John J. Hilbert, Jr. v. District of Columbia, a Municipal Corporation

411.24(e) § promulgated HCFA statutory reference to interpreted the

had “responsible pay” to include

those responsibility that assumed financial

entities By holding party third ad- claims filed. repayment of condi-

ministrators liable 411.24(e) payments, impos- § Medicare

tional duties, obligations,

es new liabilities Consequently, government could

TPAs. 411.24(e) validly apply 42 C.F.R. payments prior made to its effec-

claims date.

tive

C. Conclusion analysis

I concur both in the court’s payment,” “Medigap

HCFA’s “double exten-

sion,” “mandatory regulations, 42 notice” 411.32(a)(1), 411.24®, §§ and 411.-

C.F.R.

25(a), as consistent with the Medicare as

Secondary Payer analysis of statute and its filing regulation, override”

HCFA’s “claims 411.24(f), as inconsistent with C.F.R. I too think that HCFA’s “dou-

that statute. impermissibly payment” regulation is ret-

ble on a different basis

roactive but so conclude majority. holding

than the As to the court’s party

that HCFA’s “third administrator” 411.24(e),

regulation, C.F.R. inconsis- Secondary Payer

tent with the Medicare as

statute, applicability If dissent. of that

regulation were limited to claims or transac- regulation’s

tions that occurred after the ef- date, regulation find

fective valid. HILBERT, Jr.,

John J. et al. COLUMBIA,

DISTRICT OF A CORPORATION,

MUNICIPAL

Appellant.

