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


03/09/2017

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Date

Introduction                                                                                                                                      

On May 9, 2012, the U.S. Office of Personnel Management (OPM) received a letter dated May 9, 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 April 17, 1990, challenging his exemption status under the FLSA when he was employed as a Criminal Investigator, GM-1811-13, from August 2, 1985, to March 29, 1986, with the Office of Inspector General (OIG), Region 5, Department of Transportation (DOT), in Chicago, Illinois.  On or about October 20, 1999, the claimant’s representative filed the claim with OPM.  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 June 1, 1991, subject to the two-year statute of limitations for FLSA claims under 29 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).  In their letter to OPM dated May 9, 2012, B & L states the claimant was called to active duty with the United States Air Force Reserve (as documented in the record with a copy of DD Form 214) “from approximately October 21, 1990, to November 2, 1990,” in connection with Operation Desert Shield/Storm and, citing the provisions of 31 U.S.C. § 3702(b)(2), states:  “[H]e is entitled to retroactive back pay and interest under the FLSA and the Back Pay Act 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 April 9, 1988, less Mr. Hein’s active duty military service time, for which he does not seek recovery.”  According to the back pay FLSA settlement records submitted by B & L, the claimant received no back pay for the period he was employed by DOT, but did receive a settlement for his subsequent employment with the U.S. Customs Service, which does not impact this claim decision.  The claimant’s employment with DOT ended on March 29, 1986. 

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 3, 2001.  We also interviewed by telephone his former supervisor (now retired) who supervised the claimant at DOT during 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, United States Code (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. § 706(2)(A)) 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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The 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 non-exempt and potentially due FLSA overtime pay.    

Evaluation

Period of the Claim

As discussed above, B & L filed a claim with GAO on the claimant’s behalf on April 17, 1990.  Although this is the official date for preserving the claim, B & L indicates and the record shows that given the findings in the Armstrong case, the actual claim period covers August 2, 1985, to March 29, 1986, which B & L states includes “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…less Mr. Hein’s active duty military service time, for which he does not seek recovery.”  Because he did not receive an FLSA settlement for the period of his employment at DOT, our review covers the actual claim period identified above. 

Position Information

During the claim period, the claimant was assigned to the position of Criminal Investigator, GM-1811-13.[1]  The claimant initiated and conducted full-scale investigations throughout the seven states in Region 5 of alleged criminal activities under various laws enforced by the OIG on behalf of the DOT and its subordinate bureaus, e.g., Federal Highway Administration.  This involved interviewing witnesses and suspects, conducting searches and seizures, and securing and serving search warrants.  He inspected records and documents, developed evidence for presentation to the U.S. Attorney assigned to particular states in Region 5, and sometimes testified  in court.  Knowledge required by the position included that of the laws, statutes, and regulations on which enforcement authorities are based (e.g., title 18), and specific case law regarding seizures, civil rights, and preservation of evidence.  During the claim period OIG criminal investigators did not have arrest authority.  Consequently, the claimant called upon U.S. Marshals to make arrests when needed.  The claimant worked under the general direction and policy guidance of the Special Agent-in-Charge (SAC) of investigators who assigned all cases.  Cases generally came as referrals from local auditors, local private contractors, state employees, and other Federal agency personnel, e.g., Federal Highway Administration, Federal Aviation Administration.  The claimant independently developed and worked them, providing periodic status reports to the SAC on case progress and status, and submitted investigative reports to the SAC at the conclusion of each case.  The narrative reports tracked the entire investigation and had multiple exhibits and attachments to support factual determinations.  Upon review, the SAC determined if the case should be forwarded to the U.S. Attorney for presentation to a Federal Grand Jury for possible indictment of alleged violators. 

The claimant stated that all of his investigations during the claim period concerned criminal violations of Federal laws regarding “bid-rigging” by local construction contractors or suppliers bidding on Federal contracts, state contracts funded with DOT grants administered by state transportation departments, and local city and county contracts funded in the same manner.  Bid-rigging involved collusion by contractors to raise prices and lower their expenses by bidding on construction projects for airports, roads, and bridges, and contracts concerning federally funded fuel supplies for city or county transportation authorities.  Contractors (frequently affiliated or related to each other) colluded in submitting multiple construction bids for specific projects where all had agreed in advance that one of the group would submit the lowest (but actually inflated bid) and thus be awarded the contract.  They would rotate through each contractor in the group agreeing that one of them would submit the “lowest” bid on the next contract, thus passing the work around to each contractor in the group. 

