Honorable Charles D. Houston 

District Attorney 

One East 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, 29 U.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 may have the employee “nominally” on the payroll until the 

employee receives payment for accrued overtime compensatory time, (3) 

whether, if payment is due, payment should be made from 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 may nevertheless direct that the overtime 

compensation be paid out of the regular salary line item. The FLSA 

affects only the first two questions. 

Section 7(a)(l) of the FLSA prohibits employers from requiring or 

allowing employees to work more than 40 hours per workweek without 

compensating the employees fey the overtime at 1 l/2 times the 

employee’s regular rate of pay. 29 U.S.C. 1207(a)(l); see Attorney 

General Opinion JM-680 (1987). The FLSA applies to publicemployers. 

See Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528 

(1985); see also Attorney General Opinion JM-475 (1986) (for history 

of applicability of the FLSA to public employers). Prior to amendment 

in 1985, the FLSA required employers either to pay employees at 1 l/2 

1. It should be noted that the FLSA applies only to hours 

actually worked in excess of forty hours per workweek. If an employee 

works on a county holiday, the employee may be entitled, depending on 

county policy, to hour-for-hour compensatory time off. The FLSA will 

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 due under 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 1 l/2 times their accrued overtime hours during the 

same pay period in which the overtime accrued. Because of the burden 

this placed on public employers, Congress amended the FLSA in 1985 to 

allow public employers to provide this compensatory time off under 

more liberal terms. See Fair Labor Standards Amendments of 1985, Pub. 

L. 99-150, §2(a)(l) (1985) (amending 29 U.S.C. 5207). 

The FLSA authorizes public employers to give employees compensatory time off in lieu of overtime compensation if the public employer 

meets certain requirements: 

(1) Employees of a public agency which is a State, 

a political subdivision of a State, or an interstate governmental agency may receive, in accordance with this subsection and in lieu of overtime 

compensation. compensatory time off at a rate not 

less than one and one-half hours for each hour of 

employment for which overtime compensation is 

required by this section. 

(2) A public agency may provide compensatory time 

under paragraph (1) only -- 

(A) pursuant to - 

(1) applicable provisions of a collective bargaining agreement. memorandum of 

understanding, or any other agreement 

between the public agency and representatives of such employees; or 

(ii) in the case of employees not covered 

by subclause (i). an agreement or understanding arrived at between the employer 

and employee 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 by paragraph (3): 

In the case of employees described in clause 

(A)(ii) hired prior to April 15, 1986, the regular 

practice in effect on April 15, 1986, with respect 

to compensatory time off for such employees in lieu 

of the receipt of overtime compensation, shall 

constitute an agreement or understanding under such 

clause (A)(ii). Except as provided in the previous 

sentence, the provision of compensatory time off to 

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Honorable Charles D. Houston - Page 3 (m-733) 

such employees for hours worked after April 14, 

1986, shall be in accordance with this subsection. 

(Emphasis added). 

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

Thus, public employers may allow employees to accrue a certain 

amount of compensatory time off for overtime worked so long as the 

public employer meets two basic requirements. Cf. Attorney General 

Opinions JM-49 1, JM-475 (1986) (state agencies covered by this 

Appropriations Act also subject to one-year limit). First, the 

employee must agree that he will 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 a public safety 

activity, an emergency response activity, or a seasonal activity, the 

employee may accrue no more than 480 hours of compensatory time for 

hours worked after April 15, 1986. 29 U.S.C. 9207(o)(3) (A). If the 

employee is engaged in any other work, the employee may accrue no more 

than 240 hours of compensatory time for hours worked after April 15, 

1986. Id. It should be noted that these maximum amounts 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 maximum amounts allowed, the employee must be paid 

overtime compensation. 29 U.S.C. 5207(o) (3) (A), (B). 

Consequently, the county must provide county employees with 

either overtime compensation or compensatory time off, as provided 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, you wish to know 

whether an employee who resigns must receive lump sum payment of 

accrued overtime compensatory time, or whether the employee may remain 

on the payroll, receiving salary and other employment benefits until 

the employee receives full overtime compensatory time off. The FLSA 

requires that 

An employee who has accrued compensatory time 

off authorized to be provided under paragraph (1) 

shall, upon termination of employment, be paid 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 3 years of the 

employee’s employment, or 

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Honorable Charles D. Houston - Page 4 (JM-733) 

(B) the final regular rate received by such 

employee, whichever is higher. (Emphasis 

added). 

29 U.S.C. 5207(o) (4). See Attorney General Opinion JM-680 (how to 

determine the regular rareof pay). Once the employment relationship 

ends, the county must pay overtime compensation. On the other hand, 

the county and the employee may agree , within the PLSA guidelines 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 to the manner in which 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 

some date to be named by the Commissioners’ Court 

subsequent to August 15th and prior to the levy of 

taxes by said 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 name the hour, the date and the 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 to make such changes in the budget as in 

their iudement the law warrants and the interest 

of the taxpayers demand. When the budget has been 

finally approved by the 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, by reasonably 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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Honorable Charles D. Houston - Page 5 (JM-733) 

amendments to the original budget is made, a copy 

of the order of the Court amending the budget 

shall be filed 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. See Attorney 

- 

General Opinion JM-192 (1984). 

You ask whether payments of overtime compensation to an employee 

should be wade from the budget of the department in which 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 as adopted by the [Commissioners] Court.” Consequently, if the 

county budget provides that the expenditures for a particular 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. See Attorney 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 an unforeseeable 

emergency situation as defined in article 689a-11, a budget 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 to pay the 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 a line item for general 

overtime compensation and the funds available for that line item are 

sufficient to cover the overtime compensation due, the county must pay 

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. As indicated, if an unforeseeable 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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Honorable Charles D. Houston - Page 6 (JM-733) 

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 40 hours 

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 he will receive compensatory time off in lieu 

of overtime compensation before the overtime is 

worked, and (2) the maximum number 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 to take accrued compensatory time off just 

prior to leaving the employ of the county, the 

employee may not be "nominally" on the payroll. 

Under the FLSA, an employee 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 a particular 

line item lacks sufficient funds to cover overtime 

compensation due under the FLSA will not relieve 

the county of its legal responsibility to comply 

with the FLSA. 

JIM MATTOX 

Attorney General of Texas 

MARY KELLER 

Executive Assistant Attorney General 

JUDGE ZOLLIE STEAXLEY 

Special Assistant Attorney General 

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Honorable Charles D. Houston - Page 7 (JM-733) 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Jennifer Riggs 

Assistant Attorney General 

p. 3413