No. 92-7101. Appeals,

United States Court of

District of Circuit. Columbia

Argued Oct. 1993. May

Decided

430 in v. Antonio

changed its mind Garcia San Authority, 469 U.S. Metropolitan Transit (1985). 528, 1005, 1016 105 83 L.Ed.2d S.Ct. soften Congress then amended the FLSA to governments, impact local its on state and payments to be permitting some overtime compensatory time off in the form of made 99-150, No. 99 rather than as cash. Pub.L. (1985), codified at 29 U.S.C. Stat. 787 207(o), (p). however, Columbia, does District of The compensate not use the FLSA’s formula Counsel, McDonald, Corp. Asst. L. Karen and police at the rank of lieutenant officers DC, appel- argued the cause for Washington, Depending work. above for their overtime on the briefs were John appearing Also lant. circumstances, hour of over on the for each at the time the briefs Payton, Corp. Counsel one work these officers receive either Reischel, filed, Deputy and Charles were compensatory time off or one hour’s hour of Counsel, Washington, DC. Susan S. Corp. (their annual implicit their rate DC, McDonald, Washington, ap- entered 2,080). by D.C.Code pay divided base pearance. 4-405, Seeking application §§ 4-1104. DC, Riselli, Washington, argued instead, police captains and Michael J. formula FLSA’s appearing appellees. Also in federal district the cause for lieutenants filed this suit 6, Pressler, Jr., 1990. The court re W. Wash- court on December the brief was James jected argument that the offi the District’s ington, DC. exempt from the FLSA’s overtime cers MIKVA, Judge, Chief “executive, administrative, Before: requirements as HENDERSON, Circuit granted WILLIAMS professional” employees, and so Judges. summary judgment plaintiffs. Be for applicable that the stat cause it determined part in Opinion for the Court years, the court ute of limitations was two by part result in filed concurring in the period from De awarded them relief for the Judge F. WILLIAMS. Circuit STEPHEN 6, date of the order. cember 1988 to the Columbia, F.Supp. 784 Hilbert v. District of concurring part dissenting in Opinion (D.D.C. denied, 922, motion 597 by Judge part in Circuit KAREN filed 1992). HENDERSON. LeCRAFT appeal judgment has divided this concurring part in the result in Opinion panel. Judge Mikva would affirm Chief by Judge dissenting part in filed Chief giv- judgment essentially the reasons MIKVA. Henderson en the district court. reject portion in and I those reasons WILLIAMS, Judge: F. Circuit STEPHEN “A”, speak in which I this labeled opinion (“FLSA”) Act “B”, The Fair Labor Standards which re- portion both of us. But employees requires employers to their only my and not those of flects own views Henderson, for overtime. 29 U.S.C. time-and-a-half find an alternative 207(a). originally When this statute was judgment on which to affirm 1938, 6, Sep- enacted 1988 to from December 1974, however, Congress 6, In extend sector. 1991. The net result tember of state and judgment ed the FLSA to cover is affirmed district court’s 93-259, municipal governments. part. No. Pub.L. and reversed Supreme this 55. The Court held 88 Stat. A unconstitutional in largely extension Natio requirements Usery, The FLSA’s League al Cities U.S. n (1976), people employed an “execu- but do not cover 49 L.Ed.2d 245 S.Ct. administrative, tive, capacity professional April Ruling, See Letter Labor, ... terms are defined and delimited Wage as such and Hour Divi- (Jan. by regulations 9, 1987), from time to time Sec- reprinted sion in Notice of 213(a)(1). retary Rule, [of Labor]”. U.S.C. Fed.Reg. Final (Aug. parties agree 1992). only if the officers’ available to the District remedy This left gov- still state and local jobs satisfy requirements: two their duties exposed ernments private to the threat of type, must be of a certain must be Accordingly, 6, September lawsuits. on 1991 paid salary basis”. 29 CFR “on a See Department issued an “interim final rule” satisfy §§ 541.1-541.3. To the latter re- superseding no-docking rule for most quirement, generally, “the must re- public employees. Citing the “to need stem salary any in ceive his full week which he any liability accrual of additional to State and performs regard work without to the governments”, Department local found days number of or hours worked.” 29 CFR good prior cause to issue the rule without 541.118(a). rule, however, general § This notice and comment and to make it immedi- subject exceptions, including to some one 45824, ately Fed.Reg. effective. See 56 employers that to deduct “when allows 1991). 6, (Sept. 45825 later absents himself from work for slightly response modified the rule in to com- reasons, personal day or more for other 19, Fed.Reg. ments. (Aug. See than sickness or accident”. Id. 541.- 1992), at 29 codified CFR 541.5d. added).1 118(a)(2) (emphasis no-docking applied If the rule was valid as exception The converse of this em- —that public to the sector ployees salaried if their are not considered respect then the District loses with subject pay is to reduction for absences of period. Kinney v. District Co- of day known “no-doek- less than a as the —is lumbia, 6,10-11 (D.C.Cir.1993) (an- 994 F.2d rule, applied ing” has ever since the alyzing system captains that covers payment “on a first definition department). lieutenants the District’s fire Fed.Reg. basis”. See 19 4405-06 therefore, appeal, On the District asserts 1954). (July Congress After extended no-docking rule was not valid as sector, public Depart- FLSA sector. Because definition, preserved ment of Labor this disagree Henderson and I about whether the no distinction which draws between preserved argument appeal, this public employment. opinion this defers consideration of that is- Garcia, however, Depart- Soon after assuming validity sue. But of the “inter- Wage expressed ment’s and Hour Division 6, 1991,2 im final rule” of the no- concern about the interaction between this docking rule does not stand in the District’s that, widespread definition and the laws way for the after that date. Since accountability, payment the interest of forbid join rejecting Henderson and I public employees actually for hours not reasoning, district court’s we re- therefore no-docking the conventional worked. Under judgment respect verse its with to this later rule, employees subject to these laws could period and remand' for resolution of such “executive, qualify never for the administra- dispute. issues as remain in tive, professional” exemption. Worried outcome, Wage judgment about this and Hour Ad- The district court based its on theory ministrator decided not to enforce the no- no one who receives docking public employ- rule with “on a basis”. This respect adopted theory appeal. Though ees some it has been laws has rule, day Though plaintiffs challenge 1. Deductions for of a or more are did absences permissible even in the case of or acci- challenge currently sickness is not before us. dent when made "in accordance with a bona fide plan, policy practice providing compensa- tion for loss occasioned both sick- 541.118(a)(3). disability". ness and Id. commissions, Circuits, tions involve sales and Fifth see rejected Fourth in the Falls, hourly overtime. easily distinguishable F.2d City York v. Wichita (5th Cir.1991); Arlington v. Hartman sep- in her Judge Henderson discusses As (E.D.Va.1989), 1227, 1229 County, 720 example is much opinion, the third arate (4th Cir.1990), dicta F.2d 290 'd, aff on distinguish. Apparently based harder Ab have endorsed it. See circuits Corp., 192 F.2d McReynolds Pocahontas v. Kern, 483, 486-87 908 F.2d County shire v. (4th Cir.1951), it that an em- declares (9th Cir.1990); Claridge Hotel & Brock even considered salaried ployee will be (3d Cir.1988).3 Casino, 184-85 long as paid per shift worked as though he is Kinney, underlying logic, as we said regulatory mini- guaranteed at least he is thought basis is “[pjayment is that any any in which he does mum for week administrative, executive, pro identify to per employee earns Thus an who $100 work. precisely indi personnel fessional week is is each shift and $250 in given are discretion employees who cates mon- though he receives extra salaried even time and their activities managing their guarantee whenev- ey top of his minimum merely the num ... are not answerable Kinney, more shifts a week. he works three or hours worked-” er ber of at 11. Judge distinguishes this ex- Mikva Chief 1991, 6, however, September hourly on the ample

