Raiders of the Lost Art, Part Three: Lessons Learned from FLSA Grievances

By on January 12, 2011 in Current Events, Human Resources with 3 Comments

I noted in part one of this article that a number of Federal
agencies have had union grievances filed over their implementation of the Fair
Labor Standards Act (FLSA), and have had arbitrations go against them and/or
have been forced to settle the grievances, sometimes at a cost of millions of
dollars. I pointed out that one common
denominator in many of the cases was that the unions were represented by
Michael Snyder and his law firm. 

In part
two
, I attempted to analyze an FLSA grievance arbitration hearing in which the
arbitrator ruled in favor of the union, determining that Equal Opportunity
Specialists from GS-11 to GS-15 were nonexempt. In this third and final part of the article, I will discuss lessons
learned and potential agency strategies in dealing with FLSA designations and
related matters

Lessons learned: In developing this series finale, I got help
from two long-time Federal HR experts. My colleague and friend Steve
Sharfstein, Chief, Labor Relations Division, Uniformed Services
University of the Health Sciences, Department of Defense, had already advised me that “the real
problem…was that OPM thought that authority to administer FLSA for the Federal
sector meant the authority to define exemptions.  Actually, DOL retained the authority to define
and in many instances OPM was inconsistent, leading to many positions being
categorized as exempt that should have been non-exempt.”

Steve, along with Linda Beckles, Assistant Counsel for Labor
& Employment Law, U.S. Army Corps of Engineers, made a presentation on the
“Fair Labor Standards Act: Recent Case
Handling Experience and Dealing with Union Requests for Information,” at theDefense Employee and Labor Relations Symposium (DELRS)
2010. I am going to quote liberally in
this article from their presentation, because I think it contains better
analysis of FLSA case law in the Federal sector and more helpful guidance for
agency management than any other source I have found in the course of my
research for these articles. 

One
of the grievance cases cited by Mr. Sharfstein and Ms. Beckles wasNaval Surface Warfare Center, Crane,
Indiana, and AFGE, Local 1415, 49 FLRA No. 6, Feb. 4 1994.  In that case the arbitrator determined that
the agency’s exempt determinations were correct on 16 of 23 positions, thus
demonstrating that it is possible for an agency to successfully defend its
exempt designations under the FLSA. This
award was appealed by the union to the Federal Labor Relations Authority
(FLRA), which declined to overrule the arbitrator. 

In addition to citing key FLSA grievance arbitration/FLRA
cases and summarizing the significant aspects of those decisions, the
Sharfstein/Beckles presentation provided a great deal of additional useful
information, which included the following: 

Recommended
Management Actions


Don’t necessarily wait for the union to file a grievance.


Proactively
investigate accuracy of FLSA exempt and non-exempt designations • Prompt,
pre-emptive review may strengthen the agency’s position in grievance and
arbitration proceedings, including limiting back pay obligations. May help establish good faith defense to
liquidated damages and negate willfulness needed to support three year statute
of limitations on back pay.

Actively involve classification experts and review prior
FLSA cases.  Ensure that DOL
standards for exemption are followed 


Be
ready to change designation of specific positions if narrow exemption
criteria are not met.  Not all employees
on same PD may justify common FLSA designation

FLSA Grievances

If a grievance is filed


Conduct a serious,
objective investigation into whether relevant FLSA designations are
consistent with law and regulation.  Note that the agency has the burden of proving
exemptions 


Look
to history behind the FLSA designations in question and determine whether,
and to what extent, the designations have been reviewed


Advise management of FLSA
presumptions and entitlements.  Prepare
management for the fact that there could be significant monetary liability


Consider potential
settlement options


Determine
to what extent like positions should be consolidated for processing. The
union will generally be seeking such consolidation. Arbitrators may look favorably on hearing
testimony and receiving evidence on a few employees that can be applied to
the class of grievants.


Determine
whether the grievance was filed timely under the negotiated grievance
procedure. Although the period of
back pay is set by statute, case law is unclear on whether the time limits
for filing a grievance limit the ability to initiate a grievance involving
FLSA. See AFGE Local 3882 and Dept of Justice, Federal Correctional Institution,
Ray Brook, NY, 59 FLRA 469 (2003)


If arbitration is requested,
very carefully research potential arbitrators to see whether, and in what way,
they have previously ruled on overtime cases and issues

FLSA Settlement
Considerations


Process for administering
employee back pay claims, especially regarding alleged suffered and
permitted overtime


Two year statute of
limitations versus three (willful violations)


Reduction
of liquidated damages (Sharfstein/Beckles
noted that “Liquidated damages equal to the amount of the back pay is
presumed unless management can establish it acted in good faith.  Good faith is a substantial burden and
agency must show that it had reasonable grounds for believing that its act
or omission was not a violation of FLSA.  Cases have indicated that ‘double damages
are the norm; single the exception.’”)


