found that
the unrefuted evidence 
shows that Lieutenants, Captains, and Majors
spend almost all of their time managing personnel, instructing and
evaluating subordinates, performing administrative tasks relative to
management, preparing reports, making recommendations to
improve the overall operation and safety of ECI, . . . and they
customarily and regularly direct the work of two or more employees.
Furthermore, the ALJ noted that while Captain Colburn “testified that the position
descriptions [offered into evidence as an exhibit] are not accurate, the descriptions were
offered as joint exhibits, and there was no successful refutation of the contents of the position
descriptions.”  The ALJ then stated: 
I conclude that Lieutenants, Captains, and Majors perform duties
directly related to the operation of ECI and are essential to the
management of the facility.  Their primary duties are unquestionably,
‘office or non-manual work directly related to management policies
or general business operations’ of ECI . . . .   The duties of
Lieutenants, Captains, and Majors are not only of substantial
importance to the management or operation of ECI but [also] critical
to it, and easily satisfy the criteria for the executive exemption from
overtime.
Last, the ALJ applied the “Discretion and Independent Judgment Test.”  The ALJ
8 Appellants provide this Court with no explanation why the number of correctional
supervisors has differed in the various stages of this grievance/appeal.  At the administrative
hearing before the ALJ, there were twenty-eight correctional supervisors participating in the
grievance.  When appellants filed their complaint filed in the circuit court, they listed forty
individuals as participants.
9
stated in relevant part: 
It is apparent from the testimony and job description that the
primary tasks of Lieutenants, Captains, and Majors necessitate the
exercise of [independent] judgment and discretion.  It is undisputed
that 
these 
primary 
tasks 
include 
making 
judgments 
and
recommendations 
regarding: 
proper 
staffing 
and 
security,
changing/modifying post orders, improving the overall operation and
safety of the facility, briefing/instructing subordinates, investigating
employee infractions, coordinating inmate and cell searches,
inspecting prison and grounds daily, and drafting institution policy on
security matters.  The fact that some recommendations are subject to
review by superior officers is no bar to application of the executive
exemption.  I conclude that . . . the Grievants’ responsibilities . . .
satisfy the criteria for executive exemption from overtime.
Therefore, the ALJ concluded that “as a matter of law[,] the Grievants failed to sustain
their burden of proving that [ECI]’s refusal to pay overtime to exempt employees was a
misinterpretation or misapplication of any policy or regulation over which [ECI] has
control.” 
Unsatisfied with the ALJ’s decision, forty correctional supervisors filed a Petition for
Judicial Review in the Circuit Court for Somerset County on May 8, 2006.8  A hearing on the
petition was held on December 15, 2006, at which time the Circuit Court affirmed the
decision of the ALJ.  The Circuit Court stated:
The standard of review for the court in an appeal from an
administrative decision, which this is, is whether there is substantial
10
evidence in the record to support the findings and conclusions of
Judge Klair and whether or not the decision is premised on an
erroneous conclusion of law. 
The issue to be decided by Judge Klair basically – there was no
dispute on the underlying law that was applicable to the case.  And the
issues Judge Klair had to decide was [sic] whether applying the short
test as set forth in the regulations, federal regulations is whether the
grievants were exempt employees under the Fair Labor Standards Act.
And under the short test the employees to be exempt must be salaried
employees and their primary duties must have included the exercise
of discretion and independent judgment.  It consists of the
performance of office or non-manual work directly related to
management policies.
In resolving these issues, the administrative judge Klair made
six specific findings of fact.  She specifically found the employees
were paid a set salary, an annual salary was established for the office
of lieutenant, captain, and major.  Those salaries being in excess of
two hundred and fifty dollars per week.  They were paid a set salary.