Even before from overtime automatic denial longer difficulties with than an typically there were lasts that a shift receiving 441; Mikva, C.J., of executive status Op. of hour. See infra Secretary’s regula- hourly The Casino, overtime. F.2d at 185. Claridge Hotel & cf. employee’s chiefly on an focus whether however, tions rule”, final In view of the “interim deductions, impermissible pay is this distinction not address whether we need computed. any pay is Ac- on how extra not meaningful in order to the district reverse regulations, employee an who cording to the respect period judgment with court’s weeks, receives, “predetermined every two 6, If it is consistent after 1991. (his biweekly pay) that “consti- base amount” to calculate deductions salaried status with compensation” and is ... of his tut[es] hourly it is employees’ pay on an from subject only permissible “mil deductions just salaried status to cal- as consistent with paid ‘on a basis’ ”. be considered to be pay on that basis. culate additions to their added). 541.118(a) (emphasis In- 29 CFR certainly hourly payment of overtime The deed, in a headed “Minimum subsection “expects a suggest employer does extras”, spe- plus regulations guarantee from his certain number of hours cifically “additional note that Mikva, C.J., instance”, Op. of first see salary is not inconsistent with besides the at-, true of dock- but the same is 541.118(b). payment.” of Id. employees who can lose ing: public-sector missing of work obvi- pay for an hour hour’s hand, regulations make On the specified ously expected are to work defeat salaried status clear that “extras” they nothing of hours even have number purpose employers use them for the of when then, regulations, make current do. The regulatory requirements. circumventing the expectation perfectly consis- clear that this examples of the three of See id. And two payment “on a basis”.4 regula- tent with permissible “extras” offered Judge some evidence split 4. Chief Mikva advances also have on the issue. 3. District courts did not think that of Labor that its relaxation e.g., City Naperville, Compare, Pautlitz no-docking rule in 1368, (N.D.Ill.1992) (treating F.Supp. over treatment of sector altered the pay that does not as a "bonus scheme” Mikva, C.J., Op. at 441. To the overtime. extent that is with, status), City e.g., Banks v. defeat salaried true, at least as consistent with it is 1023, Rock, North Little overtime, Judge view'—that Henderson’s (E.D.Ark.1988) ("Payment plus of a fixed amount itself, status—as never defeated salaried in and hourly wages for extra hours worked Judge assumption the con- with Chief Mikva's status.”). consistent with salaried not is, event, trary. Department's action only Support Not would it be incoherent Authorities in of Defendant District only expectation to this in the con- Columbia’s Summary attention Cross-Motion for (Nov. 1991) Judgment 9-11; text of overtime and not the context of Defendant’s Statement of docking, misguided. it would also Additional Material but Facts as to (Nov. Which There Is though public accountability principles No Genuine Issue Even 1991) 4-7; Transcript require docking, as of Motion for do do Sum- (Feb. 1992) mary Judgment simply discourage such test would state 8-9. As the below, explained District governments way “The ameliorating and local that we arguing required docking [the offsetting rule] with should be inter- preted is that an payments apt likely much more [fail form —a salary-basis during test] of amelioration than the across-the-board sal- which his ary Judge taking was docked for suggests. increases Chief Mikva leave.” Transcript of Summary Motion for Judgment B (Dec. 1991) 13. The District never even contrary interpretation hinted that a speaking only myself, Now rule would render it invalid Henderson, peri not for I address the public sector. Though od before argues no-docking rule passage quotes Henderson validly could not applied public to the brief, from the Op. District’s see of during period, Henderson, sector it failed to chal J., 434, at is not to contrary. the Instead, lenge validity the rule’s below. it system, Under the pay District’s actual dock discussed how the rule rare, should be inter ing quite required only for it is when preted, raising arguments that we have since question the in already officer has exhausted rejected. Kinney, 10-11; See 994 F.2d at all his available leave time. passage Omaha, City but see McDonnell v. Judge quotes simply Henderson con of (8th Cir.1993). F.2d 293 Because the no- tends that the pay mere existence of such a docking (as rule therefore offers a clear system opposed to evidence of actual on which to affirm judg the district court’s docking) does not exemp defeat the FLSA’s respect period, ment with to the earlier Thus, anyone. tion for phrase in the pass validity need not on the of the district Judge Henderson out passage, elides of the reasoning court’s period. for that urged the District the lower court to inter pret no-docking the rule “in accordance with” quite Henderson is not correct to the three decisions that had understood the suggest in summary its cross-motion for apply only rule to when actual oc below, judgment “the District contested the Firefight curred. See Atlanta Professional applicability no-docking public rule to Atlanta, (11th 800, ers Union employees”. Op. Henderson, J., sector of at Cir.1991); Columbia, Harris v. District of 434. What District contested was the (D.D.C. 238, 241-42 & n. 10 applicability particular public- rule’s to the 1989); D.C. Ass’n v. Nurses District Co employees question. sector in And the rea- lumbia, (BNA) Wage 868, & Hour Cases inapplicable, son the according rule was (D.D.C. 868-69, 1988 WL 156191 Jan. District, was not that it was invalid as 1988). sector, applied public to the but rather that it something public may meant different in the picked up than It well be that the District in the suggested invalidity argument sector. The District from the sector, public Labor, that in no-docking judgment rule which—after final in the applied only employee’s pay when an actual- district court —said for the first time that the ly rule, no-docking was docked because of an applied public absence of less as to the sec- day 6, 1991, than a period September for the entire tor contrary was —not which his docking. Congress’s extending was to such intent in the FLSA’s “executive, administrative, See Amended Memorandum of professional” Points and completely putting inconsistent with Chief Mikva's “for in a certain amount of time key inquiry employees job”, view that the is whether on the id. at 438-39. exemption unavailable was See 57 Fed. public sector. (District) it because 19,1992). District of Columbia (Aug. The District Reg. at 37671/3 its for absences Kinney, docked appeal the claim on

