Court Opinion

ID: 4132996
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:32:45.199005+00
Date Added: 2024-06-11T14:07:13.915638
License: Public Domain

THEATTORNEYG~CNERAL
                      OF TEXAS
                         AUEWIN.     T-s         7SVll

                                    August 26. 1974

The Honorable Robert S. Calvert                   Opinion No. H-    382
Comptroller  of Public Accounts
State Finance Building                            Re: Application of the Fair Labor
Austin, Texas                                     Standards Act of 1938. as amended,
                                                  to state employees and related
The Honorable James E. Peavy,        M.D.         questions.
Commissioner   of Health
Texas State Dept. of Health
Aus tin, Texas

Gentlemen:

        This office has received requests for opinions from both of you
concerning the application of the Fair Labor Standards Act of 1938. 29
U.S. C. 0 3 201-219 (“FLSA”),   as recently amended by the Fair Labor
Standards Amendments of 1974.

         The 1974 amendments to the FLSA are the latest in a lengthy series
of federal legislative  enactments providing minimum wages and overtime
compensation for a wide range of workers in the United States.   In 1966.
amendments to the FlSA extended this type of coverage to employees of
hospitals, nursing homes or schools operated by states or political
subdivisions,   and to local transit operations.

        By virtue of~the 1974 amendments,   8 3(e) of the FLEA now establishes
the coverage of the Act to include most state employees.     The definition of
those covered ia:

               Section 3(e)(2).In   the case of an individual   employed   by
               a public agency,     such term means . . .

               . .   .

                                       p. 1794
The Honorable    Robert S. Calvert
The Honorable    James E. Peavy      page 2     (H-382)

                     (C) any individual employed by a State, political
                 subdivision of a State, or an interstate governmental
                 agency, other than such an individual . . .

                           (i) who is not subject to the civil service
                       laws of the State, political subdivision,   or
                       agency which employs him; and

                           (ii) who . . .

                            (I) holds a public elective office of that
                       State, mlitical subdivision,    or agency,
                            (II) is eelected by the holder of such an
                       office to be a member of his personal staff,
                            (III) is appointed by such an office holder
                       to serve on a policy making level. or
                            (IV) who is an immediate advisor to such
                       an office holder with respect to the constitu-
                       tional or legal powers of his office.

        Section 7 of the FISA provides that employers may not employ any
covered .workef for’s ,work week:longer. than forty ,ho\lr,a unless the employee
is compensated for hir work in excess of forty.hours at a rate which is not
leer than one and one-half times his regular  rate of pay.

          Payment for overtime of state employees is provided for in the
General    Appropriations Act-+hich’:readsi    ,. ‘. , .     ,  ,::.

                      e. OVERTIME.     In order to reimburse employees for
                 work performed in excess of the working hours required
                 by Acts 1963, 58th Legislature,   page 184, Chapter 104
                 (codified as Article 5165a. V. A. C. S.) it is required that
                 compensatory time be granted at the rate of l-1/2 times
                 the overtime performed within the same month (pay
                 period) that said overtime was accrued.      In the case of

                                      p. 1795
    .   .

        The Honorable   Robert S. Calvert
        The Honorable   James E. Peavy      page 3     (H-382)

                        hospital employees,   said employees shall be reimbursed
                        with compensatory time at the rate of l-1/2 times the
                        overtime accrued in excess of eighty (a hours over a
                        fourteen (14) day consecutive period.

                             This prbvision shall not apply to medical personnel
                        and employees employed in a bona fide executive, adminis-
                        trative or professional   capacity, including any employee
                        employed in the capacity of academic administrative
                        personnel or teacher in elementary or secondary schools.
                        Compensatory time for those employees excepted from
                        this provision shall be determined by the Administrator
                        of the agency or institution involved.   Provided,  however,
                        that any agency or institution subject to the Fair Labor
                        Standards Act, as amended, is authorized to reimburse
                        employees for all authorized overtime by granting com-
                        pensatory time as specified above or by paying money
                        from funds appropriated by this Act at the rate of l-1/2
                        times the regular   rate for the overtime performed.
                        (Acts 1973, 63rd Leg.,    ch. 659, Art.  V, 5 2(e), at p.2179).

                Comptroller  Calvert’s queqtions are considered first.  His first
.       question is, “What ir the effective date of the 1974 amendments to the Act
        which affect state employees??’ ,’

               Section 29(a) of the 1974 Amendments       to the FLSA   provides:

                        Except as otherwise specifically provided, the
                        amendments made by this Act shall take effect
                        on May 1, 1974.

