Untitled Texas Attorney General Opinion ( 1974 )

THEATTORNEYG~CNERAL
OF TEXAS
AUEWIN. T-s 7SVll
August 26. 1974
The Honorable Robert S. Calvert Opinion No. H- 382
Comptroller of Public Accounts
State Finance Building Re: Application of the Fair Labor
Austin, Texas Standards Act of 1938. as amended,
to state employees and related
The Honorable James E. Peavy, M.D. questions.
Commissioner of Health
Texas State Dept. of Health
Aus tin, Texas
Gentlemen:
This office has received requests for opinions from both of you
concerning the application of the Fair Labor Standards Act of 1938. 29
U.S. C. 0 3 201-219 (“FLSA”), as recently amended by the Fair Labor
Standards Amendments of 1974.
The 1974 amendments to the FLSA are the latest in a lengthy series
of federal legislative enactments providing minimum wages and overtime
compensation for a wide range of workers in the United States. In 1966.
amendments to the FlSA extended this type of coverage to employees of
hospitals, nursing homes or schools operated by states or political
subdivisions, and to local transit operations.
By virtue of~the 1974 amendments, 8 3(e) of the FLEA now establishes
the coverage of the Act to include most state employees. The definition of
those covered ia:
Section 3(e)(2).In the case of an individual employed by
a public agency, such term means . . .
. . .
p. 1794
The Honorable Robert S. Calvert
The Honorable James E. Peavy page 2 (H-382)
(C) any individual employed by a State, political
subdivision of a State, or an interstate governmental
agency, other than such an individual . . .
(i) who is not subject to the civil service
laws of the State, political subdivision, or
agency which employs him; and
(ii) who . . .
(I) holds a public elective office of that
State, mlitical subdivision, or agency,
(II) is eelected by the holder of such an
office to be a member of his personal staff,
(III) is appointed by such an office holder
to serve on a policy making level. or
(IV) who is an immediate advisor to such
an office holder with respect to the constitu-
tional or legal powers of his office.
Section 7 of the FISA provides that employers may not employ any
covered .workef for’s ,work week:longer. than forty ,ho\lr,a unless the employee
is compensated for hir work in excess of forty.hours at a rate which is not
leer than one and one-half times his regular rate of pay.
Payment for overtime of state employees is provided for in the
General Appropriations Act-+hich’:readsi ,. ‘. , . , ,::.
e. OVERTIME. In order to reimburse employees for
work performed in excess of the working hours required
by Acts 1963, 58th Legislature, page 184, Chapter 104
(codified as Article 5165a. V. A. C. S.) it is required that
compensatory time be granted at the rate of l-1/2 times
the overtime performed within the same month (pay
period) that said overtime was accrued. In the case of
p. 1795
. .
The Honorable Robert S. Calvert
The Honorable James E. Peavy page 3 (H-382)
hospital employees, said employees shall be reimbursed
with compensatory time at the rate of l-1/2 times the
overtime accrued in excess of eighty (a hours over a
fourteen (14) day consecutive period.
This prbvision shall not apply to medical personnel
and employees employed in a bona fide executive, adminis-
trative or professional capacity, including any employee
employed in the capacity of academic administrative
personnel or teacher in elementary or secondary schools.
Compensatory time for those employees excepted from
this provision shall be determined by the Administrator
of the agency or institution involved. Provided, however,
that any agency or institution subject to the Fair Labor
Standards Act, as amended, is authorized to reimburse
employees for all authorized overtime by granting com-
pensatory time as specified above or by paying money
from funds appropriated by this Act at the rate of l-1/2
times the regular rate for the overtime performed.
(Acts 1973, 63rd Leg., ch. 659, Art. V, 5 2(e), at p.2179).
Comptroller Calvert’s queqtions are considered first. His first
. question is, “What ir the effective date of the 1974 amendments to the Act
which affect state employees??’ ,’
Section 29(a) of the 1974 Amendments to the FLSA provides:
Except as otherwise specifically provided, the
amendments made by this Act shall take effect
on May 1, 1974.
