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NOLAN v. CITY OF CHICAGO

December 21, 2000

WILLIAM J. NOLAN, FRANCIS A. VALADEZ, RICHARD PALADINO, LAWRENCE CLARK, ROBERT DOYLE, JOHN DOE, JANE SMITH, AND JOHN JONES, INDIVIDUALLY, AND ON BEHALF OF ALL SIMILARLY SITUATED INDIVIDUALS, AND FRATERNAL ORDER OF POLICE, CHICAGO LODGE NO. 7, PLAINTIFFS,
V.
CITY OF CHICAGO, A MUNICIPAL CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Denlow, United States Magistrate Judge.

MEMORANDUM OPINION AND ORDER

This case presents significant issues under the Fair Labor Standards Act ("FLSA" or the "Act") arising out of a claim by the plaintiff police officers ("Plaintiffs" or "Officers") that the defendant City of Chicago ("Defendant" or "City") failed to properly calculate and pay overtime. This case comes before the Court by means of a trial on the papers in which the parties have submitted stipulated facts, trial briefs, affidavits, deposition excerpts, and supporting exhibits which constitute the record in this case. See Morton Denlow, Trial on the Papers: An Alternative to Cross-Motions for Summary Judgment, Federal Lawyer, August 1999, at p. 30. See also, May v. Evansville-Vanderburgh Sch. Corp., 787 F.2d 1105, 1115-16 (7th Cir. 1986); Allen v. United Mine Workers of America, 726 F.2d 352, 353 (7th Cir. 1984); Acuff-Rose Music Inc. v. Jostens, Inc., 155 F.3d 140, 142 (2nd Cir. 1998). The parties have agreed to proceed in this manner and to waive their right to present oral testimony on the liability issues herein presented.*fn1 Oral argument was held on December 12, 2000.

The issues presented arise out of Counts I, II, III and VII of Plaintiffs' Fifth Amended Complaint.*fn2 Counts I, II, and VII relate to the manner in which the City calculated the FLSA overtime rate for Officers prior to January 1, 1998. Count I alleges the City underpaid Officers for overtime due under the FLSA*fn3 by failing to include duty availability payments in the calculation of the regular pay from which overtime payments are derived.*fn4 The City agrees it failed to include the duty availability payments in the calculations. The City's defense is that it is entitled to a full credit for the overtime which it paid under the parties' collective bargaining agreement ("CBA"). Count II alleges the City failed to include holiday hours in determining whether Plaintiffs had reached the 171 hour FLSA threshold. Count III alleges the City failed to include hours worked by Officers in a voluntary special employment program towards the FLSA overtime threshold. Count VII alleges the City underpaid Officers by failing to include the duty availability allowance in its computations when "cashing out" compensatory time received for overtime. The Court will first discuss the issues related to Counts I, II and VII and then discuss the issues related to Count III.

The following constitute the Court's findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure. To the extent certain findings may be deemed to be conclusions of law, they shall also be considered conclusions. Similarly, to the extent matters contained in the conclusions of law may be deemed to be findings of fact, they shall be considered findings.

I. FINDINGS OF FACT

A. Collective Bargaining Agreement.

1. Plaintiffs are present or former police officers in the Chicago Police Department ("CPD").

2. The City of Chicago is a municipal corporation organized and operating under the laws of the State of Illinois. The Chicago Police Department is an executive department of the City of Chicago created and operating pursuant to section 2-84-040 et seq., of the Municipal Code of Chicago. Section 2-84-040 of the Municipal Code established the office of the Superintendent of the CPD as the chief executive officer of the department. The Superintendent is authorized to act pursuant to section 2-84-040 and other sections of the ordinance. The City is an employer under the FLSA. 29 U.S.C. § 203(d). (Stip. ¶ 9).

3. Under the authority of the Illinois Public Labor Relations Act, the Fraternal Order of Police, Lodge No. 7 ("FOP") is the sole and exclusive collective bargaining representative for all sworn police officers below the rank of sergeant, excluding probationary officers, employed by the CPD in matters concerning wages, hours, and other terms and conditions of employment. (Stip. ¶ 10).

4. The City and the FOP have been parties to a collective bargaining agreement ("CBA") since 1981. (Comp. and Ans. ¶ 12).*fn5 At all relevant times, under the CBA, police officers were compensated at the rate of at least time and one-half for hours worked in excess of an officer's regular "tour of duty." In some instances, compensation was more than time and one-half, due to negotiated sections of the CBA. (Stip. ¶ 1).

5. The CBA provides for an annual salary based on pay grade and longevity. (CBA, App.A, pp. 112-113).

B. Computation of Overtime Rate of Pay and FLSA Rate of Pay Prior to January 1, 1998

6. Prior to January 1, 1998, the City paid the same overtime rate for both contract and FLSA overtime. (Stip. ¶ 6). This overtime rate was determined by dividing an officer's annual salary by 2,080 hours to obtain an hourly rate and then multiplying that amount by 1 .5. (Stip. ¶ 6). Prior to January 1, 1998, this rate did not include the duty availability allowance in its calculation of the regular rate used for deriving overtime payments under the FLSA.

