As provided in section 551.708 of title 5, Code of Federal Regulations (CFR), this decision is binding on all administrative, certifying, payroll, disbursing, and accounting officials of agencies for which the Office of Personnel Management (OPM) administers the Fair Labor Standards Act (FLSA).  The agency should identify all similarly situated current and, to the extent possible, former employees, ensure that they are treated in a manner consistent with this decision, and inform them in writing of their right to file an FLSA claim with the agency or OPM.  There is no further right of administrative appeal.  This decision is subject to discretionary review only under conditions and time limits specified in 5 CFR 551.708 (address provided in section 551.710).  The claimant has the right to bring action in the appropriate Federal court if dissatisfied with this decision.

The agency is to review whether the claimant has worked overtime in accordance with instructions in the “Decision” section of this decision, and if the claimant is determined to be entitled to back pay, the agency must pay the claimant the amount owed him plus interest as provided in 5 CFR 550.806.  If the claimant believes the agency has incorrectly computed the amount owed him, he may file a new FLSA claim with this office.

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 March 3, 1995, 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, GS-1811, at the GS-7, 9, 11, and 12 levels with the U.S. Department of Health and Human Services (DHHS). [1] 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 March 6, 1993, to the pay period ending December 24, 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 under the Portal-to-Portal 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 March 4, 1991 to May 25, 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, in addition to the period he was employed by [DHHS] after the commencement of the Gulf War, up to the date he recovered under previous FLSA settlements.  This period includes June 21, 1987 to February 20, 1993, less Mr. Pollock’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 August 29, 2010.  We also interviewed by telephone his former supervisor (now retired) who supervised the claimant from 1988 to 1993.

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 August 26, 2016, in response to the aforementioned court decision, OPM requested an agency administrative report (AAR) from the SSA regarding this FLSA claim.  By letter dated December 8, 2017, the agency advised OPM that:

SSA-[Office of the Inspector General (OIG)] does not have historical records of DHHS-OIG, the entity that made the FLSA exemption determinations.  Therefore, we cannot state which exemption criteria DHHS-OIG applied to the GS-1811 criminal investigator positions to conclude those positions were exempt.

The claimant is requesting compensation, less his active duty military service time, for criminal investigator work performed while he occupied GS-7/9/11/12 positions with the DHHS from June 21, 1987, to February 20, 1993.  Given the agency declined to provide an FLSA exemption determination for criminal investigator work performed by the claimant, we must address the exemption status when he occupied the criminal investigator positions.  On June 21, 1987, the claimant was appointed to his Criminal Investigator, GS-1811-7, position with the DHHS-OIG, Office of Investigations, Regional Investigations Office (RIO), in Chicago, Illinois.  The position had a full performance level (FPL) of GS-12.  Although the claimant notes that the supervisory controls diminished when he occupied the higher-graded positions, he states his primary duties and responsibilities, including the types of investigations he conducted, remained essentially the same as he subsequently progressed in positions to the FPL of GS-12.  For that reason, our analysis will primarily reflect the criminal investigator work performed by the claimant at the FPL of the position he occupied during the claim period.

Position information

The mission of the claimant’s RIO was to investigate allegations of criminal activities perpetrated by service providers, program participants, private individuals, and DHHS employees involving retirement, disability, Medicare, survivors, supplemental security income, or any of the approximately 100 programs under the SSA umbrella at that time.  The RIO investigated a variety of situations involving fraud when an individual concealed work activity while receiving disability benefits, misused benefits, improperly received Social Security benefits, utilized false identification, etc.  When initially appointed to the DHHS in June 1987, the claimant was assigned to the Milwaukee Sub-Office and he was thus responsible for conducting criminal investigations of alleged or suspected violations occurring in the State of Wisconsin.  When he was later assigned to the Detroit Sub-Office on February 14, 1988, his area of responsibility shifted to the State of Michigan.  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 financial, employment, healthcare, and other records; conducting lawful searches and seizures; securing and serving summonses and search warrants; carrying out surveillance; 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 direction of the Assistant Regional Inspector General.

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 the criminal investigator positions covers 1987 to 1993, 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 December 8, 2017, the agency does not provide an FLSA exemption determination for the claimant’s criminal investigator positions.  The agency was also 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.  At our request, the claimant forwarded PD number 801 for his GS-1811-7 position.  His Standard Form 50s documenting his employment history show he was assigned to PD number 801, effective December 20, 1987.

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 criminal investigator work 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.

