The US District Court for the District of South Carolina handed down a ruling today finding that the City of Charleston violated the Fair Labor Standards Act in the manner in which it compensated its firefighters for overtime. The class action suit was filed by six Charleston firefighters in 2013 who alleged a variety of FLSA violations.
The ruling was somewhat of a split decision for the firefighter-plaintiffs, as the court also found that the city’s violations were not willful. As a result the firefighters can only recover their damages for a two-year period going back to 2011, as opposed to three-years, and their compensatory damages cannot be doubled as would have been the case for willful violations.
The court did a very good job of explaining the complicated allegations in the case as follows:
- Plaintiffs’ Complaint primarily alleges that the City’s pay plan—in particular its incentive-pay provision—failed to comply with the statutory and regulatory requirements pertaining to the [Fluctuating Workweek Method] FWW method.
- Plaintiffs’ Complaint also asserts claims related to the method by which the City previously compensated firefighter recruit trainees.
- Plaintiffs’ Complaint alleges that certain named Plaintiffs, as well as others similarly situated, were not properly compensated for training hours that they contend constituted compensable time under the FLSA.
- Finally, Plaintiffs claim that the City’s alleged violations of the FLSA were willful and knowing.
- Plaintiffs seek an award of unpaid overtime compensation, liquidated damages in an amount equal to the amount of unpaid overtime compensation, attorneys’ fees, costs, and interest.
The Incentive Pay provision was tool the city implemented shortly after the Sofa Superstore Fire on June 18, 2007 in an effort to bolster increased staffing levels until additional firefighters could be hired. Firefighters where paid additional flat-rate stipends to accept additional overtime shifts.
The firefighter-plaintiffs’ alleged the IP payments proved that the city was not paying them a fixed-salary as required under a compensation model called the Fluctuating Workweek Method. The court explained the FWM as follows:
- the FWW method authorizes an employer to pay an employee a preset, predetermined weekly salary “as straight time pay for whatever hours he is called upon to work in a workweek, whether few or many,” provided both that the fixed salary is sufficient to compensate the employee for hours worked “at a rate not less than the applicable minimum wage” and that the employer pays the employee overtime compensation “at a rate not less than one-half of his regular rate of pay.”
- the employee’s regular rate “will vary from week to week and is determined by dividing the number of hours worked in the workweek into the amount of the salary to obtain the applicable hourly rate for the week.”
- paying the employee half or 50% of the regular rate for all hours worked in excess of the applicable statutory maximum, as opposed to 150% under the time-and-a-half method, “satisfies the overtime pay requirement because such hours have already been compensated at the straight time regular rate, under the salary arrangement.”
The trial court agreed with the firefighters, ruling:
- As explained herein, there is no genuine dispute of material fact that certain City pay practices did not comply with the FLSA.
- the Court… concludes the City has failed to prove that its IP, holiday, and standby premiums were compatible with the FWW method.
- In short, paying an employee an hours-based premium in addition to a fixed salary invalidates the use of the FWW method unless that premium falls within the law’s definition of an overtime premium.
- the City’s holiday premiums ran afoul of the fixed-salary requirement.
- As discussed above, paying employees extra to work during scheduled time off is antithetical to the concept of a fixed salary.
- Thus, the Court holds that the standby premiums were inconsistent with the fixed-salary requirement.
- In sum, the City’s IP, holiday, and standby premiums were each incompatible with the FWW method’s fixed-salary requirement. As to those particular issues, the Court grants Plaintiffs’ motion and denies the City’s motion. As for training pay, with regard to Plaintiff Pack’s 2010 claim, the Court grants Plaintiff’s motion and denies the City’s motion. On all other aspects of the training pay issue, the Court grants the City’s motion and denies Plaintiff’s motion. Finally, the Court grants Plaintiff’s motion as to the issue of recruit pay.
- The Court need not address the parties’ remaining arguments ….
As for whether the city’s violation of the FLSA was willful of not, the court ruled:
- the record demonstrates that none of those violations was willful and that an award of liquidated damages in this case would be inappropriate.
- the record demonstrates that the City analyzed DOL publications in an attempt to determine whether the IP, holiday, and standby premiums complied with the law.
- Further, when the City discovered its error regarding recruit pay, it engaged an attorney to report the violation to the DOL and to develop a remedy for affected recruits.
- In sum, the City has met its burden… of showing “that it would be unfair to impose . . . more than a compensatory verdict.” …
- The City shall not have to pay any liquidated damages on any of Plaintiffs’ remaining claims.
Here is a copy of the ruling: Regan v City of Charleston
The Fluctuating Workweek Method is one of the advanced topics we will be discussing in our upcoming class – Fair Labor Standards Act (FLSA) for Fire Departments being held: