THEATTORNEYG~CNERAL 

OF TEXAS 

AUEWIN. T-s 7SVll 

August 26. 1974 

The Honorable Robert S. Calvert 

Comptroller of Public Accounts 

State Finance Building 

Austin, Texas 

Opinion No. H- 382 

Re: Application of the Fair Labor 

Standards Act of 1938. as amended, 

to state employees and related 

The Honorable James E. Peavy, M.D. 

Commissioner of Health 

Texas State Dept. of Health 

Aus tin, Texas 

questions. 

Gentlemen: 

This office has received requests for opinions from both of you 

concerning the application of the Fair Labor Standards Act of 1938. 29 

U.S. C. 0 3 201-219 (“FLSA”), as recently amended by the Fair Labor 

Standards Amendments of 1974. 

The 1974 amendments to the FLSA are the latest in a lengthy series 

of federal legislative enactments providing minimum wages and overtime 

compensation for a wide range of workers in the United States. In 1966. 

amendments to the FlSA extended this type of coverage to employees of 

hospitals, nursing homes or schools operated by states or political 

subdivisions, and to local transit operations. 

By virtue of~the 1974 amendments, 8 3(e) of the FLEA now establishes 

the coverage of the Act to include most state employees. The definition of 

those covered ia: 

Section 3(e)(2).In the case of an individual employed by 

a public agency, such term means . . . 

. . . 

p. 1794 
The Honorable Robert S. Calvert 

The Honorable James E. Peavy page 2 (H-382) 

(C) any individual employed by a State, political 

subdivision of a State, or an interstate governmental 

agency, other than such an individual . . . 

(i) who is not subject to the civil service 

laws of the State, political subdivision, or 

agency which employs him; and 

(ii) who . . . 

(I) holds a public elective office of that 

State, mlitical subdivision, or agency, 

(II) is eelected by the holder of such an 

office to be a member of his personal staff, 

(III) is appointed by such an office holder 

to serve on a policy making level. or 

(IV) who is an immediate advisor to such 

an office holder with respect to the constitutional or legal powers of his office. 

Section 7 of the FISA provides that employers may not employ any 

covered .workef for’s ,work week:longer. than forty ,ho\lr,a unless the employee 

is compensated for hir work in excess of forty.hours at a rate which is not 

leer than one and one-half times his regular rate of pay. 

Payment for overtime of state employees is provided for in the 

General Appropriations Act-+hich’:readsi ,. ‘. , . , ,::. 

e. OVERTIME. In order to reimburse employees for 

work performed in excess of the working hours required 

by Acts 1963, 58th Legislature, page 184, Chapter 104 

(codified as Article 5165a. V. A. C. S.) it is required that 

compensatory time be granted at the rate of l-1/2 times 

the overtime performed within the same month (pay 

period) that said overtime was accrued. In the case of 

p. 1795 
. . 

. 

The Honorable Robert S. Calvert 

The Honorable James E. Peavy page 3 (H-382) 

hospital employees, said employees shall be reimbursed 

with compensatory time at the rate of l-1/2 times the 

overtime accrued in excess of eighty (a hours over a 

fourteen (14) day consecutive period. 

This prbvision shall not apply to medical personnel 

and employees employed in a bona fide executive, administrative or professional capacity, including any employee 

employed in the capacity of academic administrative 

personnel or teacher in elementary or secondary schools. 

Compensatory time for those employees excepted from 

this provision shall be determined by the Administrator 

of the agency or institution involved. Provided, however, 

that any agency or institution subject to the Fair Labor 

Standards Act, as amended, is authorized to reimburse 

employees for all authorized overtime by granting compensatory time as specified above or by paying money 

from funds appropriated by this Act at the rate of l-1/2 

times the regular rate for the overtime performed. 

(Acts 1973, 63rd Leg., ch. 659, Art. V, 5 2(e), at p.2179). 

Comptroller Calvert’s queqtions are considered first. His first 

question is, “What ir the effective date of the 1974 amendments to the Act 

which affect state employees??’ ,’ 

Section 29(a) of the 1974 Amendments to the FLSA provides: 

Except as otherwise specifically provided, the 

amendments made by this Act shall take effect 

on May 1, 1974. 