Certain coverage provisions do have different “effective” dates, (see
G. a., the special treatment for public agency fire protection, and law
enforcement activities set out in 5 S 7(k) and 13(b)(20) of the FLSA).
The answer to the general question presented, however, is May 1, 1974.
p. 1796
- .
.
The Honorable Robert S. Calvert
The Honorable James E. Peavy page 4 (H-382)
The Comptroller’s second and fourth questions are:
2. If a state employee, who performs work of such a
nature as to be covered by the provision8 of the Act’
works in excess of 40 hours in one work week,
is the employee entitled to overtime pay at the rate
provided for in the Act?
4. If a State employee who peforms work of such
a nature as to be covered by the provisions of the
FLEA works 50 hours in the first work week of the
month and his employer lays him off for 15 hours
during subsequent work weeks of the same pay period
so that the employee is only paid his regular monthly
salary (l/12 of his annual classified salary), has that
employee received overtime pay as required by the
Act or compensatory time as authorized by State Law?
As provided in the Appropriations Act: state employees who are
covered by the Act and work more than forty hours in a seven day work
week accrue overtime, and may be given overtime pay at the rate of
one and one half times their regular pay rate , or. in the alternative, may
be given compensatory time off at one and one half times the amount of
overtime worked, if given during the same pay period (i. e., calendar
month) in which the overtime was accrued.
We believe this procedure outlined in the Appropriation Act is
consistent with the requirements of federal law. Opinion Letter No. 913,
issued December 27, 1968. by the Administrator of the Wage and Hour
Division of the U.S. Department of Labor states:
An employer may not credit an employee with compensa-
tory time (even at a time and one half .rate) for overtime
earned which is to be taken at some mutually agreed upon
later date subsequent to the end of the pay period in which
the overtime was earned, rather than pay cash for the
p. 1797
The Honorable Robert S. Calvert
The Honorable James E. Peavy page 5 (H-382)
overtime as it is earned, However, it in permirsible for
the employer employing one at a fixed salary for a fixed
workweek to lay off the employee a sufficient number of
hours during some other week or weeks of the pay period
to offset the amount of overtime worked (i. e. at the time
and one half rate) so that the desired wage or salary for
the pay period covers the total amount of compensation,
including overtime. CCH Lab. L. Rep. (Nov. 1966 -
March, 1969) para. 30,924.
And see, The Administrator’s Opinion Letter No. 868 (Oct. 18, 1968). CCH
Lab. L. Rep. 11ul)ro para. 30,877.
Opinion Letter No. 913 was approved in Brennan v. State of New
Jersey, 364 F. Supp. 156 (D. N. J. 1973) (appeal pending) where the court
made the following comment at page 158:
In fact, this is not really an exception to the rule of 5 7
of the Act. but ia in complete compliance therewith. For
exampl’e,, given a pay period of two weeks, with a fixed
salary of $200.00 per week and a fixed work week of forty
hours an employee works for fifty hours during the first
week of the pay period. Under the above opinion letter, the
employee may then work only twenty-five hours in the sec-
ond week of the pay period (forty hours less time and one
half for the ten hourr accrued overtime) while receiving
his full gross pay of $400.00 at the end of the two week
pay period. This would comply with § 7 of the Act
and the accompanying regulations and interpretations,
since such wages are paid both promptly and in cash.
(Emphasis added)
Brennan was shortly followed by Hodgson v. A. W. Crossley. Inc.,
365 F. Supp. 1131(S. D. N. Y. 1973). in which Brennan and Opinion Letter
No. 913 were cited with approval.
p. 1798
The Honorable Robert S. Calvert
The Honorable James E. Peavy papa 6 (H-382)
Thus, the provisions of the FLSA pertinent to this inquiry have
been construed by the Federal Wage and Hour Administrator and the
courts as permitting, under certain conditions, the granting of “compenaa-
tion time” in lieu of overtime wages. The answer to your second question,
therefore, is that state employees, not excluded or exempted from the
overtime provisions of the FLSA, are entitled to overtime pay at the rate
provided in the FLSA, or compensatory time as discussed above.
