HomeMy WebLinkAboutIR 7014 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7014
DoE aoxr�A To the Mayor and Members of the City Council
Subject: City Subject to Fair Labor Standards Act
Introduction
In a significant reversal of a prior decision, the U.S. Supreme Court recently ruled that
minimum wage and overtime provisions of the Federal Fair Labor Standards Act (FLSA) are
applicable to state and local governments. The purpose of this informal report is to give
you an update on this effect of the Supreme Court decision on the City of Fort Worth.
On February 19, 1985 in Garcia v. San Antonio Metropolitan Transit Authority, a divided
Supreme Court expanded the federal government's power to regulate state and local government
functions. The 5-4 decision overturned the 1976 finding of National League of Cities V. Usery
which granted states and municipalities immunity from federal regulation in areas of traditional
governmental functions.
In NLC v. Usery, the Court ruled the 1974 amendments to the FLSA which extended the
minimum wage and overtime provisions of the Act to virtually all state and local government
employees were unconstitutional as they affected areas of "traditional governmental functions."
In Garcia the court has held that the San Antonio Metropolitan Transit Authority, which
relies heavily on federal subsidies and is considered to be a "non-traditional" governmental
function, was subject to the minimum wage and overtime provisions of FLSA. In making
their decision in Garcia, the Court specifically overruled its 1976 decision in NLC v. Usery,
in which It held that FLSA requirements did not apply to state and local governments in areas
of traditional governmental functions.
Effect of the Decision
The Garcia decision will have a direct and immediate impact on virtually all state and local
governments, including Fort Worth. Although not determined, it appears the City will be
required to comply with all of the requirements of the Fair Labor Standards Act, particularly
the minimum wage and overtime provisions of the Act.
Coverage
0 Effective May 1, 1974, the Act was amended to cover all state and local governmental
employers employing more than four employees.
0 The Act's overtime pay requirements for fire fighters and law enforcement employees
became effective January 1, 1975.
0 Enforcement of both provisions was effectively precluded from 1974 until February 19,
1985 as a result of the National League of Cities V. Usery decision.
Minimum Wage Requirements
0 Public Employers must pay employees covered by the Act the minimum wage of $3.35 per
hour.
* This requirement would have no effect on City of Fort Worth since an salaries exceed this
rate.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7014 - Page 2
�.j foftr To the Mayor and Members of the City Council
X Subject: City Subject to Fair Labor Standards Act
Overtime Payments
0 The City will be required to pay employees covered by the Act time and a half for an
hours worked in excess of forty (40) in a week.
0 Separate overtime requirements exist for law enforcement and fire personnel. Law
Enforcement and Fire Personnel having a work period based on at least seven (7) but less
than twenty-eight (28) days must be paid overtime pay (time and one half) pay for all hours
worked beyond the less of (a) 216 hours in a 28-day period; or V the based average number
of hours for employees engaged in the activity for a typical 28-day consecutive work period
based on a DOL study. Their most recent study, completed in 1983, sets the average number
at 212 hours (53 hour average work week). The City of Fort Worth currently has a 56-hour
average work week. The DOL study found police officer hours currently average 171 hours
in a 28-consecutive day work period. The overtime requirements for Fire employees appear
to be the most costly item required by the Court's decision.
0 Compensatory time off, which is heavily used to compensate for overtime work in the City
of Fort Worth, may not be substituted for time and one half pay.
Employees Exempted From FLSA Minimum Wage and Overtime Coverage
The Fair Labor Standards Act does provide for exemption from minimum wage and overtime
coverage for a large number of employees. Certain "Executive," "Administrative," and
"Professional" employees may qualify for an exemption if they meet qualifying requirements.
Implementation
The Personnel Department is reviewing the City's employment practices and preparing
procedures for implementing the requirements of the Fair Labor Standards Act. However,
because of the many unanswered questions, we would expect to receive some guidance from
the Department of Labor.
Although the Personnel Department is drafting rules to implement the basic provisions of
FLSA, it may be several months before the City will know how to deal with those issues related
to fire and police employees. We do believe the City will have some retroactive liability
back to the effective date of the Court decision. Because of this, City departments have
been alerted to keep track of compensatory time accrued after February 19, 1985.
Departments have also been encouraged to strictly manage the hours worked of employees
to preclude needless payment of overtime.
Summary
The reversal of NLC v. Usery certainly is cause for concern. Immediately the potential
financial liability, especially if the ruling is made retroactive, will have an adverse budgetary
effect. But more important, we may see this decision becoming the cornerstone for further
federal interference into local government home rule, such as creating a public version of
ERISA or inflicting national labor relations legislation on local governments. Such initiatives
could prove devastating and costly.
roll Please advise if you need additional information.
D o u Harman
City Manager
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-ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS