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No. 98-1167: Christensen v. Harris County

No. 98-1167

In the Supreme Court of the United States


EDWARD CHRISTENSEN, ET AL., PETITIONERS

v.

HARRIS COUNTY, ET AL.



ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT



BRIEF FOR THE UNITED STATES
AS AMICUS CURIAE SUPPORTING PETITIONERS



SETH P. WAXMAN
Solicitor General
Counsel of Record
EDWIN S. KNEEDLER
Deputy Solicitor General
JONATHAN E. NUECHTERLEIN
Assistant to the Solicitor
General
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217

HENRY L. SOLANO
Solicitor of Labor
ALLEN H. FELDMAN
Associate Solicitor
EDWARD D. SIEGER
Attorney
Department of Labor
Washington, D.C. 20210

QUESTION PRESENTED

Whether a public agency governed by the compensatory time provisions ofthe Fair Labor Standards Act of 1938, 29 U.S.C. 207(o), may, absent a preexistingagreement, require its employees to use accrued compensatory time.



In the Supreme Court of the United States


No. 98-1167

EDWARD CHRISTENSEN, ET AL., PETITIONERS

v.

HARRIS COUNTY, ET AL.



ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT



BRIEF FOR THE UNITED STATES
AS AMICUS CURIAE SUPPORTING PETITIONERS



INTEREST OF THE UNITED STATES

The Secretary of Labor is responsible for implementing and enforcing theFair Labor Standards Act of 1938 (FLSA), 29 U.S.C. 201 et seq. See, e.g.,29 U.S.C. 216(c) and (e). As discussed in this brief, the Department ofLabor has issued regulations and opinion letters relevant to the questionpresented here, and the United States has a substantial interest in thecorrect resolution of that question. At the Court's invitation, the UnitedStates filed a brief as amicus curiae at the petition stage of this case.

STATEMENT

1. a. The Fair Labor Standards Act of 1938, 29 U.S.C. 201 et seq., generallyrequires covered employers to pay their employees a minimum wage and tocompensate overtime work at a rate of one and one-half times the employees'regular rate of pay. 29 U.S.C. 206, 207. Public agencies, including federalagencies and state and local governments, are subject to the FLSA. 29 U.S.C.203(d), (s)(1)(C) and (x). This Court has held that, under its power toregulate interstate commerce, Congress has validly applied the FLSA's minimumwage and overtime provisions to state and local governments. See Garciav. San Antonio Metro. Transit Auth., 469 U.S. 528 (1985) (overruling NationalLeague of Cities v. Usery, 426 U.S. 833 (1976), which in turn had overruledMaryland v. Wirtz, 392 U.S. 183 (1968)).1

In 1985, in response to Garcia, Congress amended the FLSA to give stateand local governments limited temporary relief from liability and to addresscertain additional concerns raised by public agencies. Fair Labor StandardsAmendments of 1985, Pub. L. No. 99-150, §§ 2-7, 99 Stat. 787-791.One of the 1985 amendments, codified at 29 U.S.C. 207(o), permits employeesof state and local governments to receive, "in lieu of overtime compensation,compensatory time off at a rate not less than one and one-half hours foreach hour of employment for which overtime compensation is required."29 U.S.C. 207(o)(1).

The Act attaches two conditions to the provision of compensatory time inlieu of overtime compensation. Congress specified that a public agency mayprovide compensatory time "only -

(A) pursuant to-

(i) applicable provisions of a collective bargaining agreement, memorandumof understanding, or any other agreement between the public agency and representativesof such employees; or

(ii) in the case of employees not covered by subclause (i), an agreementor understanding arrived at between the employer and employee before theperformance of the work; and

(B) if the employee has not accrued compensatory time in excess of the limitapplicable to the employee prescribed by paragraph (3).

29 U.S.C. 207(o)(2). In short, Congress specified that a public agency mayaward compensatory time (as opposed to overtime pay) only if it first securesan "agreement" or "understanding" to that effect withthe affected employees, and only then if those employees have not individuallyexceeded the statutory limit on the hours of compensatory time they mayaccumulate. The applicable limit is 480 hours for "work in a publicsafety activity, an emergency response activity, or a seasonal activity,"and 240 hours for any other work. 29 U.S.C. 207(o)(3)(A). An employee whoreaches the applicable limit "shall, for additional overtime hoursof work, be paid overtime compensation." Ibid.

