Washington, DC

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

Compensation Claim Decision
Under section 3702 of title 31, United States Code

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Robert D. Hendler
Classification and Pay Claims
Program Manager
Merit System Accountability and Compliance


08/13/2013

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Date

Introduction

The claimant was employed in a Forestry Technician, GS-462-7, position with the Alaska Fire Service (AFS) of the Alaska State Office, Bureau of Land Management (BLM), U.S. Department of the Interior (DOI), in Fairbanks, Alaska.  The employee filed a claim with his former agency which was received on June 3, 2008.  The agency transferred the claim to the Office of Personnel Management (OPM) by letter dated June 5, 2008.  He asks that his claim be considered under “the Back Pay Claim Act” for underpayment of overtime pay earned in 2003.  It appears the claimant is referring to the Back Pay Act of 1966 (Back Pay Act), codified at section 5596 of title 5, United States Code (U.S.C.). 

This claim was one of many filed with the claimant’s former agency regarding a miscalculation of overtime pay for Fair Labor Standards Act (FLSA) nonexempt employees who received a non-foreign Cost of Living Allowance (COLA).  The agency stated in its administrative report to OPM it has issued the back pay that was allowable under the FLSA for the two-year period from April 4, 2004, through April 4, 2006.  However, the claimant is requesting corrected pay for 467 hours of overtime worked during 2003.   

During the claim period, the claimant performed work the agency classified as FLSA nonexempt and the claimant does not dispute this determination.  Based on our review of the record, we concur the claimant’s work was nonexempt during the claim period. 

Applicability of the Back Pay Act (BPA)

In his June 3, 2008, letter to the agency, the claimant asks that his claim be considered under the BPA.  The BPA’s language makes clear the six-year statute of limitations is the maximum period allowed with respect to amounts payable under its provisions.  See 5 U.S.C. § 5596(b)(4).  However, for back pay claims dealing with payments under the FLSA, an agency must apply the two-year statute of limitations, or three-year statute of limitations for willful violations, prescribed in 29 U.S.C. § 255a.  See also 5 CFR 550.804(e)(3).   

Applicability of the FLSA

OPM settles Federal civilian employee compensation and leave claims under the provisions of 31 U.S.C. § 3702(a)(2) and 5 CFR part 178, and FLSA claims under the provisions of 29 U.S.C. § 204(f) and 5 CFR part 551, subpart G. 

Under 5 CFR 591.239(a), COLA is included in total remuneration for computing an FLSA nonexempt employee’s hourly regular rate of pay and in the employee’s straight time rate of pay when the employee is entitled to overtime pay under the FLSA.  Further, 5 CFR 591.239(b) makes clear that COLA is not to be included “as part of an employee’s rate of basic pay for purposes of computing entitlements for overtime pay, retirement, life insurance, or any other additional pay, COLA, or post differential under title 5, United States Code.”  Thus, 5 CFR 591.239(a) applies exclusively for the purpose of calculating overtime pay for employees covered by the overtime pay provisions of the FLSA.

Employees who are nonexempt under the FLSA always receive overtime pay under the FLSA as provided in 5 CFR part 551.  Because FLSA nonexempt employees are not paid overtime under the provisions of the Federal Employees Pay Act (FEPA) of 1945, as amended, codified at 5 U.S.C. §§ 5542, 5544, the statute of limitations provided by FEPA cannot be applied to a nonexempt employee’s overtime pay claim under the FLSA.  See Gary Aaron, et al. v. United States, 56 Fed. Cl. 98 (2003).  Thus, the claimant’s request for jurisdiction under 31 U.S.C. § 3702(a)(2) is misplaced; the claim is properly treated as an FLSA claim.  

The claimant is requesting compensation for work performed in 2003, when the record shows he was properly classified as FLSA nonexempt.  Therefore, the agency was required to compensate the claimant under the provisions of 5 CFR 591.239(a) during the claim period. 

