The opinion of the court was delivered by: CHIN
In this case, 21 managerial employees of defendant Triborough Bridge and Tunnel Authority (the "TBTA") seek to recover unpaid overtime compensation under the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. § 201 et seq., for the period from December 3, 1990 to December 3, 1993.
The issue presented is whether plaintiffs are "bona fide executive, administrative or professional" employees who are "exempt" from overtime coverage under the FLSA.
In contrast, the TBTA argues that the "salary basis" test should not be applied to public sector employees. Noting that the test was established by the DOL some 20 years before the FLSA was extended to cover public employees, and noting further that principles of public accountability make it impossible for public employers to meet the salary basis test, the TBTA argues that the DOL regulations conflict with Congress's intent to exempt "bona fide executive, administrative and professional" public employees from coverage under the FLSA.
Before me are the parties' cross-motions for summary judgment. Although I conclude that the part-day docking provision and the temporary military leave, jury duty, or attendance as a witness provision of the salary basis test must be stricken as violative of congressional intent, the remaining provisions of the salary basis test, including the disciplinary penalties provision, are valid. A genuine issue of material fact exists, however, as to whether plaintiffs were subject to reduction in salary for violating rules other than safety rules of major significance. Accordingly, both motions for summary judgment are denied.
Plaintiffs are a group of non-union employees of the TBTA who held various managerial positions, such as Bridge and Tunnel Supervisor, General Manager, and Maintenance Superintendent, during the relevant time period. The parties have stipulated that plaintiffs' job duties were those of executive, administrative, or professional employees. Each plaintiff received an annual salary between $ 60,000 and $ 84,000 per year and was classified as exempt from overtime coverage under the FLSA by the TBTA.
The TBTA is a public benefit corporation created pursuant to section 552 of the New York Public Authorities Law. The TBTA has the authority "to appoint officers, agents and employees and fix their compensation"; however, this authority is subject to the provisions of the New York Civil Service Law. N.Y. Pub. Auth. Law § 553(7) (McKinney 1994). Thus, the TBTA's employees are civil service employees who are subject to the New York Civil Service Law. Id.
B. TBTA Policies and Procedures
The TBTA established time and leave regulations and other policies for its employees concerning, inter alia, absences from work, temporary military leave, and service as a witness in court proceedings. (Pl. App. Exh. A, C).
For example, the TBTA could charge the sick and vacation leave banks of its employees for absences of less than one day. (Id. at Exh. L). Also, the TBTA could dock its employees for military leave that extended more than twenty-two work days. (Id. at Exh. A). Finally, the TBTA could dock its employees who missed work as a result of a court appearance when the employee had a personal interest in the proceeding. (Id.)
As explored more fully below, of greater significance are the TBTA's disciplinary policies. Included in the TBTA Employee Handbook, the Managerial Time and Leave System, and other policy memoranda were various policies and procedures applicable to TBTA employees. Most of these provisions included disciplinary penalties that were imposed for failure to follow such policies and procedures. Examples of the various policies, rules, and regulations include the following:
. The TBTA's work day began at 9:00 a.m. Employees were given a fifteen minute grace period to arrive at work; non-excused lateness of sixteen minutes or more was charged in half-hour increments to the employee's annual leave. (Pl. App. Exh. A at 12).
. When missing work due to a death in the family, TBTA employees could be required to provide documentation, such as a copy of the death certificate. Failure to provide documentation upon request resulted in such leave being charged to annual leave credits or without pay. (Id. at 6).
TBTA employees were also subject to a host of other disciplinary penalties, such as misuse of a department computer or photocopying machine (Williams Dep. at 116), misuse of an official vehicle (id.), misuse of a telephone for personal use (id.), misuse of a TBTA badge or pass (id. at 138; Pl. App. Exh C. at 12), attempting to gain free passage on MTA operated mass transit facilities (Pl. App. Exh. P), and improper or unauthorized transmission via use of two-way radios (Id. at Exh. S). Plaintiffs contend that these various policies violated the provisions of the salary basis test, thereby entitling them to overtime compensation under the FLSA.
To understand both parties' arguments, a discussion of the history of the FLSA and the DOL's regulations is necessary. In 1938 Congress enacted the FLSA "to promote economic justice and security for the lowest paid of our wage earners, to create conditions of employment stability, and to eliminate unfair competitive labor practices in industry." S. Rep. No. 640, 81st Cong., 1st Sess. (1949), reprinted in 1949 U.S.C.C.A.N. 2241; see also Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739, 67 L. Ed. 2d 641, 101 S. Ct. 1437 (1981) (Congress enacted the FLSA to protect all covered workers from substandard wages and oppressive working hours and labor conditions). Under the FLSA, employers were required to pay a minimum wage plus overtime at one and one-half times the employee's regular wage for hours worked in excess of forty per week. 29 U.S.C. § 207(a)(1). Congress created an exemption to this rule, however, for "any employee employed in a bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213(a)(1) (the "white-collar exemption"). Congress did not define the term "bona fide executive administrative, or professional employee," leaving that responsibility to the DOL.
In 1940, the DOL first enacted regulations and interpretations defining the parameters of the white-collar exemption. See 5 Fed. Reg. 4077 (1940). After holding hearings on the subject, the DOL amended the regulations and interpretations in 1954. The amended regulations provided for a "duties test" and a "salary basis test" that were to be applied in determining which employees qualified for exempt status. 29 C.F.R. §§ 541.1, 541.2, 541.3, 541.118.
As originally written, and as it still reads, the salary basis test provides that an employee is exempt from the FLSA overtime pay requirements only if he is paid on a salary (as opposed to an hourly) basis, that is "if under his employment agreement he regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount consisting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of work performed." 29 C.F.R. § 541.118(a).
With certain exceptions, a "salaried" employee "must receive his full salary for any week in which he performs any work without regard to the number of days or hours worked." Id. One important exception, however, is that a "salaried" employee does not lose his exempt status if he is subject to deductions for absences of "a day or more for personal reasons, other than sickness or accident." 29 C.F.R. § 541.118(a)(2). In contrast, an employee does lose his exempt status (and therefore must be paid overtime) when his salary is subject to reductions for, inter alia, partial-day absences for personal reasons, including lateness, sickness, or disability, absences for jury duty, attendance as a witness, or temporary military leave, or disciplinary reasons other than penalties imposed in good faith for infractions of safety rules of major significance. 29 C.F.R. § 541.118(a)(2-5).
When first created, neither the FLSA nor the DOL's regulations and interpretations applied to public employees. In 1966, Congress extended the minimum wage and overtime provisions of the FLSA to employees of public hospitals, schools, and certain mass transit carriers. The Supreme Court held that this extension was constitutional in Maryland v. Wirtz, 392 U.S. 183, 20 L. Ed. 2d 1020, 88 S. Ct. 2017 (1968). In 1974, Congress extended FLSA coverage to all public employees, stating that under this bill, coverage was extended to "non-supervisory employees in the public sector." 1974 U.S.C.C.A.N. 2811, 2837. The Supreme Court struck down this extension, however, holding that the Tenth Amendment barred application of ...