C. Duty Availability Allowance.

7. The CBA requires that police officers receive a "duty availability allowance" as compensation for being available to perform on the job at certain specified times. (CBA § 20.13).

8. For the years 1995 and 1996, every officer received a quarterly duty availability allowance of $455, which amounted to an annual duty availability allowance of $1,820. (Stip. ¶ 7).

9. Beginning January 1, 1997, every officer received a quarterly duty availability allowance of $505, which amounted to an annual duty availability allowance of $2,020. (Stip. ¶ 7).

D. Computation of FLSA Rate of Pay After January 1, 1998

10. Beginning January 1, 1998, the City began to pay Plaintiffs an augmented FLSA overtime rate for FLSA overtime hours, which rate included the duty availability allowance in the allocation of the regular rate for FLSA purposes. (Stip. ¶ 5). The FLSA does not require payment of overtime until an officer works in excess of 171 hours in a designated 28-day FLSA period. (Stip. ¶ 2).

E. Contract Overtime.

11. The CBA often requires the payment of overtime for work hours before the employee reaches the 171 hour threshold. Thus, there are work hours for which overtime is paid under the CBA that are not FLSA overtime work hours. (Stip. ¶ 2).

12. On designated holidays the Officers received premium pay for the hours worked. (Comp. and Ans. ¶ 19). Prior to January 1, 1998, these hours were not included by the City as hours worked towards the 171 hours necessary in any given work period to reach the overtime threshold for purposes of the FLSA. (Burke Aff. ¶ 3).

13. Furthermore, in some instances, the CBA provides for overtime to be paid for hours worked prior to reaching the FLSA 171 hour threshold during a given work period. (Stip. ¶ 2). Specifically, Officers received contract overtime any time they worked in excess of their regular "tour of duty," or more than 8 hours in a day, or more than 5 consecutive days from Sunday to Saturday. (CBA § 20).

14. Additionally, Officers received contract overtime when they were called back for additional duty beyond their regularly scheduled work hours, for attending court, or for work on holidays or their days off. (CBA § 20).

F. Compensatory Time Under Contract.

15. Pursuant to the CBA, Officers receive compensatory time for various hours worked. (CBA § 20). Moreover, an Officer who resigns, retires or dies, receives payment for all unused compensatory time at the Officer's regular rate of pay. (Comp. and Ans. ¶ 21).

16. The wages paid out for compensatory time are the same whether the compensatory time was earned according to the CBA or mandated by the FLSA. (Comp. and Ans. ¶ 22).

17. The "duty availability allowance" is not included in the calculation of the regular rate used to "cash out" compensatory time. (Comp. and Ans. ¶ 22).

G. Time Periods Involved.

18. The broadest possible relevant time period for Counts I and II begins July 16, 1995, which is three years prior to the filing of the original complaint. The relevant period for these counts ends December 31, 1997, which was the last date on which the City paid Plaintiffs at the same overtime rate for contract overtime and FLSA overtime. (Stip. ¶ 3).

19. During the relevant time period, the 28-day FLSA period for the Chicago Police Department tracked the police operational periods, which ran for 28 days beginning on a Thursday and ending on a Wednesday. Each Plaintiff worked a regular "tour of duty" in an FLSA period that varied from 18 days (144 hours), to 19 days (152 hours), to 20 days (160 hours), to 21 days (168 hours), to 22 days (176 hours). When a Plaintiff worked a 22-day (176 hours) regular "tour of duty," the Officer automatically received additional half-time for the hours from 171 to 176. (Stip. ¶ 4).

20. Beginning January 1, 1998, the City changed the FLSA period, such that every Officer's normal "tour of duty" was standardized to be 160 hours in every FLSA pay period. This was done by starting the 28-day FLSA period on a Sunday and ending on a Saturday. (Stip. ¶ 5).

II. ISSUES PRESENTED

Only Counts I, II, III and VII of Plaintiffs' fifth amended complaint are currently before the Court. The FLSA requires overtime be paid at a rate of time and one-half the Officer's regular rate of pay. The FLSA defines the regular rate of pay. Under the terms of the CBA, Officers receive a "duty availability allowance" each quarter to compensate them for being available to perform on the job at certain specified times. Counts I and VII hinge on the common issue concerning the inclusion of the "duty availability allowance" in the calculation of the regular rate of pay.

Count II alleges the City underpaid Officers by not including holiday hours towards the 171-hour threshold.

Count VII involves the "duty availability allowance" not being included in the calculation of the regular rate of pay when officers were "cashed out." Officers receive compensatory time pursuant to both the CBA and the FLSA. An Officer who resigns, retires or dies receives payment for all unused compensatory time. This payment of unused compensatory time is referred to as "cashing out."

Counts I, II and VII raise the following issues for decision by the Court:

1) whether the duty availability allowance should be included in determining the FLSA regular rate of pay;
2) whether the City is entitled to a credit under the FLSA for the payment of contract overtime;
3) whether a credit, if any, should be based upon pay periods or the entire ...

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