Raiders of the Lost Art, Part Two: Analysis of an FLSA Arbitration Case
Tuesday, January 4, 2011
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I noted in part one of this article that I would follow up with an analysis of a grievance arbitration case that I think will help illustrate why Michael Snider and his law firm, Snider & Associates, as well as others, are winning cases against Federal agencies or forcing settlements again and again. So, here goes:
As part of a grievance filed by the American Federation of Government Employees (AFGE) against the Department of Housing and Urban Development (HUD), the parties agreed that the first positions to be addressed by the arbitrator were HUD’s Equal Opportunity (EO) Specialists, GS-11 through 15.
At the hearing, both parties had the opportunity to present testimony, documents and other evidence; to examine and cross-examine witnesses; and to challenge documents and other evidence offered by the other party.
The parties stipulated that:
- Sometime in the past, prior to the filing of the grievance, the Agency made FLSA determinations solely on grade.
- After the filing of the instant grievances, the Agency made a second FLSA determination for a number of series. Regarding the GS-12 level of the Equal Opportunity Specialist, the Agency based that determination on the position description.
- The Agency did not rely upon job duties for either the determination referenced in Stipulation 1 or 2.
I am not a legal strategist, but I do work with some very astute government attorneys on a continuing basis, and I am confident that they would have advised agency management to do one of two things in this case: not sign the stipulations, which essentially amounted to an admission that HUD had violated law and regulation, both before and after the grievances were filed, or settle the case.
The first stipulation reflected a practice –designating positions as exempt or nonexempt solely or primarily based on grade - which was common years ago and was consistent with OPM guidance at the time. However, the union argued that in AFGE v. OPM, 821 F.2d 761, decided by the D.C. Circuit Court of Appeals in 1987, it had successfully challenged OPM’s guidance that all Federal employees classified at GS-11 or above were presumptively FLSA exempt, noting that OPM’s regulation conflicted with one published by the Department of Labor which stated that all employees are presumptively FLSA nonexempt. The D.C. Circuit ruled that “OPM must defer to the (FLSA) so that any employee entitled to overtime compensation under the (FLSA) receives it under the civil service rules.”
As for the second stipulation, there was nothing wrong with the agency making another FLSA determination after the grievance was filed; in fact, I think it was a very good idea. The problem was that the agency again relied strictly on the position descriptions (PDs). To many non-classifiers, it would make perfect sense to base an FLSA determination on the official position description, but PDs are often old and in my experience positions are not static but tend to change over time, in light of such factors as the interests and priorities of the incumbent and of the supervisor, mission changes, reorganizations, etc.
The third stipulation had the effect, I believe, of conceding that the agency did not follow the regulations again, in this case meaning 5 CFR 551.202(i)). Ouch!
I briefly alluded in the earlier article to the fact that I had run across some OPM training material, circa 1998, during my research. OPM recommended in “How to Make Exemption Status Determinations Under the Fair Labor Standards Act (FLSA),” that the classifier “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)
In light of the stipulations agreed to by the parties, I felt that that agency was fighting an uphill battle and had to hope that the Equal Opportunity Specialists (EOSs) would testify that their position descriptions were accurate as written – an unlikely prospect - and/or that the management and supervisory officials who testified would be able to support HUD’s determination that these specialists were exempt from the FLSA.
HUD’s first witness was a Staffing & Classification Specialist who had been in her position just 15 months. The arbitration took place in 2005, and the classifier cited PDs dated 1992 and 1997 for Equal Opportunity Specialists, GS-360-12. She testified that in reaching her conclusion that the positions were exempt, based on the FLSA definitions of the administrative exemption, “she relied only on the PDs and OPM regulations…She said she did not verify the accuracy of the PDs…She testified that she did not review the actual job duties of the employees and she was unfamiliar with the OPM requiring that FLSA exemption status is based upon the duties the employee actually performs rather than what is described in the position description...”
