Controlling Overtime Budgets Just Got Harder for Agencies

A three-judge panel of the Federal Circuit Court of Appeals has reverted to a looser standard for employees to be able to demand overtime pay in Mercier v. U.S., CAFC no. 2014-5074, 5/15/15.

The case involves a challenge by VA nurses to the agency’s refusal to pay them overtime for work that the agency expected them to do but did not officially order and approve. (Opinion, pp. 12-13)

The Court of Federal Claims had dismissed the nurses’ claim, citing a 2004 decision by the Federal Circuit (Doe v. U.S. 372 F3rd 1347) that had reversed a long-standing line of cases that required payment for so-called induced overtime work based on equitable considerations.

The effect of Doe v. U.S. had been to tighten up the need for officially ordered and approved overtime…no more “induced” overtime work being compensated. This reversal in Doe came after the Supreme Court decided two cases involving applications for government benefits where courts had ordered the benefits to be granted even though the applicants missed statutory requirements. Citing the Supreme Court’s logic, the appeals court in Doe concluded it should no longer permit overtime benefit payments by bending the “ordered and approved” requirement to extend to cases where there was “inducement” only.(pp. 7-11)

As a practical matter, Doe gave federal agencies more control over paying overtime. The tighter standard requiring official approval and authorization of the overtime is easier to manage and to control salary budgets than situations where employees claimed overtime because they felt “induced” to perform it.

Now apparently this appeals court panel in Mercier has concluded that Doe was wrongly decided and has ordered up a return to the looser “induced” overtime standard in a contorted bit of legal reasoning. Reasoning that a full en banc decision has never endorsed the Doe decision (p. 14), the panel feels free to give it the boot.

OPM and all federal agencies operating under the FEPA overtime provisions need to sit up and pay attention. The decision also makes clear that the Mercier ruling extends to the overtime standards in the Federal Employee Pay Act, since it’s wording is the same as that found in the VA law, “officially ordered or approved.” (p. 3)

Will the government petition the entire appeals court to reconsider Mercier and decide the issue, or will political forces within the administration cause the agency and Office of Personnel Management to stand down and let Mercier force a return to looser standards for overtime pay requirements? Time will tell.

Mercier v. US (2014-5074)

© 2016 Susan McGuire Smith. All rights reserved. This article may not be reproduced without express written consent from Susan McGuire Smith.

About the Author

Susan McGuire Smith spent most of her federal legal career with NASA, serving as Chief Counsel at Marshall Space Flight Center for 14 years. Her expertise is in government contracts, ethics, and personnel law.

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