Cap on union attorney fees


Treatment of employees
previously receiving comp time in lieu of overtime pay


FLRA
rarely overturns arbitration awards, especially regarding fact
determinations such as whether a specific position meets exemption
criteria

 

Are Federal agencies
ready, willing and able to do the heavy lifting necessary to prevail in FLSA
grievances? 

I think a number of them are willing, but whether they are
ready and able is another issue. 

Dennis Treadwell, a long-time Army classifier, has been an
eyewitness to the “changing of the guard” in classification, with so many
senior classifiers having retired in recent years, often to be replaced, if at
all, by employees with far less experience. 

That is not the only obstacle. When I first got into the classification
business, also with Army, the Department of Defense had a cyclic audit program,
which required that position descriptions be recertified every two or three
years. If agencies are still reviewing
positions on a cyclic basis, I’m not aware of it, and I’m convinced that many
agencies have position descriptions that are a decade or more old. As HUD found out in the grievance arbitration
hearing I analyzed in part two, that can be problematic.

The combination of fewer, less experienced classifiers and a
substantial backlog of aging PDs makes it difficult for many agencies to be
proactive in this area, or even to respond effectively once an FLSA grievance
has been filed. 

My belief is that the remaining classifiers are generally
kept pretty busy classifying positions. As I noted in the first article, OPM’s 1998 guidance, titled “How to
Make Exemption Status Determinations Under the Fair Labor Standards Act (FLSA),”
recommended that classifiers “Verify the accuracy of the position description
(e.g., interview the incumbent and supervisor) and validate the
classification. Remember that the FLSA
exemption status is based on the duties the employee actually performs (5 CFR 551.202(i)) rather than what is described
in the position description.” (emphasis in original) The OPM guidance went on to suggest that
classifiers write FLSA exemption status evaluation statements to support their
conclusions. 

I think that’s a very good idea, but I wonder where the
classifiers going to find the time to do it. Presuming they can’t, what are the alternatives? Hire more classifiers? With agency budgets likely to be tight for
years, that seems unlikely, at least in terms of permanent employees, but it
may be possible to hire classifiers on a temporary basis and/or to use contract
classifiers, at least until agencies/installations can clean up backlogs of FLSA
designations to the extent that OPM guidance indicates would be appropriate –
and get some permanent classifiers trained in the art of determining the FLSA
status of positions.

Final Thoughts: In doing research in conjunction with the
development of these articles, it occurred to me repeatedly that there seemed
to be some major discrepancies between the testimony of FLSA grievants, which
often resulted in nonexempt findings by arbitrators, and the bases on which the
positions occupied by many of those employees who were testifying had been
classified. Similar
thoughts occurred to both Dennis Treadwell and Steve Sharfstein. 

Here’s
an example from the HUD FLSA arbitration case: A GS-12 EO Specialist testified
that her work was not varied and did not require creativity because
investigators simply follow the guidelines in the Investigator’s Handbook. She described those guidelines as very comprehensive
and said EO Specialists are not allowed to deviate from them. When faced with a novel or complicated issue,
she said EO Specialists would go to regulations, then to their supervisor, to
the program center, and to the legal office, in that order.

On cross-examination, the employee
testified that she did not have a thorough knowledge of the rules, regulations,
statutes, fair-housing court case precedent and decisions, nor expert knowledge
of problem-solving techniques, or high-level skill in interpreting laws,
executive orders, regulations and court decisions. She said that there was no flexibility under
the Investigator’s Handbook except as the regulations require. She further testified that she did not
independently plan, direct and conduct her own work assignments. 

Benchmark #04 at the GS12 level of the GS-360
classification standard seems to fit the assignments of HUD’s GS-12 Equal
Opportunity Specialists very well. Under
Factor 1, Knowledge Required by the Position, Level 1-7 is credited. That level requires “Knowledge of the body of
laws, regulations, precedents, policies, and principles, and skill in
factfinding, analysis, negotiation and consulting sufficient to review agency
programs and projects in the assigned geographical areas, determine
their impact on equal opportunity, recommend changes in agency projects,
recommend approval or disapproval of grants or other projects, and provide
technical assistance to local and State officials, housing authorities, and
other recipients or applicants for program funds.”

Level 2-4 is assigned under Factor 2, Supervisory
Controls. At that level, “The supervisor
assigns the geographic area of responsibility such as counties or metropolitan
areas, determines resources to be made available, sets general goals and
priorities.  The equal opportunity
specialist exercises wide latitude and independent judgment in planning and
carrying out work including application and monitoring reviews…Work in progress
is not reviewed.  Overall work is
evaluated in terms of achievement of established affirmative action goals in
the area served.”