then raised day; September after of less than one to raise it below we of its failure but exemption is available to question. Kin- declined to entertain no-docking rule no the District because presents case at 9-10. This ney, 994 F.2d majority an obstacle. The longer stands as situation. precisely the same judgment versed plaintiffs’ claim is inconsistent But Chief for different court’s disposition of administrative, So ordered. Judge Henderson district court’s period judgment is affirmed ^[*] should part. Judge Mikva 6,1991. Accordingly, the district between beginning reasons) that the district court’s ^[*] with the FLSA’s that the nature of their work be affirmed We remaining professional” exemption. judgment and I unite ^[*] December remand the case September and I ^[*] with "with issues, agree “executive, ^[*] respect to respect reversing such as (albeit ^[*] re- waived the before the district making below. Because the 1991 fective until challenge the declines to this Court ulation to the mining the In er the public sector argued no-docking rule is invalid least one of Department’s comments rule, concluding sector consider the District’s argument no-docking can and should application employees did not become validity that, although public employees in this case employees, I believe the District court, its by failing rule 6, 1991, filings disagree. carefully no-docking inapplicable to irrespective previous the District below, to raise regulation argument in deter- consid- reg- rule did ef- prior September 1991. This Court to HENDERSON, KAREN LeCRAFT ... that the existence must then conclude Judge, concurring Circuit public pay system provides for of a dissenting part: all is pay of when leave the deduction majority opinion join portion of the the day of less than a exhausted for absences judgment court’s as it reversing the district quali- an otherwise is insufficient to defeat 6,1991; September after relates exemption fied under U.S.C. enough, majority go not far howev- the does 213(a)(1). § er, reverse the district court for I would Points and Au- Amended Memorandum of outright. Support District thorities of Defendant of Summary 6, 1991, Cross-Motion September the of Columbia’s On for added). (DOL) rule, (emphasis I would Judgment at promulgated a effective Labor plaintiffs language put both the making no-docking rule no hold that immediately, trial court on sufficient notice pub- whether and the longer applicable to determine applicability of the employ- the District contested the employees are “salaried lic sector employees, no-docking public sector meaning exemption for rule ees” within “subject generally to” it or executive, professional em- whether or administrative absences, (executive merely for actual without exemption).1 Final docked ployees rule). (the argument date Rule, confining its to the effective Fed.Reg. at 37672 regulation. Accordingly, I be- the 1991 majority interprets the 1991 rule as The 6, 1991, validity the no- vel non of September lieve dispositive: before public accountability, which the em- provides: 1. 1991 rule The personal ployee leave and sick leave accrues employee public agency of a who other- An requires public agency employ- and which 541.1, 541.2, requirements wise meets employee pay or such to be ee's to be reduced disqualified exemp- 541.3 shall not be or pay placed absences on leave without for employee basis that such tion on the injury personal or reasons or because of illness by according system a pay established to a ordinance, workday.... statute, one by policy of less than regulation, a or principles C.F.R. 541.5d. practice pursuant to established public pay public sector em- whose is docked docking rule as based on account- ployees appropriately ability before us. the need to be accountable to the —if public docking government results of a no-docking hold the rule invalid as employee’s pay, even highest those at the public employees. sector The applied to government hierarchy, levels of the those promulgated no-docking rule in DOL unquestionably whose duties are executive in revealing that an 1954 based on its research nature, may pay see their docked. Because employee pay for an ab- whose was docked docking public employee’s a sector for an day usually of less than one did not sence requirements day absence of less than one meet to fall within does not indi- Rule, way employee 57 cate one or the other that the See Final Fed.Reg. satisfy requirements 37672. The DOL investi- does not otherwise sector, however, gated be- exemption, validly of the executive it cannot apply public cause the FLSA did not gauge employee whether the exemp- fits the Although employees at that time. Therefore, sector no-docking tion. rule should docking private employee’s pay may sector exemption not render the unavailable to the is not execu- indicate before tive, professional employee, administrative or question then becomes whether the appropriately that inference is not made with used the district court for its regard public sector grant summary judgment plaintiffs, support different rationale used to is, plaintiffs’ receipt of overtime docking public employment in the context. compensation calculated on an public policy, public As a matter of sector renders unavailable to the pay docking any employee is District, 1991. I would Rule, generally absence. See Final 57 Fed. hold that it regulation does not. The DOL Reg. (“[Prevailing public at 37672 sector compensation states that “additional besides statute, ordinance, systems operating under inconsistent with the regulation, policy or other established 541.118(b). payment.” 29 C.F.R. requir[e] employees, including all otherwise- interpreted At least two circuits have section executives, exempt managers and to use ac- 541.118(b) to mean that can be in pay crued leave time or incur a reduction though they considered salaried even receive work.”). absences from on an calculated principle public is rooted the of accounta- hourly Arlington basis. See Hartman v. is, bility, “governmental employees (E.D.Va.1989), County, F.Supp. 720 1229 paid not should time not worked due (4th Cir.1990) 'd, 903 F.2d 290 aff taxpay- to the need to be accountable (overtime compensation calculated on an expenditure public the of Fi- ers for funds.” hourly “expressly permitted by is basis Rule, Fed.Reg. nal 57 at 37672. The circum- 541.118(b) § and does not defeat the execu promul- stance that motivated the DOL’s Falls, exemption”); tive York v. Wichita Tex rule, gation no-docking that an em- (5th Cir.1991) as, (“Paying ployee pay whose is docked for an absence of hourly beyond an rate for each hour worked day ordinarily less than one will not meet the regular the schedule does not defeat requirements qualify to other as an execu- exemption.”); executive see also Fair Labor tive, necessarily public does not exist sec- States, Standards Handbook Local Gov employment. private tor of a (DOL’s Opera ernments and Schools Field employee’s pay sector that the em- indicates Handbook) 1987) (May (payment tions at 21 ployee “punching is in clock” essence of additional calculated on an An while at work. who must hourly destroy employee’s not basis does sal strictly unlikely account for his hours is to status). County aried But see Thomas v. executive, primary have duties that are ad- (E.D.Va.1991). Fairfax, nature, professional ministrative or as re- agree I with those two circuits. quired by exemption. 29 C.F.R. 541.1(e)(2). 541.118(b) § Although That conclusion cannot be section does not ex- regarding pressly hourly compensa- drawn sector overtime refer captains pays police its and lieuten- com- Columbia permissible additional as a form tion hourly and not “on three ants on an regulation does include pensation, the such, basis”; plaintiffs are not “execu- compensa- additional examples of allowable Depart- manifests, applicable employees” under at least to tive tion, which the third of regulations, and the District on ment of Labor me, compensation calculated that overtime I overtime rate. pay must them the FLSA preclude not the ex- hourly should judgment and rationale an would affirm the It declares that emption’s applicability. entirety I in its because court a minimum sala- district is employee who overtime, hourly em- these days or shifts think paid for extra ry but is also enti- at all relevant times been ployees on a considered have nonetheless worked 541.118(b).2 Ac- tled, exemption. § Ex- defeats 29 C.F.R. basis. only in cordingly, concur the result reached days' worked I or shifts pay for additional tra regard to the time by Judge with pay for hours extra Williams equivalent I 1991 and dis- period Accordingly, I believe worked. my colleagues’ opinions compen- sent from both receipt of overtime plaintiffs’ regard to the and their result with subse- preclude the District from sation does quent period. invoking reversing join majority in the district I Background I. 6,1991. after for the court Act, 29 Labor Standards Fair court as to reverse the district also (West Supp. seq. § 1978 & 201 et U.S.C.A. well, however, period as the earlier 1993), during enacted was first Great no-docking nor rule that neither believe Depression improving as a means of com- receipt of plaintiffs’ § living Id. standard of of workers. rendered the executive pensation poli- (congressional finding and declaration of then. unavailable rates, Primarily governing hourly wage cy). designed improve it the lot of the MIKVA, Judge, concurring in the Chief through wage minimum dissenting part: wage earner result § 206 regulation. hour See id. maximum (“FLSA” or Act The Fair Labor Standards (maxi- (minimum hourly wage); id. “Act”) requires employers including state — hour). amended, currently Act mum As employers pay one-and- municipal —to government local em- applies to state and regular employees’ hour- times their one-half employees. 29 ployees as well as to ly any overtime hours work. rate for 203(e). things, Among U.S.C.A. Act, coverage a class of Claiming under the employers all cov- requires (“plaintiffs”) police captains and lieutenants Act ered one-and-one- liquidated declaratory judgment, sued for a ordinary hourly times their rate. half amounting damages, backpay to the dif- 207(a)(1). However, U.S.C.A. and the Dis- between the FLSA rate ference exemption,” the time-and-a-half “executive The District defends lower rate. trict’s apply “any employee requirement does not exempt plaintiffs that the are the executive, a fide adminis- employed in bona exemp- the Act under the “executive trative, capacity.” professional or tion,” “any employee applies to em- which 213(a)(1). § U.S.C.A. executive, administra- ployed in a bona fide po- has classified tive, The of Columbia capacity.” 29 U.S.C.A. professional District falling 213(a)(1) (West captains lice and lieutenants within Supp.1993). § The district By exemption. municipal ordi- the disagreed, holding that District the court 541.118(b) requirement will met is of an provides: that § which the 2. 29 C.F.R. basis, paid daily if employee on a or shift the may salary noted that the consist It should be arrangement provision employment a includes constituting predetermined all or of a amount employee will not less the receive than compensation. part employee’s In other of the regulations any specified the words, amount in in compensation the besides additional any employee performs the week salary in salary with the basis is not inconsistent type work. payment.... in Another of situation (and nance, pays performed. Subject them ail the work the ex- chief) officers, including below, the an police ceptions provided employee the ordinary equivalent to their overtime rate salary any must receive his full for in week 1104(c)—(f). §§ Al- hourly rate. D.C.Code performs any which he work without re- 4— captains a though and lieutenants receive gard days to the number of or hours weekly salary (subject worked.... absences), salary upon that is based a 40- 541.118(a) (1991). § 29 C.F.R. workweek, and each hour of overtime hour dispositive question think the central and paid hour of work is at the same rate as each employee this case is whether an can non-overtime work. Id. These payments, receive overtime over and declaratory judgment for a sued weekly predetermined above a minimum fact, Act, not, exempt from the amount, paid salary and still be a “on basis” time-and-a- that the District must them and not on an They sought liqui- basis. D.C.Code 4- half for overtime. also 1104(f)(1)(B). by regulations The damages backpay measured DOL contin- dated statutory require- between the ue: difference District’s rate for all ment and the (b) guarantee plus Minimum extras. It hours worked the Act was since salary may should be noted that the con- employers in applicable municipal made predetermined sist of a amount constitut- Metropoli- 1985. See Garcia San Antonio ing employee’s all or compensa- Auth., Transit 105 S.Ct. tan U.S. words, compensa- tion. In other additional (1985). L.Ed.2d 1016 tion besides the is not inconsistent meaning of the executive payment. with the basis (“DOL”) reg- turns on Labor met, requirement example, by will be a interpreting Act. ulations Under these manager branch who receives a regulations, employee exempt if addition, or more a and in $155 week “primary she meets both the duties test” and percent commission of 1 of the branch “salary primary basis test.” The duties requirement sales. The will also be met job. employee’s test looks the nature of the manager per- branch who receives a 541.2(f). 29 C.F.R. As this case comes centage profits of the sales or us, dispute police is no there branch, employment arrangement if the satisfy captains and lieutenants that test for guarantee includes a also of at least the Instead, dispute is over (or weekly salary equivalent minimum test,” “salary which evaluates the monthly period) required by for a or other