If an employer chooses to reduce an employee's accrued compensatory timeby paying for it, payment must be "at the regular rate earned by theemployee at the time the employee receives such payment." 29 U.S.C.207(o)(3)(B). An employee with accrued compensatory time is also entitledto be paid for it at specified rates upon termination of employment. 29U.S.C. 207(o)(4). Finally, an employee who asks to use accrued compensatorytime "shall be permitted by the employee's employer to use such timewithin a reasonable period after making the request if the use of the compensatorytime does not unduly disrupt the operations of the public agency."29 U.S.C. 207(o)(5).

b. The 1985 amendments direct the Secretary of Labor to "promulgatesuch regulations as may be required to implement [the] amendments."Pub. L. No. 99-150, § 6, 99 Stat. 790 (29 U.S.C. 203 note). The Secretarycomplied with that directive with respect to compensatory time by issuingthe regulations codified at 29 C.F.R. 553.20-553.28. The regulations contemplatethat compensatory time agreements may include "provisions governingthe preservation, use, or cashing out of compensatory time." 29 C.F.R.553.23(a)(2). Such provisions are valid so long as they are "consistentwith section [207(o)]." Ibid. Otherwise, they are "superseded"by the statute. Ibid.2

The regulations further specify the circumstances under which a public agencywill be found to have entered into a valid "agreement" or "understanding"with its employees concerning compensatory time. When employees do not havea recognized representative, an agreement or understanding with an individualemployee may "take the form of an express condition of employment,"provided that the employee "knowingly and voluntarily agrees to itas a condition of employment" and is informed "that the compensatorytime received may be preserved, used or cashed out consistent with the provisionsof section [207(o)]." 29 C.F.R. 553.23(c)(1). Moreover, "[a]nagreement or understanding may be evidenced by a notice to the employeethat compensatory time off will be given in lieu of overtime pay,"and such an agreement is "presumed to exist" with "any employeewho fails to express to the employer an unwillingness to accept compensatorytime," so long as the employee's acquiescence is free and uncoerced.Ibid.

2. a. Petitioners are deputy sheriffs employed by respondent Harris County,Texas. The County has individual agreements with petitioners under whichthey receive compensatory time for their overtime work. Pet. App. 29a-31a;Moreau v. Klevenhagen, 508 U.S. 22 (1993) (discussing Harris County arrangements).The premise of this Court's decision to grant certiorari is that those agreements(which are not in the record) are silent on whether the County may requirepetitioners to use their accrued compensatory time against their will. Seenote 4, infra; see also Pet. App. 12a.

In 1992, the County asked the Department of Labor for guidance on whether,consistent with the FLSA, it could adopt such a required-use policy. TheDepartment responded:

[A] public employer may schedule its nonexempt employees to use their accruedFLSA compensatory time as directed if the prior agreement specifically providessuch a provision, and the employees have knowingly and voluntarily agreedto such provision freely and without coercion or pressure. See [29 C.F.R.]§ 553.23(c). Absent such an agreement, it is our position that neitherthe statute nor the regulations permit an employer to require an employeeto use accrued compensatory time.

Opinion Letter from Wage & Hour Div., Dep't of Labor (Sept. 14, 1992),available in 1992 WL 845100 (paragraph break omitted). The County Sheriff'sDepartment nonetheless applies a required-use policy, which the partiesto this case have summarized in a stipulation. See Pet. App. 29a-31a. Underthat policy, "each Bureau Commander determines the maximum number ofcompensatory hours that may be maintained by employees in his or her bureau,"based on "an assessment of the personnel requirements of the particularbureau." Id. at 29a-30a. Once an employee approaches the statutorymaximum number of accrued hours, the employee "is requested to voluntarilytake steps to begin reducing the number of accumulated compensatory hours."Id. at 30a. If the employee does not take steps to do so within a reasonableperiod, his or her supervisor "is authorized to order" the employeeto reduce that number. Ibid. Although the Sheriff's Department tries toarrange mutually agreeable times for the employee to use the accumulatedtime, if no agreement>s reached the supervisor may "direct[ ] theemployee to utilize compensatory time at a time or times that will bestserve the personnel requirements of the bureau." Ibid.

