Aiken v. County of Hampton ( 1998 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ISRAEL V. AIKEN; JOSEPH MICHAEL
BOOTLE; MARTY CLAPP; KEVIN
FIRSTER; GINA M. HOLSTEIN;
MARK J. JINKS; FELISHA MIXSON;
MARK J. REID; CLAUDE E. RENTZ;
TIMOTHY NORTON SUTTON; SAMUEL
WILLIAMS; MARIE V. HIGHTOWER,
Plaintiffs-Appellants,
No. 97-2328
v.
COUNTY OF HAMPTON,
Defendant-Appellee,
and
SIDNEY L. DUPREE, Sheriff, in his
official capacity as sheriff of
Hampton County,
Defendant.
Appeal from the United States District Court
for the District of South Carolina, at Charleston.
David C. Norton, District Judge.
(CA-96-1779-18-2)
Argued: June 4, 1998
Decided: September 22, 1998
Before ERVIN and LUTTIG, Circuit Judges, and
BUTZNER, Senior Circuit Judge.
_________________________________________________________________
Affirmed by unpublished opinion. Judge Ervin wrote the opinion, in
which Judge Luttig and Senior Judge Butzner joined.
COUNSEL
ARGUED: William Allen Nickles, III, GERGEL, NICKLES &
GRANT, P.A., Columbia, South Carolina, for Appellants. Stephen
Terry Savitz, GIGNILLIAT, SAVITZ & BETTIS, Columbia, South
Carolina, for Appellee. ON BRIEF: Richard Mark Gergel, GERGEL,
NICKLES & GRANT, P.A., Columbia, South Carolina, for Appel-
lants. Linda Pearce Edwards, GIGNILLIAT, SAVITZ & BETTIS,
Columbia, South Carolina, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
ERVIN, Circuit Judge:
The appellants in this case are sheriff's deputies and jailers who
allege violations of the Fair Labor Standards Act ("FLSA" or the
"Act"), 29 U.S.C. § 201 et seq. (1994), because they are paid as "sala-
ried employees" under the "fluctuating work week" provisions of the
Act and are thereby deprived of the straight time-and-a-half overtime
pay they would be entitled to receive were they treated as "hourly
employees." The district court correctly decided that Hampton County
properly applied the fluctuating work week provisions of the FLSA
and we affirm its decision in all respects.
I.
The Fair Labor Standards Act generally requires that public
employees receive compensation for all hours worked in excess of a
40-hour week. 29 U.S.C. § 207(a). Law enforcement officers, such as
deputies, are entitled to receive overtime only after working 43 hours.
Id. at § 207(k). Employees covered by the FLSA are entitled to
receive overtime whether they are paid a straight salary or are paid
on an hourly basis. 29 C.F.R. §§ 778.110, 778.113 (1997). The FLSA
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provides different methods of compensation calculation that employ-
ers can use to ensure they pay their employees in a fair manner. In
this case, Hampton County has chosen to pay its deputies and its jail-
ers based on the "fluctuating workweek" method of calculating salary
and overtime.
The Hampton County sheriff's office employs several deputies and
jailers, whom they pay as salaried employees but whose hours of
work fluctuate depending on the law enforcement needs of the county
in any given week. The deputies and jailers are always scheduled to
work at least 43 and 40 hours respectively in any week. Their hours
vary only in that frequently the employees work more than the sched-
uled number of hours.
The deputies and jailers receive overtime pay in accordance with
the fluctuating workweek regulation set forth in 29 C.F.R. § 778.114.
Overtime pay is calculated by dividing the base pay by the number
of hours worked in a particular week. An employee whose base pay
is $250 per week, and who works 44 hours in a week, is paid $5.68
per hour for that particular week. He would receive an overtime pre-
mium of $2.84, thus bringing his overtime pay to a total of $8.52 per
hour. Effectively, then, the employee is earning time-and-a-half for
overtime pay. However, his hourly wage, and the amount of overtime
pay he earns, fluctuate depending on the total number of hours
worked, and both his hourly wage and his overtime pay decrease as
his hours increase. Thus, an hourly employee who receives a straight
hourly wage and straight time-and-a-half overtime pay could earn
more than a salaried employee.
In the Hampton County sheriff's office, if a salaried employee does
not work the requisite minimum number of hours in the week, his sick
leave or vacation leave is reduced by the number of hours he was
absent from work. Hampton County will also deduct leave time in
increments as small as one-tenth of an hour when the employees are
absent during their scheduled work time. When, however, the
employees work fewer than 40 or 43 hours per week but do not have
any leave accrued, their pay is not docked, so long as they work at
least some hours during the week.
The salaried employees receive eight hours of pay for each desig-
nated holiday. They receive that holiday pay in addition to their regu-
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lar pay when they work on holidays. If the salaried employees record
leave but work at least 40 or 43 hours in a week, their leave time is
not reduced.
The fluctuating work week regulation may not be employed if it
will regularly result in a below-minimum hourly wage. Hampton
County pays a "minimum wage adjustment" in those cases where a
deputy or jailer works so many hours that his salary is reduced below
the minimum wage. Hampton County has used the minimum wage
adjustment on five occasions in the approximately two-year period
covered by the lawsuit.
Other employees of the Hampton County sheriff's office are paid
on an hourly basis and thus receive straight time-and-a-half overtime
pay. These hourly employees are subject to the same reductions in
leave if they do not work as scheduled. If, however, they take leave
that they have not accrued, they are not paid.
Twelve employees who are either deputies or jailers in the Hamp-
ton County sheriff's office brought this claim in June, 1996. It covers
the time period January 23, 1995 to the present. A previous case,
Allen v. Hampton County, C.A. No. 9:94-1498-18, which settled out
of court, covered the period preceding January 23, 1995. The district
court granted summary judgment for Hampton County in the case
before us. On appeal, the deputies and jailers (whom we will collec-
tively refer to as "Aiken," the first named plaintiff in the case) con-
tend that Hampton County's practice violates the FLSA by not paying
them adequate amounts of overtime compensation, that Hampton
County is liable for liquidated damages under the FLSA, and that
Hampton County is liable for trebled damages and attorneys' fees
under South Carolina's Payment of Wages Act.
II.
We review a district court's grant of summary judgment de novo.
Miller v. Fed. Deposit Ins. Corp., 906 F.2d 972, 974 (4th Cir. 1990).
All evidence must be viewed in the light most favorable to the non-
moving party, and summary judgment is appropriate if, after viewing
all the evidence, the court finds no genuine issue of material fact. Fed.
R. Civ. P. 56(c).
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III.
The crux of Aiken's argument is that Hampton County did not
comply with the requirements of 29 C.F.R. § 778.114 ("section 114")
and thus could not use the "fluctuating workweek" system to calculate
and pay overtime compensation. Contrary to Aiken's statement that
section 114 acts as an exception to the strict overtime requirements of
the FLSA, this court has held that section 114 is merely an alternative
means by which an employer can determine the proper amount of
wages to pay its employees. Flood v. New Hanover County, 125 F.3d
249, 252 (4th Cir. 1997).
Hampton County must fulfill the five requirements set forth in sec-
tion 114 in order to use the "fluctuating workweek" method of pay-
ment: (1) the employee's hours must fluctuate from week to week; (2)
the employee must receive a fixed weekly salary that remains the
same regardless of the number of hours that the employee works dur-
ing the week; (3) the fixed amount must be sufficient to provide com-
pensation at a regular rate not less than the legal minimum wage; (4)
the employer and the employee must have a clear, mutual understand-
ing that the employer will pay the employee a fixed salary regardless
of the number of hours worked; and (5) the employee must receive
a 50 percent overtime premium in addition to the fixed weekly salary
for all hours that the employee works in excess of forty during the
week. Id.; 29 C.F.R. § 778.114.