way paid. in which An regulations. type Another of situation “executive, administrative, employee is an requirement in which the will be met is professional” under the basis test employee paid daily that of an on a or shift job she is on a function rather basis, if employment arrangement in- than on an hour-to-hour basis: This distinc- provision cludes will keeping apparent purpose tion is in with the specified receive not less than the amount protect hourly wage of the Act to earners regulations any week which the through wage minimum and maximum hour employee performs work.... understood, regulation. Thus a salaried em- 541.118(b). Although 29 C.F.R. this sec- beyond ployee scope of the FLSA. explains tion Specifically, regulations state: necessarily time worked is not inconsis- extra employee An will be considered ‘on basis, payment salary tent with on a it does meaning basis’ within the of the speak directly question not whether the regulations employment agree- under his hour, compensation paid by the regularly pay period ment he receives each working prescribed more than a number of predetermined constituting ... a amount workweek, hours in a defeats the compensation, all or of his ambiguity, parties Despite amount is not to reduction because this the did not Instead, quality quantity initially argue of variations in the this issue below. police captains and lieutenants for the facet of the ment on another focused dispute their the “no- ground and did not decide “no-docking this the on known as test basis Hilbert v. District docking test rule” issues. the exception to An rule.” (D.D.C.), Columbia, motion 541.118(a) F.Supp. 922 covers absences of section denied, F.Supp. 597 more; can reconsideration day or work of a (D.D.C.1992). appeals. Besides The District absences with- for such pay docked have his grounds for court’s contesting the district exemption under the losing the out (as 541.118(a)(2). decision, District also takes issue But the 29 C.F.R. basis test. strike) potential the alterna- exception preemptive with man- of this negative inference the the basis of the day ground of affirmance on than a lead tive of less that if absences dates ground, latter “no-docking rule.” On this salary, then to a reduction found argument that was asserts the salary basis.” See D’Camem District paid “on a not Kinney: that the “no- Columbia, to have been waived v. District applied to (D.D.C.1988). unreasonable as negative docking inference rule” is This municipal employees. Plaintiffs “no-docking rule.” state as the is known court that their the district alleged before that the Dis- would hold Williams absenc- subject to reduction for were salaries present in the argument that trict waived not, day they could and that es of less than well, affirm the district and he would case as therefore, exemp- the executive fall within prior Sep- period for the court’s decision 6, 1991, September Subsequently, on tion. rule,” “no-docking under the tember making the regulations, its the DOL revised subsequent period reversing while inapplicable em- “no-docking rule” change in rule. because of the Fed.Reg. 45824. ployees. 56 agrees that the old “no- Judge Henderson District’s defeat case, rule” would applied the this Circuit In a recent period, but pre-September, 1991 firefight- claim for the “no-docking rule” to hold D.C. not the District did waive system she would hold that the same (paid under ers rule, case) invalidity of that argument for the present its in the were police officers “executive, administrative, fact invalid. Both that the rule was in entitled to agree Judge Henderson Judge Williams and employee” exemption prior to professional “no-docking rule” allows 6, 1991, they the new could have September exemption for claim the executive of less District to for absences salaries docked their Columbia, would reverse employees, and Kinney these day. v. District than a (D.C.Cir.1993). case, judgment for the sub- district court’s In that But I would sequent “no-docking rule” argued that in its the district court the decision of affirm construction was an unreasonable hourly overtime entirety FLSA, the DOL’s subse- as evidenced exemption. As a con- the executive public-sec- defeats of the rule for quent amendment “no-docking I not decide the sequence, employees. But the District raised tor issues, opinion on express no rule” appeal, time on defense for the first solely in issues here. concur it. Id. at those refused to consider Court therefore by Judge Williams as result reached 9-10. and I period prior to parties’ arguments before Although the reason- the result and the dissent from both “no-docking focused on the the district court majority subsequent as to the ing of the rule,” sponte sepa- court raised sua period. employees’ entitlement rate issue disposi- proved hourly overtime. This issue II. Discussion district court held tive below. The split on the over- courts are not within Circuit police captains and lieutenants are Third and Ninth Circuits issue. The they receive exemption because hour- district court that agreed with the and thus have pay on an supplementing a salary ly overtime basis.” Ac- paid are not “on a compensa- salary strongly suggests weekly summary judg- cordingly, court entered hourly yet tion on an basis. See Abshire v. be “paid salary on a basis.” On the Cir.1990), Kern, (9th 488, County 908 F.2d contrary, payments additional explicitly are denied, 1068, rt. 498 U.S. 111 S.Ct. (b) allowed paragraph of the DOL ce 785, 112 (1991) (“Such L.Ed.2d 848 additional regulations, entitled guarantee “Minimum compensation for extra hours is ... worked plus extras,” supra page see which ex- generally not consistent with salaried sta pressly permits employees to earn additional tus.”); Casino, Claridge Brock v. Hotel and payments top on of a minimum (3d Cir.), denied, 846 F.2d cert. 488 salary yet remain within the executive U.S. 109 S.Ct. 102 L.Ed.2d 326 exemption. However, it suggest does not (1988) (“Such encouragement [to work more that all payments permissible; additional are salary pay hours] is both with inconsistent nor specifically does it question address the ment and employment.”). executive In con whether payments those additional may be trast, Fifth and Fourth Circuits have on hourly made an basis. If DOL had meant hourly held destroy overtime does not payments that all additional permissi- were exemption employee for an who other ble, it Instead, could have by said so. giving paid guaranteed salary wise is a without examples permissible payments, additional regard City to hours worked. York v. clearly DOL intended for some other addi- Falls, (5th Wichita Cir. payments tional impermissible. to be 1991) (“Paying hourly rate for hour each (b) Paragraph gives examples three of le- beyond regular worked schedule not does gitimate payments: additional the first two exemption.”); defeat the executive Hartman are commission or percentage payments; the Arlington County, example third “an employee paid is daily on a (E.D.Va.1989), (4th aff'd, 903 F.2d 290 Cir. basis, or shift 1990) employment if the (same). agreement provision includes employee a will I agree with the Third and Ninth Circuits. receive not less than the specified amount covers those regulations any week in which the employees paid salary who are “on a basis.” employee performs any work.” 29 C.F.R. salary designed basis test is to distin- 541.118(b). examples These are meant to guish employees, “executive” who are paid illustrative, exclusive, be but a court’s job basis, a function from non-executive em- creativity tempered by general should ployees, compensation depends whose upon exemptions rule that from the require- FLSA they put number of hours oppo- in. The narrowly ments are to be fulfill construed to payment basis, then, site of on a is Congress’s purpose of providing feder- broad payment on an basis. And differ- employment Abshire, protection. al E.g., ence between categories two these com- F.2d at 485. pensation is the payment difference between performing specified job a payment None examples my of these alters conclu- putting in a certain amount of on the sion that defeats job. employee paid When an is for overtime example test. It is true that the third installments, in hourly implies that she payment allows that daily on a or shift basis paid is to work a certain number of hours payment can sometimes be a “on ba- place, the first beyond because hour sis.” virtually always But paid as an of “extra” hour time work. paid for increment job, some of time on the contrast, By when an paid on a hour, shift, week, day, whether be an an additional hour is not consid- year. aor Yet we know the increment ered an “extra” hour because she is irrelevant, is not essential dis- perform a certain set of tasks and not to regulations tinction drawn the DOL work hour, for a set amount of time. That (which between on a payment salary basis then, is a job standard of her and does presumably payment weekly includes on a not entitle compensation. her basis) yearly payment on an ba- This say is not to Therefore, that an can example sis. para- the third (b) never receive graph merely illustrates the DOL’s deter- 440 yet paid “on a minimum and sup- teed payment, daily or shift mination that basis,” regardless of the increments minimum, weekly is by ported a payments are the additional time for which weekly payment than analogous more Corp., McReynolds v. Pocohontas made. See essentially a line- is hourly payment. This Cir.1951) (4th (“Any formu F.2d 303 I think the DOL has and drawing question, guarantee is suffi in such a la which results (b) paragraph line a reasonable drawn cient.”). has noted As one district court compensa- and hourly compensation between traditionally footnote, given employees are larger increments. for tion job, and put into a for extra time bonuses hourly and non- Indeed, line between this why payment of “we see little reason well-suit- particularly is hourly compensation exempt negate the status would overtime Act, to ensure that seeks ed to the Pirnie, Inc., employee.” Dole v. Malcolm an compensa- fair wage receive hourly earners (S.D.N.Y.), rev’d on 903 n. 5 Congress’s concern for labor. tion for their Martin v. Malcolm grounds sub nom. it to base its remedies hourly laborer led (2d Pirnie, Inc., Cir.1991), cert. F.2d scheme, pro- upon the — denied, -, 113 S.Ct. U.S. wage a maximum- and viding a minimum (1992). Thus, the District ar L.Ed.2d (before the time-and-a-half workday length guarantee” regula gues the “minimum that in) by measured requirement kicks —both that em be read to ensure tion should measuring Thus, cup for distin- hour. guaranteed sala ployees a minimum receive employ- exempted salaried guishing between exempt, to allow they and ry if are to be always employees has been covered ees and regardless payments beyond that it sometimes leads hourly unit. That precise form. of their line-drawing is not a rationale arbitrary between disagree. There is a difference Congress and abandoning the distinction. an for hard work and entitlement a bonus were aware the DOL hour worked that is pay for each overtime distinguish- require a means scheme employment rela- to the nature crucial exempt employees, and ing between covered tionship. goes A to an who bonus True, hourly measure. they chose paid a which she is has done the task for (b) paragraph endeavored DOL has expectations in salary, and who has exceeded exemption, play in the executive some allow may ap- his way. employer show some by effort payments extra permitting some (including extra for her hard'work preciation employee. But such allowances exempted an job) by put granting additional time into the effort of extra include a measurement cannot employee will be compensation, and still the without de- solely on hours worked based the bonus on a But when basis. the distinction between stroying basis for entitlement, and when a contractual becomes employees. exempted covered hour, employee is by it is measured dis- Henderson’s disavowal shift/hour Hourly longer paid basis. no on 435-36, recognize tinction, thus fails to Op. at to work more purely an incentive must be distinction that some time-based Brock, hours, job. not to do a better exemp- apply if are to