Evaluation of FLSA Coverage

Under the provisions of 5 CFR 551.706, OPM determines the facts necessary to adjudicate a claim.  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.  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.  Our analysis of the claimant’s duties follows.  

Because the claim period covers portions of 1985 and 1986, 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 revised 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 Fed. Reg. 1739-01 (January 22, 1988).  The claimant believes his position should have been designated as non-exempt 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 has been unable to locate any information regarding the claimant’s employment with OIG/DOT, except one Notification of Personnel Action (SF-50) documenting a reassignment of the claimant as a Criminal Investigator, GM-1811-13, during the claim period.  The agency has provided no rationale supporting the FLSA exemption status of the claimant other than that documented in the above SF-50 designating his position as FLSA “Exempt.”  Based on careful review of the record and the claimant’s assigned duties and responsibilities, we conclude the claimant’s position did not meet the professional exemption criteria, and the claimant does not disagree.  However, because his “GM” designation while at OIG/DOT derives from the Civil Service Reform Act of 1978, which created a merit pay system for employees at grades GS-13 through 15 who were identified as supervisors or management officials, we have evaluated the position against the executive exemption criteria.  In addition, to determine if the claimant functioned as an administrative employee during the claim period, we have also applied the administrative exemption criteria to his position. 

Executive Exemption Criteria

The revised regulation under 5 CFR 551.204 describes the executive exemption criteria, as follows:

An “executive” employee is a supervisor, foreman, or manager who manages a Federal agency or any subdivision thereof (including the lowest recognized organizational unit with a continuing function) and regularly and customarily directs the work of at least three subordinate employees (excluding support employees) and meets all of the following criteria:

(a) The employee’s primary duty consists of management or supervision.  The primary duty requirement is met if the employee:  (1) Has authority to select or remove, and advance in pay and promote, or make any other status changes of subordinate employees, or has authority to suggest and recommend such actions with particular consideration given to these suggestions and recommendations; and (2) Customarily and regularly exercises discretion and independent judgment in such activities as work planning and organization; work assignment, direction, review, and evaluation; and other aspects of management of subordinates, including personnel administration.

Despite the designation of the claimant’s position as “GM,” our fact-finding disclosed the claimant’s position did not meet the definition of an “executive” as defined in 5 CFR 551.204.  Unlike the executive exemption criteria, both the claimant and his former supervisor confirmed he did not supervise or manage any established organizational unit within the office of the OIG in Region 5, nor did he customarily direct the work of at least three subordinate employees in his unit.  In contrast to the executive exemption criteria, the claimant’s primary duty consisted solely of conducting criminal investigations rather than management or supervision of his organization.  Because he supervised no employees, he was not responsible for carrying out any of the personnel management, work planning, and employee work assignment and evaluation authorities discussed in section 551.204 (a)(1) and (2) of the regulation.  The only supervisor in the claimant’s investigative unit was the SAC, who stated he alone carried out all of the supervisory authorities described in the regulation.  This information is substantiated in a copy of the claimant’s performance elements and standards for his position during the claim period.  All of the elements listed address carrying out criminal investigations, but none describe any supervisory or managerial responsibilities.  The supervisor indicated the reason the criminal investigator positions in his unit were designated as “GM” by higher-level OIG management was only to ensure consistency with the Auditor, GM-511-13, positions in the OIG in both Region 5 and nationally. 

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.

(d) In addition to the primary duty criterion that applies to all employees, General Schedule employees classified at GS-5 or GS-6 (or the equivalent in other white collar systems) must spend 80 percent or more of the worktime in a representative workweek on administrative functions and work that is an essential part of those functions.

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 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 all of his time investigating criminal violations of various laws governing the use of DOT funds and grants in programs administered by the agency, its subordinate bureaus, and state and local transportation authorities. 