Aiken has stipulated that Hampton County and the deputies and
jailers had a clear mutual understanding as to the nature of the fluctu-
ating workweek method of payment except as to the use of a mini-
mum wage adjustment. J.A. at 98. We therefore address only the four
disputed criteria here.
A.
Aiken argues that neither the deputies' nor the jailers' regular hours
fluctuate under the terms of section 114 because the employees are
never scheduled to work fewer than 43 or 40 hours. Only the amount
of overtime each is required to work changes from week to week. He
claims section 114 was designed to cover situations in which an
employee's hours do not follow any kind of regular schedule but fluc-
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tuate from week to week and may involve working fewer than 40 (or
43) hours in a given week.
Aiken's claim is unavailing. The Seventh Circuit has concluded
that fixed base hours topped by fluctuating overtime fit within sec-
tion 114. Condo v. Sysco Corp., 1 F.3d 599, 603 (7th Cir. 1993)
(though work did not fall below 40 hours per week, Condo worked
varying amounts of overtime hours and number of hours worked
therefore "fluctuated" for purposes of section 114). The Fourth Circuit
has not yet directly addressed whether employers may use the fluctu-
ating workweek method when employees work predictable base hours
but fluctuating overtime. Impliedly, however, the Fourth Circuit has
concluded, in accord with the Seventh Circuit, that fluctuating base
hours are not necessary to invoke the fluctuating workweek provision.
In Griffin v. Wake County, this court held that section 114 requires
only a schedule that fluctuates, not a schedule that fluctuates in an
unpredictable manner. 142 F.3d 712, 715 (4th Cir. 1998). Griffin
involved EMTs whose schedules fluctuated in a predictable manner
-- they worked either 48 or 72 hours in any given week throughout
the year. In essence, they worked both a predictable number of base
hours and a predictable amount of overtime, though the amount of
overtime varied in any given pay period.
Similarly, in Flood, the employees worked alternating 43 and 51
hour workweeks. The court noted that section 114 generally applied
when employees worked a varying or irregular number of hours in a
workweek, but fixed-schedule, alternating workweeks also were con-
sistent with the regulation. 125 F.3d at 253. Flood, then, also involved
a fixed number of base hours plus a fixed amount of overtime.
In light of this precedent, we hold that Hampton County's practice
complies with this part of section 114.
B.
Aiken argues that he and his fellow plaintiffs do not receive a
"fixed" salary because Hampton County docks their leave when they
fail to work their scheduled number of hours. The regulation provides
6
that the employee "will receive such fixed amount as straight time pay
for whatever hours he is called upon to work in a workweek, whether
few or many." 29 C.F.R. § 778.112. Hampton County will dock an
employee's sick leave or vacation leave whenever the employee fails
to work the 40 or 43 scheduled hours in the week, regardless of
whether the employee submits a leave form. If, however, the
employee submits a leave request, but ends up working 40 or 43
hours anyway, his leave is not docked. Additionally, if an employee
has no leave time accrued, Hampton County will not dock the
employee's pay for failing to work the scheduled number of hours,
unless the employee worked no hours whatsover during the week.
Aiken contends that the employees' pay encompasses fringe bene-
fits such as sick leave and vacation leave and that Hampton County's
practice of docking leave time is equivalent to reducing their pay for
failing to work a full workweek. This claim has been foreclosed by
Griffin. Griffin held that vacation leave and sick leave are extra bene-
fits and that section 114 applies only to pay. 142 F.3d at 717-18.
Griffin noted that countenancing a claim that deductions from leave
violate section 114 would beg the question of how any system of
earned leave time could operate if an employer could never deduct
from it whenever an employee takes a vacation. Id. at 718.
