Newton v. City of Henderson

• Court: Court of Appeals for the Fifth Circuit
• Decided: March 16, 1995
• Docket: 93-05390
• Status: Published

Opinion

United States Court of Appeals,

Fifth Circuit.

No. 93-5390.

Stephen R. NEWTON, Plaintiff-Appellee,

v.

CITY OF HENDERSON, Defendant-Appellant.

March 16, 1995.

Appeal from the United States District Court for the Eastern District of Texas.

Before REAVLEY, DUHÉ and PARKER, Circuit Judges.

REAVLEY, Circuit Judge:

Stephen R. Newton brought suit for unpaid overtime

compensation against the City of Henderson (the "City") under 29

U.S.C. § 207, which codifies section 7(k) of the Fair Labor

Standards Act ("FLSA"). After a bench trial, the district court

found that: 1) Newton was an employee during the excess overtime

hours claimed; 2) the City had not demonstrated good faith

reliance that its actions were not unlawful; and 3) the City was

guilty of a "continuing violation." The court awarded overtime

compensation dating back to August, 1988 and also awarded

liquidated damages. The City appeals. We hold that no FLSA

violation was proved. We reverse and render judgment in favor of

the City.

BACKGROUND

Newton was employed by the City as a police officer. In

October 1987, he was assigned to the United States Drug Enforcement

Agency ("DEA") East Texas Drug Task Force. He remained a member of

1 the Task Force until his resignation on September 30, 1991. Newton

claims he was not compensated for all of the overtime hours he

worked as a Task Force Officer. Under the agreement entered into

by the City and the DEA, the City remained Newton's employer and

was responsible for "establishing the salary and benefits,

including overtime, of the HPD [Henderson Police Department]

officer assigned to the Task Force, and making all payments due

[him]." The DEA had the right to control Newton's day-to-day

functions and duties.

The City had a personnel policy that required all police

department employees to obtain approval prior to working overtime.

Newton admits that prior to March 7, 1990, he was not authorized by

the City to work any overtime. After this time, he was authorized

to work a limited amount of overtime (approximately 12.5 hours per

biweekly pay period). Newton did request permission to work

additional overtime. He made these requests to his supervisors at

the Henderson Police Department, Captain Roy Tate and Chief Randall

Freeman. Each time, Newton was told that he could not be paid for

any more overtime, because the City could not afford to pay him.

Newton submitted time reports to the City and was paid for all

of the hours claimed on these time reports. City policy required

that overtime be reported within 72 hours of the time it was

actually worked. Newton admits that he never made a demand for

payment for unauthorized overtime hours until he resigned in

September, 1991. Newton did submit a separate time report to the

DEA, a "352 form," which reflected the overtime hours he is now

2 claiming. Newton knew that these forms were not for payroll

purposes, and he did not present the DEA forms to the City until he

resigned in September, 1991.

Newton claims that his City supervisors, Captain Tate and

Chief Freeman, knew that he was putting in excess overtime hours,

because he reported his activities to them on a daily basis. He

admits that he did not specify the number of hours he was working

during these oral reports, but contends that based on these reports

Tate and Freeman must have known that he was working overtime.

Chief Freeman testified that when he was an undercover agent, he

had to work outside his regularly scheduled hours because of the

nature of undercover work. Both Freeman and Tate testified that

they knew that the type of work Newton was doing required working

unscheduled hours. Both also stated, however, that they assumed

Newton was taking time off, taking "flex time," so that he never

worked more than his authorized hours in a given pay period.

Freeman testified that he had spoken with Newton's DEA supervisor,

Jim Seay, and that they had an understanding that every time Newton

worked overtime, he would take flex time to compensate.

Newton initialed a memo from Seay, written on March 9, 1990,

acknowledging that he could work additional overtime hours only as

authorized by the City. Seay testified that he did not require

Newton to work overtime and was not authorized to require him to do

so. He also testified, however, that he would not expect a Task

Force Officer to refuse an assignment, because it required unpaid

overtime.

3 Newton testified that Seay never explicitly told him to work

overtime, but that Seay told him to "go out and do the job." The

implication of Newton's testimony is that doing the job required

overtime and Newton felt he could not refuse to do the job. Newton

does not explicitly state, but we must assume that he implicitly

claims that he could not use flex time to compensate for the extra

hours that he was working.

Chief Freeman was on the Board of Directors of the Task Force,

and therefore, had access to the 352 forms filled out by Newton.

He testified that he never saw these forms and the subject of

Newton's overtime never came up in the Board Meetings.

DISCUSSION

In order to recover, the plaintiff must show that he was

"employed" by the City during the periods of time for which he

claims unpaid overtime. He was employed during those hours if the

City had knowledge, actual or constructive, that he was working.

Davis v. Food Lion, 792 F.2d 1274, 1276 (4th Cir.1986). "An

employer who is armed with [knowledge that an employee is working

overtime] cannot stand idly by and allow an employee to perform

overtime work without proper compensation, even if the employee

does not make a claim for the overtime compensation." Forrester v.

