Good afternoon Group, I have a question about whether a salaried, exempt employee of one of the municipalities that I represent is entitled to comp time pay upon separation of employment. This particular employee is a manager in a department that consists of himself and one (1) other employee. However, the manager also completes work in the field. He has accumulated a large amount of comp time and recently submitted his resignation, effective this Friday, 3/21/25, to accept another position elsewhere that apparently pays better. I have been reviewing the FLSA and have been told that the municipality will have to pay out the comp time that the manager earned because, despite being salaried and exempt, he has conducted work in the field. Can someone help me identify the particular authority or rationale as to why the manager will need to be paid comp time upon separation from employment? Thanks very much in advance for any input in this regard. *D. David Haggerty* OBA #21201, CBA #193, SBT #24086687 *D. David Haggerty, PLLC* Attorney At Law 121 N. 3rd Ave. Durant, OK 74701 Office #: (580) 924-0405 Email: ddavidhaggertylaw@gmail.com Office Hours: Monday-Thursday, 8:30 a.m.-12:00 p.m. & 1:00 p.m.-4:00 p.m., Friday, 8:30 a.m. - 12:00 p.m. & 1:00 p.m.-3:00 p.m.

David, There's a lot that could be going on here. *Is the question whether the employee was properly classified as exempt?* You made a comment - that he was exempt but that the fact that he worked field work is raising the issue. That makes me wonder if the issue being raised is whether the employee was properly classified as exempt. Two main test - salary test and duties test. The two main exemptions that might apply (executive and administrative) both have a salary threshold of $684/week ($35,568/year). If the employee wasn't being paid that much, then we don't need to talk about duties - they couldn't have been classified as exempt. I should note, the DOL did issue new regulations which purported to increase this threshold to $844/week ($43,888/year) effective 7/1/2024. Federal litigation ensued after DOL issued the new regs, and after early defeats DOL announced <https://www.dol.gov/agencies/whd/overtime/salary-levels> that it was not enforcing the new, higher salary threshold during the pendency of the litigation. The final outcome of that litigation should be monitored because the same regulatory change would increase the threshold again to $1,128/week ($58,656/year) effective 7/1/2025. But as of right now, DOL is not enforcing those new thresholds - but that could change in the future. Assuming the City was paying the manager at or above the $684/week threshold, we'd then have to get to their duties to see if they qualified as exempt. Doesn't sound like they would qualify for the executive exemption since they were the manager of a 2 person department including themselves (among the duties necessary for this exemption is that "The employee must customarily and regularly direct the work of *at least two or more other full-time employees or their equivalent*"). More likely we'd be talking about the administrative exemption. Two key duties for that exemption are "The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance" and "The employee’s *primary duty *must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers". The second one I mentioned may be what is raising the question. In office work doesn't have to be the "sole" duty - just the "primary" duty. Generally speaking, if they are spending more than 50% of their time doing that duty, then they will generally satisfy the test. But even if they aren't spending 50% of their time, there are factors that can be considered that might result in a finding that the duty was still primary if it was their major or most important duty. This all goes to the question of whether they actually earned comp time. If they were *properly* classified as exempt, then they generally would have no ability to accrue comp time. "Exempt" mean an exemption from the maximum hour rule in the FLSA - the rule that says we have to pay an employee time and a half for hours worked in excess of 40 in a 7 day cycle. Comp time is available as a tool to public employers and allows the public employer to defer the payment of the OT that was earned to a later date by allowing an employee to get paid that money (they already earned) by taking time off. So if you can't earn OT, then you aren't going to earn comp time. But check your policies - *some* employers will allow exempt employees to 'earn' comp time when they work outside of their normal, expected time. It's not required by the FLSA - but becomes a perk/benefit. Also, I would ask *when* the hours were allegedly earned. Perhaps the manager was formerly an hourly employee - and, if so, perhaps they worked OT when they were an hourly employee, it was converted to comp time, but they never actually used the time off. *Do we have to pay comp time at separation* Absolutely. Generally speaking, employers are not required to offer *paid *time off. We offer paid leave like vacation, sick leave, holiday days off with pay, etc. as an added benefit of employment for recruitment and retention purposes. Generally speaking, you have to pay accrued but unused vacation leave (it's considered a 'wage' for State law purposes - but there can be exceptions) but not sick leave. But comp time is a different kind of animal. When an employee works and is entitled to OT, they have earned that pay. FLSA default would be that we need to pay that earned money promptly. But there is an exemption for public employers that allows us, by policy, to defer payment of that compensation *that was already earned* by letting the employee bank it as comp time. The employee *will get paid that money they earned* at a later date - generally when they use the comp time (so they get paid the hours they earned in the past by allowing them to not work but still get paid for scheduled hours in the future). But if they don't take the comp time, they still are entitled to the money - because they already *earned* it when they worked the OT at some point in the past. They earned it, and we still haven't paid them the money they earned. *Side/Handshake Deal* I had a lawsuit I briefly handled maybe 15 years ago that might be what you are dealing with. Police Chief was properly classified as exempt and, when he retired, he made a claim for several hundred hours of comp time. We had no record of any comp time being earned and the City's policies had nothing that would have allowed him to earn extra time off (and, since he was exempt, he couldn't earn OT that could be converted to comp time). His theory was that the manager *after* the manager that appointed him as Chief made a handshake deal with him that would allow him to earn comp time (and that he would just track those hours on a notepad that only he knew about - and, conveniently, all the entries were in the same ink and *might* have been written all at once just before he retired). Conveniently, the manager was no longer employed and had since died and couldn't testify as to whether there was any truth to his allegations. I say I only handled it briefly because we filed an Answer and before we engaged in much discovery we attempted to conflict his attorney (who was the City Attorney at the time the alleged handshake deal was made) off the case. The attorney apparently decided to weigh his options on proceeding and disappeared - and the case was ultimately dismissed for failure to prosecute and never refiled. So we didn't really get into it very deep - but I raise this as being a possible basis the guy could be relying on to make his claim. My position in that lawsuit was to sidestep the factual dispute they were going to create (since our guy was dead) by arguing that any such deal was unenforceable as it was directly contrary to the employment policies adopted by the City Council - that the City Manager had no authority to bind the City to such a deal. *Cap on Comp Time* You mentioned that they had a 'large amount' of comp time they want to be paid out. Not sure how many hours you are talking about, but it is worth noting that there is a limit on how many hours can be banked as comp time. The general cap is 240 hours, but there is a 480 hour cap for police, firefighters, emergency response personnel, and employees engaged in seasonal activities. If this is a non-emergency employee, and they are claiming more than 240 hours of comp time, then you've got some questions to be asking - e.g. *can you give me a list, by employee, of the number of comp time hours they currently have banked*. When you see anyone with over 240 hours, you need to be asking what their job is - are they a cop, firefighter, EMS, or some other kind of emergency services personnel? If not, then you have a problem. And, of course, if you see anyone with a number above 480 - then it doesn't matter what job they are in. I've had this come up with cities in the past - I had one City that had several employees with over 1,000 hours of comp time. You can't do that. Once an employee hits the applicable cap, they can no longer accrue comp time and any OT they work must be paid out as OT. *Next Steps* I'd ask about the exemption - which one did we classify them under as being exempt, and did they meet the salary and duties test for the applicable exemption. If they didn't meet either or both tests, then they were improperly classified. If they were improperly classified, then they were subject to the 7 day / 40 hour OT cycle - so we would have had to pay them OT but could have allowed them to bank the OT as comp time. If they were properly classified, then they generally would have been exempt from earning OT - and, so, exempt from having OT that they could bank as comp time. But you'll also want to check the personnel policies / handbook. Did it provide for some sort of benefit that it called 'comp time' that was above and beyond what the FLSA required? For example, if they were properly classified as exempt, did the policies/handbook provide that exempt employees will earn extra paid time off if they work hours outside of those normally contemplated (such as regular working hours, time spent at monthly council meetings, etc.)