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Pay & Leave Claim Decisions

Washington, DC

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

Estate of Richard H. Neier
Criminal Investigator
GS-1811-7/9/11/12
Internal Revenue Service
U.S. Department of the Treasury
Positions should be nonexempt, thus due FLSA overtime pay
Nonexempt; potentially due FLSA overtime pay
F-1811-12-26

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

08/15/2017


Date

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 duly appointed representative of the claimant’s estate, 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 May 19, 1992, and subsequently with OPM on October 21, 1999, challenging his exemption status under the FLSA when he was employed as a Criminal Investigator, GS-1811, at the GS-7, GS-9, GS-11, and GS-12 levels with the Columbia District Office (CDO), Criminal Investigation Division (CID), Internal Revenue Service (IRS), Department of the Treasury (Treasury), in Columbia, South Carolina.  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 24, 1990, 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 Coast Guard Reserve “from approximately August 11, 1990, to August 19, 1990”[1] 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 March 10, 1990, less Mr. Neier’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.  Neither the agency nor the claimant’s representative provided copies of the position descriptions to which the claimant was assigned during the claim period.  Although the claimant’s representative provided the names of two previous supervisors, no contact information was provided and we were unable to locate them.  Therefore, this decision is based on our understanding of the work performed in the CID as obtained from our interviews with the claimants who filed other related claims.

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.

***************

[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 performed during the claim period 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 Richard H. Neier contains [Standard Form (SF)] 50’s reflecting how he was coded as it pertains to FLSA, during his claim period of August 2, 1985, through March 10, 1990.  These periods are reflected as follows:

  • August 2, 1985, through September 14, 1985, FLSA non-exempt
  • September 15, 1985, through March 10, 1990, FLSA exempt

Based on his designation as FLSA non-exempt [at the GS-7 level] for the period of August 2, 1985, through September 14, 1985, his pay was calculated correctly.  No further action is needed for this time frame….  Only the time as a Criminal [I]nvestigator Special Agent Grade 09 through Grade 12, September 15, 1985, through March 10, 1990, had been designated by the Agency as FLSA exempt.

The agency provided an SF-50 documenting the claimant’s employment with IRS showing that he was designated nonexempt from the FLSA at the GS-7 level.  Absent an assertion by the claimant that he was not paid at the FLSA overtime rate during the period he was designated as nonexempt, we must conclude he was properly compensated under the FLSA during this period, i.e., August 2, 1985, to September 14, 1985.

Regarding the exemption status of the claimant’s GS-9 through GS-12 criminal investigator positions, IRS states: “Upon review of all available information, we believe IRS considered Criminal Investigators at the Grade 09 and above during that time period as administrative employees.  They applied the administrative exemptions making them FLSA exempt.”

The claimant is requesting compensation, less his active duty military service time, for work performed while he was a Criminal Investigator, GS-1811-9, from September 15, 1985, to September 27, 1986, as a GS-1811-11, from September 28, 1986, to May 7, 1988, and as a GS-1811-12, from May 8, 1988, to March 10, 1990.[2]  Therefore, our analysis addresses the proper FLSA exemption status of the GS-9, GS-11, and GS-12 positions held by the claimant during the claim period.

GS-1811-9/11/12 positions occupied from September 15, 1985, to March 10, 1990

Position information

Throughout the claim period, the claimant occupied criminal investigator positions with CDO’s CID, in Columbia, South Carolina.  The function of CID was to investigate allegations of violations of U.S. Internal Revenue Code and related financial crimes in an assigned geographic area.

The interviews we held with other claimants assigned to IRS CIDs show they all performed the same basic types of criminal investigator duties.  Therefore, we can reasonably conclude the claimant performed the following duties during the claim period.  For each investigation assigned, he would have identified relevant issues, decided the course of the investigation, pursued the facts, and collected information.  He would have conducted interviews with the subject(s) of the investigation, witnesses, and other individuals relevant to or part of the investigation.  In performing investigations, the claimant’s work would have also involved reviewing financial and other records, conducting lawful searches and seizures of illicit materials, securing and serving search warrants, carrying out surveillance, and arresting alleged violators.  He would have gathered evidence to demonstrate to the local Assistant U.S. Attorney whether or not the elements of a crime had been committed and may have been called upon to testify in a U.S. court.  Knowledge required by his positions would have included that of the laws, statutes, and regulations on which IRS enforcement authorities are based, and specific case law regarding seizures, civil rights, and preservation of evidence.  Based on the above, we assume the claimant worked under the general direction and policy guidance of his supervisor, independently investigated his cases, and submitted comprehensive reports to his supervisor at the conclusion of each case. 