Roth's I.G.A. Foodliner, Inc., 646 F.2d 413, 414 (9th Cir.1981).

The court in Forrester, however, went on to state that if the

"employee fails to notify the employer or deliberately prevents the

employer from acquiring knowledge of the overtime work, the

employer's failure to pay for the overtime hours is not a violation

4 of § 207." Id. In that case, the appellate court affirmed the

district court's grant of summary judgment for the employer because

the employee turned in time sheets which did not include the

overtime hours and the employee did not demonstrate that the

employer should have known that the employee worked more hours than

those claimed on his time sheets. Likewise, this court has also

upheld a judgment in favor of an employer in an overtime case

because the employee in that case was estopped from claiming that

she had worked more hours than the hours she claimed in her time

sheets. Brumbelow v. Quality Mills, Inc., 462 F.2d 1324, 1327 (5th

Cir.1972).

In Brumbelow, we acknowledged that an employee would not be

estopped from claiming additional overtime if "[t]he court found

that the employer knew or had reason to believe that the reported

information was inaccurate." Id. The district court based its

judgment in favor of Newton on the fact that Chief Freeman had

access to information regarding the Task Force's activities and on

Chief Freeman's statement, based on his former experience as an

undercover agent, that undercover work can require an officer to

work hours outside his regularly scheduled hours. Neither of these

facts support a conclusion that in this case that the City had

reason to believe that the information reported to it via Newton's

signed payroll forms was inaccurate.

The district court stated in its opinion that "much of the

[City's] knowledge" is derived from the "position and experience of

its Police Chief, Randall Freeman." Freeman was also the City

5 Manager during this time period and was on the Board of Directors

of the DEA Task Force, serving as its chairman for one year. These

positions gave the Chief access to information regarding all the

activities performed by members of the Task Force. The district

court found that this access was a basis for imputing constructive

knowledge to the City with respect to the overtime being worked by

Newton. We hold that as a matter of law such "access" to

information does not constitute constructive knowledge that Newton

was working overtime.

Newton admits that he was explicitly told by both his HPD

supervisors, Freeman and Tate, and his DEA supervisor, Seay, that

he could not work unauthorized overtime hours. The City

established specific procedures to be followed in order to receive

payment for overtime. An employee was required to submit a request

for overtime within 72 hours of the time worked and to use a

specified payroll form. Newton ignored these procedures. If we

were to hold that the City had constructive knowledge that Newton

was working overtime because Freeman had the ability to investigate

whether or not Newton was truthfully filling out the City's payroll

forms, we would essentially be stating that the City did not have

the right to require an employee to adhere to its procedures for

claiming overtime. The fact that Freeman had access to the Task

Force's activities means that perhaps he could have known that

Newton was working overtime hours, but the question here is whether

he should have known. In light of the fact that Freeman explicitly

ordered Newton not to work overtime and in light of the fact that

6 Newton admits that he never demanded payment for overtime already

worked, it is clear that access to information regarding the Task

Force's activities, standing alone, is insufficient to support the

conclusion that the City should have known that Newton was working

The court also based its conclusion, however, on the fact that

Freeman was formerly an undercover narcotics agent and admitted in

his testimony that this kind of work requires an officer to work

outside his scheduled hours. The court acknowledged that Freeman

did not state that undercover work necessarily required overtime,

but stated that "his testimony suggests" that he should have known

that Newton would be required to work overtime. This conclusion

ignores Chief Freeman's testimony that he expected his officers to

compensate themselves for unscheduled hours worked by taking "flex

time." The court does not state that the evidence presented in

this case supports the contention, implicit in Newton's claim, that

he was required to work more than his scheduled hours and could not

take flex time to compensate for those unscheduled hours. Indeed,

there is no evidence in this record to support the contention that

Newton could not have used flex time to make up for unscheduled

hours worked. Since it was reasonable for the Freeman and Tate to

assume that Newton was taking flex time to compensate for

unscheduled hours worked, it was reasonable for Freeman and Tate to

rely on Newton's payroll submissions as a reliable indicator of the

number of hours being worked by Newton.

Newton's payroll forms would not be reliable indicators of the

7 number of hours worked, if there was evidence to support the

conclusion that the City encouraged or forced Newton to submit

incorrect time sheets. The district court noted that in Brumbelow

this court stressed that there was no evidence that the company in

any manner encouraged workers to falsely report their hours. The

district court could be read to imply that there was such evidence

in this case. The court went on to reiterate that Chief Freeman

should have known that Newton was required to work overtime by the

DEA. Again, the facts upon which the district court relied in

imputing constructive knowledge to Chief Freeman do not support a

finding that the employer in this case encouraged Newton to falsely

report his hours. We find no basis for such a finding in the

record before us.

CONCLUSION

Newton does not deny that the City officially notified him

that he could not work additional overtime hours. He does not

present evidence that he was unofficially told otherwise. The

evidence will not support his contention that the City should have

known that the hours reported on his City time sheets were

incorrect. We conclude that Newton failed to show that the City

violated the FLSA by paying him only for the hours claimed on his

time sheets.

REVERSED AND RENDERED.