Washington, DC

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

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Linda Kazinetz
Classification Appeals and FLSA Claims
Program Manager
Agency Compliance and Evaluation
Merit System Accountability and Compliance


08/16/2017

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Date

Introduction

On June 4, 2012, the U.S. Office of Personnel Management (OPM) received a letter dated June 4, 2012, from the Law Offices of Bernstein & Lipsett, P.C. (B & L), the claimant’s duly appointed representative, concerning a Fair Labor Standards Act (FLSA) claim they had initially filed on the claimant’s behalf with the General Accounting Office (GAO), now the U.S. Government Accountability Office, on June 12, 1990, and subsequently with OPM on or about September 9, 1999, challenging his exemption status under the FLSA when he was employed as a Criminal Investigator, Inspector (Internal Security), GS-1811, at the GS-11 and GS-12 levels with the Internal Revenue Service (IRS), Department of the Treasury.  The claimant was a plaintiff in a lawsuit filed in the U.S. Court of Federal Claims at approximately the same time the administrative claim was filed with GAO.  Based on information provided by B & L, the claimant was awarded back pay under a settlement agreement for the pay period ending April 23, 1988, to the pay period ending October 29, 1994, subject to the two-year statute of limitations for FLSA claims under 29 United States Code (U.S.C.) 255(a).

B & L has requested OPM adjudicate the administrative claim filed with OPM and asserts that, because the claimant served in the military during the Gulf War, the statute of limitations applicable to this claim is the five-year statute of limitations under 31 U.S.C. 3702(b)(2) rather than the two-year statute of limitations (three years for willful violations) applicable to FLSA administrative claims filed under the Barring Act.  See 73 Comp. Gen 157 (May 23, 1994); 31 U.S.C. 3702(b); 29 U.S.C. 255(a).  B & L states the claimant was called to active duty with the United States Army Reserve “from approximately January 3, 1991 to July 7, 1991” in connection with Operation Desert Shield/Storm and, citing the provisions of 31 U.S.C. 3702(b)(2), asserts:  “[H]e is entitled to retroactive back pay and interest … for the period he was employed prior to the commencement of the Gulf War on August 2, 1990, up to the date he recovered under previous FLSA settlements.  This period includes August 2, 1985 to June 4, 1988, less Mr. Bratt’s active duty military service time, for which he does not seek recovery.”

In reaching our FLSA claim decision, we have carefully reviewed all information furnished by the claimant’s representative and the agency, including information obtained from a telephonic interview with the claimant, who retired from Federal civilian service on November 30, 2008.  We also interviewed by telephone a former coworker who worked with the claimant during part of the claim period.

Background

We previously accepted and decided six similar claims under section 4(f) of the FLSA, as amended, codified at section 204(f) of title 29, U.S.C., which we denied as time barred.  Subsequently, the claimant’s representative brought suit under the Administrative Procedure Act (5 U.S.C. 551 et seq., and 701 et seq.) in the United States District Court for the District of Columbia, alleging that OPM wrongfully applied a two-year statute of limitations in denying their administrative claims for unpaid FLSA overtime pay.  Armstrong v. Archuleta, 77 F.Supp.3d 9 (December 30, 2014).  In relevant part, the court stated in its opinion:

All Plaintiffs are deemed to have timely filed their claims as of the date of their filings with the Claims Court. As a result, Plaintiffs . . . can recover for the entire claim period under the five-year statute of limitations—that is, for all claims that accrued within five years before the Gulf War commenced on August 2, 1990—minus monies paid under their DOJ Settlements.

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[T]he case is remanded to OPM to adjudicate and process damages in accordance with FLSA and other applicable laws, and Plaintiffs’ respective employing agencies are directed to compensate them in accordance with OPM’s determinations.

Consistent with the holding in the Armstrong case, we will apply the five-year statute of limitations and corrective methodology (subtracting monies already received under prior settlements or judgments) to the claims of similarly-situated claimants we find to be FLSA nonexempt and potentially due FLSA overtime pay.

