By Anthony Rice
In Watkins v. City of Montgomery, fifty-four Fire Suppression Lieutenants failed to convince a federal district court that they were not exempt from the overtime requirements under the FLSA under the City of Montgomery’s claimed “executive” exemption.
The FLSA provides an exemption to the overtime requirement for persons “employed in a bona fide executive … capacity.” Under this exemption, employees who are “[c]ompensated on a salary basis at a rate of not less than $455 per week” are exempt from the FLSA’s overtime requirements. In other words, employers do not have to pay salaried employees overtime. Thus, the Court’s sole focus in this case was whether the City established that it compensated the Plaintiffs on a “salary basis”:
An employee is deemed to be paid on a salary basis if the employee “regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation [that] is not subject to reduction because of variations in the quality or quantity of the work performed.”
Therefore, an employer may lose its exemption if it applies suspensions in a given week and fails to pay the regular salary. The Montgomery Fire Department had imposed fourteen unpaid disciplinary suspensions on twelve of the Lieutenants on previous occasions. Thus, the Lieutenants argued that they were not exempt from the overtime requirement because, by suspending them without pay, the City reduced their compensation “because if variations in the quality or quantity of the work performed.”
Unfortunately, this general rule prohibiting deductions from an exempt employee’s pay is subject to a number of exceptions, two of which the court found to be applicable in this case:
An employer may, in good faith, make deductions from an exempt employee’s pay for violations of “safety rules of major significance . . .” [And] an employer may also reduce an exempt employee’s pay by way of unpaid disciplinary suspensions, imposed in good faith, for violations of “workplace conduct rules.”
The Court concluded “that all of these suspensions were permissible because they were imposed for violations of safety rules of major significance or workplace conduct rules.” The Court identified all the suspensions as either major safety violations or work misconduct violations, including driving to the wrong address on an emergency call, leaving work early, disrespect of a superior officer and excess “weight” under the Department’s “weight policy.” Having found the partial week suspensions were only for safety violations and workplace conduct rules, the district court concluded that the Fire Lieutenants were “employed in a bona fide executive … capacity” within the meaning of the FLSA’s overtime exemption and not entitled to overtime.
