Request By:
Hon. Phillip Lewis
Post Office Box 915
Main Street
Hyden, Kentucky 41749
Opinion
Opinion By: Frederic J. Cowan, Attorney General; Anne E. Keating, Assistant Attorney General
In your letter to this Office, you requested an Opinion regarding the interpretation of Kentucky statutes governing the accrual by employees of the county of overtime or compensatory time for hours worked in excess of 40 hours a week. The Leslie County Fiscal Court is in disagreement with the Kentucky Labor Cabinet concerning the Cabinet's interpretation of KRS 337.010, .285 and accompanying regulations.
You explained that the Fiscal Court has permitted certain county employees to work in excess of 40 hours per week, and has granted the employees compensatory time, hour-for-hour, for the number of hours worked over 40 per week. In the situations presented, the employees agreed with the employer to accept compensatory time, on an hour-for-hour basis. Nevertheless, the Labor Cabinet intervened, and instructed the County to pay the workers overtime at the rate of one-half the normal rate of pay for the compensatory time already accrued, and advised the County Fiscal Court that employees may not be authorized to work in excess of 40 hours per week in exchange for hour-for-hour compensatory time. You ask, in particular, whether the County may allow employees to work in excess of 40 hours in a week, and whether the County may compensate the employees to be remunerated with compensatory time on an hour-for-hour basis.
It is the Opinion of this Office that the Leslie County Fiscal Court is subject to the Federal Fair Labor Standards Act, hereinafter FLSA, 29 USC 207, as well as the Kentucky Labor Law, KRS 337.285, and accompanying regulations, governing compensation of employees for overtime hours. Both federal law and state law require compensation for hours worked over 40 at the rate of one and one-half times the rate at which the individual is employed. While FLSA provision 29 U.S.C. 207(o) permits compensation by states and political subdivisions for overtime hours by compensatory time off, KRS 337.285 does not. State law controls in the situation presented.
It is well established that FLSA requires employers, including state and local governments, to pay employees for overtime worked.
Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528, 105 S. Ct. 1005, 83 L. Ed. 2d 1016 (1985). Federal law requires that an employer compensate an employee who works for a workweek longer than 40 hours at a rate not less than one and one-half times the regular rate at which he is employed. 29 U.S.C. 207 (a)(1).
To the extent that KRS 337.285 requires that an employer compensate an employee at the rate of one and one-half times the hourly wage rate at which the individual is employed for hours worked beyond 40, the Kentucky standard is no more stringent than the federal standard. 29 U.S.C. 207 Sec.(a)(1). To the extent that KRS 337.285 requires that employers compensate employees in wages for employment in excess of 40 hours in a work week, rather than grant compensatory time off, the Kentucky standard is more stringent than the federal standard. FLSA allows an employee of a state or political subdivision, under certain conditions, to be compensated for hours worked over 40 with compensatory time off. 290 U.S.C. 207(o).
This Office has previously opined that KRS 337.285 requires compensation in wages for overtime hours rather than compensatory time. OAG 75-216 and OAG 79-296. Moreover, the definition of "wages" set forth in KRS 337.010(1)(c) includes:
any compensation due to an employee by reason of his employment, such compensation to include salaries, commissions, vested vacation pay, overtime pay, severance or dismissal pay, earned bonuses and any other similar advantages agreed upon by the employer and the employee or provided to employees as an established policy; such wages to be payable in legal tender of the United States or checks on banks convertible into cash on demand at full face value, subject to such allowances made in this chapter . . . .
(Emphasis added.) This definition does not include compensatory time off in exchange for overtime hours, but only legal tender or checks convertible into cash.
The relation of FLSA to other laws is set forth in Section 218 of the Fair Labor Standards Act which states, in pertinent part:
(a) No provision of this chapter or of any order thereunder shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter or a maximum workweek lower than the maximum workweek established under this chapter. . . .
This provision has been interpreted to indicate that Congress did not intend to lower any labor standards existing in the several states when they happen to be higher than minimum standards established by FLSA for all of the states.
Divine v. Levy, 36 F.Supp 55 (La.D.C., 1940).
Upon comparison of KRS 337.285 with 29 U.S.C. 207, it is the Opinion of this Office that the state standard requiring overtime wages as opposed to accrual of compensatory leave imposes a higher standard than the federal standard through the method of payment, although the payment is at the same rate for hours worked over 40 hours per week. Accordingly, the state standard controls in the situation presented.