b. In April 1994, petitioners filed a class action against the County andits Sheriff, alleging that respondents had violated Section 207(o) of theFLSA by, among other things, forcing petitioners to use their compensatorytime when they did not wish to do so. Pet. 4-5; see Pet. App. 3a.3 In November1996, the district court granted summary judgment to petitioners. Pet. App.24a-27a. Following Heaton v. Moore, 43 F.3d 1176 (8th Cir. 1994), cert.denied, 515 U.S. 1104 (1995), the court reasoned that, under Section 207(o),compensatory "time off must be consumable by the worker on the worker'sterms." Pet. App. 25a.

The court of appeals reversed. Pet. App. 1a-23a. After surveying the statutoryscheme, the court concluded that the FLSA does not address whether, in theabsence of a specific agreement on the issue, a public agency may requireits employees to use compensatory time. Id. at 10a. The court observed thatthe question is squarely presented here, because the parties had not identifiedany relevant agreement governing the use of accrued compensatory time. Id.at 12a. Declining to speculate how Congress might have legislated had itconsidered the issue, the court decided to "devis[e] [its] own solution."Id. at 10a. It adopted a "default rule" that, unless the partieshave specified otherwise, an employer may require its employees to use accruedcompensatory time against their will. See id. at 10a-13a. That "defaultrule," the Court reasoned, is an appropriate application of "thegeneral principle that the employer can set workplace rules in the absenceof a negotiated agreement to the contrary." Id. at 13a.

Judge Dennis dissented. Pet. App. 14a-23a. He agreed with the majority thatthe FLSA does not answer the question presented here, but he concluded thatthe Secretary of Labor's regulations do effectively answer that questionin petitioners' favor and that the Secretary's position is entitled to deference.Id. at 18a. Judge Dennis would have remanded, however, for further factualdevelopment concerning whether or not the parties had entered into a lawfulagreement specifically addressing the required-use issue. Id. at 19a-20a.

SUMMARY OF ARGUMENT

Federal law comprehensively governs any agreement between public employersand their employees on the subject of compensatory time. The question presentedhere is whether, when an employer and its employees agree to the provisionof compensatory time in lieu of overtime pay as a general matter but donot specifically address the question of the employees' preservation anduse of that time, the employer may require the employees to use the timeagainst their wishes. The court of appeals answered that question in theemployer's favor, reasoning that, in the absence of language in the agreementto the contrary, an employer has inherent authority to prescribe the rulesfor compensatory time, just as it has inherent authority to set the otherconditions of employment.

That reasoning is unsound. By virtue of the FLSA, any authority an employermight have to adopt a compensatory time program now derives solely fromthe voluntary agreement of employees, not from any inherent power of theemployer to prescribe the terms of employment. If employees withhold agreement,they retain an undisputed right to premium pay rather than compensatorytime. Because any compensatory time arrangement is a product of employeeconsent, it makes little sense to decide the question presented here againstthe interests of those without whose consent there would be no compensatorytime program to begin with. Accordingly, where an agreement does not grantthe employer control over the manner in which compensatory time will beused, the proper conclusion to be drawn from that silence is that the employees'compensatory time is generally theirs to use as they like, just as theirovertime pay would have been theirs to spend as they liked had they refusedcompensatory time altogether.

That conclusion is correct even though, as a consequence, some employeesmay accrue so much compensatory time that they might someday reach the statutorymaximum, beyond which additional overtime would have to be compensated inwages. Congress designated overtime pay as the preferred payment optionin the absence of a contrary agreement, and it therefore entitled employees,if they so choose, to receive such pay for all of their overtime. An employee'sgreater power to reject compensatory time altogether includes a lesser powerto agree to compensatory time subject to the possibility that, by operationof the FLSA, some overtime may someday need to be compensated in the formof wages.