Aiken also contends that the mere practice of calculating holiday
pay, sick leave, annual leave, and funeral pay by dividing the weekly
pay rate by the number of regularly scheduled hours for each
employee indicates that the employees are more properly viewed as
"hourly" employees as opposed to "salaried" employees. Aiken points
to two other employees working in jail administration who are
"hourly" employees and who therefore receive straight time-and-a-
half for each overtime hour worked. Because their leave pay is calcu-
lated in the same manner as that of the deputies and the jailers, Aiken
argues, it is yet more evidence that the deputies and jailers are really
"hourly" employees.
This argument is also unconvincing. The only cases Aiken cites
involve situations where the parties dispute whether certain employ-
ees are executives and therefore exempt from any overtime require-
ments whatsoever, or whether they should be paid some kind of
overtime premium. See, e.g. Thomas v. County of Fairfax, 758 F.
7
Supp. 353 (E.D. Va. 1991), aff'd sub nom. Allen v. Fairfax, 16 F.3d
408 (4th Cir. 1994). Nothing in the regulations nor the case law sug-
gests that requiring employees to keep track of the hours worked on
an hourly basis defeats their classification as salaried employees; on
the contrary, section 114 could not operate if an employer did not
keep track of the hours an employee worked. See also Griffin, 142
F.3d at 718 (describing regime in which leave is accrued by reference
to number of hours worked); Roy v. County of Lexington, 141 F.3d
533, 538 (4th Cir. 1998) (describing method of calculating overtime
hours).
Hampton County therefore does not violate section 114 by deduct-
ing time from an employee's leave bank when the employee misses
work.
C.
Aiken argues that Hampton County's practice of paying a "mini-
mum wage adjustment" prohibits the County from using the fluctuat-
ing workweek payment method. Aiken points to five instances during
the approximately two-year time period covered by this case in which
Hampton County had to invoke the minimum wage adjustment in
order to prevent the affected employees' salaries from falling below
minimum wage.
Though Aiken concedes that the Department of Labor has opined
that use of a minimum wage adjustment may be permissible in certain
circumstances, 27 Op. Wage and Hour Admin. 945 (1969) ("Opinion
Letter 945"), he contends that those circumstances are limited to situ-
ations that are not foreseeable by and are beyond the control of an
employer and that it may only be used to calculate back pay. He fur-
ther argues that the Secretary of Labor has determined that, once a
minimum wage adjustment is made, the employer and employee must
reach a new understanding as to hours and compensation. 51 Op.
Wage & Hour Admin. 1010 (1969) ("Opinion Letter 1010").
Aiken mistakes the import of the Opinion Letters. Indeed, Opinion
Letter 945 seems addressed to precisely this case and supports the dis-
trict court's conclusion. In the case addressed in Opinion Letter 945,
the employer had used a minimum wage adjustment for five weeks
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in an annual period when the employees had unexpectedly worked
sufficient overtime to place their salary below the minimum wage.
The letter stated that a variance may be permitted in unusual circum-
stances so long as the salary is reasonably calculated to give the statu-
torily applicable minimum hourly rate, and that the bona fides of such
a plan were not defeated even if it failed to provide minimum wage
in as many as five weeks in one year.
The case addressed by Opinion Letter 1010 involved a situation in
which the employer had to make a minimum wage adjustment for 27
weeks in a year. In that case, the Department of Labor found the base
salary had not been reasonably calculated to ensure pay above the
minimum wage and required the employer and employee to come to
a new agreement about either hours worked or compensation paid, or
both, to ensure adequate payment to the employee.
Though the Department of Labor's letter rulings do not bind the
court, "[they do] constitute a body of experienced and informed judg-
ment" and are entitled to substantial weight. Flood, 125 F.3d at 253(internal citations omitted). The Opinion Letters suggest that making
a minimum wage adjustment on five occasions in a two-year period
does not defeat the validity of the fluctuating workweek plan. More-
over, Aiken does not suggest any reluctance on Hampton County's
part to make the required adjustment to bring the salary up to mini-
mum wage.
