Opinion ID: 3016859
Heading Depth: 3
Heading Rank: 3

Heading: Locating the Offset

Text: Assuming that the Township could claim a credit under the FLSA for including non-work pay in the CBA’s overtime calculation, we fail to see where that calculation includes such pay. There is no question that the CBA’s base hourly rate does not include incentive/expense pay. The CBA specifies the value of each of those items, which never appear in the CBA’s overtime formula. At oral argument, the Township conceded that incentive/expense pay is remuneration that, if no offset is allowed, should be added to the CBA’s basic annual salary to satisfy the FLSA’s overtime calculation requirement. 9 Thus, on the Officers’ side of the ledger, the CBA’s overtime formula clearly does not include every augment required by the FLSA. But our search for the Township’s offsetting concession turns up nothing. According to the Township, the base hourly rate contains an augment representing non-work pay. The CBA nowhere specifies what the Officers are paid for non-working work] payments are not made as compensation for the employee’s hours worked in any workweek, no part of such payments can be credited toward overtime compensation due under the Act.”). Notwithstanding its use of the term “credit” in its brief, the Township does not truly claim a credit, in the sense of a setoff, for paying the Officers for non-work time. That surely would be double-counting forbidden by § 207(h)(1) under the authorities just cited. Instead, the Township argues that nonwork pay enhanced the basic annual salary, raising the overall rate of overtime compensation. Though we decide the case on other grounds, we note here our doubt that § 207(h)(1) speaks to that type of “credit.” 9 See Section II. C., below. 17 days. Along with the Officers, we assume such pay is folded into the Officers’ basic annual salary. Yet, we do not know what proportion of the basic annual salary non-work pay represents. The “basic annual salary” portion of the CBA’s overtime formula is a black box. As we lack any means to “go behind the contract,” we are unwilling to assume that the CBA’s base hourly rate adequately compensates the Officers, when that rate plainly does not include incentive/expense pay. The other number for which the parties bargained in the CBA’s overtime compensation formula, 2080, heightens our doubts that there is any offset in the CBA. As noted earlier, 2,080 is the number of hours by which the basic annual salary is divided to obtain the “base hourly rate” (the CBA’s version of the FLSA’s “regular rate”). Simple multiplication shows that 2,080 equals the number of working hours in a full, 52-week year of 40-hour weeks. If, as the Township claims, the CBA boosts the basic annual salary to reflect non-work pay, choosing 2,080 as the divisor seems to negate that action in the ultimate overtime calculation. That is because the higher the divisor, the lower the ultimate overtime rate.10 A simple illustration may 10 This result is supported by the regulations, which provide that in deriving an hourly rate from a salary, you must divide the salary “by the number of hours which the salary is intended to compensate,” 29 C.F.R. § 778.113 (a) (emphasis added), or, in the case of monthly salaries, “by the number of working days in the month.” Id. at § 778.113 (b). (emphasis added). See also 149 Madison Ave. Corp. v. Asselta, 331 U.S. 199 (1947) (invalidating a regular rate derived based on a fixed number of hours, rather than the actual hours scheduled to be worked). So if the Township is correct that officers are not scheduled to work during their vacation times, then those hours are not properly part of the denominator. 18 clarify this point. Let us assume that the Officers’ basic annual salary was $100, and that the number of annual hours chosen for the divisor was 10. Under the FLSA, the Officers’ overtime rate would be $15 per hour ($100/10 = 10 x 1.5 = $15). Now let us assume the same basic annual salary of $100, but that the number of annual hours chosen for the divisor was 20. Under the FLSA, the Officers’ overtime rate using those numbers would be $7.50 per hour ($100/20 = 5 x 1.5 = $7.50). In short, what the Township purports to have given by raising the basic annual salary for non-work pay, it seems to have taken away by raising the number of hours chosen for the divisor to reflect a full working year.11