Since 1990, NACo has been working with other state and local public interest groups to urge Congress and the Administration to reform the Fair Labor Standards Act (FLSA) and regulations to clarify that highly paid executive and administrative employees in the public sector are not entitled to time-and-one-half their hourly rate of pay for all hours over 40 in a work week.
Although FLSA exempts these employees from the overtime pay requirements, many courts have determined that these employees are entitled to overtime.
At issue is a salary test in the regulations which conflicts with widely used public accountability statutes.
To be exempt from the overtime pay requirements, the salary test requires that employees be paid a salary that is not subject to a reduction based on the number of hours they work. This rule conflicts with public accountability statutes in place in most state and local governments, which prohibit pay to any employee for time not actually worked.
Because these rules apply to all employees (salaried as well as hourly), many courts have ruled that all such employees are “subject to a reduction based on hours of work” and are therefore in violation with the FLSA regulations and are entitled to overtime pay.
On Oct. 5, 1994, the U.S. Ninth Circuit Court of Appeals reversed a lower court ruling in Service Employee International Union v. San Diego County and held that the salary test issued in 1954 FLSA regulations “was invalid in its entirety as applied to the public sector.”
Although the court ruling was a victory for state and local governments, it only applies to states and localities in nine Northwestern states. Only a Supreme Court ruling or congressional or Administration reforms can resolve the problem for all state and local governments.
The congressional leadership in the House and Senate have expressed an interest in working with NACo and other public interest groups in developing legislation to address overtime pay and other FLSA issues. The Administration has also expressed an interest in considering some reforms in the salary test in the near future.
NACo continues to work with other public interest groups, counties and cities, and other interested organizations to reform the FLSA.
Most recently, NACo and several other public interest groups filed an amicus brief with the United States Court of Appeals for the Second Circuit on behalf of the City of New York opposing overtime compensation for city workers. The amicus brief argues that the salary-basis test and rules prohibiting “partial day clocking” do not apply to state and local governments because of the 10th Amendment.
Congress held its first major hearing on FLSA on Feb. 27. The Senate Labor and Human Resources Committee, chaired by Senator Nancy L. Kassebaum (R-Kan.), held these hearings to determine, in part, the impact of FLSA on state, county and municipal governments. That hearing is expected to generate some efforts to reform FLSA.
The new Republican chairs of the House Economic and Educational Opportunities and the Senate Labor and Human Resources committees have voiced support for legislation to repeal the Davis-Bacon Act — legislation that requires state and local governments to pay mandatory prevailing wages, which are often higher than local prevailing wages, to workers on federally assisted construction projects.
The Congressional Budget Office has estimated that the federal government can save $3.1 billion over a five-year period by repealing the act.
Congress continues to review legislation designed to repeal Davis-Bacon. However, little activity is likely in the near term. NACo policy calls for reforms in the Davis-Bacon Act if it is not repealed.
The Administration continues to support legislation that would increase the minimum wage from $4.25 to $5.15 per hour over a two-year period.
For a full-time worker, the increase will mean $1,800 in additional income per year.
The president said the increase is needed to boost the standard of living for many working poor adults with families. House Majority Leader Richard Armey (R-Texas) has vowed to fight the minimum wage proposal in Congress because he feels it will have an adverse impact on economic growth.
NACo does not have policy on the minimum wage increase.
(Prepared by Neil Bomberg, associate legislative director.)
This document was produced using an evaluation version of HTML Transit