It was true that the set salary could be reduced for time that the
employee did not work, if there was no leave time available or not
used, but the court does not believe that meeting the requirements of
public accountability by reducing the salary for time not worked
makes the income to the grievants nonsalaried.  I think they are
salaried employees.  I agree with the inferences draw by Judge Klair
in arriving at that decision and the fact that they are subject to the
same disciplinary actions as other state employees and there could be
a deduction of income as a result of a suspension does not destroy the
salary that is paid to these grievants.
As to the primary duties of the grievants, Judge Klair found that they
spend more than fifty percent of their time performing exempt duties.
They exercised discretion and independent judgment.  They
supervised two or more employees.  She found as a fact that their
duties were set out in their position descriptions and class descriptions
and that they primarily performed supervisory and management
duties. 
From a review of the record these findings were supported by
11
substantial evidence and certainly the court believes that reasoning
minds could have reached the same conclusions as Judge Klair did in
this case.  Therefore, the Court is going to affirm the decision of the
administrative judge.
The written order affirming the decision of the ALJ was filed on January 8, 2007.
This appeal ensued.
DISCUSSION
I.
A.
“‘We review an administrative agency’s decision under the same statutory standards
as does the Circuit Court.’” Kane v. Board of Appeals of Prince George’s County, 390 Md.
145, 159, 887 A.2d 1060, 1068 (2005) (quoting Annapolis Market Place, L.L.C. v. Parker,
369 Md. 689, 703, 802 A.2d 1029, 1037 (2002)).  Judge Eldridge, writing for this Court in
Board of Physician Quality Assurance v. Banks, 354 Md. 59, 67-68, 729 A.2d 376, 380
(1999), explicated the standard of review for administrative agency decisions:
A court’s role in reviewing an administrative agency adjudicatory
decision is narrow, it is limited to determining if there is substantial
evidence in the record as a whole to support the agency’s findings and
conclusions, and to determine if the administrative decision is
premised upon an erroneous conclusion of law.
(Internal quotations and citations omitted). Accord Maryland Aviation Administration v.
Noland, 386 Md. 556, 571-74, 873 A.2d 1145, 1154-56 (2005). 
We review the agency’s factual findings using the substantial evidence test. Banks,
354 Md. at 67, 729 A.2d at 380.  In applying this test, we ask, after reviewing the evidence
9 Subsection (h) provides, in pertinent part,  that the reviewing court may:
(1) remand the case for further proceedings;
(2) affirm the final decision; or
(3) reverse or modify the decision if any substantial right of the petitioner may
have been prejudiced because a finding, conclusion, or decision:
i.   is unconstitutional;
ii.   exceeds the statutory authority or jurisdiction of the final decision          
(continued...)
12
in a light most favorable to the administrative agency,  “whether a reasoning mind reasonably
could have reached the factual conclusion the agency reached.”  Id. at 68, 729 A.2d at 380
(internal quotation omitted).  We treat “the agency's decision [a]s prima facie correct and
presumed valid.”  Id., 729 A.2d at 381.  It is the agency's province, not ours, to resolve
conflicting evidence and to draw inferences from that evidence.  Id.
With regard to legal issues before the administrative agency, we addressed the
deference afforded to administrative agencies in  Schwartz v. Maryland Dep't of Natural
Resources, 385 Md. 534, 554, 870 A.2d 168, 180 (2005): 
With respect to an agency's conclusions of law, we have often stated
that a court reviews de novo for correctness.  We frequently give
weight to an agency's experience in interpretation of a statute that it
administers, but it is always within our prerogative to determine
whether an agency's conclusions of law are correct, and to remedy
them if wrong. 
(Citation omitted.)  
Furthermore, decisions of the Office of Administrative Hearings (OAH) are subject
to review under the Administrative Procedure Act (APA), Md. Code (1984, 2004 Repl. Vol.),
§ 10-222 of the State Government Article.9
9(...continued)
       maker;
iii.  results from an unlawful procedure
iv.  is affected by any other error of law;
v.   is supported by competent, material, and substantial evidence in             
    light of the entire record as submitted; or
vi.  is arbitrary or capricious.