Analysis

Under the provisions of 5 CFR 551.706, OPM determines the facts necessary to adjudicate a claim.  Applying the court’s mandate to determine whether the claimant is owed overtime pay under the FLSA, we must first determine whether the work he performed is exempt or nonexempt from the overtime pay provisions of the FLSA.  On October 6, 2015, in response to the aforementioned court decision, OPM requested an agency administrative report (AAR) from IRS regarding this FLSA claim.  By letter dated June 14, 2017, the agency advised OPM that:

The [official personnel folder] for Kenneth L. Bratt Jr. contains [Standard Form (SF)] 50’s reflecting how he was coded as pertains to FLSA, during the claim period of August 1985 to June 4, 1988.  During this period, he served as a Criminal Investigator, Inspector (Internal Security) in the 1811 series from March 31, 1985 through March 14, 1987, at a Grade 11 and from March 15, 1987 through March 25, 2000, at a Grade 12 and was coded as FLSA exempt.

Regarding his GS-11 criminal investigator position, IRS advised that “Mr. Bratt should have been coded as Non-exempt from 3/31/1985 to 3/15/1987.”  Based on careful review of the record, we concur with the agency’s determination and have not separately addressed the claimant’s GS-11 work in this decision.

The claimant is requesting compensation, less his active duty military service time,[1] for criminal investigator work performed while he was a GS-11 with the Internal Security Division (Division) from August 2, 1985, to March 14, 1987.[2]  Therefore, IRS would have been required to compensate the claimant under the overtime provisions of Subpart E of Part 551 of 5 CFR for this work performed within the claim period.

Regarding the exemption status of the claimant’s GS-12 criminal investigator position, the agency states that “[t]he remaining timeframes during the claim period were properly coded as FLSA exempt,” additionally citing:

 29 U.S.C. § 213 (a) (1) – FLSA overtime pay requirements do not apply to any employee who is a “bona fide executive, administrative, or professional capacity”.

Given the agency’s conclusion and the need to identify the actual duties performed by GS-12 criminal investigators like the claimant, our analysis will address the exemption status when he served as a GS-12 criminal investigator.

GS-1811-12 position occupied from March 15, 1987, to June 4, 1988

Position information

From March 15, 1987, to June 4, 1988, the claimant occupied a Criminal Investigator, Inspector (Internal Security), GS-1811-12, position with the Division in Scranton, Pennsylvania.  The function of the Division was to investigate allegations of criminal or code of conduct violations committed by, against, or involving IRS employees in primarily the Northeast Pennsylvania area, as well as parts of New York and New Jersey.  Once an investigation was assigned, the claimant identified relevant issues, decided the course of the investigation, pursued the facts, and collected information.  He conducted interviews with individuals who filed the complaint, the individuals alleged to be involved in the matter, eyewitnesses, and other individuals relevant to or part of the investigation.  In performing investigations, the claimant’s work also involved reviewing personnel, financial, and other records; conducting lawful searches and seizures; securing and serving summonses and search warrants; carrying out surveillance and wire-tapping; and arresting alleged violators.  He developed suspect profiles and gathered evidence to demonstrate to the local U.S. Attorney that the elements of a crime had been committed.  The claimant was sometimes called upon to testify in a U.S. court or grand jury.  The claimant worked under the general direction of the Division’s Group Manager located in Philadelphia, Pennsylvania.

Evaluation of FLSA Coverage

Sections 551.201 and 551.202 of title 5, CFR, require an employing agency to designate an employee FLSA exempt only when the agency correctly determines that the employee meets one or more of the exemption criteria.  In all exemption determinations, the agency must observe the following principles:  (a) Each employee is presumed to be FLSA nonexempt.  (b) Exemption criteria must be narrowly construed to apply only to those employees who are clearly within the terms and spirit of the exemption.  (c) The burden of proof rests with the agency that asserts the exemption.  (d) If there is a reasonable doubt as to whether an employee meets the criteria for exemption, the employee should be designated FLSA nonexempt. (e) The designation of a position’s FLSA status ultimately rests on the duties actually performed by the employee.