On cross-examination, the classifier “testified that she did not interview supervisors, employees or individuals that classified the two GS-360 EOS positions previously…She said she did not analyze the positions at the GS-9/11/12/13/14/15 levels.” The classifier went on to testify that she had not verified the accuracy of the PDs, that she was not familiar with the OPM publication “How to Make Exemption Status Determinations…”, or with the statement that “FLSA exemption is based upon the duties the employee actually performs rather than duties described in the position description.” She conceded that “the designation of an employee as FLSA exempt or non-exempt ultimately rests on the duties actually performed by the employee and…that OPM regulations require that the actual job duties be inspected.”
By the time the classifier had finished testifying, HUD’s chances of prevailing in this case had dropped to near zero in my estimation. I don’t blame the classifier at all; I believe she testified truthfully. But what was agency management, and the HUD attorney(s) assigned to the case, thinking in putting her on the stand? Given what she had to say, and the fact that the agency had already stipulated that the FLSA determinations were based on the PD and not on actual job duties, I don’t see what HUD had to gain, even in the best-case scenario, by putting the classifier through the agony of testifying as to what she didn’t do and didn’t know about the FLSA designation process.
Of course, HUD was still able to have managers and supervisors testify about various aspects of the EO Specialist positions, but I wasn’t particularly optimistic about that testimony, given the fact that, at least in my experience, employees tended to have considerably more knowledge about the jobs they were doing than did their supervisors; that was certainly true of the employees who worked for me.
The next agency witness was a Deputy Assistant Secretary who testified that he had “very intimate knowledge regarding the duties and responsibilities of GS-360 EOSs.” He averred that EOSs “receive, review, analyze, investigate, and conciliate cases” and “represent the department in instances where there have been findings of discrimination, in testifying in court proceedings.” The HUD executive went on to say that EOSs “are expected to possess analytical skills that allow them to review (and) analyze …information, and make critical judgments regarding the worth of that information, as it pertains to a fair housing investigation…” He further observed that they are “expected to be able to review complex data sources…”
The Assistant Secretary testified that GS-12 EO Specialists are “expected to perform their work with a minimal amount of direct supervisions…as well as to provide assistance to lower graded specialists…” He said that the “base guide documents…are the Title 8 Handbook, other technical guidance memoranda, the statute, and regulations that pertain to each law.” He further stated that that statute is “the base authority for all the activities. And each of the specialists (is) expected to be able to interpret the statutes and execute their responsibility with what the statute requires….The specialists are not authorized to operate – or to supplement their judgment differently than what the handbook and the statute (require)…”
As for complexity and impact, the Assistant Secretary testified that “At the 12 level, the specialist is expected to be able to conduct investigations that have a multiplicity of issues of persons who are to be interviewed.” He observed that “If the case is…complex…it would have a profound impact on the department’s responsibilities.”
The Assistant Secretary concluded his testimony by stating that EO Specialists “are expected to exercise a high degree of independent thought and judgment in executing their responsibilities.” And when they find “situations that render the guide documents not useful, they are expected to revise their investigative approach, as well as make independent judgments about how to proceed, without being required to contact a supervisor to request authority to do so.”
The other managers and supervisors, several of whom directly supervised EO Specialists, provided similar testimony about the work.
The AFGE witnesses consisted of GS-12 and 13 EO Specialists. GS-12s testified that they spent most of their time conducting investigations. One employee said she did not make final determinations and that, depending on the time of the year, for example, when HUD was trying to reach organizational goals, she was closely supervised. Cross examination established that when the employee faced a novel situation, she would ask her supervisor or the General Counsel staff for guidance.
Another GS-12 EO Specialist testified that on August 14, 2005, she received a PD dated July 14, 1997, and that it was not completely accurate, because it stated that GS-360 EOSs develop technical assistance, while she used only HUD’s guidelines.
She testified that her primary duties were to investigate discrimination complaints and that she spent 90% of her time on that task and 10% on program work. She opined that the 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.
The next witness was a GS-13 EO Specialist at HUD headquarters. He said his “cause” findings were reviewed by his supervisor and that he used guidelines, including the Federal HUD guidelines, and the Investigator’s Handbook, from which he was not allowed to deviate. He said that he did have a thorough knowledge of rules, regulations and statutes related to housing discrimination and that he consider his work complex, but testified that at least one investigator in his office had only a high school diploma.