13
B.
The statutory provisions that are the focus of this dispute are found in Title 8 of the
State Personnel and Pensions Article.  Appellants claim they are due overtime compensation
under § 8-303.  This section, entitled “Compensation for overtime work,” reads as follows:
(a) Except as otherwise provided in this subtitle, an employee who
works more than the normal workweek for that employee's unit is
entitled to compensation for that overtime work in the form of:
(1) payment as provided in § 8-305 of this subtitle; or
(2) compensatory time as provided in § 8-307 of this subtitle.
(b) The Secretary shall adopt regulations to prevent:
(1) the granting of unnecessary overtime; and
(2) the failure to grant overtime compensation to an eligible  
employee.
Section 8-305 (a), entitled “Work period,” mandates the rate of payment for work performed
outside the employee’s normal workweek.  It provides: 
(a) Except as otherwise provided in this section:
(1) payment for time worked in excess of an employee's normal
workweek but not in excess of 40 hours in that workweek shall be
made at the employee's regular hourly rate of pay; and
14
(2) payment for time worked in excess of 40 hours in a workweek
shall be made at one and one-half times the employee's regular hourly
rate of pay.
Most pertinent to the instant appeal, § 8-302 makes clear that our construction, reading, and
application of §§ 8-303 and 8-305 in the case sub judice shall be “to the extent applicable,
in accordance with the federal Fair Labor Standards Act.” 
II.
Appellants contend that they are entitled to overtime compensation at a rate of one and
one-half times their regular hourly rate of pay for all hours worked in excess of forty hours
per workweek because they do not qualify as exempt employees under the FLSA.
Specifically, appellants argue that they are neither paid on a salary basis nor perform the
requisite executive functions necessary for the exempt status.  Focusing instead on the
correctness of the ALJ’s decision, DPSCS asserts that the ALJ did not err in concluding that
appellants were exempt employees under the FLSA. 
Upon review of the record before this Court, we hold that the ALJ did not err in
concluding that appellants are exempt employees within the meaning of FLSA and, therefore,
appellants are not entitled to receive cash compensation from DPSCS.
A.
The Fair Labor Standards Act, originally enacted in 1938, establishes, among other
things, minimum wage and overtime pay standards for workers within the United States.  29
U.S.C. §§ 201, et seq. (2002).  Congress expanded  FLSA’s coverage to state and local
10 In 2004, the Department of Labor modified the regulations concerning exemptions
(continued...)
15
government employees in 1974. Pub.L. 93-259, § 6, 88 Stat. 58-62. See also 29 C.F.R. §§
553.2 (b) and 553.32 (c) (1996) (expressly applicable to public-sector employees).  Under
its provisions, the FLSA mandates that employers must pay at least the federal minimum
wage for all hours worked and, if the employer permits or requires employees to work more
than forty hours per workweek, pay employees at least one and one-half times the regular
hourly rate of pay for all overtime hours performed.  29 U.S.C. §§ 206 and 207 (a)(1).
The FLSA, however, provides an exemption to its minimum wage and overtime pay
requirements for workers “employed as bona fide executive, administrative, or professional
employees.” 29 U.S.C. § 213 (a)(1).  In enacting the FLSA and providing this exemption,
Congress did not define important phrases of the provisions, including who qualifies as a
“bona fide executive, administrative, or professional employee.”  Instead, Congress delegated
to the Secretary of Labor the responsibility of promulgating regulations defining the scope
of the exemption.  See 29 U.S.C. § 213 (a)(1).  The regulations in force at the time of the
grievance provided that an employer may prove that an employee is an exempt employee by
satisfying a five-part test, commonly referred to as the “long test.”  See 29 C.F.R. § 541.2
(2002).  This test applies to employees who are paid “on a salary or fee basis at a rate of not
less than $155 per week.”  See 29 C.F.R. § 541.2 (e)(1) (2002).  The regulations also
provided for a second test, commonly referred to as the “short test,” for those employees who
are paid “on a salary or fee basis at a rate of not less than $250 per week.” 10  See 29 C.F.R.