The approach we advocate here would not impose a substantial prospectiveburden on public employers. Under any approach, an employer wishing to institutea compensatory-time program must first obtain the agreement of its employees;by regulation, many such agreements can be quite informal. Employers arewell situated, at the same time they reach such an agreement, to seek toensure that it specifically reflects any policy concerning the preservationand use of compensatory time. To be sure, some employees who would agreeto the substitution of compensatory time for overtime compensation mightnot wish to cede control over their use of that time. But their exerciseof that choice would not leave employers worse off than if the employeeshad simply withheld consent to a compensatory-time arrangement to beginwith. In the long term, our answer to the question presented here coulddisadvantage employers only in the sense that employees would make betterinformed decisions about the compensatory-time arrangements to which theyhave been asked to agree.

Finally, this Court does not write on a blank slate. The Secretary of Labor,in whom Congress has vested responsibility for implementation of Section207(o), has addressed the question presented here and has answered it infavor of the affected employees. The Secretary's considered position isentitled to substantial deference. See Auer v. Robbins, 519 U.S. 452, 457,461-463 (1997).

ARGUMENT

UNDER THE FLSA, A PUBLIC EMPLOYER MAY NOT REQUIRE AN EMPLOYEE TO USE ACCRUEDCOMPENSATORY TIME ABSENT A PREEXISTING AGREEMENT ON THE ISSUE

In holding that public agencies may unilaterally prescribe the terms onwhich their employees must use their compensatory time, the court of appealsinvoked, as its "default rule," a "general principle thatthe employer can set workplace rules in the absence of a negotiated agreementto the contrary." Pet. App. 13a. The court thus treated compensatorytime as it might have treated holiday bonuses: in the court's view, so longas no law or agreement directly forecloses a particular employment policy,an employer is free to adopt it. That approach might be appropriate if publicagencies could base their authority to develop compensatory-time programs,like their authority to award holiday bonuses, on their inherent powersas employers to set the conditions of employment. Under the FLSA, however,whatever authority a public agency now has to adopt a compensatory-timeprogram rests not on such inherent powers, but on the voluntary "agreement"of its employees to be subject to that program. As the Secretary of Laborhas reasonably determined, the conclusion to be drawn from an agreement'ssilence on the question presented here should be resolved in favor of theemployees without whose consent there would be no agreement, and no compensatory-timeprogram, at all.

1. The FLSA establishes a general rule that an employer must pay its employeesa cash premium for their overtime hours. The 1985 Amendments make a conditionalexception to that rule for public agencies, but the conditions to that exceptionare crucial. In particular, the 1985 Amendments do not grant public agenciesa unilateral right to provide compensatory time instead of overtime compensationto nonconsenting employees. Instead, they permit each public agency to seekan "agreement" or "understanding" with its employees-thatis, a meeting of minds-on the subject of compensatory time. See p. 3, supra;Black's Law Dictionary 62, 1369 (5th ed. 1979). In the absence of such anagreement, a public agency has no authority whatsoever to adopt a compensatory-timeprogram, and the agency must instead follow the rule applicable to all otheremployers covered by the FLSA: it must pay monetary compensation, at thepremium rate, for overtime. Any compensatory-time program is thus the productof employee consent. See Moreau v. Klevenhagen, 508 U.S. 22, 34 n.16 (1993);see also S. Rep. No. 159, 99th Cong., 1st Sess. 10-11 (1985); H.R. Rep.No. 331, 99th Cong., 1st Sess. 18 (1985).

The FLSA anticipates, and the Secretary of Labor's implementing regulationsexpressly provide, that compensatory time "agreements" will oftenbe comprehensive in scope, encompassing not just a yes or no decision onwhether compensatory time will be permitted at all, but also subsidiaryprovisions "governing the preservation, use, or cashing out of compensatorytime." 29 C.F.R. 553.23(a)(2); accord S. Rep. No. 159, supra, at 11(same); H.R. Rep. No. 331, supra, at 20 (same). An employer's authorityto require employees to use their compensatory time when they would ratherpreserve it ranks among the most important issues concerning the "preservation"and "use" of compensatory time. The question presented in thiscase, which is integral to the implementation of this federal statutoryscheme, is what to do when the parties have left that issue unaddressedin their agreement.4