made we payment for It denotes that F.2d at 185. others, not to employees and tion to some by the hour— regular is also measured begs the contemplates. It plainly Act paid weekly install- latter is even hourly measure is a question whether the employer an cannot measure ments —because is, dividing I think proper line. unless he ex- on an faithfully it must exclude to be think from his of hours pects a certain number hourly overtime from employees receiving case, In this employee in the first instance. forty expected to work plaintiffs are hours, responds, If work more The District hours a week. 435-36, agrees, Op. the hour. This apparently they receive overtime Henderson (b) an basis. The fact employment construed to mean paragraph best pays it in the form of the District out may always earn extra change fact that “salary” weekly does not guaran- money and above a sufficient over “salary” solely salary is determined refer- defeating this anteed without 5^1.118(b), ence to the number hours worked. And basis in accord with entitled employee’s compensation depends when an guarantee extras,” plus “Minimum in, puts she on the hours she is on an open was not during comment for hourly guaran- basis —even if she receives a present rulemaking affecting public weekly wage. teed minimum sector. Department expects to address Judge opinion this Williams’s relies another appropriate issue as my approach proposed to differ with revisions hourly question. overtime rests his of Part 541 at He dis- a later date. agreement regulatory change on the DOL’s The new 541.5d “salary modifies the “no-docking Apparently, Judge rule.” only by providing basis” test that an other- by changing believes that “no- Williams wise-exempt public sector provide rule” to that reduc- certain circumstances would not be dis- hourly tions for absences need not defeat the qualified from exemption where a deduc- exemption, executive the DOL must also tion is taken from employee’s pay for hourly have intended to do likewise for addi- part-day change pro- absences. The was public employee’s salary. Op. tions to a posed public employers’ because of sector Williams, J., supra at 432-33. inability, principles because of public simply This does not follow. The DOL accountability, to paying avoid not their changed “no-docking rule” out of concern worked, employees for thereby hours not virtually public employees that no would fall necessitating deductions for part-day such exemption within the executive because near- Principles absences. public accounta- ly all could have their docked for salaries bility provide do not making basis day. absences from work of less than a special public sector rule additional 1991). Fed.Reg. (Sept. This is be- compensation paid. public pains cause the sector takes to avoid added). (emphasis Id. appearance employment prac- of dubious think, then, There is no reason to paying patron- tices —such as out salaries to change “no-docking in the any way rule” in age “employees” perform who no actual func- impact affected the overtime on the except collecting paycheck. tion Id. at exemption. contrary, On the respect, In public employees that DOL chose to “no-docking alter the rule” and private face different circumstances than em- to leave preexisting untouched both the defi- ployees, they and the DOL determined that “salary nition of preexisting basis” and the less-stringent should be to a “no- explanation guarantee plus of “minimum ex- docking rule” to take account of these differ- tras.” Whatever those sections meant before ent circumstances. Id. Nowhere did the regulatory change they is what mean suggest public DOL sector circum- today public private employees —for stances differ from those of the sec- alike. And what meant and continue to respect hourly overtime,

