Today’s FLSA Question: I am a newly appointed fire chief involved in my first contract negotiations with the city’s firefighter union. Understandably, staffing and overtime are hot button topics. The city’s attorney has proposed capping overtime pay at a preset figure on an annual basis. For example, she proposed capping firefighter overtime at $250,000 annually during the term of the contract. Once the cap is spent for overtime for the budget year, firefighters will receive straight time for all hours worked, regardless of the actual number of hours a firefighter works. Our attorney assures us that this type of provision is enforceable since the union is the firefighters’ sole bargaining representative and this agreement will be the product of good faith labor negotiations. I am skeptical. Can the union agree to waive overtime pay for its members?
Answer: The answer to your question most likely lies in the difference between contract overtime and FLSA overtime. In short, a union can under certain circumstances waive the rights of its members to receive overtime paid pursuant to a collective bargaining agreement (CBA)(i.e. labor contract), however the union cannot waive a member’s right to receive overtime required by the FLSA.
Many CBAs require employers pay employees premium pay (overtime) for working additional hours outside of their normally scheduled work shifts. Provisions like this are very common in firefighter CBAs. In theory, a firefighter working under such an agreement could utilize accrued vacation, comp time, or even sick leave for the entire work period and still receive overtime pay for working an extra shift or two. This is referred to as contract overtime.
Union representatives could alter the CBA, or otherwise waive firefighters’ rights to contractual overtime as required by a CBA, during the back-and-forth of good-faith negotiations. This type of concession is relatively common in today’s economic climate.
Now, let’s compare contract overtime to overtime required by the FLSA. The FLSA requires overtime after a firefighter has physically worked more than a predetermined number of hours in a work period. The FLSA refers to this as the maximum hours standard.
For example, if a fire department has adopted a 14-day work period, FLSA overtime is required for all hours worked by firefighters in excess of 106 every 14 days. Notice the firefighters’ work schedule is irrelevant to his or her overtime rights. Under the FLSA, overtime eligibility is simply the product of hours worked in the work period.
A labor union cannot waive the member’s rights to FLSA overtime. The FLSA was drafted and enacted in response to the Great Depression. The overriding general principles of the FLSA is to protect workers wage and hour rights from unscrupulous and powerful employers. It would stand to reason that the basic tenants of the FLSA, namely a requirement for employers pay employees a guaranteed minimum wage and overtime when required under the law, cannot be circumvented through collective bargaining or other agreements.
Traditionally, courts have invalidated provisions of CBAs that run afoul of the FLSA’s basic minimum wage and overtime requirements. In 1946, the U.S. Supreme Court invalidated a written agreement between a Michigan employer and a group of employees that denied overtime pay. The agreement required overtime pay for all hours worked in excess of 44 hours per week. This is clearly a violation FLSA’s general rule requiring overtime after working 40 hours per week.
In 1995, the U.S. Court of Appeals for the Sixth Circuit found that a CBA between a city and its police officers also violated the FLSA’s overtime pay requirements. In that case, the CBA explicitly allowed the city to calculate the officer’s overtime rate as time and one-half of their base contract rate. The base contract rate did not include numerous wage augments paid to the officers. Specifically, the base rate did not include longevity, hazardous duty, shift differential, and other bonus payments regularly paid to the officers. The FLSA requires virtually all wage augments, including those listed above, included in an employee’s regular and premium pay rates.
The court soundly rejected the city’s arguments that CBA should supersede the FLSA because it was the “product of a negotiating process.” Here is an excerpt from that decision:
Finally, we address the City’s argument that the courts should not award plaintiffs what they were unable to achieve through the collective bargaining process. Union representatives may not bargain away employee rights under the FLSA. . . . Furthermore, there is no collective-bargaining exemption from the FLSA. . . . Therefore, we find unpersuasive the City’s argument that because the Agreement was the product of a negotiating process its provisions should be judicially respected. (Emphasis added.)
Now back to your question. Strictly adhering to the overtime cap could very likely land your organization in the midst of an FLSA violation and possible lawsuit and/or DOL investigation. However, carefully monitoring the hours worked by firefighters and reducing or eliminating contractual overtime obligations; while still paying FLSA required overtime could yield significant savings for the department. Whether it makes financial sense to do so will depend on your specific staffing and overtime requirements.
Also, this analysis is based solely on the implication of such a contractual provision under the FLSA and Department of Labor (DOL) regulations. There could be state wage and hour laws that impact the ability of your organization to make such an agreement. For example, Rhode Island has a very unique state statute that requires firefighters receive overtime pay for all hours worked over 42 per week (on avg.). Additionally, that state law counts paid leave as hours worked for overtime purposes. Therefore, this type of contractual provision wouldn’t likely be helpful for fire departments in the Ocean State. For more on RI’s 42-hour OT law for firefighters, click here.