                                    The Attorney General of Texas
                                                        April   15, 1986
JIM MAllOX
Attorney General


Suprmt   Cow! BulldIng
                                    Hr. Lawrence F. AlWLn, CPA                  Op~nloa No. Jl+475
P. 0. Box 12548                     State Auditor
Atmh. lx. 7a711.250                 P. 0. Box 12067                             Xc: Compensatoq   time endlor         wtt-
512/4?52501                         Austin. Texas   781’11                      time psy for state employeeb          after
lder 91om74.1367
lel~copler 51a47502+3
                                                                                April 15, 1986

                                    Dear Hr. Alwla:
714 Jackson. Suite 70Q
oa11as.TX. 75202-4500                    You ask:
214t742-8944

                                                    What does the law require in regard to s state
4824 Albs”. Are.. SUb 160                       employee’s   receipt  of compensatory  time off or
El Paso. TX. 799052793                          premium Iovertime pay for overtime    earned on or
91Y533.3484                                     after AIsrll 15, 1986?

 1001Texas. sune 700
                                    Your letter   focuses     on the United States Sutmtmc Court's        decision   in
 muston. lx. 77002.3111             Garcia v. Ssn Ant+o         Metropolitan   Trsnslt iuthoritp,     105 S.Ct. 1005.
 713lm5aaa                               U.S.       (1985).    on the Pair Lsbor Standards Amendments of 1985.
                                    pub.L. 99-150,          Stat.       (1985). and on section     2f of article   V of
                                    the current Genm>l Approstions             Act, Acts 1985, 69th Leg., ch. 980.
 SO6Brotdway, Suite 312
 Lubbock, TX 79401-3479
                                    at 7759.    A brlc:f     history   of the sppllcability       of the Fair Labor
 e.ow47-5238                        Standards Act to the states         la necessary to an undcrstatdinn         of the
                                    Garcia case, these recent amendments, and how they affect             section 2f.
                                    The amendments become effrctlve        cn April 15. 1986.
 4309 N. Tenth. Suite B
 heNen. lx. 78501-1685
 SIi882d47                                 The Fair Labor Standards Act of 1938, 29 U.S.C..                   1201 et seq.~
                                    [hereinafter      FLSA], requires employers that are covered by the act to
                                    pay their l     mployws    a mlnimum hourly vage. see 1206, and to pay then
  100 k4.l” Plaza. Suite *oo
                                    at one and cat-ho1.f       times their regular ratEOf          pay for hours Porked
  tan Antonio.m 782052797           in excess       of fcrty     during a vorkveek.         Sea 5207.
  5w22w191                                                                                                   As originally
                                    enacted,    the ?I.!% of 1938 specifically          excluded the states        and their
                                    political     subdivisions      from its provisions.         See 29 U.S.C.        0203(d)
  An Equal OppCwlunltYl             (1940 ld.);       (50 Stat.    1060).     Beginning in 196rCongress            tnscted a
  ~f~~rrnat~ve
             Action Employer        series of amcndme~~tawhich extended the coverage of the act to certain
                                    types of public        employees.       See Pair Labor Standards Amendments of
                                    1961. 02(c),        9, 75 Stat. 65.71;        Pair Labor Standards Amendments of
                                    1966, 51102(a),       Cb),   80 Stat. 831; 1206(c), 80 Stat.            836.    In 1976.
                                    Coogrtss      again    broadened      the coverage      of   the    act    by defining
                                    “tmployer” to in::Lude a “public           agency.”    Fair Labor Standards Amend-
                                    ments of 1974, (21(b),         88 Stst. 68.      Constquently , by early 1985. the
                                     act’s    minti      wg.e snd overtime provisions           extended     to almost     all
                               .,    employtee of .the states and their political             subdivisions.      See
                                                                                                                 -     Garcia
Mr. Lawrence P. Alvlo    - Page 2    (Jx-475)




v. San Antonio Netropolltac      ‘[l:ansit Authority,   B.       After  1974. but
prior to amendecnt in 1985, the act contained oulg the            general exaxp-
tion   for  executive,    adxinlstratlve     or proftssimal      parsomtl,      see
5213(a)(l).   and ac exemptlon for elected       officeholders    and cartaloof
thcfr employees.     -See 5203(e) (2) (C).
       The Fair Labor Standards Amendmtnts of 1985, Pub.L. 99-150, vare
enacted in response to tht United Statee Supreme Court’s decision                 in
Carcia.    The Gsrcla case is the wst recent of a sarles of significant
cases which axed             the constitutionality      of applying  the FLSA to
the states.      Tht  combined l::l:ect of tht amendments vhlch oare enacted
in the 1960’s vas initislly        upheld in Haryland v. Wlrtz, 392 U.S. 183
(1968).      Congress   relied   ta   the Wirtz case when it expanded the
coverage of the act in 197’1 to includcmost              public employees.     H.R.
Rep. No. 93-913, ?3d Gong., 2d Stss. 6 (1974).              Tbc 1974 amendments,
however.    triagered
                --      a challenge vhlch resulted        In a severe limitatlon
on the extent to which the act could be applied to the states.                  See
Pstlonal    League of Cities -- v.  Ustry.   426   U.S. 833  (1976).  In  ?btloGi
League of Cities 0. Ustry-, the Supreme Cnurt held that the Commerce
Clause of the Cnlted Statts Constltutlon            dots cot empover Congress to
apply the minimum wage anil overtime provisions               of the FLSA to tht
 states

