Honorable   Charles    D. Houston             Opinion    No. JM-733
District   Attorney
One East Main                                 Re:    Payment of overtime   compensa-
Bellville,   Texas      77418                 tion    to    county  employees,   and
                                              related    questions

Dear Mr.   Houston:

       You ask several     questions    about the impact of the federal                Fair
Labor Standards      Act of 1938, 29 U.S.C.        section     201 et seq.        (herein-
after    FLSA). as emended,        on overtime    compensatory       ‘time    accrued     by
county    employees.      You ask (1)       whether    the county          must pay the
employee     for  accrued    overtime   compensatory       time when the employee
resigns    or his employment is otherwise           terminated,        (2) whether       the
county    may have the employee        “nominally”      on the payroll         until     the
employee receives      payment for accrued      overtime     compensatory       time,    (3)
whether,    if payment is due, payment should be made from the budget of
the department      in which the employee worked,            and (4) whether,          if a
budget line item exists        for the pay-men= of overtime          compensation,       the
county commissioners       court may nevertheless        direct     that the overtime
compensation     be paid out of the regular          salary    line     item.    The FLSA
affects   only the first     two questions.

        Section    7(a)(l)     of the FLSA prohibits     employers      from requiring   or
allowing      employees      to work more than 40 hours per workweek without
compensating        the employees       fey   the overtime      at     1 l/2     times  the
employee’s       regular    rate of pay.       29 U.S.C.    1207(a)(l);      see Attorney
General Opinion JM-680 (1987).              The FLSA applies     to publicemployers.
See Garcia v. San Antonio Metropolitan             Transit   Authority,      469 U.S. 528
(1985);     see also Attorney        General Opinion JM-475 (1986)           (for history
of applicability         of the FLSA to public     employers).       Prior to amendment
in 1985,       the FLSA required      employers either     to pay employees at 1 l/2




       1. It    should   be noted      that   the FLSA applies      only   to hours
actually  worked in excess of forty hours per workweek.              If an employee
works on a county holiday,         the employee may be entitled,       depending  on
county policy,     to hour-for-hour      compensatory   time off.     The FLSA will
apply only if the total         number of hours worked during          the workweek
exceeds   forty.      For similar      reasons,   a paid    holiday    on which   an
employee does not work does not count toward hours worked under the
FLSA. This opinion       addresses    only compensatory    time off due under the
FLSA.
Honorable   Charles    D. Houston   - Page      2      (JM-733)




times their   regular     rate of pay for overtime       or to allow employees   to
take time off at 1 l/2 times their           accrued   overtime   hours during the
same pay period       in which the overtime     accrued.     Because of the burden
this placed   on public      employers,   Congress amended the FLSA in 1985 to
allow public     employers     to provide    this   compensatory    time off  under
more liberal    terms.     See Fair Labor Standards Amendments of 1985, Pub.
L. 99-150,   §2(a)(l)     (1985)   (amending 29 U.S.C.     5207).

     The FLSA authorizes    public employers  to give               employees     compensa-
tory time off in lieu of overtime    compensation   if              the public     employer
meets certain requirements:

            (1)   Employees of a public         agency which is a State,
            a political    subdivision     of a State,      or   an inter-
            state    governmental     agency may receive,         in accor-
            dance with this subsection           and in lieu of overtime
            compensation.       compensatory     time off    at a rate not
            less than one and one-half            hours for each hour of
            employment      for    which     overtime     compensation    is
            required    by this section.

            (2)  A public   agency may provide              compensatory   time
            under paragraph   (1) only --

                 (A)    pursuant    to -

                        (1)     applicable  provisions      of a collec-
                        tive   bargaining   agreement.     memorandum of
                        understanding,     or   any     other   agreement
                        between the public     agency and representa-
                        tives   of such employees;     or

                        (ii)    in the case of employees not covered
                        by subclause      (i).  an agreement   or under-
                        standing    arrived    at between   the employer
                        and employee before      the performance  of the
                        work; and

                (B)  if the employee     has not accrued      compensa-
                tory time in excess     of the limit    applicable    to
                the employee prescribed    by paragraph    (3):

            In    the   case    of     employees    described      in   clause
            (A)(ii)    hired prior       to April   15, 1986, the regular
            practice     in effect      on April   15, 1986, with respect
            to compensatory       time off for such employees         in lieu
            of    the   receipt     of    overtime    compensation,       shall
            constitute      an agreement or understanding          under such
            clause    (A)(ii).     Except as provided       in the previous
            sentence,     the provision      of compensatory     time off to




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Honorable     Charles    D. Houston      - Page 3      (m-733)




              such employees    for hours worked                 after     April    14,
              1986, shall be in accordance   with                this    subsection.
              (Emphasis added).

