Moreau v. Klevenhagen ( 1992 )


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  •                    United States Court of Appeals,
    Fifth Circuit.
    No. 90–2833.
    Lynwood MOREAU, Individually, as President of the Harris County
    Deputy Sheriff's Union, Local 154, IUPA, AFL–CIO, and as FLSA
    Representative of 37 Similarly Situated consenting Harris County
    Law Enforcement Officers, et al., Plaintiffs–Appellants,
    v.
    Johnny KLEVENHAGEN, et al., Defendants–Appellees.
    March 31, 1992.
    Appeal from the United States District Court For the Southern
    District of Texas.
    Before WILLIAMS, WIENER, Circuit Judges, and LITTLE, District Judge
    *
    .
    WIENER, Circuit Judge:
    A deputy sheriffs' union appeals the district court's grant of
    summary judgment in favor of Harris County, Texas on all three of
    the union's claims under the Fair Labor Standards Act (FLSA).             We
    affirm the grant of summary judgment on two of those claims.             But
    finding   that   the   union    was   misled   by   the   district   court's
    bifurcation of the case and was thereby prevented from presenting
    adequate summary judgment proof on the third claim, we reverse and
    remand to the district court for further proceedings with respect
    to that claim.
    I.
    *
    District Judge of the Western District of Louisiana,
    sitting by designation.
    FACTS
    On      April   15,    1988,   Eugene     T.    Merritt,   Jr.   brought     suit
    individually and as President of the Harris County Deputy Sheriffs
    1
    Union          (the Union), together with approximately 400 other Harris
    County Deputy Sheriffs, against Harris County and Sheriff Johnny
    Klevenhagen (collectively, the "County").                    The complaint alleged
    that the County violated the FLSA by (1) failing to pay cash in
    lieu of compensatory time for overtime work in the absence of an
    agreement with the plaintiffs' designated representative (the comp
    time       claim);      (2)    failing    to   include      longevity    pay   in   the
    plaintiffs' "regular rate of pay" for overtime payment calculations
    (the longevity claim);            and (3) excluding non-mandated firearms
    qualification time from the calculation of number of hours worked
    (the firearms qualification claim).                   The district court denied the
    Union's motion for partial summary judgment and granted summary
    judgment in favor of the County on all three claims.
    II.
    ANALYSIS
    A. The Comp Time Claim.
    Under the Harris County pay system, deputy sheriffs receive
    1
    At the time of appeal, Lynwood Moreau served as president
    of the Union.
    compensatory time as overtime compensation at 1–1/2 times the
    normal pay rate.       When a deputy's bank of comp time reaches 240
    hours, the deputy receives compensation in cash for overtime at the
    hourly rate, based on the deputy's "base pay rate."                  Each of the
    deputies   in   this   action    designated      the    Union   as   his   or   her
    representative.      The County instituted its pay system without an
    agreement with the Union.
    The   Union's     claim    alleges   that    the    County's    pay   system
    violates Section 7(o ) of FLSA, which provides in part:
    (2) A public agency may provide compensatory time under
    paragraph (1) only—
    (A) Pursuant to—
    (i) applicable provisions of a collective bargaining
    agreement, memorandum of understanding or any other
    agreement between the public agency and representatives
    of such employees; or
    (ii) in the case of such employees not covered by
    subclause (i), an agreement or understanding arrived at
    between the employer and employee before the performance
    of work....
    * * * * * *
    (B)
    * * * * * *
    In the case of employees described in clause (A)(ii) hired
    prior to April 15, 1986, the regular practice in effect on
    April 15, 1986, with respect to compensatory time off for such
    employees in lieu of the receipt of overtime compensation,
    shall constitute an agreement or understanding under such
    clause (A)(ii).2
    The County's current pay system was the "regular practice in
    2
    29 U.S.C. § 207(o ).
    effect"   on    April   15,   1986.    Each   deputy   signed   a   payroll
    compensation form that stated that the deputy understood and
    accepted the County's personnel regulations, which set forth the
    terms of the pay system.