The record shows that the claimant did not meet the requirements of paragraph (a)(1) of the administrative exemption criteria.  His primary duties did not significantly affect the formulation or execution of management policies or programs.  As a regional office OIG employee assigned to a field location performing the line investigative work of the agency, he did not make policy decisions or participate indirectly through developing proposals that were acted on by others.  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 paragraph (a)(2) of the administrative exemption criteria.  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 performed the line law enforcement work of the OIG.  His tasks did not include providing general management, business, or other supporting services to line managers.  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 paragraph (a)(3) of the administrative exemption criteria.  The claimant’s 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 DOT’s OIG requiring technical knowledge of substantive law enforcement and criminal investigative work relating to bid-rigging. 

Under paragraph (b)(1) of the administrative exemption criteria, the claimant performed office non-manual work which was intellectual and varied in nature.  In carrying out a variety of criminal investigations concerning violations of numerous laws and regulations administered by DOT, the claimant applied perceptiveness, analytical reasoning, and judgment based on considering, selecting, adapting, and applying criminal investigative principles to numerous variables.  In doing so, he determined the best approach to the case and investigative techniques needed to substantiate it (e.g., interviews of subjects and witnesses, review of contracting records, developing and gathering the most supportable evidence for presentation to the U.S. Attorney) in order to identify the violation and assess the scope of the illegal activity.  While as a law enforcement agent he was required to abide by specific laws and OIG procedures governing the methods and collection of evidence and circumstances supporting seizures and arrests, in doing so he considered the effect of alternative investigative methods, adapting techniques and procedures as appropriate to the nature and extent of the violation. 

Under paragraph (b)(2) of the administrative exemption criteria, the claimant’s work as a senior criminal investigator was highly specialized and technical in nature, requiring considerable special training, experience, and knowledge.  He possessed and regularly applied specialized knowledge of the complex subject matter field of Federal criminal investigation, including the principles, techniques, practices, and investigative procedures associated with that field.  This knowledge was acquired through regular and extensive formal agency in-service training, and considerable on-the-job training and experience with the OIG and previous agencies, i.e., the Internal Revenue Service. 

Under paragraph (c) of the administrative exemption criteria, the claimant frequently exercised discretion and independent judgment in performing assignments covering the states in Region 5, under only general supervision, carrying out his normal day-to-day work.  In doing so, he developed and expanded investigations, comparing and evaluating possible courses of action and necessary investigative techniques to efficiently utilize resources and achieve the goals of each investigation.  He interpreted results gathered from investigative lead information (e.g., state contracting staff, informers) and made decisions on subsequent investigative steps after considering the various possibilities.  Since many of his cases involved numerous variables in terms of the investigative procedures needed because of the scope and complexity of the violation, he regularly applied discretion and judgment in determining approaches, techniques, and in evaluating results.  As a GM-13 criminal investigator, the claimant had full authority to make such determinations during the course of investigations, consulting with his supervisor only on the status of cases or need for additional resources.  His investigative decisions were more significant than just making decisions on procedural details, or deciding whether a situation conformed to clearly applicable criteria.  Although he had to follow specific legal requirements for gathering and admitting evidence, requesting search warrants, and in some cases worked closely with U.S. and state attorneys in preparing evidence for prosecution, he independently made decisions on significant matters affecting case development.  This included identifying the most effective investigative techniques and processes to build a thorough and comprehensive investigation supportable before a Grand Jury or Federal court. 

The final administrative exemption criterion in paragraph (d) summarized above, regarding GS-5 or GS-6 employees who must spend 80 percent or more of their work time performing administrative functions, does not apply to the claimant’s position. 

Although the claimant’s position meets paragraphs (b) and (c) of the administrative exemption criteria, it fails to meet all of the required exemption criteria because it does not meet paragraph (a) of the criteria.  Therefore, we conclude the claimant did not meet the administrative exemption.

Decision on FLSA Coverage

The claimant’s work did not meet the executive, administrative, or professional exemption criteria.  Therefore, his work was nonexempt and covered by the overtime pay provisions of the FLSA.  He is entitled to compensation for all overtime hours worked at the FLSA overtime rate.[2]  The claim was originally received by GAO on April 17, 1990, but the actual claim period relevant to this decision is August 2, 1985, to March 29, 1986, when the claimant was employed by DOT.  The claimant is entitled to retroactive back pay and interest under the FLSA and the Back Pay Act for the period he was employed by the OIG prior to the commencement of the Gulf War on August 2, 1990.  Since both the claimant’s active duty military service time and his previous FLSA settlement were for time periods subsequent to March 29, 1986, 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 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.  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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