            insofar    as . . . [they] operate to directly     dis-
            place the States’      freedom to stmcture   ‘inregrsl
            operations     in areas of traditioual   governmental
            functions.    . . .

 426  U.S.   at 852.     Responding to the Pational   League of Citlrs       case.
 the    United    Ststes    Department  of  Labor    promulgated     regulatlocs
 providing    that it would not enforce      the minimum vagc and overtime
 provisions    of the act against a stste or polirical      subdivision     unless
 notice    had first been gIvt:l that the sctivitios     In question were not
 integral    operations    in areas of traditional    goverrmental     functions.
 29 C.F.R.    0775.2(b)   (1984).

        In Garcia,  the Suprasu: Court reversed    its decision  in liatlonal
 League of Cities.     Like tha: National Lesguc of Cities case, the Gsrcia
 decision   was the result        of a sharply  divided   court.   In T-57
 decision.   the Court rejectc!d.

             as unsound In pr~inciple and unvorkablt         in prac-
             tice.    a rule   of   state     immunity from federal
             regulstion   that turns on a judicial      appraisal   of
             whether    a part:Lcular     govtrnmental   function   is
             ’integral’   or ’t~raditional. ’

 105 S.Ct. at 1016.   The Court held that the FLSA, as applied  to the
 San Antonio Metropolitan  Transit  Authority, does not violate   stJtc
 soverdgnty . The Court renBoMd broadly that oucc a paver is found to




                                      p. 2173
Mr. Lawrence F. Alvin     - Page 3    (J?l47S)




be delegated to the federal, governacnt by the Constitution.       exercise
of chat specific  paver by the states  cannot br protected by using the
Tenth Azendrmnt or judicially  created limitrtions  se affirmative     state
shields to federal action.

       The primary impact of the Garcia decision was the removal of the
coostltutional     shield which hedxcted              states sad localitle6     from
potentialiy    burdensow     fcl&!ral  legislation       enacted ucder Congress’
Commerce Clause pavers.          Consequently,      uder     Garcia the potent161
Impact of existing      or proposed federal      legi6lstioo    and regularlone    on
the states and localltics       bacome no longer a constitutional        issue.    It
became s policy matter to ha resolved          ln the course of the lcgi6latlve
process.     10s s.ct.   at 1020-21.

      When the Garcia declelon    was handed down, the FL.SA minimum ‘sage
and overtime provisions     extended to virtually      all employers    of the
states and their political    subdivisloab.     Although Csrcis dealt with s
transit    authority, the broad language employed ard the express over-
ruling    of the National L#clw      of Cities    case indicated   that these
provlslons    of the act ve&    to be applied to the state and munlclpal
employees which Congress Intended to include when it passed the 1574
amendments. Order that rctrtding , once cm individul         fslls vithin   the
cctegory    of covered employees,     the employee6 can be excluded        from
application     of the act only if      they are covered by an exception
clause.     See Ososky v. Wck,     704 F.2d 1264, 1268 (G.C. Cir.        1983).
The Fair Labor Standard6 AE&dments of 1085 created new exceptions            for
public     employees.   You rwe concerned      about the effect      of   these
amendment6 on the current kpproprlations       Act.


       Section 2f of article V of the current Appropriations    Act con-
 tains two riders enacted ln response to these changes in the law and
 in anticipation  of amendolrnts by Congress to the FLSA.    Acts 1985.
 69th Leg., ch. 980;~ nt 7759-7760.  Sectlon 2f provides,  %rr pertinent
 part:

                f. OVERTIME. (1)    Employees Subject to FLSA.
            An employee who !Ls subject  to overtime provisions
            of the Fair Labcr Standards Act of 1938, 29 U.S.C.
            sets. 201 et SCQ.., (FLU) IS entitled’ to compensa-
            tion for overtime as provided by &is subdivision.