Certain coverage provisions do have different “effective” dates, (see 

G. a., the special treatment for public agency fire protection, and law 

enforcement activities set out in 5 S 7(k) and 13(b)(20) of the FLSA). 

The answer to the general question presented, however, is May 1, 1974. 

p. 1796 
- . 

The Honorable Robert S. Calvert 

The Honorable James E. Peavy page 4 (H-382) 

The Comptroller’s second and fourth questions are: 

2. If a state employee, who performs work of such a 

nature as to be covered by the provision8 of the Act’ 

works in excess of 40 hours in one work week, 

is the employee entitled to overtime pay at the rate 

provided for in the Act? 

4. If a State employee who peforms work of such 

a nature as to be covered by the provisions of the 

FLEA works 50 hours in the first work week of the 

month and his employer lays him off for 15 hours 

during subsequent work weeks of the same pay period 

so that the employee is only paid his regular monthly 

salary (l/12 of his annual classified salary), has that 

employee received overtime pay as required by the 

Act or compensatory time as authorized by State Law? 

As provided in the Appropriations Act: state employees who are 

covered by the Act and work more than forty hours in a seven day work 

week accrue overtime, and may be given overtime pay at the rate of 

one and one half times their regular pay rate , or. in the alternative, may 

be given compensatory time off at one and one half times the amount of 

overtime worked, if given during the same pay period (i. e., calendar 

month) in which the overtime was accrued. 

We believe this procedure outlined in the Appropriation Act is 

consistent with the requirements of federal law. Opinion Letter No. 913, 

issued December 27, 1968. by the Administrator of the Wage and Hour 

Division of the U.S. Department of Labor states: 

An employer may not credit an employee with compensatory time (even at a time and one half .rate) for overtime 

earned which is to be taken at some mutually agreed upon 

later date subsequent to the end of the pay period in which 

the overtime was earned, rather than pay cash for the 

. 

p. 1797 
The Honorable Robert S. Calvert 

The Honorable James E. Peavy page 5 (H-382) 

overtime as it is earned, However, it in permirsible for 

the employer employing one at a fixed salary for a fixed 

workweek to lay off the employee a sufficient number of 

hours during some other week or weeks of the pay period 

to offset the amount of overtime worked (i. e. at the time 

and one half rate) so that the desired wage or salary for 

the pay period covers the total amount of compensation, 

including overtime. CCH Lab. L. Rep. (Nov. 1966 - 

March, 1969) para. 30,924. 

And see, The Administrator’s Opinion Letter No. 868 (Oct. 18, 1968). CCH 

Lab. L. Rep. 11ul)ro para. 30,877. 

Opinion Letter No. 913 was approved in Brennan v. State of New 

Jersey, 364 F. Supp. 156 (D. N. J. 1973) (appeal pending) where the court 

made the following comment at page 158: 

In fact, this is not really an exception to the rule of 5 7 

of the Act. but ia in complete compliance therewith. For 

exampl’e,, given a pay period of two weeks, with a fixed 

salary of $200.00 per week and a fixed work week of forty 

hours an employee works for fifty hours during the first 

week of the pay period. Under the above opinion letter, the 

employee may then work only twenty-five hours in the second week of the pay period (forty hours less time and one 

half for the ten hourr accrued overtime) while receiving 

his full gross pay of $400.00 at the end of the two week 

pay period. This would comply with § 7 of the Act 

and the accompanying regulations and interpretations, 

since such wages are paid both promptly and in cash. 

(Emphasis added) 

Brennan was shortly followed by Hodgson v. A. W. Crossley. Inc., 

365 F. Supp. 1131 (S. D. N. Y. 1973). in which Brennan and Opinion Letter 

No. 913 were cited with approval. 

p. 1798 
The Honorable Robert S. Calvert 

The Honorable James E. Peavy papa 6 (H-382) 

Thus, the provisions of the FLSA pertinent to this inquiry have 

been construed by the Federal Wage and Hour Administrator and the 

courts as permitting, under certain conditions, the granting of “compenaation time” in lieu of overtime wages. The answer to your second question, 

therefore, is that state employees, not excluded or exempted from the 

overtime provisions of the FLSA, are entitled to overtime pay at the rate 

provided in the FLSA, or compensatory time as discussed above. 