29 U.S.C.     5207(o).

       Thus, public      employers     may allow employees           to accrue        a certain
amount of compensatory           time off      for overtime       worked so long as the
public    employer meets two basic             requirements.        Cf. Attorney          General
Opinions      JM-49 1,   JM-475      (1986)      (state     agencies     covered        by     this
Appropriations       Act    also    subject      to    one-year     limit).        First,       the
employee must agree that he will receive                 compensatory       time-off      in lieu
of overtime       compensation     before     the overtime       is worked.         Second,       an
employee      cannot   accrue     more than the number of compensatory                       hours
specified      in the FLSA. If the employee is engaged in a public                          safety
activity,      an emergency response         activity,     or a seasonal       activity,        the
employee may accrue no more than 480 hours of compensatory                              time for
hours worked after        April    15, 1986.        29 U.S.C.     9207(o)(3)     (A).      If the
employee is engaged in any other work, the employee may accrue no more
than 240 hours of compensatory              time for hours worked after               April      15,
1986.     Id.     It should be noted that these maximum amounts refer                             to
accrued;ertime          compensatory      time, not to actual           hours of overtime
worked.      As indicated,       compensatory        time must be provided             at 1 l/2
times the number of overtime              hours worked.         If an employee            accrues
more than the maximum amounts allowed,                     the employee        must be paid
overtime    compensation.        29 U.S.C.      5207(o) (3) (A), (B).

       Consequently,      the    county     must provide     county     employees    with
either   overtime    compensation      or compensatory     time off,     as provided    in
the    FLSA.     You ask       whether      the   county   may leave        an employee
“nominally”     on the payroll       until    the employee receives       “payment” for
accrued overtime       compensatory      time off.     In essence,    you wish to know
whether    an employee       who resigns       must receive     lump sum payment of
accrued overtime      compensatory      time, or whether the employee may remain
on the payroll,       receiving     salary    and other employment benefits         until
the employee receives         full   overtime    compensatory     time off.     The FLSA
requires    that

                 An employee who has accrued      compensatory   time
              off authorized    to be provided  under paragraph    (1)
              shall,   upon termination  of employment, be paid for
              the unused compensatory      time at a rate     of com-
              pensation   not less than --

                   (A)   the  average     regular   rate    received                by
                   such employee   during    the last    3 years    of             the
                   employee’s  employment,     or




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Honorable   Charles     D. Houston       - Page 4          (JM-733)




                (B)   the      final   regular           rate   received     by such
                employee,         whichever         is       higher.       (Emphasis
                added).

29 U.S.C.     5207(o) (4).     See Attorney      General    Opinion   JM-680 (how to
determine    the regular    rareof    pay).     Once the employment relationship
ends,   the county must pay overtime         compensation.        On the other hand,
the county and the employee may agree , within              the PLSA guidelines    set
forth    above,   that    the employee      will    be allowed      to take   accrued
compensatory    time off just prior      to leaving      the employ of the county.

      Your remaining    questions     relate    to the manner in which the county
budget is determined.        Article    689a-9,    V.T.C.S.,   provides    that county
budgets   shall   be prepared     “to cover all proposed        expenditures     of the
county    government     for    the     succeeding      year.”     Article     689a-11,
V.T.C.S.,   provides:

                The Commissioners’              Court in each county              shall
            each year provide               for   a public        hearing      on the
            county budget -- which hearing                  shall take place on
            some date to be named by the Commissioners’                           Court
            subsequent        to August 15th and prior              to the levy of
            taxes by said Commissioners’                  Court.     Public     notice
            shall    be given         that on said date of hearing                   the
            budget      as prepared          by the County Judge will                 be
            considered         by     the     Commissioners’         Court.        Said
            notice     shall name the hour, the date and the place
            where the hearing              shall    be conducted.           Any tax-
            payer of such county                shall    have the right          to be
            present      and participate           in said hearing.             At the
            conclusion        of the hearing,           the budget as prepared
            by the County Judge shall                    be acted      upon by the
            Commissioners’             Court.        The     Court      shall      have
            authority       to make such changes in the budget as in
            their     iudement the law warrants                  and the interest
            of the taxpayers            demand.      When the budget has been
            finally      approved by the Commissioners’                  Court,      the
            budget,       as approved         by the Court shall            be filed
            with    the Clerk          of the County Court,               and taxes
            levied       only      in     accordance        therewith,         and no
            expenditure         of     the     funds     of    the    county      shall
            thereafter         be made except             in strict       compliance
            with the budget as adopted by the Court.                            Except
            that     emergency         expenditures,          in case       of    grave
            public     necessity,         to meet unusual           and unforeseen
            conditions       which could not, by reasonably                  diligent
            thought        and attention,             have     been    included        in
            the original          budget,       may from time to time be
            authorized         by the Court             as amendments          to    the
            original         budget.          In    all      cases      where      such




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Honorable      Charles     D. Houston      - Page 5         (JM-733)




               amendments to the original    budget is made, a copy
               of the order     of the Court   amending the budget
               shall be filed   with the Clerk of the County Court,
               and attached    to the budget    originally  adopted.
               (Etaphasis added).

