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Court of Appeals Holds Police Officers Are Entitled Overtime Where Their Salary Minus Annunities / Pension Payments Falls Below $455 Per Week

Last month, a United States Court of Appeals ruled that police officers whose salaries minus annunities fell below $455 per week were entitled overtime under the federal wage statute called the Fair Labor Standards Act (“FLSA”). Typically, the first question when determining whether salaried employees are entitled to overtime is whether their job duties are exempt typically under the executive, administrative or professional capacity. In this case, the police officers were not arguing about their job duties. Instead, they were arguing a different provision of the FLSA.

For salaried employees, in order for an employer to legally not pay overtime, the employer must pay the employees at least $455 per week. The District of Columbia was compensating the police officers less than $455 per week but the police officers were receiving annunities / pension payments which together with their salary equaled move than $455 per week. The police officers argued that the pension payments could not be counted towards the calculation of the $455 requirement and the Court of Appeals agreed. Thus the Court of Appeals held that because the employer failed the $455 per week requirement, the police officers were entitled to overtime for all overtime hours.

The Court of Appeals held that the employer:

may not count these plaintiffs’ annuities as compensation for purposes of the salary basis test. Under no reasonable reading of the term can the pension payments be considered “compensation” for these plaintiffs’ current work. Rather, the money they receive from their pensions is a retirement benefit, earned over the course of their past employment with the MPD, not their present work for the District. The pensions were funded in part by the plaintiffs’ own required contributions, which were automatically deducted from their MPD paychecks. There is no connection between their pensions and the work they currently perform for the District, and thus no sense in which their annuities constitute “compensation” for that work.

If you have a question about whether your salary meets the FLSA’s $455 salary test, contact Martin & Martin for a free consultation.

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