(...continued)
from overtime pay.  For example, an exempt employee under the administrative and
executive exemption must now earn at least $455 per workweek.  29 C.F.R. § 451.600
(2006).  These amendments apply prospectively; hence, only the prior version of the
regulations is applicable to the instant case.  See Moore v. Tractor Supply Co., 352 F.Supp.2d
1268, 1273 n.5 (S.D. Fla. 2004), aff’d, 150 Fed.Appx. 168 (2005); King v. Windsor Capital
Group, Inc., 632 S.E.2d 557, 560 n.1 (N.C. App. 2006).
11 Lieutenants earn between $35,660 and $54,988, while Captains earn between
$38,007 and $58,596 per year, depending on experience and other factors. Thus, the
minimum amount that an appellant at the rank of Lieutenant or Captain could possibly
receive on a weekly basis is $685.77 and $730.90, respectively, an amount which far exceeds
the $250 per week minimum set forth in 29 C.F.R. § 541.1(e)(2).  In addition, both parties
argued in their respective briefs that the "short test" applied in the present case and never
addressed the use of the “long test” in their analysis.
12 We shall limit our analysis to the administrative “short test,” as the ALJ relied on
that test to conclude that appellants are exempt employees.
16
§ 541.2 (e)(2) (2002).
It is undisputed that appellants were paid over $250 per week;11 therefore, we shall
apply the “short test” to determine whether appellants fall within the bona fide administrative
employee exemption.12  Under this test, DPSCS must first prove that it paid appellants on a
salary basis.  29 C.F.R. § 541.2 (a)(1); see also Donovan v. Burger King Corp., 675 F.2d 516,
517-18 (2d Cir. 1982).  In addition, DPSCS must prove that appellants meet a set of criteria
concerning their job duties.  For example, to be considered an exempt administrative
employee, the appellants’ primary duties must consists of: (1) “[t]he performance of office
or non-manual work directly related to management policies or general business operations
of his employer or his employer’s customers,” and (2) the performance of work “requiring
the exercise of discretion and independent judgment.”  29 C.F.R. § 541.2 (e)(2) (2002).
17
Likewise, an executive employee is exempt if the employee: (1) “primarily engages in
management of the enterprise, department or subdivision in which the employee is employed,
and (2) customarily and regularly directs or supervises two or more other employees.”  29
C.F.R. § 541.1(f) (2002). 
B.
Analysis
1.
Salary
Appellants first contend that they are not exempt employees under the FLSA because
they are not salaried employees.  Appellants argue: 
[Appellants] have no set minimum which they receive regardless of
the number of hours worked.  Rather, they are ‘paid only for hours
worked or hours for which they have eligible leave available for
their use.  There is no predetermined amount of pay to which
[appellants] are entitled . . . .  If [appellants] do not work or are not
otherwise on paid leave, they are not paid. 
DPSCS argues that there is substantial evidence to support the ALJ’s finding that
appellants were salaried employees.   DPSCS contends that appellants’ claim that they do not
receive a “predetermined amount” of compensation because they are “paid only for hours
actually worked or hours for which they have eligible leave available for their use” is
incorrect.  DPSCS, citing to C.F.R. § 541.5d(a) (2002), Shockley v. City of Newport News,
997 F.2d 18, 25 (4th Cir. 1993) and Demos v. City of Indianapolis, 302 F.3d 698, 701-03 (7th
Cir. 2002), states: 
 The Department of Labor’s FLSA regulations specifically provide that
a public agency plan, which reduces compensation  . . . “pursuant to
18
principles of public accountability,” is consistent with a finding that the
employee is paid on a salary basis. 
 
In reviewing the record, we hold that the ALJ did not err in concluding that appellants
were employed on a salary basis.  An employee is employed 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.
