Opinion ID: 2205569
Heading Depth: 1
Heading Rank: 6

Heading: Does the State's Policy of Requiring Peace Officers to Take Leave for Absences of Less Than a Day in Connection With Sick Leave and Personal Leave Violate the FLSA's Salary-Basis Test?

Text: In the prior appeal of this action, we addressed the salary-basis test in connection with the State's policy of reductions in pay for disciplinary suspensions. An employee is exempt from the overtime provisions of the FLSA if the salary-basis test, along with the two other tests, is satisfied. Anthony, 632 N.W.2d at 902-03. If an employee `regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed,' the employee is considered to be paid on a salary basis. Id. at 903 (quoting 29 C.F.R. § 541.118(a)). For an employee to qualify for exempt status, the 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. Id. (quoting 29 C.F.R. § 541.118(a)). Reductions in pay for disciplinary suspensions are impermissible reductions destroying an employee's exempt status. Auer v. Robbins, 519 U.S. 452, 456, 117 S.Ct. 905, 909, 137 L.Ed.2d 79, 87 (1997). In Anthony, we held the State did provide for disciplinary suspensions without pay; thus, the peace officers were not exempt from the overtime provisions of the FLSA. [3] 632 N.W.2d at 904-05. On remand, the district court found the State rescinded its policy of disciplinary pay deductions on August 7, 1998. The district court concluded the State was not liable for overtime wages ... after August 7, 1998 based solely on [the State's] continuing policy of making partial day pay deductions [for disciplinary suspensions]. Neither party appealed this ruling. Presently, the State reduces a peace officer's pay for partial day absences if vacation or sick leave is not available. The peace officers contend the State remains noncompliant after August 7, 1998, with the salary-basis test, because it continues to make deductions in the peace officers' pay for these partial-day absences. The peace officers claim the parties litigated this issue on appeal in Anthony; thus, Anthony is the law of the case. See United Fire & Cas. Co. v. Iowa Dist. Ct., 612 N.W.2d 101, 103 (Iowa 2000). The peace officers are correct that an appellate decision is final as to all questions decided on appeal, and the district court normally is duty-bound to follow that decision. Id. In Anthony, however, we did not address the salary-basis test in connection with partial day absences if vacation or sick leave is not available; therefore, Anthony is not the law of the case on this issue. On addressing the merits of whether the State remains noncompliant with the salary-basis test because it continues to make deductions in the peace officers' pay for these partial-day absences, the district court concluded the State was compliant with the salary-basis test under the regulation promulgated by the Secretary. 29 C.F.R. § 541.5d provides in relevant part: (a) An employee of a public agency who otherwise meets the requirements of § 541.118 shall not be disqualified from exemption under §§ 541.1, 541.2, or 541.3 on the basis that such employee is paid according to a pay system established by statute, ordinance, or regulation, or by a policy or practice established pursuant to principles of public accountability, under which the employee accrues personal leave and sick leave and which requires the public agency employee's pay to be reduced or such employee to be placed on leave without pay for absences for personal reasons or because of illness or injury of less than one work-day when accrued leave is not used by an employee because: (1) permission for its use has not been sought or has been sought and denied; (2) accrued leave has been exhausted; or (3) the employee chooses to use leave without pay. 29 C.F.R. § 541.5d(a) (1993). The State's practice regarding partial-day absences is based on statutes and regulations adopted pursuant to theories of public accountability. The peace officers accrued sick leave pursuant to a duly enacted statute. Iowa Code § 79.1 (1991). The Iowa Code required the director of the department of personnel to establish rules pertaining to attendance and leaves of absences, with or without pay, or reduced pay. Id. § 19A.9(18). The department of personnel adopted regulations requiring employees to be placed on leave without pay for absences for personal reasons or because of illness or injury of less than one work-day. Iowa Admin. Code rs. 581-14(1)-(10) (1991). We believe the rules adopted by the department of personnel conform to the principles of public accountability under the Secretary's regulation found at 29 C.F.R. 541.5d(a). Compliance with this regulation permits public employers to maintain leave policies to promote public accountability without affecting the salary-basis test. Thus, the district court was correct when it concluded the requirement that these peace officers take leave for absences of less than a day in connection with sick leave and personal leave does not violate the FLSA's salary-basis test.