hourglass-small.jpgThis blog post was authored by Leighton Davis

What is the Section 7(k) Exemption?

Unless an overtime exemption applies, the Fair Labor Standards Act (FLSA) requires employers to pay their employees overtime compensation for any work performed in excess of 40 hours in a workweek, defined as seven consecutive days.  While the white collar overtime exemptions (administrative, executive and professional) set forth in the FLSA are used by all public agencies, there is also a partial exemption in Section 207(k) which is essential for public agencies with police and fire departments for employees engaged in fire protection or law enforcement activities.  

The Section 7(k) exemption softens the overtime provisions by allowing employers to extend the length of the work period beyond seven consecutive days and to increase the threshold of maximum hours.  As long as the public agency establishes a work period between seven and 28 consecutive days, it does not need to pay overtime until an employee satisfies the maximum hours standard set out in the Code of Federal Regulations (29 CFR Section 553.230).  If, for example, a public agency establishes a work period of fourteen days, it does not have to pay overtime to a fire protection employee unless he or she works 106 hours or to a law enforcement employee until he or she works in excess of 86 hours.  If the agency did not adopt the Section 7(k) partial overtime exemption, a court would likely rule that overtime would be owed based on the seven day work period.  Therefore, if established correctly, claiming the Section 7(k) exemption can save a public agency a significant amount of money.

Why Should the Section 7(k) Exemption Be Adopted in the MOU?

If challenged in court, a defendant employer claiming the Section 7(k) exemption has the burden of showing that (1) it established the work period and (2) the work period is “regularly recurring.” 

A public agency may not claim the Section 7(k) exemption retroactively.  However, the FLSA does not mandate how a public agency is supposed to affirmatively establish the work period.  While the agency can pass an ordinance or resolution, it is not required to do so.  The simplest way to establish a work period is to include it into the applicable memorandum of understanding (MOU).  Including language about the Section 7(k) work period in a MOU provides official documentation that the agency has adopted the work period and puts all affected employees on notice, but without the time or hassle involved with adopting an ordinance or resolution.

In Adair v. City of Kirkland, the MOU between the City and the police officers stated that “[f]or purposes of complying with the Fair Labor Standards Act, the Patrol Division work period shall be eight days and the Detective Division seven days.”  In Farris v. County of Riverside, the MOU between the County and the Riverside Sheriffs’ Association specifically identified a work period of 10 working days and contemplated a change to a “different bi-weekly work period.”  In both cases, the language was sufficient for demonstrating that the Section 7(k) work period had been established.

Like establishing the work period, there is no set method for showing that the work period is “regularly recurring.”  However, as demonstrated by Adair and Farris, an agency should be able to produce evidence that its officers’ schedules actually match up with the established work period.  While it is unclear how the City in Adair proved this, the County in Farris produced its payroll activity reports.

Once an agency establishes its “regularly recurring” Section 7(k) work period, it can begin calculating overtime for its fire protection and law enforcement employees using the maximum hours standard in Title 29, section 553.230. However, if it calculates and pays overtime using the Section 7(k) work period without officially establishing the Section 7(k) work period, it could be liable for unpaid overtime based on the standard 40-hour per week limit.  Therefore, we recommend that agencies adopt a MOU clearly identifying the Section 7(k) work period before taking advantage of the Section 7(k) partial overtime exemption.