    The Union asserts that as the deputies in this case have
    designated the Union as their representative, under Section 207(o
    )(2)(A)(i) the County has no authority to pay deputies for overtime
    in comp time, even if the deputies elect to be paid in comp time,
    unless the County has entered into an agreement with the Union to
    that effect.     The Union relies on the Tenth Circuit's decision in
    International Ass'n of Fire Fighters, Local 2203 v. West Adams
    County Fire Protection Dist.3         In that case, the Tenth Circuit
    analyzed the Department of Labor regulations interpreting Section
    207(o ) and held that (1) if employees have a representative, an
    employer may pay comp time in lieu of cash only pursuant to an
    agreement between the employer and the representative, and (2)
    employees are deemed to have a representative by merely designating
    a representative, whether or not the employer recognizes the
    representative.       The Union argues that under West Adams, as the
    deputies had designated the Union as their representative, the
    County could not pay comp time in the absence of an agreement with
    the Union.
    We        find     the      Union's      argument     unpersuasive.
    TEX.REV.CIV.STAT.ANN. art. 5154c prohibits any political subdivision
    3
    
    877 F.2d 814
    (10th Cir.1989).
    from entering into a collective bargaining agreement with a labor
    organization unless the political subdivision has adopted the Fire
    and Police Employee Relations Act.         Harris County has not adopted
    that Act;   thus, under article 5154c the County has no authority to
    bargain with the Union.      In light of that Texas statute, it is not
    West Adams but two other circuit court decisions, one from the
    4
    Fourth Circuit        and another from the Eleventh Circuit,5 that are
    instructional in the disposition of this case.
    In Abbott v. City of Virginia Beach,6 the Fourth Circuit held
    that neither FLSA nor the regulations implementing it showed any
    intent to preempt state laws prohibiting cities from entering into
    collective bargaining agreements.7          As Virginia law had such a
    prohibition,     and   as   the   pay   system   in   Virginia   Beach   gave
    individual police officers an absolute choice of receiving either
    comp time or cash for overtime work, the Fourth Circuit held that
    the pay system, which was not the result of an agreement between
    the city and the officers' designated representative, did not
    violate FLSA.8
    4
    Abbott v. City of Virginia Beach, 
    879 F.2d 132
    (4th
    Cir.1989), cert. denied, 
    493 U.S. 1051
    , 
    110 S. Ct. 854
    , 
    107 L. Ed. 2d 848
    (1990).
    5
    Dillard v. Harris, 
    885 F.2d 1549
    (11th Cir.1989), cert.
    denied, ––– U.S. ––––, 
    111 S. Ct. 210
    , 
    112 L. Ed. 2d 170
    (1990).
    6
    Note 
    4, supra
    .
    7
    
    Id. at 136.
         8
    
    Id. at 137.
          In Dillard v. Harris,9 the Eleventh Circuit agreed with the
    analysis in Abbott and went on to discuss an alternative approach
    that led to the same result.                In Dillard, as in Abbott and the
    instant case, (1) the employees had designated a representative,
    (2) state law prohibited the city from entering into a collective
    bargaining agreement, and (3) the city, without an agreement with
    the   employees'     representative,          had    established      a   pay    system
    providing for comp time.               The city employees argued that, as they
    had designated a representative, the city could not pay them in
    comp time in the absence of an agreement with their representative.
    The Dillard court held that under the plain language of Section
    207(o )(2)(A), the prerequisite for coverage under subclause (i)
    was   the     existence    of     an    agreement    between    the   city      and   the
    representative, rather than the existence of the representative.10
    Thus, held the court, even though the employees had designated a
    representative, subclause (ii) rather than subclause (i) applied
    because      there   was     no    agreement        between    the    city   and      the
    representative under subclause (i).11                 The court held that as the
    employees were hired before April 15, 1986, and as the city's
    practice before that date was to give comp time in lieu of cash,
    that practice constituted an agreement under subclause (ii), and
    was permissible under Section 207(o )(2)(B).12
    9
    Note 
    5, supra
    .
    10
    
    Id. at 1552–54.
          11
    
    Id. at 1552–53.
          12
    
    Id. at 1553.
           Joining our colleagues of the Fourth and Eleventh Circuits, we
    hold that, because Texas law prohibits the County from entering
    into a collective bargaining agreement with the Union—and thus
    there    is     no   such   agreement—the       deputies       are   not    covered   by
    subclause (i) of Section 207(o )(2)(A).                    Rather, subclause (ii) of
    that section applies.          Under Section 207(o )(2)(B), the County's
    pay system, which was in effect on April 15, 1986, constituted an
    agreement between the County and deputies hired prior to that date.
