Opinion ID: 773633
Heading Depth: 1
Heading Rank: 3

Heading: the city of los angeles

Text: 15 The parties stipulated to the bulk of the material facts. The plaintiffs employed by the City were members of six different bargaining units, all of which were represented by the Engineers and Architects Association (EAA). There were over 5,500 employees in the six bargaining units, but only about 600 who were purportedly paid on a salary basis. Over a six-year time frame, the City imposed partial week disciplinary suspensions on nineteen employees who were members of the same EAA bargaining units as the plaintiffs. These nineteen employees were purportedly paid on a salary basis and thus did not receive time and a half for hours worked in excess of a normal workweek. 16 In opposition to the employees' motion for summary judgment, the City provided an affidavit by the City's administrative analyst, Royce Menkus. Menkus's affidavit explains that he contacted various City departmental personnel officers to learn more about the stipulated suspensions, and the affidavit summarizes the results of his inquiries. According to Menkus's declaration, nine of the suspended employees had actually been paid hourly at the time of their suspensions and received overtime compensation of 1.5 times their hourly rate. In addition, Menkus reported, one employee was suspended for violation of a major safety rule, another was subsequently reimbursed for the suspension, and yet another was salaried at the time of the suspension, but disciplined for an act which occurred while paid on an hourly basis. 17 The employees objected to the Menkus declaration, claiming that it lacked proper foundation and that the information contained in it was inadmissible under Federal Rules of Evidence 802, 901 and 1002. While not explicitly ruling on the employees' objection, the district court did consider information from the declaration when ruling on the summary judgment motion. 18 The district court disregarded eleven of the nineteen disciplinary suspensions, finding they were consistent with the salary basis regulations because nine employees were paid on an hourly basis at the time they were suspended, one was suspended for a major safety violation, and one was suspended but later reimbursed. The court thus concluded that there were eight suspensions by the City that were inconsistent with salaried status, and that this constituted an actual practice of making impermissible disciplinary deductions from purportedly salaried employees. The court further held that because the City had engaged in an actual practice, it could not correct the improper suspensions through the window of correction in 29 C.F.R. §§ 541.118(a)(6), and granted summary judgment to the employees on the issue of overtime liability under 29 U.S.C. §§ 207(a). 19 The parties then stipulated to the amount of overtime compensation due, but could not agree whether the employees were entitled to liquidated damages pursuant to 29 U.S.C. §§ 260. The employees moved for summary judgment on the liquidated damages claim, which the district court granted. The City appeals from both the liability and damages rulings.
20 The City argues that the district court improperly counted the suspensions of four employees who were suspended for more than a week. The City argues that it is only suspensions of less than a week that are problematic under the regulations. 21 The district court dismissed this argument as without merit, relying on the provision in the salary basis regulation which indicates that a salaried 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. 29 C.F.R. §§ 541.118(a). Under the district court's interpretation, if an employee were suspended from Monday to Friday of one week and Monday and Tuesday of the next week, the employee would perform work on Wednesday, Thursday and Friday of the second week and be entitled to full salary for the second week as a result. 22 Although we have never explicitly addressed the propriety of disciplinary suspensions of more than a week, we have suggested that only even-week suspensions comply with the salary basis test. See Stanley, 120 F.3d at 184 (describing suspensions in full-week increments as consistent with salaried status); see also Paresi, 182 F.3d at 667 n.1 (noting that two supposedly improper suspensions were actuallyweek long Monday-to-Friday suspensions); Childers , 120 F.3d at 945 n.1 (salaried employees may be suspended without pay for the period of a week but must be compensated where they are suspended for a period of less than a week). In light of these precedents, we agree that the district court correctly surmised the effect of section 541.118(a). This interpretation also appears to be consistent with the Secretary's viewpoint as set forth in its amicus brief in Auer: 23 The Secretary does not consider unpaid disciplinary suspensions of a full-week pay period to violate the salary basis rule, because the Secretary has adopted a general policy, reflected in 29 C.F.R. §§ 541.118(a), not to question the salaried status of an employee who receives no pay in a week in which the employee performs no work. 24 1996 WL 595843 at  n.5 (emphasis added) (theAmicus Brief). We agree with the district court that it is the partial-week aspect of the suspensions that creates a problem under the salary basis regulations, whether they are for more or less than full week increments. 25 On the other hand, it is also easy to see where the City's confusion might arise. Until now, no case has specifically addressed disciplinary suspensions of more than a full week. The cases which have addressed partial-week suspensions tout the problem of suspensions of less than a week, which could create a negative implication that suspensions of a week or more are acceptable. Cf. Childers, 120 F.3d at 946 n.1. Likewise, in her Amicus Brief, the Secretary constantly refers to suspensions of less than a week as problematic. 1996 WL 595843 at  (an employee suspended without pay for less than one week . . . would be classified as nonsalaried); id. at  ([t]he rule against disciplinary deductions of less than one week's pay is an integral component of the test); id. at -15 (showing of actual deductions unnecessary if employer communicates that deductions will be made for disciplinary suspensions of less than one week); and id. at  (penalties can be imposed without running afoul of the prohibition against disciplinary deductions of less than one week). 