Honorable Charles D.Houston District Attorney OneEast Main Bellville, Texas 77418 Opinion No.JM-733

Re: Payment of overtime compensation to county employees, and related questions

Dear Mr. Houston:

You ask several questions about the impact of the federal Fair Labor Standards Act of 1938, 29U.S.C. section 201 et seq. (hereinafter FLSA). as emended, on overtime compensatory ‘time accrued by county employees. You ask (1) whether the county must pay the employee for accrued overtime compensatory time when the employee resigns or his employment is otherwise terminated, (2) whether the county mayhave the employee “nominally” on the payroll until the employee receives payment for accrued overtime compensatory time, (3) whether, if payment is due, payment should bemadefrom the budget of the department in which the employee worked, and (4) whether, if a budget line item exists for the pay-men=of overtime compensation, the county commissioners court maynevertheless direct that the overtime compensation be paid out of the regular salary line item. The FLSA affects only the first twoquestions.

Section 7(a)(l) of theFLSAprohibits employers fromrequiring or allowing employees to work more than 40hours per workweek without compensating the employees fey the overtime at 1 l/2 times the employee’s regular rate of pay. 29U.S.C. 1207(a)(l); see Attorney General Opinion JM-680 (1987). TheFLSAapplies to publicemployers. SeeGarcia v. SanAntonio Metropolitan Transit Authority, 469U.S. 528 (1985); see also Attorney General Opinion JM-475 (1986) (for history of applicability of the FLSAtopublic employers). Prior to amendment in 1985, the FLSArequired employers either topay employees at 1l/2

1. It should be noted that the FLSA applies only to hours actually worked in excess of forty hours perworkweek. If anemployee works onacounty holiday, the employee maybe entitled, depending on county policy, tohour-for-hour compensatory time off. TheFLSAwill apply only if the total number of hours worked during the workweek exceeds forty. For similar reasons, a paid holiday on which an employee does not work does not count toward hours worked under the FLSA. This opinion addresses only compensatory time off dueunder the FLSA.Honorable Charles D.Houston -Page 2 (JM-733)

times their regular rate of pay for overtime or to allow employees to take time off at 1l/2 times their accrued overtime hours during the

samepayperiod inwhich the overtime accrued. Because of the burden this placed onpublic employers, Congress amended the FLSAin 1985to allow public employers to provide this compensatory time off under

more liberal terms. SeeFair Labor Standards Amendmentsof 1985, Pub. L. 99-150, §2(a)(l) (1985) (amending 29U.S.C. 5207).

TheFLSAauthorizes public employers to give employees compensatory time off in lieu of overtime compensation if the public employer meets certain requirements:

(1) Employees of apublic agency which is aState,

apolitical subdivision of aState, or an interstate governmental agency may receive, in accordance with this subsection andin lieu of overtime compensation. compensatory time off at arate not less than one andone-half hours for each hour of employment for which overtime compensation is required bythis section.
(2) Apublic agency mayprovide compensatory time under paragraph (1) only -- (A) pursuant to -
(1) applicable provisions of a collective bargaining agreement. memorandumof understanding, or any other agreement between the public agency andrepresentatives of such employees; or
(ii) in the case of employees not covered by subclause (i). an agreement or understanding arrived at between the employer andemployee before the performance of the work; and
(B) if the employee has not accrued compensatory time in excess of the limit applicable to the employee prescribed byparagraph (3):

In the case of employees described in clause (A)(ii) hired prior toApril 15, 1986, the regular practice in effect onApril 15, 1986, with respect tocompensatory time off for such employees in lieu of the receipt of overtime compensation, shall constitute anagreement or understanding under such clause (A)(ii). Except asprovided in the previous sentence, the provision of compensatory time off to

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such employees for hours worked after April 14, 1986, shall be in accordance with this subsection. (Emphasis added).

29U.S.C. 5207(o).

Thus, public employers mayallow employees to accrue a certain amount of compensatory time off for overtime worked so long as the public employer meets twobasic requirements. Cf. Attorney General Opinions JM-491, JM-475 (1986) (state agencies covered by this Appropriations Act also subject to one-year limit). First, the employee mustagree that hewill receive compensatory time-off in lieu of overtime compensation before the overtime is worked. Second, an employee cannot accrue more than the number of compensatory hours specified in the FLSA. If the employee is engaged in apublic safety activity, anemergency response activity, or aseasonal activity, the employee mayaccrue nomore than 480hours of compensatory time for hours worked after April 15, 1986. 29U.S.C. 9207(o)(3) (A). If the employee is engaged in anyother work, the employee mayaccrue nomore than 240hours of compensatory time for hours worked after April 15, 1986. Id. It should be noted that these maximumamounts refer to accrued;ertime compensatory time, not to actual hours of overtime worked. As indicated, compensatory time must be provided at 1 l/2 times the number of overtime hours worked. If an employee accrues
more than the maximumamounts allowed, the employee must be paid overtime compensation. 29U.S.C. 5207(o) (3)(A), (B).
Consequently, the county must provide county employees with either overtime compensation or compensatory time off, asprovided in the FLSA. You ask whether the county may leave an employee

“nominally” on the payroll until the employee receives “payment” for accrued overtime compensatory time off. In essence, youwish to know whether an employee who resigns must receive lump sumpayment of accrued overtime compensatory time, orwhether the employee mayremain

on the payroll, receiving salary and other employment benefits until the employee receives full overtime compensatory time off. The FLSA requires that

Anemployee whohas accrued compensatory time

off authorized tobe provided under paragraph (1) shall, upontermination of employment, bepaid for the unused compensatory time at a rate of compensation not less than -- (A) the average regular rate received by such employee during the last 3years of the employee’s employment, or

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(B) the final regular rate received by such employee, whichever is higher. (Emphasis added).