                An employee v’ho 16 required   to work hours           io
             excess of 40 hoers Ia a vorkveek Is entitled              to
             compensation fol, the excess hours either by:

                    (A) the urgency allowing  (or requiring) the
                employee to take compensatory time off during
                the bane pay jleriod, at the rate of l-112 hours
                off for each hour of overtime; or


                                      p. 2174
Us. Lawrence P. Alvin           - Page 4   (JU-475)




                    (B) st ttie discretion     of  the evzploylng
                sgcncy, in CP~IC:SIL which grsnting compensetory
                time off is ~q~rectScs1,   the employac receiving
                pay for the overtime at the rate l  qusl to l-112
                times the emp:.oyea’s rcgulsr rste of pby.

                    .   .   .   .

                    (4) Contitlgency       Prov1*1cm.
                employees     src   excluded    generally ‘:rom”‘%
                spplicstion    of the FLSA as a result of A court
                dacision    or etatutory   change, this subdivision
                govern6 overt~lme pay and compens&tcry leave.

                    A regularI,   full-time   employee vho is re-
                quired to vork hours In excess of the standard
                workveek ests’D’ll6hed for the position   In bccor-
                dance with tbc nppllcnble      statutes Is tntitled
                to compenatlon    for the excess hours either by:

                     (A)  the agency aliovlng (or requlrlng)            the
                 aaployee to t&kc lquivnlent  c0mpen**t0ry             the
                 off during the 12-mocth period    follovipp             the
                 end of the w&week;    or

                     (B) nt the discretion      of  the employing
                 Agency, io c6ses in vhlcb granting compensatory
                 time off is Inpractical,   the employee receivirg
                 pay for the ct-ertimc nt the rate of l-112 tlmaa
                 the employer’s   rcgulsr rate of psy.   ~Emphbsls
                 added).

 The  primary difference brween these NO subsections Involves                   the rime
 period during which comperwstory tl& off mUst be t&n.

         Section    Zf(1)    appliw      to cmployaas subject       to the PLSA vhile
 section     2f(4) applies       “[IIf     stntc   employees nre excluded      generally
 from the application          of t.he FLSA AS 6 result        of a ccurt declsicn      or
 sratutory      chbnge. . . .”         As indicpted     In the discussion     above,   the
 Gnrcin declsiun WAS the result of A sharply divided court.                    The Te%bS
 Leglslsture      prepnred for the possibility            thst the dcclsion     could be
 recoPsidercd.          Because     of     the   slgnif icacce    of the     controversy
 surrounding the decision,            the Texss Leglsisture      also prepsred for the
 possibility       that Congress        vould bddress       the question    through the
 1egiSibtiW       PSOCeSS -- the solution          suggested in the Carcis case.         It
 is clesr      that    section    2f (4) WAS intended to respond to legislative
 change6 in       the FLSA.       The problem 16 that Congress reacted             to the
 &mdS       cbse in A vby that the hngUSge                 Of SeCtiOn 2f(h)     doe6 not
 anticipate.        Section     2f (4) bpplies      only “[llf     state  tmployees    are
 excluded generally         from th,c npplicstion      of the FLSA. . . .I’



                                           p. 2175
Fr.   Lnvrence   F.   Alvin - Pa:&teS (m-475)




       The 1985 nmepdmantr to the FLSA do not totslly                    exclude    the
employees     cf A public      agency;    rother,    they specify     th6t a public
agency may provide compensatory time off in lieu of overtime compcnsa-
tlon    pAymeW      In certain    circumstruces.        Pub.1.. 99-150,    I2 (to be
codified    AS 29 U.S.C. #207(o)).          The time off i6 oat limited         to the
SAM pay period.         The emcru~wnts also provide          limited exemptions for
three sp~cibl situations:         (1) speclnl     drtnil work for fire protection
and lnv enforcement.        (2)  occnsional     or   sporadic    employment, and (3)
eubstitutlon.      Pub.L. 99-153, 13 (to be codified          as 29 D.S.C. EX7(p)).
Pub.L. 99-150, 14 (to be CDdlfied AS 29 U.S.C. 1203(e)).                Your concern.
hovever,     focuses   cn the (:aneral applicability           of the time off pro-
visions    rather than with l,be special        exceptions.      The 1985 amendments
create a conditional       exception    for public     employees from the cvertime
provisions     of the FLSA. The issue to bc resolved is whether this Is a
“general    exclusion” within the treenine and Intent of subsection              2fC4).

