Washington, DC

U.S. Office of Personnel Management
Fair Labor Standards Act Decision
Under section 204(f) of title 29, United States Code and

Compensation Claim Decision
Under section 3702 of title 31, United States Code

---

Robert D. Hendler
Classification and Pay Claims
Program Manager
Merit System Audit and Compliance


12/10/2012

---

Date

Introduction

The claimant was employed in a Forestry Technician (Smoke Jumper), GS-462-07, position in the Fire Operations Branch, Division of Fire and Aviation, Alaska Fire Service (AFS), of the Alaska State Office, Bureau of Land Management (BLM), U.S. Department of the Interior (DOI), in Fairbanks, Alaska.  In a letter to the agency from the claimant’s duly appointed representative dated May 27, 2008, and received by the agency on May 28, 2008, the claimant seeks “a Back Pay Claim, based upon the miscalculation of overtime pay due [the claimant] between June 3, 2002 and the present.”  The claimant’s representative included with the claim a copy of the legal analysis he had prepared and submitted in similar, related claims.  As stated in the representative’s letters to the claimant’s employing agency on these claims, the claimant seeks:

[t]he differential owed him based upon the failure of the government to include the appropriate non-foreign cost of living allowance (“COLA”) in the straight-time portion of his compensation, for the purposes of calculating overtime pay for non-exempt employees such as [the claimant].

The requested period of the claim is June 3, 2002, through the present.  However, the agency stated in its June 4, 2008, administrative report to OPM that the claimant retired from BLM on August 1, 2005.  The agency also stated the claimant "received back pay that was allowable under the [Fair Labor Standards Act] for a period of two years (April 4, 2004 through August 1, 2005)."  As cited on page 3 of this decision, in a May 5, 2008, letter on behalf of three similarly situated claimants, the claimant's representative acknowledged the claimants have been properly compensated by BLM since April 4, 2006, and that "[i]n response we have asserted a Back Pay claim for those additional monies due from... June 3, 2002 to April 4, 2006."

The claimant has provided calculations for what he believes to be correctly computed overtime work hours for the 2002 and 2003 fire seasons which reflect a total of $6,038.98.  During this period, the claimant performed work the agency classified as Fair Labor Standards Act (FLSA) nonexempt.  The claimant did not question this determination during the claim adjudication process.

FLSA Evaluation

 As specified in sections 591.239(a) and (b) of title 5, Code of Federal Regulations (CFR), agencies are required to calculate COLAs and post differentials in an employee’s regular rate of pay for computing overtime pay entitlements only for FLSA nonexempt employees.  The claimant requests compensation for work performed since June 3, 2002.  He occupied one GS‑462 Forestry Technician position within BLM’s AFS since 2002.  Therefore, we must determine whether the position occupied by the claimant was properly covered by the FLSA.

Under 5 CFR 551.201 and 551.202 as in effect during the claim period,[1] an agency may designate an employee FLSA exempt only when the agency correctly determines the employee meets one or more of the exemption criteria.  In all exemption determinations, the agency must observe the following principles:  each employee is presumed to be FLSA nonexempt; exemption criteria must be narrowly construed to apply only to those employees who are clearly within the terms and spirit of the exemption; the burden of proof rests with the agency asserting the exemption; and the employee should be designated FLSA nonexempt if there is a reasonable doubt as to whether the employee meets the criteria for exemption.  There are three primary exemption categories applied to Federal employees:  executive, administrative, and professional.

During the claim period requested, the claimant occupied one GS-462 position, with a "Smoke Jumper" parenthetical title, and was assigned to the below official position description (PD) as follows:

06/03/2002 to 08/01/2005     Forestry Technician, GS-462-07, # 0F244AH

We considered the work performed by the claimant in the position listed above, as described by the PD of record, and whether the work performed was exempt or nonexempt from FLSA provisions.  The agency determined the work performed by the claimant while occupying the above position was nonexempt.  The claimant does not contest his agency’s FLSA determination and, based on careful review of the record, we concur.  Consequently, we will not discuss this work further. 

Applicability of the Back Pay Act (BPA)

In the legal analysis accompanying his May 27, 2008, letter to the agency, the claimant’s representative asserts the agency has incorrectly characterized this matter as an FLSA claim and, therefore, incorrectly invoked the two- or three-year statute of limitations set out at 29 U.S.C. § 255(a) and 5 CFR 551.101, et. seq.  He asserts the six-year limitation period set out at 5 U.S.C. § 5596(b)(4) and 5 CFR 550.801, et. seq.:

I say this because OPM has already resolved the FLSA issues by regulation.  (5 CFR 591.239.)  Thus, from my perspective, [the claimant is] due the incremental compensation contemplated by OPM in its 2002 final regulation.  This is clearly a Back Pay Act claim and the Back Pay Act limitations period should apply; not that which governs in FLSA matters.