29 C.F.R. § 541.118(a) (2002) (emphasis added); see also 29 C.F.R. §541.212 (2002) (cross-
referencing 29 C.F.R. § 541.118(a) to apply to “administrative” employees). 
 In the case sub judice, it is clear from the record as well as undisputed  that appellants
earn a set amount of money per year, depending on the position they hold. The record shows
that Lieutenants earn between $35,660 and $54,988, while Captains earn between $38,007
and $58,596 per year.  Appellants claim, however, that despite this stated yearly salary, they
do not receive a predetermined set amount each pay period, as required by the federal
regulations.  Rather, according to their argument, appellants are paid for only those hours
they actually work or have leave available for their use.  Appellants’ argument fails to
consider two federal regulations interpreting the FLSA.
First,  29 C.F.R. § 541.118(b) specifically  clarifies that an employee’s salaried status
19
will not be affected if deductions are made to his or her salary when “the employee absents
himself from work for a day or more for personal reasons, other than sickness or accident.”
Moreover, in 1992, in response to many government employers reducing wages of
their salaried employers for unexcused absences in the name of public accountability, the
Department of Labor developed a specific regulation, 29 C.F.R. § 541.5d, which permitted
government employers to continue this practice without risking the overtime exemption for
their salaries employees.  See Demos, 302 F.3d 702-03.  29 C.F.R. § 541.5d reads as follows:
(a) An employee of a public agency who otherwise meets the
requirements of § 541.118 shall not be disqualified from exemption
under §§ 541.1, 541.2, or 541.3 on the basis that such employee is
paid according to a pay system established by statute, ordinance, or
regulation, or by a policy or practice established pursuant to principles
of public accountability, under which the employee accrues personal
leave and sick leave and which requires the public agency employee’s
pay to be reduced or such employee to be placed on leave without pay
for absences for personal reasons or because of illness or injury of less
than one work-day when accrued leave is not used by an employee
because—
(1) permission for its use has not been sought or has been sought and
denied;
(2) accrued leave has been exhausted; or
(3) the employee chooses to use leave without pay.
(b) Deductions from the pay of an employee of a public agency for
absences due to a budget-required furlough shall not disqualify the
employee from being paid ‘‘on a salary basis’’ except in the
workweek in which the furlough occurs and for which the employee’s
pay is accordingly reduced.
We agree with DPSCS that, under this Department of Labor regulation, deductions made to
13 DPSCS also contends that this issue was not raised below by appellants, and
therefore, is not preserved for our review.   In our review of the record, we find that the ALJ
addressed the issue of disciplinary deductions in pay in her written opinion.  Under Maryland
Rule 8-131, we review those issues that have been “raised in or decided by” the lower
tribunal.  See Md. Rule 8-131.  Therefore, this issue has been properly preserved for our
review.
20
public employees’ salaries, as required by the principles of public accountability, do not
disqualify appellants from the overtime exemption.  Therefore, the State of Maryland’s
practice of deducting a salaried employee’s wages for unexcused absences would not
automatically disqualify the employee from the FLSA overtime exemption.
Appellants also urge that the ALJ erred in finding that “there was no evidence that
[appellants’] salaries are subject to, ‘ . . . reduction because of variation in the quality or
quantity of work performed.’” Appellants claim that this finding is in error because, under
Md. Code (1993, 1997 Repl. Vol., 2000 Supp. Vol.), § 11-104 of the State Personnel and
Pensions Article, they are subject to disciplinary suspension without pay. 13  DPSCS counters,
arguing that the “possibility of a disciplinary suspension does not render an employee, who
would be otherwise salaried and exempt, subject to the FLSA.”  Rather, DPSCS asserts that
case law requires an actual practice or policy for making such deductions to disqualify an
otherwise exempt employee.  See Auer v. Robbins, 519 U.S. 452, 117 S.Ct. 905, 137 L. Ed.