That question should be answered in favor of the affected employees, asthe Department of Labor has previously determined. See Opinion Letter fromWage & Hour Div., Dep't of Labor (Sept. 14, 1992), available in 1992WL 845100 (discussed at pp. 5-6, supra); accord Br. of Sec'y of Labor asAmicus Curiae at 6-11, Local 889, AFSCME v. Louisiana, 145 F.3d 280 (5thCir. 1998) (same). That conclusion is the natural consequence of Congress'sdecision to give employees the right to consent-or to withhold consent-toany substitution of compensatory time for overtime pay. When employees giveup their right to premium pay, the proper inference from silence is thatthey will have broad discretion to use or preserve it as they wish, justas they would have enjoyed the right to save or spend their overtime payas they wished had they not agreed to compensatory time to begin with.5

That is so even though preserving employee discretion over the use of compensatorytime could ultimately result in the employer's having to pay overtime compensationwhen it would have preferred to provide compensatory time, if the employeeconcerned reaches the statutory maximum number of compensatory-time hoursthat can be accrued. See 29 U.S.C. 207(o)(3)(A). Congress made employeeconsent a precondition to any compensatory time policy precisely becauseit recognized that many employees would prefer cash to compensatory time,and it therefore prescribed cash, rather than compensatory time, as thedefault payment option in the absence of a relevant agreement. Respondents'position would turn that statutory policy on its head, relying on the potentialfor cash payments (if and when the statutory maximum is reached) as an affirmativereason for divesting employees of control over their own compensatory time.See Collins v. Lobdell, 188 F.3d 1124, 1129-1130 (9th Cir. 1999), petitionsfor cert. pending, No. 99-592 (filed Oct. 5, 1999), and No. 99-788 (filedNov. 5, 1999). That reasoning makes no sense within a statutory scheme inwhich employee consent is the sine qua non of compensatory time and in whichcompensation in cash is the default method of compensating employees forovertime work. Absent an agreement to the contrary, then, an employee'sgreater power to insist on monetary compensation for all overtime includesa lesser power to accrue compensatory time as he or she wishes, even thoughthe employee may someday reach the statutory maximum and then receive monetarycompensation for any further overtime work.6

Finally, and for similar reasons, it would make little sense to resolvethis case by invoking, as the court of appeals did, a "default rule"that "the employer can set workplace rules" as it wishes. Pet.App. 13a. That "default rule" can have no logical applicationwhere, by statute, any authority an employer may have to adopt any compensatorytime program derives not from the employer's own underlying power to setthe terms of employment, but from employee consent. At all events, any uncertaintyabout the proper disposition of this case should be resolved by referenceto the Secretary of Labor's reasonable regulations and interpretive guidanceimplementing the FLSA, not by judge-made "default rules"-especiallydefault rules that conflict with those policies. See Auer v. Robbins, 519U.S. 452, 457, 461-463 (1997); see generally Chevron U.S.A. Inc. v. NaturalResources Defense Council, Inc., 467 U.S. 837, 842-843 (1984).7

2. Congress's decision to make employee consent a precondition to any compensatory-timepolicy is sufficient, by itself, to answer the question presented here infavor of the affected employees. Even apart from that consideration, however,other aspects of the statutory scheme independently confirm that Congressintended for employees, in the absence of a contrary agreement, to retainthe general right to use or preserve their compensatory time as they choose.

First, Section 207(o) is not silent on the subject of an employer's authoritywith respect to an employee's use of compensatory time. Congress in factaddressed that subject and identified only one circumstance in which anemployer may exercise some measure of control: when an employee requeststhe use of compensatory time, the employer must allow such use within areasonable period of time except where the use would "unduly disrupt"the employer's operations. 29 U.S.C. 207(o)(5). If Congress had intendedfor employers to exercise unilateral control over the use of compensatorytime in other respects as well, it presumably would have so provided. Seegenerally Russello v. United States, 464 U.S. 16, 23 (1983). The decisionbelow, however, would entitle an employer not only to limit the circumstancesin which an employee may choose to use his or her compensatory time, butalso to compel the use of compensatory time against the employee's wishes.That construction of Section 207(o) would impermissibly "enlarge[]by implication" Section 207(o)'s exception to the general rule requiringpremium pay for overtime. Citicorp Indus. Credit, Inc. v. Brock, 483 U.S.27, 35 (1987); see Moreau, 508 U.S. at 33 (applying to Section 207(o) the"well-established rule that 'exemptions from the [FLSA] are to be narrowlyconstrued'").