tor with and the mean payments de- accordingly changes DOL made no feat the executive aspect public basis test for private employees except for the relaxation “incoherent,” maj. Far from Op. at “no-docking rule.” way strikes me as the sensible change. view the contrary, in implementing On the the final response system Williams’s such a regulation relaxing rule,” “no-docking —that discourage public employers pay- expressly chang- DOL stated that it was not ing hourly compensate ing preexisting for the rules for additions. 1992). “no-docking” Fed.Reg. ignores two rather (August obvi- rule — First, response public points. In suggesting comments ous there is no evidence to suggest the new rules should address additional that DOL ever considered whether compensation docking, as well as DOL re- employers discouraged; would be so if it had sponded: problem, specified seen this as a it could have

Exempt employees may longer receive addi- overtime would no defeat tional guar- addition to a employees. In- intact the to leave stead, chose expressly sala- compensation on the effect of Second, even

ry test. public employer’s concern for

Williams’s yet ex- claim the compensate ability to valid, regulation does not

emption were the con- On compensation. such

foreclose finds that the public employer

trary, if the discourages potential em-

“no-docking” rule ones, the em- current

ployees demoralizes salaries simply their base may raise

ployer non-hourly for hard work— bonuses grant exemption. But losing

without exemption may claim the employer convert his salaried instead to

he decides Hourly over- ones.

employees into that effect.

time has paid on plaintiffs are hold that the

I would the District of Colum- therefore, compensation scheme:

bia’s by the executive not covered them time-and-a-half District owes

and the pre- post-Septem- for both Accordingly, I periods.

ber as to the only in the result

concur change, and I dissent

prior to the period. subsequent

as to the America,

UNITED STATES

Plaintiff-Appellant,

v. Jr., Earline, BUDD,

Earl a/k/a Defendant-Appellee. America, STATES

UNITED

Plaintiff-Appellee, Jr., Earline, BUDD,

Earl a/k/a

Defendant-Appellant. 93-3081,

Nos. 93-3086. Appeals,

United States Court Circuit. Columbia 5, 1994.

Argued April May

Decided

Case Details

Case Name: John J. Hilbert, Jr. v. District of Columbia, a Municipal Corporation

Court Name: Court of Appeals for the D.C. Circuit

Date Published: May 17, 1994

Citation: 23 F.3d 429

Docket Number: 92-7101

Court Abbreviation: D.C. Cir.