Willful violation

Under 5 CFR 551.104, “willful violation” is specifically defined as follows:

Willful violation means a violation in circumstances where the agency knew that its conduct was prohibited by the Act or showed reckless disregard of the requirements of the Act.  All of the facts and circumstances surrounding the violation are taken into account in determining whether a violation was willful.

Clearly, not all violations of the FLSA are willful as this term is defined in the regulations.  There is no question the agency erred in determining the claimant’s straight time rate of pay for calculating FLSA overtime pay.  However, error alone does not reach the level of willful violation as defined in the regulations.  A finding of willful violation requires that either the agency knew its conduct was prohibited or showed reckless disregard of the requirements of the FLSA.  The regulation further instructs that the full circumstances surrounding the violation must be taken into account.

In evaluating the circumstances surrounding the violation, it is important to consider the origin of this error and the actions taken by the agency subsequent to its discovery.  It is instructive to consider how the agency reacted when it discovered it was not calculating FLSA overtime pay properly for nonexempt employees receiving non-foreign COLA.  The agency administrative report (AAR) includes a June 8, 2006, memorandum from the Chief, Payroll Operations Division, of DOI’s National Business Center:

The National Business Center (NBC) recently became aware of a change in the calculation methodology for overtime pay for employees who are non-exempt from the Fair Labor Standards Act and who are also receiving a non-foreign allowance (COLA).  Although this change occurred in 2002, none of the four major payroll providers, including NBC, had been notified.  As a result, on April 4, 2006, the Office of Personnel Management notified each of the payroll providers that we are required to process back pay plus interest for affected employees for a period of two years.

The memorandum, in itself, is evidence that the agency was making an honest attempt to correct erroneous overtime pay calculations:

System changes are in the process of being made to FPPS.  Once the system changes are made, recomp will be triggered for the prior 26 pay periods.  Shortly after that, the Payroll Operations Division will begin making manual adjustments for the interest and for periods prior to recomp.  We will make every effort to process the retroactive payments as quickly as possible, and hope to have them completed in six months or less.

Based on all of the above, we find the agency erred in not implementing the FLSA overtime pay calculation provisions of 5 CFR 591.239(a), initially issued in 67 FR 22339 (May 3, 2002).  However, we also find the agency acted in good faith by making a full and adequate inquiry once their attention was focused on the issue, and they took action to resolve the matter.  In doing so, the agency did not recklessly disregard the requirements of the FLSA.  In its administrative report, the agency acknowledged it made errors in payroll processing.  However, such technical errors also do not rise to the level of willful violation.  In summary, we find the agency’s actions do not meet the criteria for willful violation as defined in 5 CFR 551.104. 

The claim is time barred

The regulations governing the filing of an administrative claim (5 CFR 551.702(c)) also state in pertinent part:  “If a claim for back pay is established, the claimant will be entitled to pay for a period of up to 2 years (3 years for a willful violation ) back from the date the claim was received.”  (Emphasis added.)

The claim period is April 5, 2003, to October 4, 2003.  The record shows the claimant preserved his claim with his agency on June 3, 2008, when his claim dated June 3, 2008, was received.  Since we find the agency did not willfully violate the FLSA, the claimant would have been eligible for back pay two years prior to that date, if he had still been employed by the agency during that time period, in connection with the filing of this claim.  Therefore, the claim is time barred prior to June 3, 2006, and must be denied. 

As provided in 5 CFR 551.708, this decision is binding on all administrative, certifying, payroll, disbursing, and accounting officials of agencies for which OPM administers the FLSA.  There is no further right of administrative appeal.  This decision is subject to discretionary review only under conditions specified in 5 CFR 551.708.

Those aspects of this decision reviewed under the authority of 31 U.S.C. § 3702(a)(2) and 5 CFR part 178 regarding the Back Pay Act and COLA are not subject to further administrative review.  Nothing in this settlement limits the employee’s right to bring an action in an appropriate United States court.

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