29U.S.C. 5207(o) (4). SeeAttorney General Opinion JM-680 (how to determine the regular rareof pay). Once the employment relationship ends, the county must pay overtime compensation. Onthe other hand, the county andthe employee mayagree,within the PLSAguidelines set forth above, that the employee will be allowed to take accrued compensatory time off just prior to leaving the employ of the county.

Your remaining questions relate tothe manner inwhich the county budget is determined. Article 689a-9, V.T.C.S., provides that county budgets shall be prepared “to cover all proposed expenditures of the county government for the succeeding year.” Article 689a-11, V.T.C.S., provides:

The Commissioners’ Court in each county shall each year provide for a public hearing on the county budget -- which hearing shall take place on
somedate tobenamedby the Commissioners’ Court subsequent toAugust 15th andprior tothe levy of taxes bysaid Commissioners’ Court. Public notice shall be given that on said date of hearing the budget as prepared by the County Judge will be considered by the Commissioners’ Court. Said notice shall namethe hour, the date andthe place where the hearing shall be conducted. Any taxpayer of such county shall have the right to be present and participate in said hearing. At the conclusion of the hearing, the budget as prepared by the County Judge shall be acted upon by the Commissioners’ Court. The Court shall have authority tomakesuch changes in thebudget asin their iudement the lawwarrants and the interest of the taxpayers demand. Whenthe budget hasbeen finally approved bythe Commissioners’ Court, the budget, as approved by the Court shall be filed with the Clerk of the County Court, and taxes levied only in accordance therewith, and no expenditure of the funds of the county shall thereafter be made except in strict compliance with the budget as adopted by the Court. Except that emergency expenditures, in case of grave public necessity, to meet unusual and unforeseen conditions which could not, byreasonably diligent thought and attention, have been included in the original budget, may from time to time be authorized by the Court as amendments to the original budget. In all cases where such

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amendments to the original budget is made, acopy of the order of the Court amending the budget shall befiled with the Clerk of the County Court, and attached to the budget originally adopted. (Etaphasis added).

See also V.T.C.S. art. 3912k. §2. Article 689a-11 requires that county salary payments comply with the county budget. SeeAttorney
- General Opinion JM-192 (1984).

Youask whether payments of overtime compensation to anemployee should bewadefrom thebudget of the department inwhich the employee worked. Article 689a-11 provides that “no expenditure of the funds of the county shall

. . . be made except in strict compliance with the budget asadopted by the [Commissioners] Court.” Consequently, if the county budget provides that the expenditures for aparticular county department are to come out of that department’s budget, overtime compensation for that department’s employees should come from that department’s budget. On the other hand, article 689a-11 provides for budget amendments for emergency expenditures in unforeseeable emergency situations. SeeAttorney General Opinion Nos. h-777 (1976); H-12, H-11 (1973); cf.7T.C.S. art. 1666a (applies to counties of

over 225,000 populats, does not apply to Austin or Wailer county). If the need for overtime compensation stemmed from anunforeseeable emergency situation as defined in article 689a-11, abudget amendment would be warranted. Article 689a-11 cannot be used as a shield to avoid compliance with the PLSA. In other words, the fact that a particular department’s budget lacks sufficient funds to cover PLSA overtine compensation will not relieve the county of its responsibility topaythe compensation.

You also ask whether, if a budget line item exists for the payment of overtime compensation, the county commissioners court may nevertheless direct that the overtime compensation be paid out of the regular salary line item. Article 689a-11 requires that counties comply with their budgets. Consequently, the terms of the particular budget in question govern the disposition of county funds. As a general rule, if the county budget contains aline item for general overtime compensation and the funds available for that line item are sufficient to cover the overtime compensation due, the county mustpay the overtime compensation from the overtime compensation line item. If the overtime compensation line item lacks the funds for the overtime compensation legally due under the PLSA, the compensation could be paid from the line item for salaries. Counties must comply with the PLSA. Asindicated, if anunforeseeable emergency caused the need for overtime work and therefore overtime compensation, an emergency amendment to the budget would be warranted. Moreover, a potential violation of federal law could be deemed an emergency situation.

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SUMMARY

The federal Fair Labor Standards Act of 1938, 29 U.S.C. 1201 et seq., as amended, prohibits public employers, such as counties, from requiring

or allowing employees to work more than 40hours per workweek without compensating the employees for the overtime at 1 l/2 times the employee's regular rate of pay. The act authorizes public employers to give employees compensatory time off in lieu of overtime if (1) the employee agrees that hewill receive compensatory time off in lieu of overtime compensation before the overtime is worked, and (2) the maximumnumber of overtime compensatory hours set forth in the act has not already accrued. Although the county and an employee may agree that the employee will be allowed totake accrued compensatory time off just prior to leaving the employ of the county, the employee maynot be "nominally" on the payroll. Under the FLSA, anemployee is either employed or not employed.

Article 689a-11 provides that expenditures of county funds must be made in strict compliance with the budget adopted by the commissioners court. Thus, the line items in particular budgets govern the funds from which overtime compensation will be paid. Article 689a-11 authorizes budget amendments. Moreover, the fact that aparticular line item lacks sufficient funds to cover overtime compensation due under the FLSAwill not relieve the county of its legal responsibility to comply with theFLSA.

JIM MATTOX Attorney General ofTexas

MARYKELLER Executive Assistant Attorney General

JUDGEZOLLIESTEAXLEY Special Assistant Attorney General

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RICKGILPIN Chairman, Opinion Committee
Prepared byJennifer Riggs Assistant Attorney General

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