Moreover, the court of appeals' approach would eliminate much of the "freedomand flexibility enjoyed by public employees" (see H.R. Rep. No. 331,supra, at 20) that Congress enacted Section 207(o) to preserve. Congresspermitted employees to agree to the provision of compensatory time ratherthan overtime pay on the premise that they could thereby enjoy otherwiseunavailable opportunities to take extended vacations, get away from jobstresses when necessary, care for relatives, and attend to other familyor personal matters. See Hearing on the Fair Labor Standards Act Beforethe Subcomm. on Labor Standards of the House Comm. on Educ. & Labor,99th Cong., 1st Sess. 4, 71, 160, 205, 224-225 (1985); Fair Labor StandardsAmendments of 1985: Hearings on S. 1570 Before the Subcomm. on Labor ofthe Senate Comm. on Labor & Human Resources, 99th Cong., 1st Sess. 17,96, 109-110, 275, 311, 321, 374-375, 492-493, 520, 573 (1985).8 Conferringon employers a unilateral right to compel the use of compensatory time whenemployees would rather not use it could significantly impair the value ofsuch time for many employees.

Finally, there is no merit to respondents' argument (Br. in Opp. 5-6, 9)that the policy at issue here is lawful on the theory that, by requiringan employee to use his or her compensatory time, the County is, in essence,simply shortening the employee's work week and cashing out the employee'saccrued compensatory time (see note 6, supra). Respondents seek to "shorten"each affected employee's "work week" only sporadically and onlyas a transparent means of forcing the employee to consume accrued compensatorytime. However characterized, this is a required-use policy, and it is unlawfulbecause petitioners, without whose consent there would be no compensatory-timeprogram at all, did not consent to the required use of their accrued time.This Court has invalidated similar attempts to elevate form over substanceas a means of evading the FLSA's overtime requirements.9

3. Answering the question presented here in petitioners' favor would imposeonly a very limited marginal burden on public employers. Because (as allagree) any public employer must bear the burden of securing an employeeagreement before providing compensatory time in lieu of overtime pay, theemployer is well positioned to seek an agreement that specifies the circumstancesunder which that employer may properly control the preservation or use ofcompensatory time. Of course, some employees who agree to the substitutionof compensatory time for overtime pay as a general matter may not agreeto cede to the employer control over their preservation or use of such time.But in that event a public employer is no worse off than it would be ifthose employees simply withheld consent to compensatory time altogether,as they are statutorily entitled to do. In the long term, the only respectin which the Secretary's position would disadvantage employers is that theiremployees will know in advance what to expect if they agree to an employer'scompensatory-time program. But full disclosure is a virtue, not a vice,and the consequences of providing it are obviously no basis for resolvingthe issue presented here in favor of the parties that might benefit fromthe absence of full disclosure.10

Even in the near term, the Secretary's position will impose little burdenon employers that have already reached agreements with their employees with-out specifically addressing the question presented here. Where the employmentrelationship is governed by "applicable provisions of a collectivebargaining agreement" or a similar arrangement, see 29 U.S.C. 207(o)(2)(A)(i),the employer is free to renegotiate the issue at the expiration of the currentagreement (or even during its term if the agreement and applicable law allow).

Where, as in this case, the employment relationship is not characterizedby collective bargaining with a designated labor representative, see Moreau,supra, the employer need only reach an "agreement or understanding"with the affected employee "before the performance of the work."29 U.S.C. 207(o)(2)(A)(ii). By regulation, such an "agreement or understanding"can be quite informal. See 29 C.F.R. 553.23(c). For example, it "maytake the form of an express condition of employment," provided thatthe employee knowingly and voluntarily agrees to it and is informed thathis compensatory time "may be preserved, used or cashed out consistentwith the provisions" of Section 207(o). 29 C.F.R. 553.23(c); accordS. Rep. No. 159, supra, at 11 (same); H.R. Rep. No. 331, supra, at 20 (same).And an agreement or understanding "may be evidenced by a notice tothe employee," so long as the employee registers no objection and hisor her decision to acquiesce is free and uncoerced. 29 C.F.R. 553.23(c).Just as those procedures provide simple and informal methods for seekingemployee consent to the substitution of compensatory time for overtime payas a general matter, so too do they provide an equally unburdensome meansof seeking employee consent to an employer's proposal to afford the employersome control over the employee's preservation or use of accrued compensatorytime.