The Comptroller’s third question is: 

If your answer to question number 2 ir affirmative, 

may such overtime pay be paid by a warrant on the 

State Treasury thm ugh the classified salary fund 

of the employing agency? 

Attorney General Opinion M-1155 (1972) considered a virtually 

identical question. That opinion states in part: 

Your . . . question brings into consideration 5 6 of 

Article VIII of the Texas Constitution. That section 

provides that no money shall be drawn from the 

Treasury but in pursuance of specific appropriation 

made by law. 

In our opinion the necessary specific appropriation for 

overtime pay is provided by the same appropriation that 

provides for regular pay of the employee. The designad 

tion given this sum will no doubt vary from institution to 

institution. Each employee’s warrant, including his overtime, should be charged to that fund. 

See National Biscuit Co. v. State( 135 S. W. 2d 687, page 

693 (Tex. Sup. 1940). wherein it was said: 

. 

‘As just stated, one of the provisions of 06 of Article 

8 of our Constitution requires all appropriations of 

money out of the State Treasury to be specific. It 

p. 1799 
The Honorable Robert S. Calvert 

The Honorable James E. Peavy page 7 (H-3821 

is settled that no particular form of words is 

required to render an appropriation specific 

within the meaning of the constitutional provision under discussion. It is sufficient if the 

Legislature authorizes the expenditure by law, 

and specifies the purpose for which the appropriation is made . . . . ’ 

Therefore, your third question is answered in the affirmative. 

The Comptroller’s fifth question. asks: Are there any restrictions 

on state employers regarding lay off of their regular full-time employees? 

No doubt your intention was to raise this question in light of the 

language of Opinion Letter No. 913, supra. 

Article 51658, V. T. C. S., establishes a basic forty hour workweek 

for state employees; however, it also states that: 

. . . exceptions to the minimum length of the 

work week may be made by the executive head 

of a state agency to take care of any emergency 

or public necessity that he may find to exist. 

We believe Article 516hmurt be read together with the General Apprbpriation Act provisions relating to the granting of compensatory time. Clearly, 

the Legislature there provides just the sort of procedure Opinion Letter 

No. 913 and Brennan describe as being in compliance with the FLSA overtime requirements. We note that the alternative “compensatory time” 

procedure, provided for in the General Appropriations Act, could only be 

implemented by the state agency/employer “laying off” the state employee 

(that is, causing an absence from the work place and from actual work) for 

cl.= -ppropriate number of hours during the same pay period the overtime 

was accrued. 

p. 1800 
The Honorable Robert S. Calvert 

The Honorable James E. Peavy page 8 (H-382) 

The answer to your fifth question is, therefore, that the only 

restriction on “laying off” employees (in the sense of FLSA compliance 

and consistent with the requirements of the Appropriations Act) is that 

the “lay off” take place during the same period in which overtime accrues. 

The Comptroller’s sixth question asks: 

If a state employee is terminated with overtime 

accrued after May 1.1974, must his final salary 

warrant include pay at the rate specified in the 

Act for such overtime? 

We assume you intend to limit this inquiry to FLSA “covered” 

employees. Attorney General’s Opinion M-1155, supra. considered a 

rimilar question, and concluded as follows:. 

. . . Your question asks whether you have authority 

to include payment for authorized overtime properly 

accrued at the time of death or separation of the 

employee from employment with the department. 

Overtime pay is not a separable stipend, It is part 

and parc’el of the compensation called for in the 

employee’s contract, and is properly payable, if 

accrued, at the time the base pay is paid. The 

employee has a vested right in overtime pay the 

moment it accrues under his contract of employment. 

Therefore, your question is answered in the affirmative. 

The Comptroller’s seventh question is in two parts, the first 

part reading as follows: 

May a state employee covered by the Act choose to 

receive compensatory time in the same pay period 

in which the overtime is worked? 

p. 1801 
The Honorable Robert S. Calvert 

The Honorable James E. Peavy page 9 (H-382) 

As discussed in answer to your second and fourth questions, the 

granting of compensatory time within the same pay period in which the 

overtime is accrued or the payment of overtime wages is permissible at 

the discretion of the employer. The FLSA does not grant state employees 

discretion in this area as a matter of right, 

The second part of question seven asks: 

May a state employee covered by the Act choose 

to receive compensatory time in subsequent pay 

periods for overtime worked? 