Another GS-13 EO Specialist testified that her primary duties were also discrimination complaint investigations. She said the investigative plan she developed was submitted to her supervisor for review and then reviewed by legal. She combined the data into a final investigative report and determination that was reviewed by her supervisor and by legal.
She testified that the difference between the work of GS-11 and 12 EO Specialists and GS13s was “[t]he complexity of the case…number of issues…number of bases, or just the subject matter is more difficult.” She described the Investigator’s Handbook as an extremely detailed guideline and said that investigators were not allowed to deviate from it without permission.
HUD’s contentions: The GS-12 through15 EO specialist positions met the primary duties test under the administrative exemption. The classifier testified that the work performed by GS-360s is of great significance because errors would be costly to HUD. For this reason, the jobs were highly complex and highly demanding, and their decisions required a great deal of judgment and creativity. The Deputy Assistant Secretary testified that the EO Specialists’ discrimination investigations had a profound impact on HUD’s enforcement policy.
AFGE’s contentions: HUD failed to prove it made a proper FLSA determination based on the employees’ actual duties. HUD stipulated that it originally classified employees based solely on grade level, a per se FLSA violation. HUD also stipulated that the agency classified employees as exempt based solely on position descriptions, which was another per se FLSA violation. The clear testimony revealed HUD classifiers never examined actual job duties, as required by OPM written guidance, another per se FLSA violation. HUD could not then claim that reliance on OPM regulations or guidance to avoid liquidated damages. The testimony of the classifier established that HUD did not make a proper FLSA classification determination because she admittedly did not interview any employees on their actual duties compared to their PDs.
Award: The arbitrator found, on July 17, 2007, that HUD had failed to meet its burden of proof that GS-360 Equal Opportunity Specialists were FLSA exempt under the administrative exemption. He sustained the grievances filed by Council 222, American Federation of Government Employees, on June 18, 2003, and December 24, 2003, ruling that GS-360 Equal Opportunity Specialists in grades 11, 12, 13, 14, and 15 were FLSA nonexempt.
My take: Before reading the case, I was skeptical of the arbitrator’s award, but I can’t say I found any fault with his logic. I did correctly guess that AFGE would use the stipulations against HUD in its arguments. It still seems to me that the case was pretty much unwinnable for the agency from the start, and I can’t understand why they took it forward. But, of course, I had the benefit of hindsight, which is typically 20-20.
What could HUD have done differently? It did not seem to me that the agency representatives anticipated the kinds of questions that Mr. Snider and his associates were likely to ask on direct and cross-examination, or even how at least one of its own witnesses was going to testify. I don’t think it would have been particularly difficult to predict Mr. Snider’s hearing strategy, in that his website, sniderlaw.com, tells actual and potential clients what the target agencies have done wrong in making FLSA designations and how the law firm is going to beat them. Not only is Mr. Snider straightforward about that, but his website contains more information about the FLSA and Title 5 overtime than anything I have seen produced by OPM. Nor did I see much evidence that HUD had, in advance of the arbitration, taken a hard look at its own stance and actions, probing for weaknesses and attempting to shore them up.
As for the stipulations, I don’t think that the first one was fatal, in that it referred to a non-specific time period (“sometime in the past”) and could well have been demonstrated to be consistent with OPM guidance at the time.
The problems were with the second and third stipulations. The fact that the second FLSA determinations, made after the grievance had been filed, were based on the position descriptions, without relying on the actual duties involved, was the torpedo that sank HUD’s ship, in my opinion.
My overall observation is that AFGE and its representative, Snider & Associates, were better prepared for the arbitration hearing than was the agency. Given the law firm’s unquestioned expertise in this area and its track record of wins and settlements, I think agencies would be well-advised to either spend whatever time and effort are necessary to make proper FLSA determinations and to show why its exempt determinations are appropriate and consistent with the FLSA, OPM regulations, and case law, or settle the grievances.
In the next, and final, chapter of this saga, I’ll talk about lessons learned and potential agency strategies in dealing with FLSA designations and related matters.
© 2012 Steve Oppermann. All rights reserved. This article may not be reproduced without express written consent from Steve Oppermann.
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