Newspaper Clipping - Newspaper Clipping Scan - Public Management Magazine The Fiscal Impact of FLSA - 8/1/1985
'Public
Management
August 1985
International
City
Management
Association
THEFIscAL IMPACT of FLSA
by Gregg B. Jackson tion is not available on a large pay or benefits to which employees
Director of Research scale. The rough estimates provided would otherwise be entitled. The ef-
ICMA in this paper are based partly on the fect of this option on the 24/48 duty
limited information that is available cycle would be 329 hours of over-
and partly on explicitly stated as- time per person-year if a 7-day work
THE SUPREME COURT's re- sumptions. period is adopted, or 158 hours per
cent decision in Garcia v. Saar person-year if a work period of 9,
Antonio will create a financial Impact on Fire Departments 12, 15, 18, 21, 24, or 27 days is es-
burden for local governments. The tablished.' Provision 1 cannot be
magnitude of the burden will de- FLSA is commonly thought to have combined with provision 2.
pend on forthcoming interpreta- its heaviest impact on fire depart- In a 1974 ICMA survey, 80 per-
tions of the Fair Labor Standards ment budgets. Firefighters in this cent of report ing jurisdictions with
Act (FLSA) by the Department of country most commonly work a populations of 10,000 and greater
Labor and the U.S. courts, on the duty cycle of 24 hours on and 48 reported having 24-hour-long fire
reactions of public employees, and hours oft, with three shifts rotating duty periods and duty cycles of 3, 6,
on the responses of public officials. through a cycle every 3 days. Every 9, 12, 21, or 27 days. In a 1984
This paper presents rough esti- third week it results in 72 hours of ICMA survey, 56 percent of the
mates of the first-year financial work and during the other two firefighters were reported to have a
impact for just three classes of pub- weeks it yields 48 hours. The over- regular work week of 56 hours,
lic employees: firefighters, police, time is not readily reduced by which is the average number of
and low-level professionals. The adding a small number of a&- hours worked per week under the
sum of these estimates ranges from tional personnel, because 24/48 duty cycle. A spring 1985 call
a low of $321 million to a high of firefighters work in teams, with to the International Association of
$1.5 billion. These amounts are each person having specialized Fire Chiefs brought the reply, "An
solely for the overtime compensa- skills and each heavily dependent overwhelming majority of fire de-
tion required by FLSA and do not on the others for his or her effec- partments use the 24/48 duty
include several other costs that will tiveness and personal safety. cycle." For purposes of rough esti-
be necessary for achieving compli- If the overtime of this duty cycle mates, it is assumed that 24,000 of
ance. were calculated for every hour over the 212,000 full-time firefighters
The Fair Labor Standards Act 40 in a week, it would amount to work in departments with fewer
now requires that most public em- 832 hours of overtime per person- than five employees, 70 percent of
plovees be paid a minimum wage of year.' FLSA, however, has two the remaining full-time firefighters
$135 per hour, and time and one- provisions that can potentially re- are on the 24/48 duty cycle, and as-
half for hours worked in excess of duce this amount. sumptions are obviously incorrect,
40 per week. There are just a few Provision 1: When an employee is but in counterbalancing directions
exceptions for the minimum wage. on duty for at least 24 hours, the for the purposes of the following es-
Executives, administrators, and employer and emplovee may agree timates. It is also assumed that 20
highly skilled professionals, includ- to exclude meal times (of at least 30 percent of firefighters are exempt
ing teachers and registered nurses, uninterrupted minutes) and sleep executives, administrators, or pro-
are exempt from the overtime pro- time up to 8 hours in 24 (if at least fessionals. These assumptions yield
visions. Police and fire departments 5 hours are uninterrupted) (29 105,000 nonexempt firefighters on
with fewer than five employees are C.ER. Secs. 785.19 & 22). The effect the 24/48 duty cycle.°
also exempt from the overtime pro- of this provision, when there is the Under the worst case situation,
visions. requisite agreement, is to reduce when neither provision 1 nor 2 can
There are about 3,000 counties, the overtime to somewhere around be used, each works 832 hours of
19,000 municipalities, 17,000 town- 208 hours, depending on the fre- overtime in a year. Based on salary
ships, 15,000 school districts, and quency of uninterrupted sleep data from a 1984 ICMA survey and
29,000 local special districts in the time .4 the overtime calculations of 29
United States.' Together they em- Provision 2: Employers can estab- C.F.R. Sec. 778.1 14, that would re-
ploy 7 million full-time people, with lish a "work period" of from 7 to 28 quire overtime payments of $2,719
421,000 police officers, and 212,000 days in length for fire personnel per firefighter and a total overtime
firefighters. The aggregate payroll and then calculate for every hour expenditure of $285 million in the
exceeds $12 billion a montO worked in excess of the equivalent first year.'
Even if the interpretations of of 53 hours per week (29 C.ER. Sec. If all nonexempt firefighters are
FLSA and reactions to it could be 553.1). FLSA allows the employer subject to provision 1, each would
predicted, detailed information on unilateral discretion in adopting work about 208 hours of overtime
the number of nonexempt employ- this arrangement. Negotiated labor in a year. That would require over-
ees, their hours worked, and their agreements and contracts, however, time payments of $808 per fire-
pay rates would be needed to accu- may prohibit such unilateral action fighter and a total overtime
rately estimate the fiscal impact on by clauses that require negotiation
local governments. That informa- of any change that would affect the (continued on page 22)
groups, civic organizations, special that cannot be predicted in ad- that may arise from efforts to reduce
interest groups, and so on, but will vance. This often results in overtime hours, and the fact that
need to act as brokers with and unscheduled overtime. some personnel already receive pre-
among council committees as well. Assuming that 36,000 police work mium pay for overtime, which can
I am interested in hearing from in departments with fewer than 5 be credited toward the FLSA-re-
those managers who are presently employees and 20 percent of the re- quired overtime compensation.
