Source: http://openjurist.org/999/f2d/293/mcdonnell-v-city-of-omaha-nebraska/2
Timestamp: 2013-05-21 12:11:44
Document Index: 428659594

Matched Legal Cases: ['§ 201', '§ 213', '§ 541', '§ 207', '§ 213', '§ 541', '§ 541', '§ 541', '§ 541']

999 F2d 293 McDonnell v. City of Omaha Nebraska | OpenJurist
999 F. 2d 293 - McDonnell v. City of Omaha Nebraska	Home 999 f2d 293 mcdonnell v. city of omaha nebraska
999 F2d 293 McDonnell v. City of Omaha Nebraska 999 F.2d 293
123 A.L.R.Fed. 771, 125 Lab.Cas. P 35,839,1 Wage & Hour Cas.2d (BNA) 1312,1 Wage & Hour Cas.2d (BNA) 785
William C. McDONNELL; Robert J. Warsocki; Michael Dineen;Don E. Brunken; Verne Beers, Plaintiffs-Appellees,v.CITY OF OMAHA, NEBRASKA, Defendant-Appellant.National Institute of Municipal Law Officers; NebraskaLeague of Municipalities; Minnesota League ofMunicipalities; National League of Cities; NationalAssociation of County Officers; United States Conference ofMayors; National Public Employer Labor RelationsAssociation; International Personnel ManagementAssociation, Amici Curiae.
Submitted March 15, 1993.Decided July 2, 1993.Rehearing and Suggestion for Rehearing En Banc Denied Sept. 3, 1993.
The City of Omaha, Nebraska, appeals from summary judgment entered against it on claims filed by William C. McDonnell, Robert J. Warsocki, Michael Dineen, Don E. Brunken, and Verne Beers, all assistant fire chiefs of the Omaha Fire Division. The chiefs sought a declaratory judgment that they were entitled to overtime wage benefits specified in sections 1-19 of the Fair Labor Standards Act. 29 U.S.C. §§ 201-219 (1988 and Supp. III 1991). The City contended that the chiefs were not entitled to these overtime benefits because the chiefs were employed in an executive or administrative capacity, and therefore, exempt from the Act's overtime provisions under 29 U.S.C. § 213(a)(1). The district court rejected this argument, applying regulations which establish a duties and salary test to determine whether an employee is a bona fide executive. See 29 C.F.R. § 541.1(a)-(f) (1991).1 The district court concluded that the City failed to meet the salary test because the chiefs' pay was subject to reduction for absences of less than a day for personal reasons, sickness, or disability. On appeal, the City argues that the district court incorrectly applied the salary test, and that the mere possibility of salary reduction is insufficient to prevent an employee from being a salaried executive. We reverse and remand for entry of judgment in favor of the City.
In general, the FLSA requires employers to pay overtime compensation for hours worked in excess of a 40-hour work week. See 29 U.S.C. § 207. The FLSA, however, exempts from overtime pay provisions "any employee employed in a bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213(a)(1). An employee may qualify for the executive exemption if the employee meets both the "duties" and "salary" requirements set forth in 29 C.F.R. § 541.1(a)-(f). The regulations define a "bona fide executive" as an employee with supervisory duties who is paid on a salaried basis. Id. The test for whether an employee is paid on "a salary basis" is set out at 29 C.F.R. § 541.118(a) (1991):
Both sides filed summary judgment motions. The district court looked to the FLSA regulations, and concluded that the City's scheme of compensation violated the salary basis test set forth in 29 C.F.R. § 541.118(a). McDonnell v. City of Omaha, No. CV90-0-17, slip op. at 3 (D.Neb. June 17, 1991). The district court relied on a 1986 Department of Labor letter ruling which stated that salary deductions "for absences of less than a day's duration for personal reasons, or for sickness or disability, would not be in accordance with section 541.118(a)(2) and (3)," and on a Ninth Circuit decision, Abshire v. County of Kern, 908 F.2d 483, 486-90 (9th Cir.1990), cert. denied, 498 U.S. 1068, 111 S.Ct. 785, 112 L.Ed.2d 848 (1991), ruling that a similar pay policy was inconsistent with salaried status. Id. The district court granted partial summary judgment in favor of the chiefs.
Exemptions to the FLSA must be narrowly construed in order to further Congress' goal of providing broad federal employment protection. Mitchell v. Lublin, McGaughy & Assoc., 358 U.S. 207, 211, 79 S.Ct. 260, 263-64, 3 L.Ed.2d 243 (1959); Abshire, 908 F.2d at 485. Employers have the burden of proving that the exemption applies, and they must demonstrate that their employees fit "plainly and unmistakably within [the exemption's] terms and spirit." Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 456, 4 L.Ed.2d 393 (1960). We review the district court's grant of summary judgment de novo to determine whether the record, when viewed in the light most favorable to the non-moving party, shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).