(e) Work of an intellectual nature.  Work requiring general intellectual abilities, such as perceptiveness, analytical reasoning, perspective, and judgment applied to a variety of subject matter fields, or work involving mental processes which involve substantial judgment based on considering, selecting, adapting, and applying principles to numerous variables.  The employee cannot rely on standardized application of established procedures or precedents, but must recognize and evaluate the effect of a continual variety of conditions or requirements in selecting, adapting, or innovating techniques and procedures, interpreting findings, and selecting and recommending the “best” alternative from among a broad range of possible actions.

(f) Work of a specialized or technical nature.  Work which requires substantial specialized knowledge of a complex subject matter and of the principles, techniques, practices, and procedures associated with that subject matter field.  This knowledge characteristically is acquired through considerable on-the-job training and experience in the specialized subject matter field, as distinguished from professional knowledge characteristically acquired through specialized academic education.

(g) Discretion and independent judgment.  The exercise of discretion and independent judgment involves:  (1) comparing and evaluating possible courses of conduct, and (2) interpreting results or implications, and independently taking action or making a decision after considering the various possibilities.  However, firm commitments or final decisions are not necessary to support exemption.  The “decisions” made as a result of the exercise of independent judgment may consist of recommendations for action rather than the actual taking of action.  The fact that an employee’s decisions are subject to review, and that on occasion the decisions are revised or reversed after review, does not mean that the employee is not exercising discretion and independent judgment of the level required for exemption.

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 criminal investigator assigned to the RIO, he spent all his time conducting investigations within his assigned geographic area of suspected violations involving SSA programs including fraud against the Government, bribery, improper and false claims, forged and counterfeit checks, misuse of funds, etc.  According to the claimant, he was assigned to investigate up to 50 cases at a time, each requiring approximately three months to two years to adjudicate.  His supervisor recollects the claimant completed approximately 10 to 15 investigations each month.

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 RIO employee performing investigative work at the Sub-Office level, 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 the general public making allegations, or counterparts from the Federal Bureau of Investigation, Secret Service, Immigration and Naturalization Service, Internal Revenue Service, Postal Service, or other Federal, State, and local law enforcement agencies).  He conducted investigations by verifying a crime or misconduct occurred, identifying the criminal statute pertaining to the allegations, identifying 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.  The purpose of the claimant’s investigative work was to secure convictions of individuals who committed SSA program-related violations leading to the collection of fines, savings, and restitutions; his 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 organizations serviced.  Although he performed a staff support function by providing factual investigative information to assist U.S. Attorneys in prosecuting individuals committing violations involving SSA programs, the claimant did not perform a support function of substantial importance to the organization serviced as expected by (a)(2).  He independently investigated allegations and submitted investigative reports at the conclusion of a case.  When needed, he consulted his supervisor if outside assistance or resources beyond the RIO were required.  The claimant completed financial, healthcare, employment, and other record checks, in addition to conducting interviews with perpetrators and witnesses.  He developed and expanded investigations, comparing and evaluating possible courses of action and necessary investigative techniques to efficiently utilize resources to prove the elements of a crime had been committed.  For example, the claimant went undercover as a patient when conducting an investigation of a podiatrist’s billing practices under Medicare.  He interpreted results gathered from investigative leads (e.g., from informants, witnesses, and record searches) and made decisions on subsequent investigative steps after considering the various possibilities.  If appropriate, he would refer case files containing interview notes, affidavits, and other evidence to the U.S. Attorney for prosecution.  The claimant (as well as all criminal investigators at the RIO) was also responsible for identifying patterns of fraud to determine if, e.g., the crime was committed as a result of loosely or poorly worded program rules.  The criminal investigator drafted a paper explaining how the fraud was committed along with any program-related recommendations, which was then forwarded to the supervisor (the Assistant Regional Inspector General) and the OIG at DHHS headquarters.  The decision to adopt recommendations regarding program improvements was made by or through the Deputy Inspector General at DHHS headquarters.  We conclude 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 OIG work in a field office requiring technical knowledge of substantive law enforcement and investigative work relating to violations of laws.

The claimant did not meet the administrative exemption because he did not meet paragraph (a) of the criteria.  Although we conclude the claimant’s position met paragraphs (b) and (c) of the exemption criteria, it failed to meet all of the required exemption criteria in (a), (b), and (c).  Therefore, we conclude the claimant’s work performed as a GS-12 criminal investigator did not meet the administrative exemption, and that the criminal investigator work he performed at the lower GS-7/9/11 grade levels would also fail to meet the administrative exemption.

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 June 21, 1987, to February 20, 1993, less his active duty military service time. [2]   Since his FLSA settlement was for a time period subsequent to February 20, 1993, it 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’s copies of SF 50s documenting receipt of premium pay which were 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.