26 The Secretary may have chosen suspensions of less than a week simply as an illustrative example to contrast against full-week suspensions. But it may also be that only those suspensions of less than a week are troubling to the Secretary. There are no other regulations pertaining to this issue; indeed, the entire actual practice concept has been developed by caselaw and aided by the briefing of the Secretary. See, e.g., Auer, 519 U.S. at 461 (relying on amicus brief of Secretary of Labor); Klem, 208 F.3d at 1091 (same); Yourman, 229 F.3d at 130 (same). Thus, the Auer Amicus Brief is likely an informative source for practitioners struggling with the contours of the salary basis regulations. 27 Although we agree with the district court that suspensions of more than a week run afoul of the salary basis test, we do not find the City's position as wholly unreasonable as the district court believed it to be. It appears that the City believed these suspensions to be permissible under the FLSA, 1 and that the law was not altogether clear on the subject at the time. 28 If there were, as the district court concluded, only eight improper suspensions over six years, with fully half of those occurring as the result of an erroneous but not absurd interpretation of the law, we would be hesitant to agree with the district court that the employees were entitled to summary judgment on this issue. In fact, other circuits have upheld summary judgment in favor of the employer in somewhat similar circumstances. DiGiore, 172 F.3d at 464-64 (affirming grant of summary judgment to employer despite five improper suspensions because suspensions were infrequent and under unusual circumstances); cf. Davis v. City of Hollywood, 120 F.3d 1178, 1180 (11th Cir. 1997) (four suspensions for less than a week did not prevent employer from availing itself of window of correction). 29 The employees, however, contend that it was error for the district court to have considered the Menkus declaration, and that if the declaration were disregarded, the remaining stipulated facts would provide an alternative ground for affirming the grant of summary judgment in their favor. We therefore turn to the merits of their evidentiary objection to the declaration.
30 As noted above, the employees argued that the Menkus declaration lacked foundation and that the information it contained was inadmissible under Federal Rules of Evidence 802, 901 and 1002. To survive summary judgment, a party does not necessarily have to produce evidence in a form that would be admissible at trial, as long as the party satisfies the requirements of Federal Rules of Civil Procedure 56. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). With respect to evidence submitted by affidavit, Rule 56(e) requires that the affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Fed. R. Civ. P. 56(e). 31 The Menkus affidavit appears inadequate under Rule 56(e). Not made on personal knowledge, it did not set forth facts that would be admissible in evidence. It is clear from the affidavit that Menkus was not personally involved in any of the disciplinary suspensions, and that he did not personally review any business records containing information regarding such disciplinary suspensions. Menkus instead relied on information from (unsworn) departmental personnel officers, and the source of these officers' information is unclear. Rather than set forth facts that would be admissible in evidence, the affidavit was instead based on inadmissible hearsay. Fed. R. Evid. 802. It was thus an abuse of discretion to consider the information contained in the Menkus declaration. 2
32 It turns out that disregarding the Menkus declaration leads us to the same conclusion as the district court. Without it, we are left with the City's stipulation that it suspended nineteen purportedly salaried employees for disciplinary reasons. Six of these suspensions were for more than a week. 3 Even if we ignore those six suspensions, we are still left with thirteen improper suspensions, most of them occurring after the mayor's directive not to suspend salaried employees for less than a week. 4 Thus, even viewing the evidence in the light most favorable to the City as the non-moving party, we find that the stipulated facts establish a pattern or practice of violations demonstrating an intention not to pay employees on a salaried basis. Klem, 208 F.3d at 1093-94. As such, the City could not bear its burden of proving that the employees were exempt from FLSA overtime requirements, and summary judgment in favor of the employees was appropriate.
33 Although the City appealed the district court's determination that it could not avail itself of the window of correction contained in 29 C.F.R. §§ 541.118(a)(6), 5 while this appeal was pending, we foreclosed this argument with our decision in Klem. 208 F.3d at 1091-94 (accepting Secretary's interpretation that window of correction is not available when there is an actual pattern of practice of making impermissible disciplinary deductions). 6 The window of correction is therefore not available to the City, which engaged in an actual practice of making improper disciplinary deductions.
34 The City also appeals the district court's determination that the employees are entitled to liquidated damages. If an employer has violated the FLSA, the employees are entitled to liquidated damages unless the employer meets its burden of proving both that the employer acted in subjective good faith and that it had reasonable grounds for believing it was not violating the FLSA. 29 U.S.C. §§ 260; 29 C.F.R.§§ 790.22(b). The statute thus establishes a test with both subjective and objective components. Bratt v. County of Los Angeles, 912 F.2d 1066, 1071-72 (9th Cir. 1990). The City's subjective good faith is not at issue. 35 We agree with the district court that the City did not present sufficient evidence to survive summary judgment on objective good faith. As noted above, a few suspensions were for more than one week, and these were perhaps the result of an erroneous but not completely unreasonable interpretation of the salary basis regulations and developing caselaw. The City, however, did not explain how or why it believed it was complying with the FLSA with respect to any of the remaining thirteen suspensions. Because the City did not show that a genuine issue existed with respect to the objective component, the district court properly awarded summary judgment to the employees on this issue.