Under Factor 3, Guidelines, Level 3-4 is assigned. The benchmarks states that “Guidelines
include laws governing civil rights in housing, employment, business
opportunities and nondiscrimination in agency programs, department regulations
and guides, and relevant precedent decisions.  Gaps in guidelines and precedents covering
important issues are common, and precedent cases are often nonexistent or are
in conflict.  The equal opportunity
specialist must exercise considerable judgment in determining the intent and
applying broad guidelines to unique local conditions, and in interpreting an
extensive, complicated, and changing body of law, regulation, and precedent
decision, to deal with the specific facts identified during each review…”

Level 4-4 is assigned under Factor 4, Complexity. At that level, “The
workload assigned involves the largest and most complex programs in large
metropolitan areas containing affirmative action issues, and often numerous and
severe problems of nonperformance.

Decisions regarding what needs to be done include deciding
the scope of the review, analyzing a vast body of interrelated facts and
opinions, and identifying and defining problems and issues.  In identifying what needs to be done, the
incumbent must be able to analyze a number of socio-economic factors affecting
employment, municipal services, housing trends, and population characteristics.
 The work requires skill in identifying
main problems, finding alternatives, and recommending solutions compatible with
the equal opportunity mission.  The work
requires extensive and intensive analysis of information to determine if a
local government is or is not in compliance with the law. Usually this requires
the analysis of complex cause and effect relationships, and the development of
persuasive factual information and analysis to support the conclusion…”

If the
GS-12 Equal Opportunity Specialist whose testimony at the FLSA arbitration
hearing I referred to above had provided me with the same information during a
desk audit, I would have had a very hard time classifying the employee’s
position at the GS-12 level. And the
GS-360 standard only goes as high as GS-13 in describing non-supervisory
assignments, which means that the standard had to be “extended” for HUD to
classify non-supervisory positions at the GS-14 level, much less the GS-15
level. 

Given the testimony of the GS-12 and 13 Equal
Opportunity Specialists at the arbitration hearing, I think HUD had every right
to revisit the classification of those positions, since it is difficult to reconcile
portions of their testimony with the basis for classifying their positions.

In closing, I would encourage interested parties to read the complete PowerPoint
presentation of Mr. Sharfstein and Ms. Beckles at www.cpms.osd.mil. There is probably an easier way, but in the
search option I plugged in “DELRS 2010,” then clicked on “DELRS 2010 in Review,”
which brings up all of the presentations. I then scrolled down to “FLSA Recent Case Handling Dealing with Union
Request for FLSA Information,” which contains the Sharstein/Beckles
presentation.

Some FedSmith.com readers have interpreted the content of my
first two articles on the FLSA grievances to mean that I am trying to help
agency management find ways to avoid paying monies legitimately owed to
employees who were found to be wrongly designated as exempt. I understand such an interpretation but that
is not my intent. 

I am trying
to encourage agency management to take the issue of FLSA determinations more
seriously, and to interpret the law, case law and OPM guidance correctly. I have also attempted to point out that doing
so, and appropriately documenting agency findings on each position, is a
time-consuming process, and I have questioned whether a number of
agencies/organizations have both the ability and the willingness to do so. In addition, I am suggesting that agencies
develop and maintain a cadre of classifiers who are experts in interpreting and
applying the FLSA to positions. 

And when agencies have determined that positions are
nonexempt, have had findings by an arbitrator to that effect, or have settled
union grievances which argued that agency exempt determinations were made in
error, I am hopeful that they understand what that designation means and manage
accordingly. For example, if a group of
positions in a bargaining unit has been designated FLSA nonexempt, which
automatically brings with it the concept of “suffer or permit” overtime, I
would like to see agency managers issue – and enforce – guidance which clearly
states that employees are only to work overtime when
specifically directed to do so by their supervisors. In the absence of both elements – written
guidance and ongoing enforcement – a nonexempt employee’s claim for suffer or
permit overtime is going to be very difficult for agency management to
contest. 

I have also encouraged OPM to step out of the shadows and
take the lead in guiding agencies in their efforts – and their responsibility –
to categorize positions appropriately under the FLSA. I have seen no movement in that direction to
date, but I have not given up hope. 

I will give the final word to Dennis Treadwell, who, in
reflecting on the dearth of classification resources and experience and the
need for increasing attention to FLSA determinations, observed that “In a few
more years, they will be scouring the nursing homes and asylums for
classifiers.”   

© 2016 Steve Oppermann. All rights reserved. This article may not be reproduced without express written consent from Steve Oppermann.

About the Author

Steve Oppermann completed his Federal career on March 31, 1997, after more than 26 years of service, virtually all in human resources management. He served as Regional Director of Personnel for GSA and advised and represented management in six agencies during his federal career. Steve passed away after a battle with cancer on December 22, 2013.

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