functioning with a council or com- maining full-time officers are Factors that will have an upward ef-
mission that uses a standing exempt, there remain 308,000 po- feet on the estimates include: the use
committee system. Your observa- lice who must be paid for their of compensatory time for seasonal
tions about the impact of overtime hours.10 If they average work loads and other purposes, the
committee systems on decision just 3 hours of overtime a week, need to pay volunteer firefighters
making, council-manager relations, that amounts to 156 hours per year. and police reserves a minimum
council-staff relations, and the im- Based on salary data from a 1984 wage if they already receive a stipend
pact on a manager's job would be ICMA survey, the FLSA-required in excess of their actual expenses, the
greatly appreciated. These thoughts overtime payments would be $2,363 costs of implementing new record-
can then be shared with others in a per police person and a total of keeping systems, the cost of legal
later issue of Public Management. $728 million in the first year." counsel for advice on achieving
-Alan Harvey If all nonexempt police were sub- compliance, retroactive payments
City Manager ject to provision 2 and one of the that may be required, and court
in-
St. Petersburg, Florida longer work periods was estab- costs, legal costs, and damages lished, there would be overtime curred from employee suits.
payments of $197 per person and a
total expenditure of $61 million of
(continued from inside fi-ont cover) Notes
overtime in the first year.12
expenditure of $85 million in the I Bureau of the Census, Historical Statis-
first year-8 Impact on Regular tics on Governmental Firxutce.s and
n
If all nonexempt firefighters are Employees mcnIs (W (Wasenthi- 1 982 . o/ Govern
ntngton, D D.C.C.: : U U.S. Government
subject to provision 2, and a 9-, 12-, Printing Office, 1985), p. I.
15-,18-, 21-, 24-, or 27-day work pe- Local jurisdictions' first worries 2 Bureau of the Census, Public Employ-
riod was established, there would about FLSA have generally been in rneut in 1983 (Washington, D.C.: U.S.
be overtime payments of $569 per respect to their fire personnel. But Government Printing Office, 1984), pp. 2-
.
person and a total overtime expen- many regular employees are also 3 3A three-week cycle occurs 17.333 times
diture of $60 million in the first subject to FLSA, and overtime by in a year. There are two 48-hr. weeks and
year.9 them may have a major financial im- one 72-hr. week in the cycle, so the over-
pact. More than 50 percent of time will be (48 hrs. - 40 hrs.) x 34.666 +
impact on Police regular local employees are teach- (72 hrs. - 40 hrs.) X 17.333 = 832 hrs. per
firefighter.
Departments ers, who are exempt from the 41n the 48-hr. work weeks, it is assumed
overtime provisions. Likewise, exec- that there will be at least 8 hrs. of ex-
Police can come under the same utives, administrators, and highly eluded meal and sleep and therefore no kweeks, FLSA provisions discussed above skilled professionals
are exempt. In suovertime. in med that th e72-hrbe an average it i5as-
- the will of
for firefighters, but since they very addition, many clerical workers al
excluded hrs. of meal time and 15 ex-
seldom work 24-hour duty periods, ready receive time and one-half or eluded hrs. of steep time; the overtime will
only provision 2 is of practical con- something close to it for working be (72 hrs. - 5 hrs. - 15 hrs. - 40 hrs.) x
sequence. When applied to police, overtime. But with more than 6 mil- 17.333 = 208 hrs. per firefighter per year.
SThe 24/48 duty cycle exceeds the 53-hr.
that provision has an overtime lion local regular employees, that overtime threshold for the seven-day work
threshold equivalent to 42.8 hours still leaves several hundred thousand period only every third week. That will
per week rather than 53. low-level professionals who will not yield overtime of (72 hrs. - 53 hrs.) x
A 1984 ICMA survey of jurisdic- qualify for the professional exemp 17.333 = 329 hrs. per firefighter per year.
The same duty cycle exceeds the 68.1-hr.
tions with populations of 10,000 tion under the high standards of 29 overtime threshold for the nine-day work
and more found that only 2 percent C. FR. Sec. 541.3. If they average just period by only 3.9 hrs. per work period.
reported regular work weeks in ex- 2 hours of overtime a week, that There are 40.555 nine-day work periods in
cess of that threshold. This suggests would amount to 104 hours per year, a year. This will yield overtime of 3.9 hrs.
that FLSA will impose little finan- about $1,248 per person, and $200 x 40.555 = 158 hrs. per firefighter.
6About 12,000 of the 19,000 municipal-
cial burden on police departments, million to $500 million in the first ities in the country have populations
but the suggestion may be mislead- year." under 2,500 persons. An ICMA survey of
Ing .jurisdictions with populations of 10,000 or
Police generally work more un- Additional Considerations greater showed firefighter ratios about
scheduled overtime than fire- 1.6 per thousand people, with som mewhat
lower ratios in smaller jurisdictions. Some
fighters, and overtime is not Several factors that cannot be quan- of these small jurisdictions have an all-vol-
included in the hours reported to tified were not included when untcer department, and some have just 1
ICMA. Police who initiate pursuit or calculating the above estimates. Fac- paid person. So it is roughly estimated that
an arrest toward the end of their tors that will have a downward effect there are 24,000 firefighters in depart-
shift will work unscheduled over on the estimates are: employers' abil ments with fewer than 5 employees. The
number of nonexempt firefighters working
time. Police also make appearances ity to bargain down pay rates when the 24/48 duty cycle is (212,000 - 24,000)
in court on days and for durations coming into compliance, efficiencies x .70 x .80 = 105,000.
22 Public Management/August 1985