The Comptroller’s third question is:
If your answer to question number 2 ir affirmative,
may such overtime pay be paid by a warrant on the
State Treasury thm ugh the classified salary fund
of the employing agency?
Attorney General Opinion M-1155 (1972) considered a virtually
identical question. That opinion states in part:
Your . . . question brings into consideration 5 6 of
Article VIII of the Texas Constitution. That section
provides that no money shall be drawn from the
Treasury but in pursuance of specific appropriation
made by law.
In our opinion the necessary specific appropriation for
overtime pay is provided by the same appropriation that
provides for regular pay of the employee. The designad
tion given this sum will no doubt vary from institution to
institution. Each employee’s warrant, including his over-
time, should be charged to that fund.
See National Biscuit Co. v. State( 135 S. W. 2d 687, page
693 (Tex. Sup. 1940). wherein it was said:
.
‘As just stated, one of the provisions of 06 of Article
8 of our Constitution requires all appropriations of
money out of the State Treasury to be specific. It
p. 1799
The Honorable Robert S. Calvert
The Honorable James E. Peavy page 7 (H-3821
is settled that no particular form of words is
required to render an appropriation specific
within the meaning of the constitutional provi-
sion under discussion. It is sufficient if the
Legislature authorizes the expenditure by law,
and specifies the purpose for which the appropria-
tion is made . . . . ’
Therefore, your third question is answered in the affirmative.
The Comptroller’s fifth question. asks: Are there any restrictions
on state employers regarding lay off of their regular full-time employees?
No doubt your intention was to raise this question in light of the
language of Opinion Letter No. 913, supra.
Article 51658, V. T. C. S., establishes a basic forty hour workweek
for state employees; however, it also states that:
. . . exceptions to the minimum length of the
work week may be made by the executive head
of a state agency to take care of any emergency
or public necessity that he may find to exist.
We believe Article 516hmurt be read together with the General Apprbpria-
tion Act provisions relating to the granting of compensatory time. Clearly,
the Legislature there provides just the sort of procedure Opinion Letter
No. 913 and Brennan describe as being in compliance with the FLSA over-
time requirements. We note that the alternative “compensatory time”
procedure, provided for in the General Appropriations Act, could only be
implemented by the state agency/employer “laying off” the state employee
(that is, causing an absence from the work place and from actual work) for
cl.= -ppropriate number of hours during the same pay period the overtime
was accrued.
p. 1800
The Honorable Robert S. Calvert
The Honorable James E. Peavy page 8 (H-382)
The answer to your fifth question is, therefore, that the only
restriction on “laying off” employees (in the sense of FLSA compliance
and consistent with the requirements of the Appropriations Act) is that
the “lay off” take place during the same period in which overtime accrues.
The Comptroller’s sixth question asks:
If a state employee is terminated with overtime
accrued after May 1.1974, must his final salary
warrant include pay at the rate specified in the
Act for such overtime?
We assume you intend to limit this inquiry to FLSA “covered”
employees. Attorney General’s Opinion M-1155, supra. considered a
rimilar question, and concluded as follows:.
. . . Your question asks whether you have authority
to include payment for authorized overtime properly
accrued at the time of death or separation of the
employee from employment with the department.
Overtime pay is not a separable stipend, It is part
and parc’el of the compensation called for in the
employee’s contract, and is properly payable, if
accrued, at the time the base pay is paid. The
employee has a vested right in overtime pay the
moment it accrues under his contract of employ-
ment.
Therefore, your question is answered in the affirmative.
The Comptroller’s seventh question is in two parts, the first
part reading as follows:
May a state employee covered by the Act choose to
receive compensatory time in the same pay period
in which the overtime is worked?
p. 1801
The Honorable Robert S. Calvert
The Honorable James E. Peavy page 9 (H-382)
As discussed in answer to your second and fourth questions, the
granting of compensatory time within the same pay period in which the
overtime is accrued or the payment of overtime wages is permissible at
the discretion of the employer. The FLSA does not grant state employees
discretion in this area as a matter of right,
The second part of question seven asks:
May a state employee covered by the Act choose
to receive compensatory time in subsequent pay
periods for overtime worked?