See also    V.T.C.S.   art.  3912k. §2.  Article  689a-11                           requires    that
county  salary    payments comply with the county budget.                             See
                                                                                      -    Attorney
General Opinion JM-192 (1984).

       You ask whether payments of overtime                 compensation      to an employee
should be wade from the budget of the department in which the employee
worked.     Article    689a-11 provides        that “no expenditure          of the funds of
the county     shall    . . . be made except            in strict      compliance    with the
budget as adopted by the [Commissioners]                  Court.”     Consequently,      if the
county budget provides          that the expenditures            for a particular        county
department      are to come out of that                department’s       budget,    overtime
compensation       for  that department’s           employees      should    come from that
department’s       budget.     On the other          hand,    article      689a-11   provides
for budget      amendments for         emergency       expenditures       in unforeseeable
emergency situations.          See Attorney       General Opinion Nos. h-777 (1976);
H-12, H-11 (1973);         cf.7T.C.S.          art.    1666a (applies        to counties      of
over 225,000      populats,        does not apply to Austin or Wailer                county).
If the need for overtime             compensation       stemmed from an unforeseeable
emergency situation         as defined     in article       689a-11,     a budget amendment
would be warranted.           Article     689a-11     cannot be used as a shield              to
avoid    compliance     with    the PLSA.        In other       words,     the fact     that a
particular     department’s      budget     lacks    sufficient       funds to cover        PLSA
overtine     compensation      will    not relieve        the county      of its    responsi-
bility    to pay the compensation.

       You also         ask whether,         if    a budget      line     item exists          for    the
payment of overtime            compensation,          the county commissioners              court may
nevertheless         direct   that the overtime           compensation        be paid out of the
regular       salary     line    item.      Article      689a-11      requires       that     counties
comply with their budgets.                 Consequently,       the terms of the particular
budget     in question         govern      the disposition          of county         funds.       As a
general      rule,     if the county budget contains                 a line      item for general
overtime       compensation       and the funds available              for that line         item are
sufficient        to cover the overtime            compensation      due, the county must pay
the overtime          compensation       from the overtime           compensation         line     item.
If    the overtime          compensation         line    item     lacks      the    funds     for     the
overtime       compensation        legally      due under the PLSA, the compensation
could be paid from the line                 item for salaries.             Counties     must comply
with the PLSA. As indicated,                  if an unforeseeable           emergency caused the
need     for      overtime     work      and therefore          overtime        compensation,          an
emergency        amendment to the budget               would be warranted.              Moreover,        a
potential        violation      of    federal        law could      be deemed an emergency
situation.




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Honorable   Charles   D. Houston      - Page 6        (JM-733)




                                       SUMMARY

                The federal        Fair Labor Standards          Act of 1938,
            29 U.S.C.         1201 et seq.,         as amended,       prohibits
            public     employers,     such as counties,        from requiring
            or allowing        employees     to work more than 40 hours
            per workweek without             compensating       the employees
            for    the overtime        at 1 l/2       times the employee's
            regular     rate     of pay.       The act authorizes         public
            employers       to give employees        compensatory      time off
            in lieu       of overtime       if   (1)    the employee      agrees
            that he will receive          compensatory      time off in lieu
            of overtime         compensation      before    the overtime        is
            worked,      and (2)      the maximum number of overtime
            compensatory         hours set forth         in the act has not
            already       accrued.       Although       the   county     and an
            employee       may agree       that     the employee       will     be
            allowed     to take accrued compensatory             time off just
            prior     to leaving       the employ of the county,              the
            employee      may not be "nominally"            on the payroll.
            Under the FLSA, an employee is either                   employed or
            not employed.

                 Article     689a-11    provides     that expenditures       of
            county      funds must be made in strict              compliance
            with     the    budget     adopted     by   the    commissioners
            court.       Thus, the line items in particular           budgets
            govern     the funds from which overtime            compensation
            will    be paid.       Article    689a-11    authorizes    budget
            amendments.        Moreover,     the fact    that a particular
            line item lacks sufficient            funds to cover overtime
            compensation       due under the FLSA will           not relieve
            the county of its          legal    responsibility      to comply
            with the FLSA.




                                                      JIM      MATTOX
                                                      Attorney  General     of Texas


MARY KELLER
Executive Assistant       Attorney     General

JUDGE ZOLLIE STEAXLEY
Special Assistant Attorney           General




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Honorable    Charles   D. Houston   - Page 7    (JM-733)




RICK GILPIN
Chairman, Opinion      Committee

Prepared    by Jennifer   Riggs
Assistant    Attorney   General




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