CONCLUSION

The decision of the court of appeals should be reversed.

Respectfully submitted.



SETH P. WAXMAN
Solicitor General
EDWIN S. KNEEDLER
Deputy Solicitor General
JONATHAN E. NUECHTERLEIN
Assistant to the Solicitor General

HENRY L. SOLANO
Solicitor of Labor
ALLEN H. FELDMAN
Associate Solicitor
EDWARD D. SIEGER
Attorney
Department of Labor


DECEMBER 1999

1 In Seminole Tribe v. Florida, 517 U.S. 44 (1996), this Court held thatCongress lacks the power under the Commerce Clause to abrogate a State'ssovereign immunity from suit in federal court. In Alden v. Maine, 119 S.Ct. 2240 (1999), the Court held that sovereign immunity also protects aState from FLSA suits for money damages by private parties in state court.State sovereign immunity, however, "does not extend to suits prosecutedagainst a municipal corporation or other governmental entity which is notan arm of the State." Alden, 119 S. Ct. at 2267. Respondent HarrisCounty has not argued that it is immune from suit in this case.

2 For employees subject to Section 207(o)(2)(A)(ii) who were hired beforeApril 15, 1986, "the regular practice in effect on April 15, 1986,with respect to compensatory time off for such employees in lieu of thereceipt of overtime compensation, shall constitute an agreement or understanding."29 U.S.C. 207(o)(2). For such employees, that "regular practice"must also conform to the provisions of Section 207(o). 29 C.F.R. 553.23(c)(2).

3 Petitioners raised, but ultimately abandoned, several other claims. Thecourt of appeals concluded that it had appellate jurisdiction over thiscase even though the district court had not specifically ruled on thoseabandoned claims. As noted in our brief at the petition stage (at 6 n.4),the parties have not questioned that conclusion.

4 This Court granted certiorari to address whether a public agency may requireemployees to use their accrued compensatory time "absent a preexistingagreement" permitting such compulsion. 120 S. Ct. 320 (1999); see alsoPet. i (question presented); Pet. App. 12a-13a (deciding case on premisethat parties had no agreement on that issue). As we observed in our amicusbrief at the petition stage (at 18 n.12), respondents did not contend intheir brief in opposition that the parties had in fact entered into anyagreement that addresses this issue, and any such contention would now bewaived. See Sup. Ct. R. 15.2.

5 See Heaton, 43 F.3d at 1180; see also 29 C.F.R. 531.35 ("wages"under FLSA must be "paid finally and unconditionally or 'free and clear'");H.R. Rep. No. 331, supra, at 23 ("Clearly, compensatory time is notenvisioned as a means to avoid overtime compensation. It is merely an alternativemethod of meeting that obligation."); S. Rep. No. 159, supra, at 10(compensatory time is provided "in lieu of monetary compensation"and must be at the premium rate, "just as the monetary rate for overtimeis calculated at the premium rate"). The Secretary recently returnedto this issue in rejecting a regulatory proposal that would have given anemployer a unilateral right to substitute an employee's accrued compensatorytime for the employee's unpaid leave under the Family and Medical LeaveAct of 1993, 29 U.S.C. 2601 et seq. The Secretary reasoned that, under theFLSA, compensatory time is "not a benefit provided by the employer.Rather, it is an alternative for paying public employees * * * for overtimehours worked. The public employee's 'comp time bank' is not the propertyof the employer to control, but rather belongs to the employee." 60Fed. Reg. 2180, 2206-2207 (1995). Moreover, the Secretary noted, permittingan employer "to unilaterally require substitution would conflict withFLSA's rules on public employees' use of comp time only pursuant to an agreementor understanding * * * reached before the performance of the work."Id. at 2207.

6 The Secretary of Labor's regulations implementing the FLSA permit employersto cash out an employee's accrued compensatory time by paying the monetaryequivalent of what the employee would have earned for overtime in the absenceof a compensatory time agreement. See 29 C.F.R. 553.27(a); see also 29 C.F.R.553.26(a). (The FLSA itself does not squarely address that issue, althoughit does contemplate "cashing out" under at least some circumstances.See 29 U.S.C. 207(o)(3)(B).) The premise underlying that regulation is thesame premise that underlies the Secretary's position here: Paying cash forovertime satisfies the general purposes of the FLSA, and compensatory timeis the statutory exception to that policy rather than the rule. Certainlynothing in the Act or the regulations suggests that an employer may unilaterallyreduce accrued compensatory time without paying for it.