*                             *                              *                             *                             *

The claiming employee should receive the full effect of 5 CFR 591.239 and receive all Back Pay due, as of June 3, 2002.  That is, the claiming employee should be made whole as regard the compensation differential not paid between June 3, 2002, and the present. 

 In his May 5, 2008, letter on behalf of other similarly situated claimants, the claimant’s representative states:

The BLM only recomputed and paid my clients corrected overtime as of April 4, 2006.  In response we have asserted a Back Pay claim for those additional monies due from the effective date of OPM’s regulation, June 3, 2002 to April 4, 2006.  By its reliance on the two year limitation provision of the FLSA, the BLM has failed to meet its regulatory duty and now would deprive my clients of the money owed them in reliance on its own inaction.

*                             *                              *                             *                             *

The fact that the BLM failed or neglected to comply in a timely fashion with OPM’s June 3, 2002 regulation governing the proper calculation of overtime compensation does not, in and of itself, convert these claims from BPA claims to FLSA claims.  The six year statute of limitations applicable to Back Pay Act claims should be applied in this case.

The claimant’s representative appears to misinterpret the BPA as requiring the application of a six-year statute of limitations in all situations.  The BPA’s language makes clear the six-year statute of limitations is the maximum period allowed with respect to amounts payable under its provisions.  See 5 U.S.C. § 5596(b)(4).  However, for back pay claims dealing with payments under the FLSA, an agency must apply the two-year statute of limitations, or three-year statute of limitations for willful violations, in 29 U.S.C. § 255a.  5 CFR 550.804(e)(3).

Applicability of the FLSA

 OPM settles Federal civilian employee compensation and leave claims under the provisions of 31 U.S.C. § 3702(a)(2) and 5 CFR part 178, and FLSA claims under the provisions of 29 U.S.C. § 204(f) and 5 CFR part 551, subpart G.  We construe the claimant’s representative’s assertion seeking settlement of this claim under the provisions of 31 U.S.C. § 3702(a)(2) to be based on his citation of 5 CFR 591.239, which regulates the treatment of non-foreign COLA and post allowance for the purpose of overtime pay and other entitlements.

 Under 5 CFR 591.239(a), COLA is included in total remuneration for computing an FLSA nonexempt employee’s hourly regular rate of pay and in the employee’s straight time rate of pay when the employee is entitled to overtime pay under the FLSA.  Further, 5 CFR 591.239(b) makes clear that COLA is not to be included “as part of an employee’s rate of basic pay for purposes of computing entitlements for overtime pay, retirement, life insurance, or any other additional pay, COLA, or post differential under title 5, United States Code.”  Thus, 5 CFR 591.239(a) applies exclusively for the purpose of calculating overtime pay for employees covered by the overtime pay provisions of the FLSA.

Employees who are nonexempt under the FLSA always receive overtime pay under the FLSA as provided in 5 CFR part 551.  Because FLSA nonexempt employees are not paid overtime under the provisions of the Federal Employees Pay Act (FEPA) of 1945, as amended, codified at 5 U.S.C. § § 5542, 5544, the statute of limitations provided by FEPA cannot be applied to a nonexempt employee’s overtime pay claim under the FLSA.  See Gary Aaron, et al. v. United States, 56 Fed. Cl. 98 (2003).  Thus, the claimant’s representative’s assertion of jurisdiction under 31 U.S.C. § 3702(a)(2) is misplaced; the claim is properly treated as an FLSA claim.

Willful violation

 In his May 5, 2008, letter the claimant’s representative states:

 …even assuming, arguendo, that the BLM is correct in applying the FLSA limitation period…a proposition which we do not concede in this matter - it fails to address the liquidated damages provisions of the FLSA….That is, if OPM determines that the claims of my clients are to be treated under the FLSA rather than the BPA, the conduct of the government is clearly so willful as to invoke the three year limitation period, rather than the two year limitation period the Agency would apply.  This, in turn, serves to entitle the claiming employees here to additional, unpaid, overtime compensation and an equal amount as liquidated damages.  Similarly, given the willful conduct of the Agency in this matter, my clients are entitled to an award of reasonable attorney fees and costs necessarily incurred in this matter.

 Under 5 CFR 551.104, “willful violation” is specifically defined as follows:

 Willful violation means a violation in circumstances where the agency knew that its conduct was prohibited by the Act or showed reckless disregard of the requirements of the Act.  All of the facts and circumstances surrounding the violation are taken into account in determining whether a violation was willful.

Clearly, not all violations of the FLSA are willful as this term is defined in the regulations.  There is no question that the agency erred in determining the claimant’s straight time rate of pay for calculating FLSA overtime pay.  However, error alone does not reach the level of willful violation as defined in the regulations.  A finding of willful violation requires that either the agency knew its conduct was prohibited or showed reckless disregard of the requirements of the FLSA.  The regulation further instructs that the full circumstances surrounding the violation must be taken into account.

In evaluating the circumstances surrounding the violation, it is important to consider the origin of this error and the actions taken by the agency subsequent to its discovery.  It is instructive to consider how the agency reacted when it discovered it was not calculating FLSA overtime pay properly for nonexempt employees receiving non-foreign COLA.  The agency administrative report (AAR) includes a June 8, 2006, memorandum from the Chief, Payroll Operations Division, of DOI’s National Business Center:

The National Business Center (NBC) recently became aware of a change in the calculation methodology for overtime pay for employees who are non-exempt from the Fair Labor Standards Act and who are receiving a non-foreign allowance (COLA).  Although this change occurred in 2002, none of the four major payroll providers, including NBC, had been notified.  As a result, on April 4, 2006, the Office of Personnel Management notified each of the payroll providers that we are required to process back pay plus interest for affected employees for a period of two years.

The memorandum, in itself, is evidence that the agency was making an honest attempt to correct erroneous overtime pay calculations:

System changes are in the process of being made to FPPS.  Once the system changes are made, recomp will be triggered for the prior 26 pay periods.  Shortly after that, the Payroll Operations Division will begin making manual adjustments for the interest and for periods prior to recomp.  We will make every effort to process the retroactive payments as quickly as possible, and hope to have them completed in six months or less.

The agency reported in the AAR that “[a]ll affected employees were identified and paid back pay with interest as of February 2007 for the 2-year period April 2004-April 2006.”  The claimant’s representative was mailed a copy of the AAR on June 4, 2008.   

Based on all of the above, we find the agency erred in not implementing the FLSA overtime pay calculation provisions of 5 CFR 591.239(a), initially issued in 67 FR 22339 (May 3, 2002).  However, we also find the agency acted in good faith by making a full and adequate inquiry once their attention was focused on the issue, and they took action to resolve the matter.  In doing so, the agency did not recklessly disregard the requirements of the FLSA.  In its administrative report, the agency acknowledged it made errors in payroll processing.  However, such technical errors also do not rise to the level of willful violation.  The claimant’s representative’s assertions in his May 5, 2008, letter would require us to conclude the agency engaged in a series of actions based on animus and willful avoidance of its responsibilities which, as discussed previously, we find was not the case.  In summary, we find the agency’s actions do not meet the criteria for willful violation as defined in 5 CFR 551.104. 

Liquidated damages

Under 29 U.S.C. §§ 216 and 260, Federal courts have substantial discretion in fashioning remedies for violations of the FLSA, including liquidated damages.  The authority of the court to grant liquidated damages does not extend to administrative claim decisions issued by OPM. Unlike the courts, OPM’s administrative claims process derives its remedial authority from the BPA, codified as 5 U.S.C. § 5596.  Under the BPA, a claimant can receive back pay and interest for FLSA overtime performed within the claim period, but an agency must apply the two-year statute of limitations (three-years for willful violations) in 29 U.S.C. 255a.  5 CFR 550.804(e)(3). See also 5 CFR part 550, subpart H.  There is no provision in the BPA for liquidated damages.  Therefore, we conclude the claimant’s rationale with regard to liquidated damages is misplaced in that the FLSA administrative claims process does not provide for the awarding of liquidated damages. 

The claim is time barred

The regulations governing the filing of an administrative claim (5 CFR 551.702(c)) also state in pertinent part:  “If a claim for back pay [emphasis added] is established, the claimant will be entitled to pay for a period of up to 2 years (3 years for a willful violation ) back from the date the claim was received.” 

The claim period is June 3, 2002, to August 1, 2005 (when the claimant retired).  The record shows the claimant's representative preserved his claim with his agency on May 28, 2008, when his claim dated May 27, 2008, was received.  Since we find the agency did not willfully violate the FLSA, the claimant would have been eligible for back pay two years prior to that date in connection with the filing of this claim.  Therefore, the claim is time barred prior to May 28, 2006, and must be denied. 

As provided in 5 CFR 551.708, this decision is binding on all administrative, certifying, payroll, disbursing, and accounting officials of agencies for which OPM administers the FLSA.  There is no further right of administrative appeal.  This decision is subject to discretionary review only under conditions specified in 5 CFR 551.708.

Those aspects of this decision reviewed under the authority of 31 U.S.C. § 3702(a)(2) and 5 CFR part 178 regarding the Back Pay Act and COLA are not subject to further administrative review.  Nothing in this settlement limits the employee’s right to bring an action in an appropriate United States court.

Back to Top