As indicated in answer to the Comptroller’s second and fourth 

questions, granting of compensatory time in subsequent pay periods for 

overtime worked is not permitted by the FLSA. 

In a separate request the Comptroller asked two questions relating 

to the Teacher Retirement System. They are: 

Is there pre-existing law for an agency of the State 

to pay overtime from trust funds when such agency 

comes under the Federal Fair Labor Standards Act 

as that Act was amended effective May 1. 1974? 

Is the department legally authorized to issue warrants 

in payment of this overtime payroll when paid from 

trust funds with the Stats Treasury and not in the 

State Treasury? 

Section 3.59 (j), Vernon’s Texas, Education Code, provides in part: 

.’ 

The rate of compensation of all persons employed by 

the State Board of Trustees, as well as the amounts 

necessary for other expenses for the operation of the 

retirement system. shall be approved by the State 

Board of Trustees, provided they shall be no greater 

p. 1802 
The Honorable Robert S. Calvert 

The Honorable James E. Peavy page 10 (H-382) 

than tho*e for similar rervices performed for the 

State of Texas. 

We believe this provision along with the requirements of the FLSA 

provide ample pre-existing law to permit the payment of overtime from 

trust funds. Attorney General Opinions M-1155 (1972), M-341 (1969). 

Therefore your office is authorized to issue warrants for that purpose. 

Dr. Peavy’s que*tion is: 

May the fees collected for overtime and special 

services pursuant to Article 4476-7 be used to 

pay overtime wager: to meat inspectors in carrying out their duties pursuantb the State Wholesome 

Meat and Poiiltry Act? 

The answer to your question is affirmative. The Texas Meat and 

Poultry Inspection Act (Article 4476-7. V. T. C. S.) provides for examination and inspection of meat animals before entering slaughter houses, for 

post-mortem examinations and inspections, and related regulatory provisions, including making investigations of disease findings. Section 410 

of Title III of Article 4476-7 authorizes the Department of Health, as you 

point out, to collect fees for overtime worked and special services rendered 

to regulated establishments, and the current General Appropriations Act, 

at page 1822, “Department of Health, ” provides a* follows: 

Any fees collected for overtime or special services 

under Senate Bill No. 28, Sixty-first Legislature, are 

hereby appropriated for the biennium beginning Segtember 1, 1973 for the enforcement of Senate Bill No. 

28. (Emphasis added) - 

We conclude that the overtime worked by meat inspectors in 

connection with their regulatory activities would necessarily be performed 

aa part of the enforcement of Article 4476-7 (being Senate Bill No. 28, 61st 

Legirlature); thu*, the described fees collected are appropriated for the 

p. 1803 
The Honorable Robert S. Calvert 

The Honorable Jamen E. Peavy page 11 (H-382) 

payment of ruch overtime wages. 

SUMMARY 

1. The effective date of the Fair Labor Standards 

Amendments of 1974 is May 1. 1974. 

2. State employees, covered by the overtime provisions of the Fair Labor Standards Act of 1938, as 

amended, may be given overtime pay or compensatory 

time off, if compensatory time off is given in the same 

pay period the overtime is accrued. 

3. Overtime pay may be paid by a warrant on the 

State Treasury through the classified salary fund of the 

employing agency. 

4. If a state employee covered by the overtime proviaions of FLSA and FLSA 1974 is terminated with over-’ 

time accrued, his or her final salary warrant must include 

the FLSA overtime pay. 

5. A state employee, covered by the FLSA overtime 

provisions, has no legal right to insist on receiving overtime wage* where that employee is given compensatory 

time off during the same pay period the overtime was 

accrued; nor does that employee have discretion to receive 

compensatory time in subsequent pay periods for overtime 

worked. 

6. There is pre-existing law for a state agency to pay 

overtime wages from trust funds. 

7. Fees collected from regulated institutions for 

overtime worked by meat inspector*, pursuant to 

p. 1804 
The Honorable Robert S. Calvert 

The Honorable James E. Peavy page 12 (H-382) 

Article 4476-7, V. T. C. S., may be used to pay 

overtime wage* to those meat inspectors. 

Very truly yours, 

Attorney General of Texas 

APPRXX’ED: 

. . -i -3bh.+& 

DAVID M. KENDALL, Chairman 

Opinion Committee 

lg 

p. 1805