        Although there are cwtain            aspects     of sectlcn 2f(4) vhich weigh
against     finding that it WI; intended to apply to the nev amendments,
these considerations          are not compelline.          Section  if (4) (A) authorize6
a state agency to allov 01: require                 *n “employat to take &vcler.t   --
compensatory time off during the 12-month period follovlng                     the end of
the vorkveek.”            (Emphasis added).            The 1985 amendments do uot
authorize      "equivalent"      cor:pensatory     time off.      They require tloc cff
“at a rate not less that, one and cne-half                     hours for each tour of
employment for          vhich     overtime     compensation       is required     by this
section.”        Pub.L.     99-lSO,, 52(a)(l)        (to   be codified      as 29 U.S.C.
6207 (0) (1)).        Section     21(4)(S)      grants     the   employing    agency    the
discretion,        in  crises in ,vhich granting            compensatory tine      off   1s
impractical,        to pay the ea!ployee for overtime at the rate of ode and
one-half      times the employw’s          regular    rnte pf pay. It Ccts not seem
 likely    that the 1eglslature         intended to grent state agencies the dis-
 cretion     to choose brtveen g;iving equal time off snd time and cnc--half
 PAY.    Thus,    the term “equivalent”        in section 2f (&)(A) need not be road
 as a limit on time off to one hour of leave for one bour of overtinc.

       The legislature    intended subsection     2f(4)    to bpply if  Congress
 enacted   legislation  exclwiing   state employees;      they did not hove the
 benefit    of knoving    exact:ly  vhet   that   legislation    vould  provide.
 Accordingly,     state agencies   may allov    or require employees to take
 time off during the 12-month period following          the end of the workweek.
 but the time off must be nt s rate of not less than one and one-half
 hours for each hour of overt-.

       In contrbst,     sact%ou 2f(l)    authorizes   an agency to allov      or
 require   Its  Lmployees “to take c~pensatory      time off during the sama
 JJ Y period,   at the rnte of l-1/2 hour6 off for each hour of ovcrtlme.~
 (;mphssis    added).  This rc!qulrement VAS included    only in an effort    to
 comply vlth     the  FLSA as It    existed    vhen Garcia  vbs  decided   last
 spring.    Court jnterpretations     of the lT.SA indicate     thst   the   act
 allowed compensatory time off In lieu of payment only if time off vns


                                       P. 2176
Mr. Lawrence F. Alvin       - Page 6      (JtI-475)




granted during the ssw pimp period.          see Dunlop v. Few Jersey.    522
F.2d 504. Sll (3d Cir. 1075). vacated a          remanded for consideration
of National League of CltleL sub nom New Jersey v. 0s~~.       427 U.S. 909
(1976).     The 1985 amendment6 do not contain this requirement.        Thus,
the requlrrmcnt     that cvert1u.e time off be taken during the same pay
period    is Inconsistent   both ulth the 1985 smendments and vlth         the
leglslatlve    lnteut behind sectlcn 2f (4).

      Ey    enacting   bection     2,f!l),     the Texas Legislature        has clearly
evldenccd     the intent   to  comply with the FLSA. For trample,                the l&St
paragraph    of section     2f(l)     indicates      simply that exceptions         to the
workweek overtime       cslcula~::~ons      for certsin     cstcgorirs     of employeas
“shall   be made in accordawe           with    the FLSA.” Py enactitg         the slter-
nste section,     section   2f(4).     hovever,     the legislature    just as clearly
expressed the intent       that state       agencies be able to take advantage of
excluslcns     granted hy Congress.             ThUS, neither    section     is strictly
enforceable.      Nevertheless,      heccior~6 2f (1) (A) and 2f (4)(A),       when taken
together,    express a state poilcy           that state agencit-s have sufflcltnt
authorlry    to comply with 6nd to take sdvantage of the exclusions                       to
the FLSA enacted        in 1985.         State    agencies   may therefore       allw     or
require bn employee to take time off,                nt the rate of one and one-lrslf
hours for each hour of ove.rtlre,             during the l?-month period following
 the end of the workweek.



                 The legislative    intent behind sections 2f (1) (A)
              and 2f(4)(A)    of article     V of the current General
              h~,XOpSiOtiOUS Act, Acts 1485. 69th Leg., ch. 980.
              when taken tcgec:her,      express s state policp      that
              state sgencies have sufficient         authority to comply
              with and to take advantage         of the exclusions      to
              the Fair Labor Standards          Act enacted in 1985.
              Accordingly,    state agencies     may allw      or require
              on employee to tske time off,          at the rate of one
              and one-half     hours for      each hour of overtime,
              during the 12-u:anth period         folloving   the end of
              the workweek.




                                                      JIkl    HATTOX
                                                      Attorney General of TeXaS




                                          p.   2177
Er.     tu~~cncc    F.    hlvln     - Pqe      i        (Jfl475)




.lAcr    l!ICHfOuER
First      Arislktent     Attorney      General

HARYKF.LLER
Executive Assistant               Attorney     General

ROBERTGRAY
Special Assistant           Attoroty         General

RICK CILPIN
Cbail-maa.      Opinion     Comlctec

Prepared      by Jennifer Riggs
Assistant      Attorney General




                                                   p.     2178