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 covers 1985 to 1990, 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’s representative believes the 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.

The agency indicates that due to the age of the claim, it could provide only limited information regarding the claimant’s employment with IRS during the claim period.  In its June 14, 2017, letter to OPM, the agency stated that the claimant’s GS-9, GS-11, and GS-12 criminal investigator positions had been determined to be FLSA exempt under the administrative exemption.  Based on careful review of the record and our assumptions about the claimant’s assigned duties and responsibilities during the claim period, we conclude the claimant’s positions did not meet the professional or executive exemption criteria, and the agency does not disagree.  Therefore, we have evaluated his positions as a GS-9, GS-11, and GS-12 criminal investigator solely against the administrative exemption criteria. 

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. 

We concluded, based on previously confirmed IRS CID criminal investigator duties, that the claimant’s work in doing criminal investigations 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, the claimant spent his time investigating criminal violations of financial laws. 

The claimant did not meet the requirements of paragraph (a)(1) of the administrative exemption criteria because we conclude his primary duties did not significantly affect the formulation or execution of management policies or programs.  The information provided shows the claimant was a field office employee assigned to CID’s CDO.  We also conclude the claimant performed line investigative work, did not make policy decisions or participate indirectly through developing proposals that were acted on by others, and did not perform any phase of program management such as planning, controlling, or evaluating operating programs. 

The claimant did not meet the requirements of paragraph (a)(2) of the administrative exemption criteria.  We conclude the claimant’s primary duties did not involve general management or business functions or supporting services of substantial importance to the organization serviced.  Rather, the claimant’s assignment to the CID indicates he performed the line law enforcement work of the IRS.  As such, his tasks would not have included providing general management, business, or other supporting services to line managers.  He would not have been involved in systems analysis or general management support functions, e.g., safety management, personnel management, or budgeting and financial management.  He would not have represented agency management in negotiating and administering contracts for goods or services, or have provided support services, e.g., automated data processing, communications, procurement and distribution of supplies. 

The claimant did not meet the requirements of paragraph (a)(3) of the administrative exemption criteria.  We conclude 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 line work of the IRS’s CDO requiring technical knowledge of substantive law enforcement and criminal investigative work relating to financial law violations.  

The claimant did not meet the administrative exemption because he did 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 September 15, 1985, to March 10, 1990.  Since both the claimant’s active duty military service and his previous FLSA settlement were for time periods subsequent to March 10, 1990, they are 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’s estate must submit evidence showing the amount and extent of overtime that was performed as provided for in 5 CFR 551.706(a).  The agency will have the opportunity to review this evidence using any other 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’s estate believes to be incorrectly computed, his estate may file a new FLSA claim with this office. 



[1] These dates are verified in the claimant’s “Reserve Orders and Pay Voucher” issued by the U.S. Coast Guard and contained in the record. 

[2] Some of the dates in the claimant’s employment history provided by B & L in the claim submission do not correspond to those on the SF-50s submitted with the AAR.  Because the SF-50s are the official record of the claimant’s Federal civilian employment, we must assume these documents are accurate and accept them as the definitive record of when he served at the GS-9, GS-11, and GS-12 levels during the claim period.

[3]The agency’s overtime and interest calculations must account for the claimant’s prior receipt of administratively uncontrollable overtime during the claim period, reported by the agency in its AAR as “premium pay,” using the principles contained with 29 U.S.C 207(k), 5 CFR 551.501(a)(1) and (5), and 5 CFR 551.541(a).  See OPM’s Fact Sheet on the topic at https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/fact-sheets/guidance-on-applying-flsa-overtime-provisions-to-law-enforcement-employees-receiving-administratively-uncontrollable-overtime-pay/.

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