        Certain coverage provisions do have different “effective”       dates, (see
        G. a., the special treatment for public agency fire protection, and law
        enforcement activities   set out in 5 S 7(k) and 13(b)(20) of the FLSA).
        The answer to the general question presented, however, is May 1, 1974.

                                             p. 1796
                                                                          -   .

                                                                                  .

The Honorable   Robert S. Calvert
The Honorable   James E. Peavy    page 4      (H-382)

        The Comptroller’s   second and fourth questions   are:

                2. If a state employee, who performs work of such a
                nature as to be covered by the provision8 of the Act’
                works in excess of 40 hours in one work week,
                is the employee entitled to overtime pay at the rate
                provided for in the Act?

                4. If a State employee  who peforms work of such
                a nature as to be covered  by the provisions of the
                FLEA works 50 hours in the first work week of the
                month and his employer lays him off for 15 hours
                during subsequent work weeks of the same pay period
                so that the employee is only paid his regular monthly
                salary (l/12 of his annual classified salary), has that
                employee received overtime pay as required by the
                Act or compensatory time as authorized by State Law?

        As provided in the Appropriations Act: state employees who are
covered by the Act and work more than forty hours in a seven day work
week accrue overtime,   and may be given overtime pay at the rate of
one and one half times their regular pay rate , or. in the alternative, may
be given compensatory time off at one and one half times the amount of
overtime worked, if given during the same pay period (i. e., calendar
month) in which the overtime was accrued.

        We believe this procedure outlined in the Appropriation Act is
consistent with the requirements  of federal law. Opinion Letter No. 913,
issued December 27, 1968. by the Administrator    of the Wage and Hour
Division of the U.S. Department of Labor states:

                     An employer may not credit an employee with compensa-
                tory time (even at a time and one half .rate) for overtime
                earned which is to be taken at some mutually agreed upon
                later date subsequent to the end of the pay period in which
                the overtime was earned, rather than pay cash for the

                                    p. 1797
The Honorable   Robert S. Calvert
The Honorable   James E. Peavy      page 5     (H-382)

                overtime as it is earned,   However,   it in permirsible for
                the employer employing one at a fixed salary for a fixed
                workweek to lay off the employee a sufficient number of
                hours during some other week or weeks of the pay period
                to offset the amount of overtime worked (i. e. at the time
                and one half rate) so that the desired wage or salary for
                the pay period covers the total amount of compensation,
                including overtime.    CCH Lab. L. Rep. (Nov. 1966 -
                March, 1969) para. 30,924.

And see, The Administrator’s  Opinion Letter       No. 868 (Oct. 18, 1968). CCH
Lab. L. Rep. 11ul)ro para. 30,877.

        Opinion Letter No. 913 was approved in Brennan v. State of New
Jersey,  364 F. Supp. 156 (D. N. J. 1973) (appeal pending) where the court
made the following comment at page 158:

                In fact, this is not really an exception to the rule of 5 7
                of the Act. but ia in complete compliance therewith. For
                exampl’e,, given a pay period of two weeks, with a fixed
                salary of $200.00 per week and a fixed work week of forty
                hours an employee works for fifty hours during the first
                week of the pay period.     Under the above opinion letter, the
                employee may then work only twenty-five hours in the sec-
                ond week of the pay period (forty hours less time and one
                half for the ten hourr accrued overtime) while receiving
                his full gross pay of $400.00 at the end of the two week
                pay period.    This would comply with § 7 of the Act
                and the accompanying regulations and interpretations,
                since such wages are paid both promptly and in cash.
                (Emphasis added)

       Brennan was shortly followed by Hodgson v. A. W. Crossley.     Inc.,
365 F. Supp. 1131(S. D. N. Y. 1973). in which Brennan and Opinion Letter
No. 913 were cited with approval.

                                     p. 1798
The Honorable   Robert S. Calvert
The Honorable   James E. Peavy      papa 6      (H-382)

         Thus, the provisions of the FLSA pertinent to this inquiry have
been construed by the Federal Wage and Hour Administrator       and the
courts as permitting,    under certain conditions, the granting of “compenaa-
tion time” in lieu of overtime wages.     The answer to your second question,
therefore,  is that state employees,   not excluded or exempted from the
overtime provisions of the FLSA, are entitled to overtime pay at the rate
provided in the FLSA, or compensatory time as discussed above.