Though Aiken is correct that Opinion Letter 1010 required the
employee and employer to renegotiate their agreement because of the
27 weeks during which the previous agreement failed to guarantee the
employee minimum wage, Opinion Letter 1010 did not imply that a
contract must be renegotiated in all cases. In fact, Opinion Letter 945,
which is most closely on point, did not mention renegotiation. It only
stated that a variance from the salary regularly paid under the fluctu-
ating workweek method may occur only a "few isolated workweeks"
and that such a variance must not be foreseeable to the employer.
Here, Aiken does not argue that falling below minimum wage was
"foreseeable" except that it happened five times (to four different offi-
cers) in a two-year period, and therefore it might happen again. He
does not contend that employees are frequently and deliberately
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required to work such long hours that their salaries fall below mini-
mum wage.
D.
Aiken contends that the employees did not receive an overtime pre-
mium for excess hours because the minimum wage adjustment
resulted in pay of only $6.38 per hour (based on a minimum wage of
$4.25 per hour plus half that at $2.13 per hour), and that amount was
less than the base salary rate would have been if one divided the
employees' salaries by their regularly scheduled number of hours.
Thus, Aiken would receive $7.27 per hour based on a 43 hour week.
Aiken therefore argues that paying only $6.38 per overtime hour
meant he did not receive the required overtime premium because his
regular pay was properly calculated at $7.27 per hour.* The other
employees affected by the minimum wage adjustment make a similar
argument.
Aiken's claim is not without facial appeal, but is based on a mis-
reading of section 114. Section 114 does say that the arrangement is
not permitted when "all the facts indicate that an employee is being
paid for his overtime hours at a rate no greater than that which he
receives for non-overtime hours." A fluctuating workweek employ-
ee's salary is calculated by dividing the number of hours actually
worked into the amount of compensation fixed for the pay period. His
hourly rate therefore fluctuates with the amount of hours worked, and
it diminishes as he works more hours. Flood, 125 F.3d at 253. That
hourly amount may not go below minimum wage, however, and an
employer may not refuse to pay an overtime premium, nor may an
employer attempt to avoid overtime by asking an employee to record
fewer hours than he actually works. Nevertheless, nothing in the regu-
_________________________________________________________________
*At the time Aiken filed his suit, minimum wage was $4.25 per hour.
29 U.S.C. § 206(a)(1). Minimum wage has since been raised to $5.15 per
hour. Id. Thus, the overtime rate Aiken and his colleagues must be paid
has risen to $7.73 per hour. For the purposes of this case, we will assume
that Aiken has received a raise in the intervening time period and that his
current hourly salary, caclulated by dividing the number of hours in a
"regular workweek," would still exceed the overtime premium based on
minimum wage.
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lations indicates that the rate an employee receives for non-overtime
hours should be calculated based on a workweek comprising only a
base number of hours. Indeed, the fundamental premise of section 114
is that there is no "regular" workweek. "[T]he regular rate of the
employee will vary from week to week and is determined by dividing
the number of hours worked in the workweek into the amount of the
salary to obtain the applicable hourly rate for the week." 29 C.F.R.
§ 778.114. So long as the hourly pay during a week is greater than
minimum wage, the employer is complying with the FLSA. Id. Aiken
has produced no evidence to show that the employees were not paid
an overtime premium of at least 50% greater than minimum wage.
Hampton County has therefore complied with the requirements of
section 114 and Aiken and the other plaintiffs are not entitled to
unpaid overtime compensation calculated on a straight time-and-a-
half basis.
IV.
Aiken is not entitled to liquidated damages because we have con-
cluded that Hampton County has not violated the Act. His claim that
Hampton County violated the South Carolina Payment of Wages Act,
S.C. Code Ann. § 41-10-10 et seq. (1997), by failing to pay the proper
amount of wages when they were due must also fail.
AFFIRMED
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