Virginia Lawyers Weekly//July 3, 2023
Virginia Lawyers Weekly//July 3, 2023//
Where Alexandria fire department battalion chiefs argued they were owed overtime under federal and state law, but they qualified as a highly compensated employee, or HCE, they were exempt from the overtime rules.
Plaintiffs are or have been fire department battalion chiefs, or BCs, for the City of Alexandria. From 2019 to 2022, when plaintiffs worked overtime hours, the city paid them their normal hourly rate. Plaintiffs claim they were owed the equivalent of one-and-a-half times their straight-time rate for those overtime hours under the Fair Labor Standards Act, or FLSA.
Plaintiffs also seek additional damages under the Virginia Wage Payment Act and Virginia Overtime Wage Act. The city argues that plaintiffs are exempt from the FLSA’s overtime pay requirement because of their compensation structure and the nature of their work duties.
The city filed a motion for summary judgment raising the affirmative defense that plaintiffs were exempt from protection under the FLSA. The plaintiffs then filed a partial motion for summary judgment, arguing that only the issue of damages need be resolved at trial. After both motions were fully briefed, this court ordered supplemental briefing in light of the recent Supreme Court decision in Helix Energy Sols. Grp., Inc. v. Hewitt, 143 S. Ct. 677 (2023).
To qualify as a HCE, an employee must be paid on a salary basis, meet certain annual compensation thresholds and “regularly and customarily perform” just “one or more of the exempt duties or responsibilities of an executive, administrative, or professional employee” as laid out in the regulations.
The first and principal issue in this case is whether plaintiffs have been paid on a salary basis, a prerequisite for HCE status. The court finds that plaintiffs are hourly-rate employees that satisfy § 604(b)’s salary basis test. It is undisputed that in all two-week pay periods, when operational BCs worked more than 106 hours and administrative BCs worked more than 80 hours, their earnings directly correlated with the number of hours worked.
Therefore, inconsistent with § 602(a)’s salary basis requirements, it cannot be said plaintiffs received the full salary for work in any week without regard to the number of hours they worked, because their pay for those weeks with overtime hours was always directly a function of those hours worked. In this sense, plaintiffs are best characterized as hourly-rate workers.
Nevertheless, as the Supreme Court has made clear, hourly rate workers can still be paid on a salary basis under § 604(b) so long as they (1) also receive a weekly guarantee of at least $684 and (2) that guarantee bears a reasonable relationship to their actual earnings in a normal scheduled workweek. Both conditions are met here.
Plaintiffs nevertheless argue these 106 and 80 hour minimums cannot be considered guarantees because they were never explicitly promised in any contract. However, whether a guarantee exists or not depends on if an employer has a practice of subjecting their employees to improper salary deductions based on the quality or quantity of their work.
Moreover, to demonstrate the nonexistence of an identified guarantee, it is the plaintiff’s burden to provide evidence of a practice of improper reductions. Here, payroll records confirm that no such improper deductions took place as BCs were always given at least 106 or 80 hours worth of pay regardless of the hours worked.
Because the court finds that plaintiffs meet both conditions for salary basis status under § 604(b), there are two remaining issues as to whether they can be considered exempt as HCEs. First, there is the question of whether their annual compensation meets the required threshold for highly compensated employees under § 541.601(a). The parties do not dispute that the total annual compensation received by plaintiffs crosses the HCE threshold even after it was raised in 2020.
Second, the court must determine whether at least some of the regular duties of operational and administrative BCs are administrative or executive in nature. Plaintiffs have not provided any arguments as to why their duties should not be considered administrative or executive in nature. The court finds that operational BCs regularly and customarily perform administrative and executive duties. The court also finds that administrative BCs, in all their roles, regularly and customarily perform administrative and executive duties.
The BCs are exempt from the FLSA. Plaintiff’s state law claims also fail as a matter of law because they require the city to be liable under the FLSA.
Plaintiffs’ motion for partial summary judgment denied. Defendant’s motion for summary judgment granted.
Kelly v. The City of Alexandria, Case No. 1:22-cv-196, June 13, 2023. EDVA at Alexandria (Hilton). VLW 023-3-333. 16 pp.