Because the claim period when the claimant occupied his GS-12 position covers 1987 and 1988, we must apply the FLSA regulations of 5 CFR part 551 (1984) in effect during the period of the claim.  However, in response to a court decision, OPM amended these regulations in 1988 by eliminating the presumption that employees in positions classified at GS-11 and above were exempt from the overtime pay provisions of the FLSA, and changed the criteria for determining whether a Federal employee was an executive under the FLSA.  See 53 Federal Register 1739-01 (January 22, 1988).  The claimant believes his position should have been designated as nonexempt from the overtime pay provisions of the FLSA and thus not covered by the executive, administrative, or professional exemptions as detailed in 5 CFR 551.204, 5 CFR 551.205, and 5 CFR 551.206 of those regulations.

In its letter of June 14, 2017, the agency states the claimant’s GS-12 criminal investigator position was exempt from the FLSA but provides no rationale.  The agency was unable to provide organizational charts, mission and function statements, or copies of the position descriptions (PD) to which the claimant was officially assigned during the claim period.  The claimant’s SF-50s documenting his employment history show he was assigned to PD #SS91086025 when he occupied the GS-12 position.  By email dated June 28, 2017, the agency provided multiple standardized PDs from “that time period.”  None of the PDs provided match PD #SS91086025 to which the claimant was officially assigned.

Based on careful review of the record and the claimant’s assigned duties and responsibilities, we conclude his position did not meet the executive or professional exemption criteria, and the claimant does not disagree.  However, we have evaluated his GS-12 criminal investigator position against the administrative exemption criteria in effect during the time of the claim.

Administrative Exemption Criteria

The regulation under 5 CFR 551.205 describes the administrative exemption criteria as follows:

An administrative employee is an advisor, assistant, or representative of management, or a specialist in a management or general business function or supporting service who meets all of the following criteria:

(a) The employee’s primary duty consists of work that:  (1) significantly affects the formulation or execution of management policies or programs; or (2) involves general management or business functions or supporting services of substantial importance to the organization serviced; or (3) involves substantial participation in the executive or administrative functions of a management official.

(b) The employee performs office or other predominantly non-manual work which is:  (1) intellectual and varied in nature; or (2) of a specialized or technical nature that requires considerable special training, experience, and knowledge.

(c) The employee must frequently exercise discretion and independent judgment, under only general supervision, in performing the normal day-to-day work.

Although no longer in effect, the definitions of terms used in the FLSA exemption criteria as contained in the Attachment to Federal Personnel Manual (FPM) Letter 551-7, dated July 1, 1975, provide useful guidance in applying the administrative exemption criteria in 5 CFR 551.205 discussed above.  The meaning of terms relevant to the criteria follows:

(a)    Primary duty.  As a general rule, the primary duty is that which constitutes the major part (over 50%) of the employee’s work.

(b)   Formulation or execution of management policies or programs.  Management policies and programs range from broad national goals that are expressed in statutes or Executive Orders to specific objectives of a small field office.  Employees may actually make policy decisions or participate indirectly, through developing proposals that are acted on by others.  Employees who significantly affect the execution of management policies or programs typically are those whose work involves obtaining compliance with such policies by other individuals or organizations, within or outside of the Federal Government, or making significant determinations in furtherance of the operation of programs and accomplishment of program objectives.  Administrative employees engaged in formulation or execution of management policies or programs typically perform one or more phases of program management (i.e., planning, developing, promoting, coordinating, controlling, or evaluating operating programs of the employing organization or of other organizations subject to regulation or other controls).  Some of these employees are classified in occupations that reflect these functions (e.g., program analyst) but many are classified in subject matter occupations.