? Like vacation/sick/holiday leave, an employer can choose to offer benefits above what is required by the law. If the employee was mis-classified as being exempt, then you may owe them money. But I wouldn't just accept their calculation on its face. I'd want to see what records we kept of their hours worked as well as records of any vacation or sick leave they took. The FLSA requirement is that you pay time and a half for hours *actually* worked in excess of 40 in your 7 day cycle. But just because an employee put down for more than 40 hours of pay does *not* necessarily mean they are entitled to OT (and, so, doesn't necessarily mean those hours could be banked as comp time). *Example*: non-exempt employee worked their 8 hours on Monday and Tuesday, worked 4 hours on Wednesday and took 4 hours of paid leave, worked 12 hours on Thursday, and worked 8 hours on Friday. For that 7 day cycle, they will put in for 44 hours of pay - but only 40 of those hours were actually worked with the other 4 hours being paid leave. Since they did not *actually* work in excess of 40 hours, they wouldn't be entitled to OT for that 7 day cycle. They will get paid for 44 hours of straight time. *But check your policies/handbook* to make sure that it does not purport to treat paid leave (or certain kinds of paid leave) as hours worked. Also keep in mind that it is a 7 day cycle. A lot of cities pay on a bi-weekly basis. You don't just want to look at the total hours worked for the 14 day pay period - because that pay period encompasses two separate 7 day cycles. *Example*: non-exempt employee actually works 48 hours in week 1. Their supervisor, unaware of the benefits of comp time, decides to furlough them for one day the following week, so they only work 32 hours in week 2 (and don't put in for paid leave for the other day). This will show as a total of 80 hours worked during those two weeks. But they actually worked 48 hours during week 1 - so 40 hours at straight time and 8 hours at time and a half. The fact that they only worked 32 hours in week 2 doesn't save you. They would have 72 hours at straight time and 8 hours at time and a half for that pay period. I used that example to illustrate that 80 hours doesn't necessarily mean 80 hours of straight time. If, instead of a furlough, they took a vacation day in week 2, it would have been easier to spot the OT issue. This example should help illustrate the value of having comp time available as an option. But your comp time policy will dictate how it is accrued. For example, is it the employee's option whether to bank OT hours as comp time? If so, in the above example, the employee had 8 hours of OT that they could have banked as comp but if they didn't want to do so then they would be entitled to the OT and we couldn't short them hours the following week to try to avoid that liability. But the comp time policy can also allow the employer to decide to defer that payment of OT by banking it as comp. The point being - you have a lot of flexibility to define the terms on comp time in your policy. You just need to check that policy to see what it said. Hope that helps. Matt On Wed, Mar 19, 2025 at 3:18 PM D. David Haggerty via Oama < oama@lists.imla.org> wrote: > Good afternoon Group, > > I have a question about whether a salaried, exempt employee of one of the > municipalities that I represent is entitled to comp time pay upon > separation of employment. This particular employee is a manager in a > department that consists of himself and one (1) other employee. However, > the manager also completes work in the field. He has accumulated a large > amount of comp time and recently submitted his resignation, effective this > Friday, 3/21/25, to accept another position elsewhere that apparently pays > better. I have been reviewing the FLSA and have been told that the > municipality will have to pay out the comp time that the manager earned > because, despite being salaried and exempt, he has conducted work in the > field. Can someone help me identify the particular authority or rationale > as to why the manager will need to be paid comp time upon separation from > employment? > > Thanks very much in advance for any input in this regard. > > *D. David Haggerty* > OBA #21201, CBA #193, SBT #24086687 > > *D. David Haggerty, PLLC* > Attorney At Law > 121 N. 3rd Ave. > Durant, OK 74701 > Office #: (580) 924-0405 > Email: ddavidhaggertylaw@gmail.com > Office Hours: Monday-Thursday, 8:30 a.m.-12:00 p.m. & 1:00 p.m.-4:00 > p.m., Friday, 8:30 a.m. - 12:00 p.m. & 1:00 p.m.-3:00 p.m. > -- > Oama mailing list -- oama@lists.imla.org > To unsubscribe send an email to oama-leave@lists.imla.org >

