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

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By on January 12, 2011 in Human Resources with 0 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.”

© 2019 Steve Oppermann. All rights reserved. This article may not be reproduced without express written consent from Steve Oppermann.

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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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