2d 79 (1997).  In addition, DPSCS claims that § 11-104 of the State Personnel and Pensions
Article “precludes an exempt employee from experiencing a disciplinary deduction in pay
that would compromise the employee’s FLSA-exempt status.”  In other words, DPSCS
asserts that the State policy is that any such suspension “must be for one or more full
21
workweek(s), so that . . . the employee receives no compensation for a full week in which the
employee performed no work, rather than receiving a disciplinary deduction in pay for a
week during which some work is performed.”
Under the Department of Labor regulations, a salaried employee’s pay may not be
“subject to reduction because of variations in the quantity or quality of the work performed.”
29 C.F.R. § 541.118(a) (2002). There is, however, an exception to this rule: 
Penalties imposed in good faith for infractions of safety rules of major
significance will not affect the employee’s salaried status.  Safety
rules of major significance include only those relating to the
prevention of serious danger to the plant, or other employees, such as
rules prohibiting smoking in explosive plants, oil refineries, and coal
mines.
29 C.F.R. 541.118(a)(5) (2002).  We are required to narrowly construe exemptions to FLSA
“in order to further Congress’ goal of providing broad federal employment protection.”
Abshire v. County of Kern, 908 F.2d 483, 487 (9th Cir. 1990).
Appellants point to § 11-104 of the State Personnel and Pensions Article as proof that
they are subject to disciplinary suspension without pay.  Section 11-104, entitled
“Disciplinary Action permitted,” reads as follows:
An appointing authority may take the following disciplinary actions
against any employee:
(1) give the employee a written reprimand;
(2) direct the forfeiture of up to 15 work days of the employee's
accrued annual leave;
(3) suspend the employee without pay;
22
(4) deny the employee an annual pay increase;
(5) demote the employee to a lower pay grade; or
(6) with prior approval of the head of the principal unit:
(i) terminate the employee's employment, without prejudice; or
(ii) if the appointing authority finds that the employee's actions are
egregious to the extent that the employee does not merit employment
in any capacity with the State, terminate the employee's employment,
with prejudice.
Essentially, appellants contend that because § 11-104 nominally subjects all State employees
to a range of disciplinary sanctions, including suspension without pay, they are subject to
“reduction [in pay] because of variations in the quantity or quality of the work performed,”
and therefore are non-exempt under FLSA.  We disagree.
In Auer v. Robbins, supra, the United States Supreme Court was asked to review a
situation similar to the one presented before this Court.  In that case, several sergeants and
one lieutenant of the St. Louis Police Department sued for overtime compensation  under the
FLSA.  Auer, 519 U.S. at 455, 117 S.Ct. at 908, 137 L. Ed. 2d at 86.  The officers argued in
that case that they were not salaried employees because they were subject to suspension
without pay as a possible disciplinary action.  Auer, 519 U.S. at 460-63, 117 S.Ct. at 910-12,
137 L. Ed. 2d at 89-91.  The Court rejected the officers’ argument that the possibility of a
disciplinary suspension among a range of disciplinary options rendered them non-exempt
employees.  Auer, 519 U.S. at 461, 117 S.Ct. at 911, 137 L. Ed. 2d at 90.  The Court, in
23
deferring to the Secretary of Labor’s interpretation of the salary-basis test, stated:
The Secretary of Labor, in an amicus brief filed at the request
of the Court, interprets the salary-basis test to deny exempt status
when employees are covered by a policy that permits disciplinary or
other deductions in pay “as a practical matter.”  That standard is met,
the Secretary says, if there is either an actual practice of making such
deductions or an employment policy that creates a “significant
likelihood” of such deductions.  The Secretary's approach rejects a
wooden requirement of actual deductions, but in their absence it
requires a clear and particularized policy – one which “effectively
communicates” that deductions will be made in specified
circumstances.  This avoids the imposition of massive and
unanticipated overtime liability (including the possibility of
substantial liquidated damages . . .) in situations in which a vague or
broadly worded policy is nominally applicable to a whole range of
personnel but is not “significantly likely” to be invoked against
salaried employees.