        The Comptroller’s   third question is:

                If your answer to question number 2 ir affirmative,
                may such overtime pay be paid by a warrant on the
                State Treasury thm ugh the classified salary fund
                of the employing agency?

         Attorney General Opinion M-1155 (1972) considered   a virtually
identical question.  That opinion states in part:

                Your . . . question brings into consideration  5 6 of
                Article VIII of the Texas Constitution.  That section
                provides that no money shall be drawn from the
                Treasury but in pursuance of specific appropriation
                made by law.

                In our opinion the necessary specific appropriation for
                overtime pay is provided by the same appropriation that
                provides for regular pay of the employee.   The designad
                tion given this sum will no doubt vary from institution to
                institution.  Each employee’s warrant, including his over-
                time, should be charged to that fund.

                See National Biscuit Co. v. State( 135 S. W. 2d 687, page
                693 (Tex. Sup. 1940). wherein it was said:
                         .
                ‘As just stated, one of the provisions of 06 of Article
                8 of our Constitution requires all appropriations  of
                money out of the State Treasury to be specific.   It

                                    p.   1799
The Honorable   Robert S. Calvert
The Honorable   James E. Peavy      page 7   (H-3821

                is settled that no particular form of words is
                required to render an appropriation       specific
                within the meaning of the constitutional provi-
                sion under discussion.     It is sufficient if the
                Legislature  authorizes the expenditure by law,
                and specifies the purpose for which the appropria-
                tion is made . . . . ’

Therefore,   your third question is answered   in the affirmative.

        The Comptroller’s  fifth question. asks: Are there any restrictions
on state employers regarding lay off of their regular full-time employees?

        No doubt your intention was to raise   this question in light of the
language of Opinion Letter No. 913, supra.

        Article 51658, V. T. C. S., establishes a basic forty hour workweek
for state employees; however, it also states that:

                . . . exceptions to the minimum length of the
                work week may be made by the executive head
                of a state agency to take care of any emergency
                or public necessity that he may find to exist.

We believe Article 516hmurt be read together with the General Apprbpria-
tion Act provisions    relating to the granting of compensatory time. Clearly,
the Legislature    there provides just the sort of procedure Opinion Letter
No. 913 and Brennan describe as being in compliance with the FLSA over-
time requirements.       We note that the alternative “compensatory     time”
procedure,    provided for in the General Appropriations      Act, could only be
implemented by the state agency/employer         “laying off” the state employee
(that is, causing an absence from the work place and from actual work) for
cl.= -ppropriate   number of hours during the same pay period the overtime
was accrued.

                                     p. 1800
The Honorable    Robert S. Calvert
The Honorable    James E. Peavy      page 8     (H-382)

          The answer to your fifth question is, therefore,    that the only
restriction   on “laying off” employees (in the sense of FLSA compliance
and consistent with the requirements     of the Appropriations    Act) is that
the “lay off” take place during the same period in which overtime accrues.

        The Comptroller’s   sixth question asks:

                If a state employee is terminated with overtime
                accrued after May 1.1974, must his final salary
                warrant include pay at the rate specified in the
                Act for such overtime?

       We  assume you intend to limit this inquiry to FLSA “covered”
employees.   Attorney General’s Opinion M-1155, supra. considered a
rimilar question, and concluded as follows:.

                . . . Your question asks whether you have authority
                to include payment for authorized overtime properly
                accrued at the time of death or separation of the
                employee from employment with the department.

                Overtime pay is not a separable stipend,    It is part
                and parc’el of the compensation called for in the
                employee’s contract, and is properly payable, if
                accrued, at the time the base pay is paid. The
                employee has a vested right in overtime pay the
                moment it accrues under his contract of employ-
                ment.

        Therefore,   your question is answered     in the affirmative.

        The Comptroller’s   seventh question is in two parts,      the first
part reading as follows:

                May a state employee    covered by the Act choose to
                receive compensatory     time in the same pay period
                in which the overtime   is worked?

                                      p. 1801
The Honorable    Robert S. Calvert
The Honorable    James E. Peavy         page 9      (H-382)

         As discussed in answer to your second and fourth questions, the
granting of compensatory time within the same pay period in which the
overtime is accrued or the payment of overtime wages is permissible    at
the discretion of the employer.   The FLSA does not grant state employees
discretion in this area as a matter of right,

         The second part of question seven asks:

                 May a state employee covered by the Act choose
                 to receive compensatory time in subsequent pay
                 periods for overtime worked?