(c)    General management, business, or supporting services.  This element brings into the administrative category a wide variety of specialists who provide general management, business, or other supporting services as distinguished from production functions.  Administrative employees in this category provide support to line managers by:  (1) providing expert advice in specialized subject matter fields, such as that provided by management consultants or systems analysts; (2) assuming facets of the overall management function, such as safety management, personnel management, or budgeting and financial management; (3) representing management in such business functions as negotiating and administering contracts, determining acceptability of goods or services, or authorizing payments; or (4) providing supporting services, such as automated data processing, communications, or procurement and distribution of supplies.  To warrant exemption, each employee’s work must involve substantial discretion on matters of enough importance that the employee’s actions and decisions have a noticeable impact on the effectiveness of the organization advised, represented, or serviced.

(d)   Participation in the functions of a management official.  This element includes those employees (variously identified as secretaries, administrative or executive assistants, aids, etc.) who participate in portions of the managerial or administrative functions of a supervisor whose scope of responsibility precludes personally attending to all aspects of the work.  To support exemption, such assistants must be delegated and exercise substantial authority to act for the supervisor in the absence of specific instructions or procedures.  Typically these employees do not have technical knowledge of the substantive work under the supervisor’s jurisdiction.  Their primary knowledge is of administrative procedures, organizational relationships, and the policies, plans, interests and views of the supervisor.

The FPM letter lists three elements involved in the evaluation of discretion and independent judgment:  (1) The work must involve sufficient variables as to regularly require discretion and judgment in determining the approaches and techniques to be used, and in evaluating results.  This precludes exempting employees who perform work primarily requiring skill and applying standardized techniques or knowledge of established procedures, precedents, or other guidelines which specifically govern the employee’s action.  (2) The employee must have authority to make such considerations during the course of assignment.  This precludes exempting trainees who are in a line of work which requires discretion but who have not been given authority to decide discretionary matters independently.  (3) The decisions made independently must be significant.  Although this term is not so restrictive as to include only the kinds of decisions made by employees who formulate policies or exercise broad commitment authority, it does not extend to the kinds of decisions that affect only the procedural details of the employee’s own work, or to such matters as deciding whether a situation does or does not conform to clearly applicable criteria.

The claimant’s investigative work did not meet paragraph (a) of the administrative exemption criteria.  His primary duty was not to serve as an advisor, assistant, or representative of agency management; or as a specialist in a management or general business function or supporting service.  As a GS-12 Criminal Investigator, Inspector (Internal Security) assigned to the Division, he spent all of his time conducting investigations of a criminal or code of conduct nature committed by, against, or involving IRS employees in his assigned geographic area.  According to the claimant, he investigated six to ten cases at a time, each requiring a few weeks to several months to adjudicate.  Approximately eighty percent of his cases involved investigating criminal violations including allegations of bribery, assaults, threats, and the use, possession, or trafficking of drugs.  The remaining cases involved code of conduct issues involving violations of rules that were not criminal, such as improper use of Government equipment.

The claimant did not meet the requirements of (a)(1) of the administrative exemption criteria.  We found the claimant’s primary duties did not significantly affect the formulation or execution of management policies or programs.  The claimant carried out individual investigations rather than major assignments associated with conducting the operations of the organization.  As a Division employee at a field office performing investigative work, he did not make policy decisions or participate indirectly through developing proposals that were acted on by others.  Rather than affecting the organization’s operations to a substantial degree, the claimant’s work products tracked an individual investigation to determine whether a crime or misconduct had occurred.  His cases were assigned by his supervisor or through leads (e.g., from IRS employees alleging being threatened, assaulted, or bribed; general public making allegations against IRS employees; or counterparts from State police or other Federal agencies).  He conducted investigations by verifying a crime or misconduct occurred, identifying employees or other individuals involved, performing record checks, conducting interviews, and gathering sufficient evidence to support conclusions.  His case files supporting legal actions were forwarded to the U.S. Attorney for prosecution of the facts meeting a criminal offense.  His findings of misconduct involving an IRS employee were provided to the employee’s (subject of the investigation) management, who would be responsible for determining appropriate disciplinary actions.  Though providing the evidence to support the wrongdoing, the claimant was not responsible for making recommendations of actions to be taken against the subject.  The claimant’s investigative work did not involve making significant determinations in furtherance of the operation of programs and accomplishment of program objectives.  In addition, unlike administrative employees, he did not perform any phases of program management such as planning, controlling, or evaluating operating programs.