The Kentucky statute that defines entities covered by the provisions in KRS 337.285 is KRS 337.010 which states:
(1)(d) "Employer" is any person, either individual, corporation, partnership, agency or firm who employs an employee and includes any person, either individual, corporation, partnership, agency or firm acting directly or indirectly in the interest of an employer in relation to an employee; and
(2) As used in KRS 337.275 TO 337.325, 337.345 and 337.385 to 337.405 unless the context requires otherwise:
(a) "Employee" is any person employed by or suffered or permitted to work for an employer, but shall not include:
1. Any individual employed in agriculture;
2. Any individual employed in a bona fide executive, administrative, supervisory or professional capacity, or in the capacity of outside salesman, or as an outside collector as such terms are defined by administrative regulations of the commissioner
3. Any individual employed by the United States;
4. Any individual employed in domestic service in or about a private home. The provisions of this section shall include individuals employed in domestic service in or about the home of an employer where there is more than one (1) domestic servant regularly employed;
5. Any individual classified and given a certificate by the commissioner of workplace standards showing a status of learner, apprentice, handicapped worker, sheltered workshop employee, and student under administrative procedures and administrative regulations as prescribed and promulgated by the commissioner of workplace standards. This certificate shall authorize employment at such wages, less than the established fixed minimum fair wage rates, and for such period of time as shall be fixed by the commissioner and stated in the certificate issued to such person;
6. Employees of retail stores, service industries, hotels, motels, and restaurant operations whose average annual gross volume of sales made for business done is less than ninety-five thousand dollars ($ 95,000) for the five (5) preceding years exclusive of excise taxes as the retail level or if the employee is the parent, spouse, child or other member of his employer's immediate family;
7. Any individual employed as a babysitter in employer's home, or live-in companion to a sick, convalescing or elderly person whose principal duties do not include housekeeping;
8. Any individual engaged in the delivery of newspapers to the consumer;
9. Any individual subject to the provisions of KRS Chapters 7, 16, 27A, 30A, and 18A provided that the commissioner of personnel shall have the authority to prescribe by administrative regulation those emergency employees, or others who shall receive overtime pay rates as necessary for the efficient operation of government and the protection of affected employees; or
10. Any employee employed by an establishment which is an organized nonprofit camp, religious or nonprofit educational conference center, if it does not operate for more than seven (7) months in any calendar year;
The requirements for employers to follow in compensating employees for work weeks that are longer than 40 hours are set forth in KRS 337.285:
No employer shall employ any of his employees for a work week longer than forty (40) hours, unless such employee receives compensation for his employment in excess of forty (40) hours in a work week at a rate of not less than one and one-half (1 and 1/2) times the hourly wage rate at which he is employed. This provision does not apply to employees of retail stores engaged in work connected with selling, purchasing and distributing merchandise, wares, goods, articles or commodities or to employees of restaurant, hotel and motel operations, to employees as defined and exempted from the overtime provision of the Fair Labor Standards Act in Sections 213(b)(1), 213(b)(10) 213(b)(17) of Title 29, U.S.C. or to employees whose function is to provide twenty-four (24) hour residential care on the employer's premises in a parental role to children who are primarily dependent, neglected and abused and who are in the care of private nonprofit childcaring facilities licensed by the cabinet for human resources under KRS 199.640 to 199.670.
Clearly, "employer," as defined in KRS 337.010, encompasses the Fiscal Court of Leslie County. The question that remains is whether the employees in question qualify for the exemptions set forth in KRS 337.285: employees of retail stores, employees of restaurant, hotel and motel operations, employees as defined and exempted from the overtime provisions of FLSA, or employees who provide 24 hour residential care to children under the terms of the statute. Note that the definitions of "employee" and of employees who are exempt under FLSA are clarified, in addition, in 803 KAR 1:065-070. Additional information on exclusions from overtime provisions may be found in 803 KAR 1:075-080. It is the responsibility of the employer to determine whether the exemptions apply in accordance with the regulations.
In conclusion, Leslie County may continue to allow employees to work in excess of 40 hours per week, but, in compliance with 29 USC 207(a)(1) and KRS 337.285, the County must compensate employees who do so at the rate of one and one half times the hourly wage rate at which the individuals are employed, and, in compliance with KRS 337.285, the County must compensate the employees in wages, not in compensatory time off.