        As indicated in answer to the Comptroller’s second and fourth
questions, granting of compensatory time in subsequent pay periods for
overtime worked is not permitted by the FLSA.

        In a separate request the Comptroller  asked two questions          relating
to the Teacher Retirement System.    They are:

                 Is there pre-existing law for an agency of the State
                 to pay overtime from trust funds when such agency
                 comes under the Federal Fair Labor Standards Act
                 as that Act was amended effective May 1. 1974?
                 Is the department legally authorized to issue warrants
                 in payment of this overtime payroll when paid from
                 trust funds with the Stats Treasury and not in the
                 State Treasury?

         Section 3.59 (j),   Vernon’s   Texas, Education Code,   provides   in part:

                 The rate of compensation of all persons employed by
                 the State Board of Trustees, as well as the amounts
    .’           necessary for other expenses for the operation of the
                 retirement system. shall be approved by the State
                 Board of Trustees,  provided they shall be no greater

                                        p.   1802
The Honorable    Robert S. Calvert
The Honorable    James E. Peavy        page 10 (H-382)

                 than tho*e for similar   rervices   performed   for the
                 State of Texas.

        We believe this provision along with the requirements   of the FLSA
provide ample pre-existing   law to permit the payment of overtime from
trust funds. Attorney General Opinions M-1155 (1972), M-341 (1969).
Therefore your office is authorized to issue warrants for that purpose.

        Dr.   Peavy’s   que*tion is:

                 May the fees collected for overtime and special
                 services pursuant to Article 4476-7 be used to
                 pay overtime wager: to meat inspectors in carry-
                 ing out their duties pursuantb the State Wholesome
                 Meat and Poiiltry Act?

         The answer to your question is affirmative.     The Texas Meat and
Poultry Inspection Act (Article 4476-7. V. T. C. S.) provides for examina-
tion and inspection of meat animals before entering slaughter houses, for
post-mortem     examinations and inspections,   and related regulatory pro-
visions, including making investigations    of disease findings.  Section 410
of Title III of Article 4476-7 authorizes the Department of Health, as you
point out, to collect fees for overtime worked and special services rendered
to regulated establishments,   and the current General Appropriations     Act,
at page 1822, “Department of Health, ” provides a* follows:

                Any fees collected for overtime or special services
                under Senate Bill No. 28, Sixty-first Legislature,  are
                hereby appropriated for the biennium beginning Seg-
                tember 1, 1973 for the enforcement of Senate Bill No.
                28.
                -    (Emphasis added)

         We conclude that the overtime worked by meat inspectors in
connection with their regulatory activities would necessarily   be performed
aa part of the enforcement   of Article 4476-7 (being Senate Bill No. 28, 61st
Legirlature);  thu*, the described fees collected are appropriated for the

                                       p. 1803
The Honorable   Robert S. Calvert
The Honorable   Jamen E. Peavy       page 11 (H-382)

payment of ruch overtime    wages.

                               SUMMARY

                     1. The effective date of the Fair   Labor   Standards
                Amendments of 1974 is May 1. 1974.

                       2. State employees, covered by the overtime pro-
                visions of the Fair Labor Standards Act of 1938, as
                amended, may be given overtime pay or compensatory
                time off, if compensatory time off is given in the same
                pay period the overtime is accrued.

                      3. Overtime pay may be paid by a warrant on the
                State Treasury through the classified salary fund of the
                employing agency.

                       4. If a state employee covered by the overtime pro-
                viaions of FLSA and FLSA 1974 is terminated with over-’
                time accrued, his or her final salary warrant must include
                the FLSA overtime pay.

                       5. A state employee, covered by the FLSA overtime
                provisions,  has no legal right to insist on receiving over-
                time wage* where that employee is given compensatory
                time off during the same pay period the overtime was
                accrued; nor does that employee have discretion to receive
                compensatory time in subsequent pay periods for overtime
                worked.

                       6. There is pre-existing law for a state agency to pay
                overtime wages from trust funds.

                       7. Fees collected from regulated institutions   for
                overtime worked by meat inspector*,    pursuant to

                                     p. 1804
The Honorable   Robert S. Calvert
The Honorable   James E. Peavy      page 12   (H-382)

                Article 4476-7, V. T. C. S., may be used to pay
                overtime wage* to those meat inspectors.

                                              Very truly yours,

                                              Attorney   General   of Texas

APPRXX’ED:

.-i.
  -3bh.+&
DAVID M. KENDALL,       Chairman
Opinion Committee

lg

                                    p. 1805