7 Several other exceptions to the FLSA's general overtime provisions areconditioned on the existence of an agreement or understanding between theemployer and its employees before work is performed. See 29 U.S.C. 207(g)(piece rates), 207(j) (employment in hospital or similar institution), 207(n)(transit employees). Neither the Secretary's regulations nor, to our knowledge,the courts have applied to those provisions any "default rule"similar to the one adopted below. See, e.g., 29 C.F.R. 548.200(a), 548.306(f),548.401, 778.601(c).

8 See also 131 Cong. Rec. 28,987 (1985) (Sen. Kasten) ("This [legislation]will allow workers with erratic work periods more flexibility in meetingtheir needs."); id. at 29,224 (Rep. Martinez) ("[M]any employees* * * have actually come to prefer having comp time instead of overtimepay for those extra hours worked. To them, the extra time to spend on projectsthat benefit themselves, their homes, their future and their families, aremore important than the cash they could earn."); id. at 29,225 (Rep.Gilman) ("[This legislation] allows workers the freedom to receivedeserved compensation in the manner they prefer while reducing the compliancecost of [Garcia] for public employers. Many of the hard-working people employedby our State and local governments value their private time more than theovertime pay they could earn.").

9 See, e.g., Walling v. Harnischfeger Corp., 325 U.S. 427, 430-431 (1945)(overtime pay must be based on a regular rate that takes into account incentivepay); Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424 (1945)(overtime pay must be based on a regular rate that takes into account paymentsresulting from guaranteed piece rates); Walling v. Helmerich & Payne,Inc., 323 U.S. 37, 39-41 (1944) ("split-day plan" under whichdaily work hours are classified as either "regular" or "overtime"in order to perpetuate the pre-statutory wage scale violates the FLSA);see also 29 C.F.R. Pt. 778, Subpt. F (Pay Plans Which Circumvent the Act);id. § 553.224 (state or local government cannot change the length andstarting time of work periods in order to evade the FLSA's overtime requirements);6A Wage & Hour Man. (BNA) 99:5254 (Feb. 15, 1991) (although an employermay use compensatory-time provisions in conjunction with a time-off planwithin a biweekly pay period, it may not pay a fixed salary for such fluctuatinghours); H.R. Rep. No. 331, supra, at 22 ("The Committee expects goodfaith compliance by public employers and would direct the Secretary of Laborto enforce these amendments so as to prevent * * * attempts to evade Congressionalintent.").

10 Petitioners present no claim that the compensatory-time program describedin the parties' stipulation violates any independent substantive policyof Section 207(o) or of the FLSA in general, such that the program wouldbe unlawful even if the employees had agreed to it. See generally Barrentinev. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 740 (1981) (FLSA rightsmay not be waived); Overnight Motor Transp. Co. v. Missel, 316 U.S. 572,577-578 (1942) (explaining that one key goal of the FLSA is to reduce unemploymentby giving employers an adequate incentive to hire additional workers). Securingan agreement with employees is a necessary, but not always sufficient, conditionfor the lawfulness of a compensatory-time policy, because such policiesmust also be consistent with the substantive terms of Section 207(o). See29 C.F.R. 553.23(a)(2); 6A Wage & Hour Man. (BNA) 99:5212, 99:5213-99:5214(July 29, 1988); Opinion letter from Wage & Hour Div., Dep't of Labor(Sept. 14, 1992), available in 1992 WL 845100. A key factor in determiningwhether a required-use arrangement is substantively consistent with thestatutory scheme is whether the arrangement preserves for employees sufficient"flexibility" (H.R. Rep. No. 331, supra, at 20) in deciding howto use their compensatory time. See pp. 17-18 and note 8, supra (discussinglegislative history); see also 52 Fed. Reg. 2016 (1987) (rejecting suggestions"that the scheduling of compensatory time should be solely at the employer'sdiscretion"). We see no reason why the sort of arrangement describedin the parties' stipulation could not be administered to afford that flexibility.