Michael T. McGuire James P. Klum, Grant M. Coffey, Patrick A. Dooney, Jerry L. Ivie v. City of Portland, Oregon

91 F.3d 1293, 96 Daily Journal DAR 9401, 96 Cal. Daily Op. Serv. 5741, 1996 U.S. App. LEXIS 18997, 1996 WL 431720
Court of Appeals for the Ninth Circuit·Decided August 2, 1996·No. 95-35391·Published·Cited by 2 cases

Opinions

Opinion by Judge GOODWIN; Concurrence by Judge SKOPIL.

GOODWIN, Circuit Judge:

Plaintiffs, current or former battalion chiefs for the Portland Fire Bureau, sued the [1294]*1294city for overtime pay under the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201-209. The city defended on the theory that plaintiffs were not entitled to overtime pay because they were salaried workers and fell within the FLSA’s overtime exemption for executive and administrative employees. 29 U.S.C. § 213(a)(1). The district court granted partial summary judgment for plaintiffs. We affirm.

I. Statutory Scheme

FLSA overtime requirements do not apply to “any employee employed in a bona fide executive, administrative, or professional ca-pacity_” 29 U.S.C. § 213(a)(1). The only issue in this appeal is whether one or more of the plaintiffs “is compensated for his services on a salary basis.” 29 C.F.R. §§ 541.1(f) & 541.2(e).

An employee is paid on a salary basis if he or she receives a predetermined amount each paycheck, which is not subject to reduction due to variations in the quality or quantity of work performed, and the employee is paid a full week’s salary for any week in which he or she performed any work. 29 C.F.R. § 541.118(a).1

The district court agreed with plaintiffs’ contention that the city’s published disciplinary policy produces the unintended result that the city loses its overtime exemption under the “salary test.” The city’s express policy provides that all city employees may suffer disciplinary suspensions with loss of pay for a variety of offenses and infractions. The policy manual does not limit these potential reductions in pay to weeks in which the employee does not work. In theory, an employee can work for three days, and be suspended without pay for two, contrary to the salary requirement of the regulation that an employee be paid full salary for any week in which she performed any work. No battalion chief has ever suffered such a reduction, but other city employees subject to the policy have been suspended without pay for disciplinary reasons.

On cross-motions for summary judgment, the district court concluded that the chiefs are not compensated on a “salary basis” within the meaning of the regulation because they are subject to the possibility of salary reductions for periods of less than one week. The court therefore granted summary judgment to the plaintiffs.

II. Discussion

A. The “Salary Basis” Test.

Exemptions under the FLSA are to be narrowly construed in order to further Congress’ goal of providing broad federal protection to the rights of workers. Mitchell v. Lublin, McGaughy & Assoc., 358 U.S. 207, 211, 79 S.Ct. 260, 263, 3 L.Ed.2d 243 (1959). An employer seeking to classify certain employees as exempt from the FLSA’s overtime requirements bears the burden of proving that the employee falls plainly and unmistakably within the exemption. Abshire v. County of Kern, 908 F.2d 483, 485-86 (9th Cir. 1990) (citing Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 456, 4 L.Ed.2d 393 (1960)), cert. denied, 498 U.S. 1068, 111 S.Ct. 785, 112 L.Ed.2d 848 (1991).

The city argued in the district court, and here, that plaintiffs are salaried employees despite the city’s disciplinary policy because no battalion chief has ever received a deduction of pay for a week in which she worked, nor does the city intend ever to impose such a deduction on a battalion chief. As the Third Circuit has noted, “[tjhere is a circuit split on the issue of whether docking must have actually occurred in order to place the employee outside the scope of the exemption.” Balgowan v. New Jersey, Dept. of Transportation, 84 F.3d 656 (3rd Cir.1996).2 Balgowan went on to observe that the Ninth Circuit had chosen its side in this split in Abshire. There we held that employees were not “salaried” where an express policy provided for “invalid” deductions, even [1295]*1295though the county had never in fact imposed such deductions. We stated, “[t]he disposi-tive factor is that under the County’s policy, the employee’s pay is at all times ‘subject to ’ deductions for tardiness or other occurrences. Either pay is fixed and immutable, or it is contingent. [Employees’] pay is contingent.” Abshire, 908 F.2d at 487 (emphasis in original).

Barner v. City of Novato, 17 F.3d 1256 (9th Cir.1994), cited by the city, at first glance looks to be inconsistent with Abshire. But it carries only part of the load the city wants to place upon it. In Barrier we held that the employees were not “subject to” deductions in pay within the meaning of the FLSA because no deductions in pay had ever occurred. Id. at 1262-63. However, we explicitly limited our holding to the facts in Barrier where the policy providing for deductions in pay was unofficial, not an express policy as in Abshire, which we distinguished. Id. at 1261. Here we face an express, published policy and potential suspension without pay. Abshire provides the controlling precedent, not Barner. See also Hurley v. Oregon, 27 F.3d 392, 394-96 (9th Cir.1994) (state police officers who were subject to paramilitary discipline including demotion, and temporary suspension with “economic sanctions” for violations of departmental rules or policies under an express personnel policy were not salaried) and Balgowan, 84 F.3d 656 (adopting the rationale of Abshire, and concluding that employees did not meet the salary test under circumstances almost identical to those we face here).

Nor are we swayed by the city’s promises never to impose “invalid” deductions on the battalion chiefs. In light of the express policy allowing the “invalid” deductions, the city would have to adopt an express policy barring application of the deductions to otherwise salaried employees. See, e.g., Hackett v. Lane County, 91 F.3d 1289 (9th Cir.1996) (filed this day).

B. Salary Test’s Validity with Respect to Public Employees

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Michael T. McGuire James P. Klum, Grant M. Coffey, Patrick A. Dooney, Jerry L. Ivie v. City of Portland, Oregon, 91 F.3d 1293, 96 Daily Journal DAR 9401, 96 Cal. Daily Op. Serv. 5741, 1996 U.S. App. LEXIS 18997, 1996 WL 431720 (9th Cir. 1996).

91 F.3d 1293 (Michael T. McGuire James P. Klum, Grant M. Coffey, Patrick A. Dooney, Jerry L. Ivie v. City of Portland, Oregon) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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