    For     deputies      hired    after        April    15,     1986,    the   individual
    compensation form signed by each deputy constituted individual
    agreements of the type contemplated by Section 207(o )(2)(A)(ii).
    Thus, the County has complied with Section 207(o ) and the payment
    of comp time in lieu of cash is proper.
    Nevertheless, the Union argues that, even in light of the
    Texas law that prohibits political subdivisions from entering into
    collective bargaining agreements, the County was still required to
    enter into an agreement with the Union before it could pay deputies
    in comp time.        The Union contends that under Section 207(o ) comp
    time    may     be   authorized      pursuant       to   agreements    that    are    not
    classified as collective bargaining agreements, thus not violating
    Texas law.       Section 207(o )(2)(A)(i) provides that a public agency
    may provide comp time pursuant to:
    [A]pplicable provisions of a collective bargaining agreement,
    memorandum of understanding, or any other agreement between
    the public agency and representatives of such employees
    (emphasis added).
    The     Union    asserts      that     it     represents      the    deputies    in     a
    non-collective bargaining capacity and that any agreement between
    the   Union   and    the   County   would    be   classified   as   "any   other
    agreement" under Section 207(o ), not in violation of Texas law.
    The Union also cites TEX.REV.CIV.STAT.ANN., art. 5154c Section 6,
    which   recognizes      the   right   of    public    employees     to   present
    grievances through a "representative" such as the Union, and argues
    that under that statute, the Union is allowed to deal with the
    County in a non-collective bargaining capacity.
    We reject this argument.              Presentation of grievances is
    acceptable under Texas law because it is a unilateral procedure
    under which the employee can be represented by anyone he or she
    chooses, be it a lawyer, clergyman, union or some other person or
    organization.       Texas law prohibits any bilateral agreement between
    a city and a bargaining agent, whether the agreement is labeled a
    collective bargaining agreement or something else.                  Under Texas
    law, the County could not enter into any agreement with the Union.
    B. The Longevity Claim.
    The County pays its deputy sheriffs "longevity pay" each year.
    Those payments are calculated by multiplying a fixed dollar amount,
    which the County Commissioners Court determines annually, by the
    number of years an individual employee has been employed by the
    County. That total is paid to the employee in monthly installments
    throughout the year.
    The "regular rate of pay" is the rate which is multiplied by
    one and one-half to arrive at the rate of overtime pay pursuant to
    Section 7(a) of FLSA.13    The County does not include longevity pay
    in its determination of the "regular rate of pay" for purposes of
    calculating the rate of overtime pay. The Union contends that this
    violates FLSA.     Section 7(e) of FLSA provides in part:
    (e) As used in this section the "regular rate" at which an
    employee is employed shall be deemed to include all
    remuneration for employment paid to, or on behalf of, the
    employee, but shall not be deemed to include—
    (1) sums paid as gifts; payments in the nature of gifts
    made at Christmas time or on other special occasions, as
    a reward for service, the amounts of which are not
    measured by or dependent on hours worked, production, or
    efficiency (emphasis added).14
    The regulation interpreting Section 207(e) provides that if a
    payment "is measured by hours worked, production, or efficiency,
    the payment is geared to wages and hours during the bonus period
    15
    and is no longer to be considered as in the nature of a gift."
    The district court concluded that the longevity payments were not
    geared to wages, efficiency or production and held that they were
    a "reward for service."         Thus, held the court, the payments
    qualified as "sums paid as gifts" under Section 207(e)(1) and were
    properly excluded from the determination of "regular rate of pay."
    The Union cites three administrative letter rulings by the
    Department of Labor for its argument that longevity payments must
    13
    29 U.S.C. § 207(a).
    14
    29 U.S.C. § 207(e).
    15
    29 C.F.R. § 778.212 (1989).
    be included in "regular rate of pay" for purposes of calculating
    overtime pay.     Those letters are easily distinguishable, however.
    One letter concerns incentive payments made to employees following
    the completion of educational or career development programs and is
    clearly not applicable to the instant case.         The other two letters
    state that longevity payments made pursuant to a city ordinance or
    a   collective    bargaining    agreement    between    the     employer   and
    employees must be included in "regular rate of pay."                   In the
    instant case, no such ordinance or bargaining agreement binds the
    County to make longevity payments.
    The deputies receive the longevity payments regardless of the
    number of hours worked or wages earned.            The payments serve no
    purpose other than to reward the deputies for their tenure as
    County employees.      The Union cites no authority in support of its
    argument other than the administrative letter rulings which we have
    distinguished. As the payments are not measured by or dependent on
    hours worked, production or efficiency, we hold that the longevity
    payments qualify as "sums paid as gifts."              As such, the County
    properly excludes the longevity payments from "regular rate of
    pay."
    C. The Firearms Qualification Claim.
    The Union's complaint alleged that the County wrongfully
    excluded certain time spent in firearms qualification from the
    calculation      of   the   number   of   hours   worked   by    the   deputy
    sheriffs—thereby depriving deputies of compensation for that time.
    Texas law requires law enforcement officers to meet firearms
    proficiency qualifications once each year.                       The Union and the
    County agree that training time spent to meet that qualification,
    as well as time spent training for requalification—as distinguished
    from time spent in a second actual qualification—is not compensable
    under FLSA, even if such time exceeds a deputy's normal working
    hours.      From 1986 until August 1991, however, the County required
    its law enforcement officers to meet the proficiency qualifications
    twice      each      year.16         The    Union   argues   that,     as    the   second
    qualification requirement each year exceeded the state requirement
    of one qualification per year, any overtime spent by the deputies
    in   qualifying        a    second     time    during   each   of    those     years   was
    compensable.
    Job-related training activities are generally compensable
    under      FLSA,17    but      the   FLSA    regulations     provide    that    required
    training is not compensable in the following situations:
    (1) Attendance outside of regular working hours at specialized
    or follow-up training, which is required by law for
    certification of public and private sector employees within a
    particular governmental jurisdiction (e.g., certification of
    public and private emergency rescue workers), does not
    constitute compensable hours of work for public employees
    within that jurisdiction and subordinate jurisdictions.
    (2) Attendance outside of regular working hours at specialized
    or follow-up training, which is required for certification of
    employees of a governmental jurisdiction by law of a higher
    level of government (e.g., where a State or county law imposes
    16
    The County now requires its officers to qualify only once
    each year.
    17
    29 C.F.R. 785.27 (1989).
    a training obligation on city employees), does not constitute
    compensable hours of work.18
    The Union argues that, although overtime related to the first
    qualification       during     a   year     is    excluded         from    compensability
    pursuant to the regulations, as the second qualification during a
    year is required by county policy only—not by state or county
    law—any overtime spent meeting the second qualification requirement
    is not an exception to the general rule of compensability.
    Central       to   our    determination           here   is    the    fact   that   the
    district court bifurcated this case into two stages—the first stage
    was supposed to address only liability and the second stage was
    supposed to address damages.              The Union argues that, despite the
    bifurcation, the district court's holding in fact addressed the
    issue of damages during the first, or liability stage, at a time
    when the parties had not yet conducted discovery.                                 The Union
    asserts that the sole purpose of the liability stage of the
    proceedings was to determine whether in fact the County maintained
    a policy of not compensating deputies for any overtime spent
    training      to   meet       either   of        the    semi-annual         qualification
    requirements and, if so, whether implementation of that policy
    would violate the overtime provision of FLSA.                             Thus, the Union
    contends, it should not have been required in the liability stage
    to produce proof that any deputies had actually trained twice
    without being compensated for overtime on either occasion, and the
    district court erred in ruling on the damages stage before the
    18
    29 C.F.R. 553.226(b) (1989) (emphasis added).
    Union had an opportunity to present summary judgment proof on that
    issue.    The    Union    urges   that,   inasmuch    as    the    twice-a-year
    qualification    policy,    if    applied,    would   entitle      deputies   to
    overtime, we should remand this case to the district court with
    instructions to allow the Union to adduce its evidence of actual
    damages suffered, on a deputy by deputy basis, whether by summary
    judgment proof, in an evidentiary hearing, or in a full-blown
    trial.   We agree.