*
*
*
The Secretary's approach is usefully illustrated by reference to
this case.  The policy on which petitioners rely is contained in a
section of the police manual that lists a total of 58 possible rule
violations and specifies the range of penalties associated with each.
All department employees are nominally covered by the manual, and
some of the specified penalties involve disciplinary deductions in pay.
Under the Secretary's view, that is not enough to render petitioners'
pay “subject to” disciplinary deductions within the meaning of the
salary-basis test.  This is so because the manual does not “effectively
communicate” that pay deductions are an anticipated form of
punishment for employees in petitioners' category, since it is perfectly
possible to give full effect to every aspect of the manual without
drawing any inference of that sort.  If the statement of available
penalties applied solely to petitioners, matters would be different; but
since it applies both to petitioners and to employees who are
unquestionably not paid on a salary basis, the expressed availability
of disciplinary deductions may have reference only to the latter.  No
clear inference can be drawn as to the likelihood of a sanction's being
applied to employees such as petitioners.  Nor, under the Secretary's
24
approach, is such a likelihood established by the one-time deduction
in a sergeant's pay, under unusual circumstances.
Auer, 519 U.S. 461-62, 117 S.Ct. at 911-12, 137 L. Ed. 2d at 90-91 (emphasis added). 
Like in Auer, § 11-104, the statutory provision upon which appellants in the instant
case rely to support their argument that they are not salaried employees, contains a list of
several possibilities for disciplinary action for an offending employee, only one of which is
suspension without pay.  Under the Secretary of Labor’s interpretation of the salary-basis
test, the mere possibility of a disciplinary suspension without a significant practice or policy
of suspending correctional supervisors for disciplinary infractions “is not enough to render
[appellants]’ pay ‘subject to’ disciplinary deductions.”  Auer, 519 U.S. at 462, 117 S.Ct. at
911, 137 L. Ed. 2d at 90.  Just as the Supreme Court concluded with regards to the police
manual at play in Auer, § 11-104 does not “effectively communicate” that suspension without
pay is “an anticipated form of punishment for employees in [appellants’] category.”  Id.
Appellants provided no evidence before the ALJ that suspension without pay had ever been
utilized as a disciplinary action by DPSCS against  any correctional supervisors.   Indeed, it
is clear that the penalties of § 11-104 do not apply solely to correction supervisors; instead,
these seven disciplinary sanctions are applicable to “all employees in the State Personnel
Management System within the Executive Branch.”  Therefore, we hold that the ALJ did not
err in finding that appellants are paid on a salary basis.
14 For a description regarding the composition and maintenance of the State Personnel
Management System, see Dep’t of Pub. Safety and Correctional Srvs. v. Myers, 392 Md. 589,
590-92, 898 A.2d 465, 466 (2006).
25
2.
Duties
Appellants also contend that they do not qualify for the administrative or professional
employee exemption because they do not fulfill the necessary statutory criteria relating to
their job duties.  First, appellants claim that they do not perform managerial or executive
functions as defined by the FLSA.  Specifically, appellants argue that they do not carry out
any functions of management; rather, in performing their assigned duties,  they “carry out the
planning of their superiors, and may make recommendations that are subject to and must be
acted upon by the superiors.”  Second, appellants assert that they do not perform managerial
or executive functions under State law.  Specifically, appellants argue that their positions are
within the State’s “Skilled Service,” which, under the State Personnel and Pensions Article,
is separate and distinct from the “Management Service,” “Executive Service,” or
“Professional Service.”14  See Md. Code (1993, 1997 Repl. Vol.), §§ 6-401 through 6-404
of the State Personnel and Pensions Article (explaining the employment categories in the
State Personnel Management System). 