Matt, Thank you very much for this information; it is most helpful. I am following up with my municipal staff to obtain further information as you have set forth in your response. Much appreciated!! *D. David Haggerty* OBA #21201, CBA #193, SBT #24086687 *D. David Haggerty, PLLC* Attorney At Law 121 N. 3rd Ave. Durant, OK 74701 Office #: (580) 924-0405 Email: ddavidhaggertylaw@gmail.com Office Hours: Monday-Thursday, 8:30 a.m.-12:00 p.m. & 1:00 p.m.-4:00 p.m., Friday, 8:30 a.m. - 12:00 p.m. & 1:00 p.m.-3:00 p.m. On Thu, Mar 20, 2025 at 9:31 AM Matt Love <matt.love@gmail.com> wrote: > David, > > There's a lot that could be going on here. > > *Is the question whether the employee was properly classified as exempt?* > > You made a comment - that he was exempt but that the fact that he worked > field work is raising the issue. That makes me wonder if the issue being > raised is whether the employee was properly classified as exempt. Two main > test - salary test and duties test. The two main exemptions that might > apply (executive and administrative) both have a salary threshold of > $684/week ($35,568/year). If the employee wasn't being paid that much, then > we don't need to talk about duties - they couldn't have been classified as > exempt. I should note, the DOL did issue new regulations which purported to > increase this threshold to $844/week ($43,888/year) effective 7/1/2024. > Federal litigation ensued after DOL issued the new regs, and after early > defeats DOL announced > <https://www.dol.gov/agencies/whd/overtime/salary-levels> that it was not > enforcing the new, higher salary threshold during the pendency of the > litigation. The final outcome of that litigation should be monitored > because the same regulatory change would increase the threshold again to > $1,128/week ($58,656/year) effective 7/1/2025. But as of right now, DOL is > not enforcing those new thresholds - but that could change in the future. > > Assuming the City was paying the manager at or above the $684/week > threshold, we'd then have to get to their duties to see if they qualified > as exempt. Doesn't sound like they would qualify for the executive > exemption since they were the manager of a 2 person department including > themselves (among the duties necessary for this exemption is that "The > employee must customarily and regularly direct the work of *at least two > or more other full-time employees or their equivalent*"). More likely > we'd be talking about the administrative exemption. Two key duties for that > exemption are "The employee’s primary duty includes the exercise of > discretion and independent judgment with respect to matters of > significance" and "The employee’s *primary duty *must be the performance > of office or non-manual work directly related to the management or general > business operations of the employer or the employer’s customers". The > second one I mentioned may be what is raising the question. In office work > doesn't have to be the "sole" duty - just the "primary" duty. Generally > speaking, if they are spending more than 50% of their time doing that duty, > then they will generally satisfy the test. But even if they aren't spending > 50% of their time, there are factors that can be considered that might > result in a finding that the duty was still primary if it was their major > or most important duty. > > This all goes to the question of whether they actually earned comp time. > If they were *properly* classified as exempt, then they generally would > have no ability to accrue comp time. "Exempt" mean an exemption from the > maximum hour rule in the FLSA - the rule that says we have to pay an > employee time and a half for hours worked in excess of 40 in a 7 day cycle. > Comp time is available as a tool to public employers and allows the public > employer to defer the payment of the OT that was earned to a later date by > allowing an employee to get paid that money (they already earned) by taking > time off. So if you can't earn OT, then you aren't going to earn comp time. > But check your policies - *some* employers will allow exempt employees to > 'earn' comp time when they work outside of their normal, expected time. > It's not required by the FLSA - but becomes a perk/benefit. > > Also, I would ask *when* the hours were allegedly earned. Perhaps the > manager was formerly an hourly employee - and, if so, perhaps they worked > OT when they were an hourly employee, it was converted to comp time, but > they never actually used the time off. > > *Do we have to pay comp time at separation* > > Absolutely. Generally speaking, employers are not required to offer *paid > *time off. We offer paid leave like vacation, sick leave, holiday days > off with pay, etc. as an added benefit of employment for recruitment and > retention purposes. Generally speaking, you have to pay accrued but unused > vacation leave (it's considered a 'wage' for State law purposes - but there > can be exceptions) but not sick leave. But comp time is a different kind of > animal. > > When an employee works and is entitled to OT, they have earned that pay. > FLSA default would be that we need to pay that earned money promptly. But > there is an exemption for public employers that allows us, by policy, to > defer payment of that compensation *that was already earned* by letting > the employee bank it as comp time. The employee *will get paid that money > they earned* at a later date - generally when they use the comp time (so > they get paid the hours they earned in the past by allowing them to not > work but still get paid for scheduled hours in the future). But if they > don't take the comp time, they still are entitled to the money - because > they already *earned* it when they worked the OT at some point in the > past. They earned it, and we still haven't paid them the money they earned. > > *Side/Handshake Deal* > > I had a lawsuit I briefly handled maybe 15 years ago that might be what > you are dealing with. Police Chief was properly classified as exempt and, > when he retired, he made a claim for several hundred hours of comp time. We > had no record of any comp time being earned and the City's policies had > nothing that would have allowed him to earn extra time off (and, since he > was exempt, he couldn't earn OT that could be converted to comp time). His > theory was that the manager *after* the manager that appointed him as > Chief made a handshake deal with him that would allow him to earn comp time > (and that he would just track those hours on a notepad that only he knew > about - and, conveniently, all the entries were in the same ink and > *might* have been written all at once just before he retired). > Conveniently, the manager was no longer employed and had since died and > couldn't testify as to whether there was any truth to his allegations. I > say I only handled it briefly because we filed an Answer and before we > engaged in much discovery we attempted to conflict his attorney (who was > the City Attorney at the time the alleged handshake deal was made) off the > case. The attorney apparently decided to weigh his options on proceeding > and disappeared - and the case was ultimately dismissed for failure to > prosecute and never refiled. So we didn't really get into it very deep - > but I raise this as being a possible basis the guy could be relying on to > make his claim. My position in that lawsuit was to sidestep the factual > dispute they were going to create (since our guy was dead) by arguing that > any such deal was unenforceable as it was directly contrary to the > employment policies adopted by the City Council - that the City Manager had > no authority to bind the City to such a deal. > > *Cap on Comp Time* > > You mentioned that they had a 'large amount' of comp time they want to be > paid out. Not sure how many hours you are talking about, but it is worth > noting that there is a limit on how many hours can be banked as comp time. > The general cap is 240 hours, but there is a 480 hour cap for police, > firefighters, emergency response personnel, and employees engaged in > seasonal activities. If this is a non-emergency employee, and they are > claiming more than 240 hours of comp time, then you've got some questions > to be asking - e.g. *can you give me a list, by employee, of the number > of comp time hours they currently have banked*. When you see anyone with > over 240 hours, you need to be asking what their job is - are they a cop, > firefighter, EMS, or some other kind of emergency services personnel? If > not, then you have a problem. And, of course, if you see anyone with a > number above 480 - then it doesn't matter what job they are in. > > I've had this come up with cities in the past - I had one City that had > several employees with over 1,000 hours of comp time. You can't do that. > Once an employee hits the applicable cap, they can no longer accrue comp > time and any OT they work must be paid out as OT. > > *Next Steps* > > I'd ask about the exemption - which one did we classify them under as > being exempt, and did they meet the salary and duties test for the > applicable exemption. If they didn't meet either or both tests, then they > were improperly classified. If they were improperly classified, then they > were subject to the 7 day / 40 hour OT cycle - so we would have had to pay > them OT but could have allowed them to bank the OT as comp time. If they > were properly classified, then they generally would have been exempt from > earning OT - and, so, exempt from having OT that they could bank as comp > time. > > But you'll also want to check the personnel policies / handbook. Did it > provide for some sort of benefit that it called 'comp time' that was above > and beyond what the FLSA required? For example, if they were properly > classified as exempt, did the policies/handbook provide that exempt > employees will earn extra paid time off if they work hours outside of those > normally contemplated (such as regular working hours, time spent at monthly > council meetings, etc.)