    In our de novo review of this case, we hold that the district
    court erred in two respects.        First, the district court erred in
    its determination of the factual circumstances under which a deputy
    would be entitled to overtime compensation.                The district court
    stated that if a deputy met the State-required annual qualification
    but   failed    to   meet   the    County's    semi-annual        qualification
    requirements within the same year, and as a result that deputy was
    required to participate in remedial training which caused him to
    work more than forty hours during a week, the deputy would be
    entitled to overtime compensation.           The district court held that
    the Union's claim did not survive the County's motion for summary
    judgment, however, because the Union had failed to demonstrate by
    summary judgment proof that one or more of the deputies had not in
    fact been compensated in such a situation.
    In the situation discussed by the district court, an officer
    who twice tries but fails even once to meet the certification
    requirements    must     make   additional    attempts     until    he   or   she
    succeeds.       But the Union concedes that time spent by an officer in
    training for such "make-up" qualification tests is not compensable
    overtime under FLSA because the County allows participation in such
    remedial activities to take place during normal working hours. The
    situation actually being contested, though, is different.                              It
    questions overtime entitlement of a deputy who passes his shooting
    test twice a year on his own time without being paid overtime for
    either event.        Thus, contrary to the district court's conclusion,
    deputies are claiming entitlement to overtime compensation only if
    they spend time in excess of normal working hours to meet the
    requirements for the second shooting qualification during a year
    after    having      already     worked    on     their    own   time    to     meet   the
    requirement once that year.
    The district court's second error was in granting summary
    judgment in favor of the County on the firearms qualification
    issue.      A    memorandum       dated    February       16,    1987    from    Sheriff
    Klevenhagen to all Sheriff's Office personnel provided:
    Firearms requalification for peace officers is required by the
    State of Texas as a condition of maintaining the Peace Officer
    License. A thorough search of applicable law by the office of
    the County Attorney has determined that under this condition
    the time spent in demonstrating firearms proficiency is not
    compensable time when occurring outside normal duty hours.
    Therefore, effective immediately, no overtime compensation
    will be granted for time spent on firearms requalification
    (emphasis added).
    That summary judgment proof clearly showed that the County did in
    fact    have     a    policy     under    which     deputies     would    receive       no
    compensation         for   any    overtime      spent     meeting   either       of    the
    semi-annual qualification requirements.                   Whether any deputies were
    actually deprived of overtime compensation because of the County's
    firearm qualification policy should have been addressed only at the
    damages stage of the proceedings. Thus, the district court "jumped
    the gun" when it granted summary judgment in favor of the County
    before the Union had an opportunity to conduct discovery and
    present proof of damages.
    We therefore reverse the district court's grant of summary
    judgment on this issue and remand for further proceedings.   As we
    have concluded that the County had a policy which potentially could
    deprive deputies of their just compensation, the Union must be
    allowed to discover and present proof, if there be any, of which
    deputies suffered damages as a result of that policy, and to what
    extent.   To establish that its members actually incurred damages,
    the Union must show that one or more deputies (1) trained on their
    own time to meet both semi-annual qualification requirements during
    a year, and (2) received no overtime compensation for either
    occasion.   Obviously, each deputy will be limited to recovery of
    overtime for only one such qualification per year because the other
    is required by state law and therefore is not compensable.
    III.
    CONCLUSION
    As Texas law prohibits the County from entering into an
    agreement with the Union, the County's pay system constitutes an
    agreement   between   the   County   and   the   individual   deputies   in
    compliance with Section 7(o ) of FLSA.            Therefore, the district
    court did not err in granting summary judgment in favor of the
    County on the Union's comp time claim.           Neither did the district
    court err in granting summary judgment in favor of the County on
    the Union's longevity payments claim because the payments were not
    measured by or dependent on hours worked, production or efficiency
    but qualified as gifts.      The district court did err, however, in
    granting summary judgment in favor of the County on the Union's
    firearms qualification claim.        We therefore REVERSE the district
    court's grant of summary judgment in favor of the County on that
    claim and REMAND to the district court for the sole purpose of
    determining whether any deputies suffered damages and, if so, to
    what extent.   In all other respects, we AFFIRM the judgment of the
    district court.