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
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
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. ¶
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
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
Counts I, II and VII raise the following issues for decision by
1) whether the duty availability allowance should be
included in determining the FLSA regular rate of
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 liability period; and
4) whether the City must include holiday hours in
calculating the 171-hour FLSA threshold.
Count III of Plaintiffs' complaint involves a voluntary
supplementary work program ("VSEP") in which Officers can work in
a law enforcement capacity for the Chicago Transit Authority
("CTA") and the Chicago Housing Authority ("CHA"). The hours
worked in this program are not counted towards the 171-hour FLSA
threshold. Plaintiffs claim these hours should be counted. The
City claims the
hours should not be counted because the programs are exempt.
Count III raises the following issues for decision by the
5) whether the City's VSEP falls within the statutory
exemption of 29 U.S.C. § 207(p)(1);
6) whether the City is a separate and independent
governmental entity from the Chicago Housing
Authority ("CHA"); and
7) whether the City is a separate and independent
governmental entity from the Chicago Transit
III. CONCLUSIONS OF LAW
This action arises under the Fair Labor Standards Act,
29 U.S.C. § 201, et seq. This Court has jurisdiction pursuant to
28 U.S.C. § 1331.
B. Count I and VII — Duty Availability Allowance Issue
The FLSA was enacted to improve "labor conditions detrimental
to the maintenance of the minimum standard of living necessary
for health, efficiency, and general well-being of workers."
29 U.S.C. § 202(a). In furtherance of this policy, the FLSA requires
non-exempt employers to pay their employees overtime compensation
at a rate of one and a half times their regular hourly wage for
each hour worked in excess of forty hours per week.
29 U.S.C. § 207(a). A special provision exists for public employees working
in law enforcement activities. 29 U.S.C. § 207(k). The FLSA does
not require the payment of overtime until an Officer works in
excess of 171 hours in a designated 28-day FLSA period.
28 U.S.C. § 207(k)(1); 29 C.F.R. § 553.230(c).
In computing FLSA overtime, the first step is to determine the
employee's "regular rate." "Regular rate" is defined to include
"all remuneration for employment paid to, or on behalf of, the
employee . . ." with seven exceptions. 29 U.S.C. § 207(e). Count
I alleges the City was required to include the duty availability
allowance as part of the numerator in calculating the regular
rate*fn6 from July 16, 1995, to December 31, 1997.*fn7 The City
concedes the "duty availability allowance" does not fall into one
of the seven exceptions and "should have technically been
calculated into the FLSA `regular rate.'" (City Tr. Br., p. 4).
Officers may accrue compensatory time under the CBA in lieu of
overtime compensation. Under the CBA, an Officer who resigns,
retires, or dies is entitled to receive payment for all unused
compensatory time. (CBA § 26.5). Plaintiffs assert in Count VII
that the City's failure to include the duty availability
allowance in the FLSA regular rate of pay calculation caused
Plaintiffs to be underpaid at the time they were cashed out. The
parties agree the resolution of County VII flows from the
resolution of Count I. If there is no rate violation in Count I,
there is no basis for liability on Count VII. (Stip. ¶ 8).
The inclusion of the duty availability allowance in the regular
rate of pay would have added between 87¢ and 97¢ per hour to the
overtime rate for FLSA overtime hours. (City Tr. Br. p. 3). The
City's defense to Counts I and VII is that it is
entitled to an FLSA credit that is more than sufficient to offset
C. FLSA Credits for Extra Compensation
Certain contractual overtime payments are creditable towards
deficiency in FLSA overtime payments:
Extra compensation paid as described in paragraphs
(5), (6), and (7) of subsection (e) of this section
shall be creditable towards overtime compensation
payable pursuant to this section.
29 U.S.C. § 207(h)(2).
Subsections (5), (6) and (7) provide in relevant part as
(5) extra compensation provided by a premium rate
paid for certain hours worked by the employee in
any day or workweek because such hours are hours
worked in excess of eight in a day or in excess
of the maximum workweek applicable to such
employee under subsection (a) of this section or
in excess of the employee's normal working hours
or regular working hours, as the case may be;
(6) extra compensation provided by a premium rate
paid for work by the employee on Saturdays,
Sundays, holidays, or regular days of rest, or on
the sixth or seventh day of the workweek, where
such premium rate is not less than one and
one-half times the rate established in good faith
for like work performed in non-overtime hours on
other days; or
(7) extra compensation provided by a premium rate
paid to the employee, in pursuance of an
applicable employee contract or
collective-bargaining agreement, for work outside
of the hours established in good faith by the
contract or agreement as the basic, normal, or
regular workday(not exceeding eight hours) or
workweek (not exceeding the maximum workweek
applicable to such employee under subsection (a)
of this section, where such premium rate is not
less than one and one-half times the rate
established in good faith by the contract or
agreement for like work performed during such
workday or workweek.
29 U.S.C. § 207(e)(5)-(7).