The City filed an affidavit in the district court stating that it paid each chief an annual salary of $56,114 or more. The chiefs filed an affidavit stating that when they were absent from work for less than a day, their compensation was "subject to deduction ... unless [they] are able to use annual leave, sick leave, or other leave with pay entitlement." The regulation specifically defines a salaried employee as one whose compensation "is not subject to reduction because of variations in the quality or quantity of the work performed." 29 C.F.R. § 541.118(a). The evidence in the record establishes that the City paid the chiefs a predetermined amount, and this amount was not reduced for part days missed from work unless the employee had no accumulated paid leave time. For the reasons more fully discussed below, we do not believe that a contingent deduction in pay defeats salaried status. The affidavit filed by the chiefs adds a contingency that was in the record before the district court entered partial summary judgment. Moreover, the stipulation that the chiefs suffered no actual loss of pay was presented to the district court before it entered final judgment, and is part of the district court record. Fed.R.App.P. 10(a).
In interpreting the salary basis test, the district court followed the Ninth Circuit's reasoning in Abshire, 908 F.2d at 483. In Abshire, the Ninth Circuit reversed the district court's holding that county battalion fire chiefs were bona fide executives exempt from the overtime provisions of the Act, ruling that the fire chiefs were not salaried employees because their pay was subject to reduction for absences of less than a day when they had no accrued or compensatory leave. Id. at 484, 486. Reasoning that pay is either "fixed and immutable, and not subject to such deductions, or it is contingent," the court held that employees whose pay could be reduced for absences are not salaried, even if the employer has not actually made any deductions.3 Id. at 487. The Second Circuit and the D.C. Circuit followed Abshire in Martin v. Malcolm Pirnie, Inc., 949 F.2d 611, 617 (2d Cir.1991), cert. denied, --- U.S. ----, 113 S.Ct. 298, 121 L.Ed.2d 222 (1992), and in Kinney v. District of Columbia, 994 F.2d 6 (D.C.Cir.1993). The Sixth Circuit similarly followed this line of reasoning from Abshire in Michigan Association of Governmental Employees v. Michigan Department of Corrections, 992 F.2d 82 (6th Cir.1993) (per curiam), although it concluded that the case was distinguishable on its facts. Id. at 85-86.
Although the City's pay system is similar to that in Abshire, the systems are factually distinguishable. In Abshire, the county paid battalion chiefs overtime pay for every tenth of an hour they worked beyond their regularly scheduled work hours, and usual hourly rates for their attendance at training activities outside of their work shifts. 908 F.2d at 485. This policy alone, the Ninth Circuit observed, is inconsistent with salaried status. Id. at 486; see also Kinney, 994 F.2d at 12 n. 3 (policy of overtime compensation also inconsistent with salaried status); Klein v. Rush-Presbyterian-St. Luke's Med. Ctr., 990 F.2d 279, 284 (7th Cir.1993) (fact that employee's supervisors were not subject to compensation time policy defeats salaried status). In our view, the overtime compensation policy in Abshire severely limits its persuasive weight. The City does not have such an overtime compensation policy here; the chiefs are paid a predetermined amount regardless of hours worked.
The Eleventh and Fifth Circuits have not followed Abshire. In Atlanta Professional Firefighters v. City of Atlanta, 920 F.2d 800 (11th Cir.1991), the City of Atlanta had an ordinance requiring that the City dock the pay of fire captains if they were late or violated certain rules. Id. at 805. The Eleventh Circuit concluded that an actual deduction must be shown before the exemption is lost. Id. The court reasoned that because the union presented no evidence that any captain ever suffered a loss in pay, the City met its burden of proving that the captains' pay was not subject to reduction based on the quality or quantity of their work. Id. Likewise, the Fifth Circuit in York v. City of Wichita Falls, 944 F.2d 236 (5th Cir.1991), considered a pay situation similar to that here, and reversed the district court's order entering summary judgment, concluding that there was a question of fact as to whether the fire captains and battalion chiefs were salaried employees. Id. at 242. The court stated that executive status would not necessarily be defeated if the City did not actually take the salary deductions. Id. Our holding is consistent with that of these two courts.
The district court for the Eastern District of Virginia also differed with Abshire in Fire Fighters Local 2141 v. City of Alexandria, 720 F.Supp. 1230 (E.D.Va.1989), aff'd, 912 F.2d 463 (4th Cir.1990). In that case, the district court concluded that the docking of accrued compensatory leave time for short absences would not defeat salaried status. Id. at 1232. The court reasoned "[w]hile personal leave, sick leave and/or compensatory time may be part of an employee's compensation package, it does not constitute salary." Id. The court in that case also relied on the July 17, 1987, Department of Labor letter ruling which we have referred to above which states "that while deductions in salary are not permitted for absences of less than a day, an employer may require an employee to substitute paid leave for such absences without losing the exemption." Id. The Virginia district court's reasoning and the letter rulings which we have referred to above are persuasive.
Several district courts have similarly held that the possibility of deductions defeats executive status. See, e.g., Banks v. City of North Little Rock, 708 F.Supp. 1023, 1025 (E.D.Ark.1988); Hawks v. City of Newport News, 707 F.Supp. 212, 215 (E.D.Va.1988); Persons v. City of Gresham, 704 F.Supp. 191, 194 (D.Or.1988); Knecht v. City of Redwood City, 683 F.Supp. 1307, 1311 (N.D.Cal.1987)
In 1974, Congress first tried to extend the FLSA to state and local governments, and the Supreme Court declared the law unconstitutional. National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976). The Supreme Court later reversed Usery in Garcia v. San Antonio Metropolitan Transportation Authority, 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985)
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