? Like vacation/sick/holiday leave, an employer can > choose to offer benefits above what is required by the law. > > If the employee was mis-classified as being exempt, then you may owe them > money. But I wouldn't just accept their calculation on its face. I'd want > to see what records we kept of their hours worked as well as records of any > vacation or sick leave they took. The FLSA requirement is that you pay time > and a half for hours *actually* worked in excess of 40 in your 7 day > cycle. But just because an employee put down for more than 40 hours of pay > does *not* necessarily mean they are entitled to OT (and, so, doesn't > necessarily mean those hours could be banked as comp time). > > *Example*: non-exempt employee worked their 8 hours on Monday and > Tuesday, worked 4 hours on Wednesday and took 4 hours of paid leave, worked > 12 hours on Thursday, and worked 8 hours on Friday. For that 7 day cycle, > they will put in for 44 hours of pay - but only 40 of those hours were > actually worked with the other 4 hours being paid leave. Since they did not > *actually* work in excess of 40 hours, they wouldn't be entitled to OT > for that 7 day cycle. They will get paid for 44 hours of straight time. *But > check your policies/handbook* to make sure that it does not purport to > treat paid leave (or certain kinds of paid leave) as hours worked. > > Also keep in mind that it is a 7 day cycle. A lot of cities pay on a > bi-weekly basis. You don't just want to look at the total hours worked for > the 14 day pay period - because that pay period encompasses two separate 7 > day cycles. > > *Example*: non-exempt employee actually works 48 hours in week 1. Their > supervisor, unaware of the benefits of comp time, decides to furlough them > for one day the following week, so they only work 32 hours in week 2 (and > don't put in for paid leave for the other day). This will show as a total > of 80 hours worked during those two weeks. But they actually worked 48 > hours during week 1 - so 40 hours at straight time and 8 hours at time and > a half. The fact that they only worked 32 hours in week 2 doesn't save you. > They would have 72 hours at straight time and 8 hours at time and a half > for that pay period. I used that example to illustrate that 80 hours > doesn't necessarily mean 80 hours of straight time. If, instead of a > furlough, they took a vacation day in week 2, it would have been easier to > spot the OT issue. > > This example should help illustrate the value of having comp time > available as an option. But your comp time policy will dictate how it is > accrued. For example, is it the employee's option whether to bank OT hours > as comp time? If so, in the above example, the employee had 8 hours of OT > that they could have banked as comp but if they didn't want to do so then > they would be entitled to the OT and we couldn't short them hours the > following week to try to avoid that liability. But the comp time policy can > also allow the employer to decide to defer that payment of OT by banking it > as comp. The point being - you have a lot of flexibility to define the > terms on comp time in your policy. You just need to check that policy to > see what it said. > > Hope that helps. > > Matt > > On Wed, Mar 19, 2025 at 3:18 PM D. David Haggerty via Oama < > oama@lists.imla.org> wrote: > >> Good afternoon Group, >> >> I have a question about whether a salaried, exempt employee of one of the >> municipalities that I represent is entitled to comp time pay upon >> separation of employment. This particular employee is a manager in a >> department that consists of himself and one (1) other employee. However, >> the manager also completes work in the field. He has accumulated a large >> amount of comp time and recently submitted his resignation, effective this >> Friday, 3/21/25, to accept another position elsewhere that apparently pays >> better. I have been reviewing the FLSA and have been told that the >> municipality will have to pay out the comp time that the manager earned >> because, despite being salaried and exempt, he has conducted work in the >> field. Can someone help me identify the particular authority or rationale >> as to why the manager will need to be paid comp time upon separation from >> employment? >> >> Thanks very much in advance for any input in this regard. >> >> *D. David Haggerty* >> OBA #21201, CBA #193, SBT #24086687 >> >> *D. David Haggerty, PLLC* >> Attorney At Law >> 121 N. 3rd Ave. >> Durant, OK 74701 >> Office #: (580) 924-0405 >> Email: ddavidhaggertylaw@gmail.com >> Office Hours: Monday-Thursday, 8:30 a.m.-12:00 p.m. & 1:00 p.m.-4:00 >> p.m., Friday, 8:30 a.m. - 12:00 p.m. & 1:00 p.m.-3:00 p.m. >> -- >> Oama mailing list -- oama@lists.imla.org >> To unsubscribe send an email to oama-leave@lists.imla.org >> >