As indicated in answer to the Comptroller’s second and fourth
questions, granting of compensatory time in subsequent pay periods for
overtime worked is not permitted by the FLSA.
In a separate request the Comptroller asked two questions relating
to the Teacher Retirement System. They are:
Is there pre-existing law for an agency of the State
to pay overtime from trust funds when such agency
comes under the Federal Fair Labor Standards Act
as that Act was amended effective May 1. 1974?
Is the department legally authorized to issue warrants
in payment of this overtime payroll when paid from
trust funds with the Stats Treasury and not in the
State Treasury?
Section 3.59 (j), Vernon’s Texas, Education Code, provides in part:
The rate of compensation of all persons employed by
the State Board of Trustees, as well as the amounts
.’ necessary for other expenses for the operation of the
retirement system. shall be approved by the State
Board of Trustees, provided they shall be no greater
p. 1802
The Honorable Robert S. Calvert
The Honorable James E. Peavy page 10 (H-382)
than tho*e for similar rervices performed for the
State of Texas.
We believe this provision along with the requirements of the FLSA
provide ample pre-existing law to permit the payment of overtime from
trust funds. Attorney General Opinions M-1155 (1972), M-341 (1969).
Therefore your office is authorized to issue warrants for that purpose.
Dr. Peavy’s que*tion is:
May the fees collected for overtime and special
services pursuant to Article 4476-7 be used to
pay overtime wager: to meat inspectors in carry-
ing out their duties pursuantb the State Wholesome
Meat and Poiiltry Act?
The answer to your question is affirmative. The Texas Meat and
Poultry Inspection Act (Article 4476-7. V. T. C. S.) provides for examina-
tion and inspection of meat animals before entering slaughter houses, for
post-mortem examinations and inspections, and related regulatory pro-
visions, including making investigations of disease findings. Section 410
of Title III of Article 4476-7 authorizes the Department of Health, as you
point out, to collect fees for overtime worked and special services rendered
to regulated establishments, and the current General Appropriations Act,
at page 1822, “Department of Health, ” provides a* follows:
Any fees collected for overtime or special services
under Senate Bill No. 28, Sixty-first Legislature, are
hereby appropriated for the biennium beginning Seg-
tember 1, 1973 for the enforcement of Senate Bill No.
28.
- (Emphasis added)
We conclude that the overtime worked by meat inspectors in
connection with their regulatory activities would necessarily be performed
aa part of the enforcement of Article 4476-7 (being Senate Bill No. 28, 61st
Legirlature); thu*, the described fees collected are appropriated for the
p. 1803
The Honorable Robert S. Calvert
The Honorable Jamen E. Peavy page 11 (H-382)
payment of ruch overtime wages.
SUMMARY
1. The effective date of the Fair Labor Standards
Amendments of 1974 is May 1. 1974.
2. State employees, covered by the overtime pro-
visions of the Fair Labor Standards Act of 1938, as
amended, may be given overtime pay or compensatory
time off, if compensatory time off is given in the same
pay period the overtime is accrued.
3. Overtime pay may be paid by a warrant on the
State Treasury through the classified salary fund of the
employing agency.
4. If a state employee covered by the overtime pro-
viaions of FLSA and FLSA 1974 is terminated with over-’
time accrued, his or her final salary warrant must include
the FLSA overtime pay.
5. A state employee, covered by the FLSA overtime
provisions, has no legal right to insist on receiving over-
time wage* where that employee is given compensatory
time off during the same pay period the overtime was
accrued; nor does that employee have discretion to receive
compensatory time in subsequent pay periods for overtime
worked.
6. There is pre-existing law for a state agency to pay
overtime wages from trust funds.
7. Fees collected from regulated institutions for
overtime worked by meat inspector*, pursuant to
p. 1804
The Honorable Robert S. Calvert
The Honorable James E. Peavy page 12 (H-382)
Article 4476-7, V. T. C. S., may be used to pay
overtime wage* to those meat inspectors.
Very truly yours,
Attorney General of Texas
APPRXX’ED:
.-i.
-3bh.+&
DAVID M. KENDALL, Chairman
Opinion Committee
lg
p. 1805