The claimant did not meet the requirements of (a)(2) of the administrative exemption criteria.  His primary duties did not involve general management or business functions or supporting services of substantial importance to the organization serviced.  Although he performed a staff support function by providing factual investigative information to, for example, assist agency management in making recommendations on individual allegations of employee misconduct, the claimant did not perform a support function of substantial importance to the organizations serviced as expected by (a)(2).  He independently investigated allegations and submitted investigative reports at the conclusion of a case.  According to the claimant, cases involving assault, or the threat of, were of high priority to ensure the safety of IRS employees and were typically completed in a matter of weeks.  Once allegations were reported by the IRS employee (or supervisor), he completed real estate, financial, law enforcement, and other record checks, in addition to conducting interviews with the employee and perpetrator.  If appropriate, he would refer case files containing interview notes, affidavits, and other evidence to the U.S. Attorney for prosecution.  Cases involving allegations of bribery or corruption would be completed in months.  If, for example, IRS employees alleged that they had been targets of attempted bribery, the claimant interviewed employees; took affidavits and sworn statements; conducted record searches; identified the facts; and developed the case (e.g., by monitoring future meetings, wiring employees, setting up cameras, and preparing employees and others to be involved in meetings).  If an investigation revealed a crime had occurred as a result of an operating procedure (e.g., how IRS employees conduct meetings), the claimant states any changes to operating procedures or practices would be identified, recommended, and implemented by IRS management officials above the Group Manager position.

The claimant’s investigative responsibilities were not viewed as an extension of the management process, and the impact of his work was limited to that which he personally performed relating to the subject individual investigation, rather than helping to manage or affecting the management of significant matters within the claimant’s agency.  Furthermore, he was not involved in systems analysis and general management support functions, e.g., safety and personnel management, budgeting, and financial management.  The claimant did not represent agency management in negotiating and administering contracts for goods or services, and did not provide support services, e.g., automated data processing, communications, procurement, and distribution of supplies.

The claimant did not meet the requirements of (a)(3) of the administrative exemption criteria.  His assignments did not involve substantial participation in the executive or administrative functions of a management official.  He did not act as a secretary or administrative assistant participating in portions of the managerial or administrative functions of a supervisor, with no requirement for technical knowledge of the substantive work under the supervisor’s jurisdiction.  Unlike such employees, the claimant independently performed the Division work in a field office requiring technical knowledge of substantive law enforcement and investigative work relating to violations of laws.

The claimant does not meet the administrative exemption because he does not meet paragraph (a) of the criteria.  Although we conclude he met paragraphs (b) and (c) of the exemption criteria, we will not discuss them since an administrative employee must meet (a), (b), and (c) in its entirety.

Decision

The claimant’s work was nonexempt (i.e., covered by the overtime pay provisions of the FLSA), and he is entitled to compensation for all overtime hours worked at the FLSA overtime rate for the period of the claim he was improperly designated as FLSA exempt; i.e., from August 2, 1985, to June 4, 1988.  However, since the claimant was awarded back pay under a settlement agreement beginning on the pay period ending April 23, 1988, the period of time for which back pay is owed in connection with this claim is August 2, 1985, to April 9, 1988.  The claimant’s military service time occurred after April 9, 1988, and thus is not germane to the overtime pay calculations for the period of the claim covered by this decision.  The agency must follow the compliance requirements on page ii of this decision.

The claimant must submit evidence showing the amount and extent of overtime that was performed as provided for in 5 CFR 551.706(a) as informed by the agency payroll records submitted to OPM and the claimant.  The agency will have the opportunity to review this evidence using any sources of information available, including witnesses, before a determination is made as to whether the claimant is entitled to any back pay under the FLSA and any interest as required under 5 CFR part 550, subpart H.[3]  Any petition for attorney’s fees and expenses must be submitted to the agency out of which this claim arose.  Should the claimant be determined to be entitled to back pay which the claimant believes to be incorrectly computed, the claimant may file a new FLSA claim with this office.

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