DPSCS counters, asserting that “the ALJ’s determination that [appellants] are exempt
is reasonable and supported by substantial evidence.”  First, DPSCS contends that
“overwhelming and undisputed evidence supports the administrative finding that all of the
Supervisors “customarily and regularly direct the work of two or more employees.”  DPSCS
26
points to the testimony of Captain Joseph Colburn, who testified that he directly supervised
employees who served as Correctional Officers I’s or II’s, Sergeants, or Lieutenants.
Second, DPSCS contends that the appellants’ argument that their assignment to the “Skilled
Service” indicates their FLSA status is “without support in law or fact.”  Specifically,
DPSCS argues that the General Assembly did not intend for the particular service class of
a state employee to indicate the employee’s FLSA status; rather the particular service class
assignment indicates whether an employee has a vested interest in continued employment
with the State.
We hold that the ALJ did not err in concluding that appellants’ job duties qualified
them for the administrative employee overtime exemption. As we explained above, in order
for an employee to qualify for the administrative employee exemption, the employer must
prove that the employee’s primary duty consists of: (1) “[t]he performance of office or non-
manual work directly related to management policies or general business operations of his
employer or his employer’s customers,” and (2) the performance of work “requiring the
exercise of discretion and independent judgment.”  29 C.F.R. § 541.2 (e) (2) (2002). 
With regard to the first prong of the job duties test, the ALJ stated that appellants’
“primary duties are unquestionably, ‘office or non-manual work directly related to
management policies or general business operations’ of ECI.” The ALJ concluded: “The
duties of Lieutenants, Captains, and Majors are not only of substantial importance to the
management or operation of ECI, but [also] are critical to it, and easily satisfy the criteria for
27
the [administrative] exemption from overtime.”  There is substantial evidence to support
these findings. The record shows that appellants were members of ECI’s management team.
As the ALJ pointed out in her written opinion, ECI Security Chief Ron Dryden testified that
ECI’s management team consists of Lieutenants, Captains, and Majors as well as the
Administration (Security Chief, Assistant Warden, Warden).  Security Chief Dryden also
testified that the day-to-day duties of Lieutenants, Captains, and Majors were aptly described
on the position descriptions submitted before the ALJ.  These duties included, depending on
the position: supervising other correctional employees; scheduling work rotations;
conducting daily inspections of buildings and grounds; coordinating prison activities,
including prisoner transfer; investigating complaints of employee misconduct; and,
completing administrative reports and evaluations. Hence, we conclude that there is
substantial evidence in the record to support the ALJ’s reasoning and finding that the
appellants’ job duties concern the management and operation of ECI.
Second, there is substantial evidence in the record to support the ALJ’s finding that
appellants exercise discretion and independent judgment.  As the ALJ mentioned in her
written opinion, the duties assigned to appellants include tasks that require discretion and
judgment on the part of the employee.  In considering the job descriptions submitted, the ALJ
noted that the duties of Lieutenants included:  preparing the daily post assignment schedules;
providing “specific guidance to subordinates in the application of direct supervision” of
subordinates’ activities, including routine and special searches; preparing written
28
investigative reports and employee evaluations; and, counseling subordinate employees. The
ALJ also noted that the duties of Captains included: supervising subordinate employees,
including lieutenants; providing guidance and direction to subordinates; investigating inmate
complaints and employee misconduct; preparing shift schedules and managing employee
leave; coordinating inmate searches and transfers; and recommending changes to post orders
and policy directives.  It is clear that duties such as these require discretion and independent
judgment on the part of the employee.  
Accordingly, we shall affirm the ALJ’s conclusion that appellants are exempt
employees under the Fair Labor Standards Act.  Therefore, appellants are not entitled to
overtime compensation for work performed in an overtime capacity.
JUDGMENT OF THE CIRCUIT COURT
FOR SOMERSET COUNTY AFFIRMED.
COSTS TO BE PAID BY PETITIONERS.