subject to" reduction because of a violation of disciplinary rules. And second, whether, under the applicable directives, the City imposes discipline upon Commanders for violations of "safety rules of major significance". The Court will address the latter question first.
(1) Safety Rules of Major Significance
The City argues that under its disciplinary policy, discipline is imposed only when there has been a violation of a major safety rule. It is undisputed that the City's disciplinary policy is contained in the Disciplinary Code of the Philadelphia Police Department ("Disciplinary Code"), dated November, 1982. The Disciplinary Code provides for a range of penalties up to and including suspension without pay for a wide array of violations. For example, under the Disciplinary Code, a Commander could be suspended without pay for, inter alia, allowing a prisoner to escape through carelessness or neglect, for being asleep on duty or for improper use, handling or display of firearms. (Stip. P 30 & Ex. 11). On the other hand, a Commander could also be suspended for up to five days for such seemingly minor offenses as refusal to obey proper orders from superiors, using profane or insulting language to superior officers, failure to be home without a legitimate reason, after reporting off sick, failure to obtain medical treatment or certificate while on sick leave when required, omitting, altering, or abbreviating title when addressing any superior officer, failure to properly salute when in uniform and changing residence without giving 24 hours prior notification. (Id.).
In the City's view, all of its disciplinary rules constitute major safety rules because the Police Department is a paramilitary organization, in which maintaining proper discipline is essential for the department to function properly. However, courts have properly rejected the notion that "'disciplinary infractions by law enforcement personnel could be construed as safety violations inasmuch as any breakdown in discipline may ultimately be seen to jeopardize public health.'" Shockley, 997 F.2d at 25 (quoting Pautlitz v. City of Naperville, 781 F. Supp. 1368, 1372 n.6 (N.D. Ill. 1992)). The Pautlitz court concluded, correctly in this Court's view, that such considerations would "find a more comfortable home on a legislator's agenda." Pautlitz, 781 F. Supp. at 1372 n.6.
Accordingly, courts have focused on the precise infractions for which discipline may be imposed and have not hesitated to conclude that the word "major" means what it says. In Shockley, for example, the Fourth Circuit concluded that a law enforcement officer's failure to report absences did not constitute a violation of a safety rule of major significance, and that the City's disciplinary policy, which permitted suspension without pay for such an infraction did not fall within the § 541.118(a)(5) exception. 997 F.2d at 25. Similarly, in Pautlitz, the court held that a law enforcement officer's acceptance of gratuities, in violation of department policy, did not constitute a violation of a "safety rule of major significance." Pautlitz, 781 F. Supp. at 1372 n.6. Like the violations at issue in Shockley and Pautlitz, many of the violations for which unpaid suspensions may be imposed under the Disciplinary Code cannot be defined as "safety violations of major significance". However, this conclusion does not end the inquiry.
(2) Whether an Actual Violation is Required?
Under the City's approach, the City does not lose the executive exemption unless it has actually docked one of the plaintiffs for a non-safety-related infraction. The City has produced evidence that none of the Commander plaintiffs were ever docked at all, let alone for violating a non-safety-related rule. (Defendant's Motion, Ex. N (Golden Aff., P 23)). The plaintiffs have not produced any evidence to rebut the City's evidence concerning whether any plaintiff was actually docked because of a disciplinary violation. Rather, they argue that the mere potential that their pay will be reduced for violations of general disciplinary rules mandates a conclusion that they are not exempt executive employees, but rather, are non-salaried employees under § 541.118(a).
The courts are split on this issue. Some courts have read the words "subject to" as meaning that any time there is the potential for reduction in pay due to an employee's violation of a general disciplinary rule, the affected employees are not paid "on a salary basis," and, therefore, are not exempt as executive employees. See, e.g., Shockley, 997 F.2d at 24; see also Kinney, 994 F.2d at 10-11 (holding that phrase "subject to reduction" encompasses plaintiffs' claims that employer's policy may theoretically result in reduction of salary based on quality or quantity of work); Michigan Ass'n of Gov't Employees, 992 F.2d at 85-86 (same); Abshire, 908 F.2d at 487 (same); Martin v. Malcolm Pirnie, Inc., 949 F.2d 611, 615 (2d Cir. 1991) (same), cert. denied, 121 L. Ed. 2d 222, 113 S. Ct. 298 (1992). Other courts have held that an employer does not lose the Section 13(a) exemption merely because there is a policy in place that theoretically could result in a covered employee being docked. See McDonnell, 999 F.2d 293, 297 ((holding that employees must show an actual loss of pay to benefit from partial day deduction exception); Atlanta Professional Firefighters Union, Local 134 v. City of Atlanta, 920 F.2d 800, 805 (11th Cir. 1991) (same); York, 944 F.2d at 242 (holding that absent evidence of an actual deduction in pay, summary judgment is improper).
The Court is persuaded that the "actual violation" approach advocated by the Fifth, Eighth and Eleventh Circuits is the better reasoned approach, especially in the context of a public employer, such as the City of Philadelphia. Accordingly, the Court holds that the Disciplinary Code does not deprive the City of the executive employee exemption.
c. The Effect of Paying Overtime to Commanders
The plaintiffs final challenge under the salary basis test involves the City's overtime payment practices with respect to Commanders. Specifically, the plaintiffs argue that because Commanders receive compensatory time pursuant to the CBA for time worked in excess of their daily shift, Commanders are not salaried employees under the FLSA. The plaintiffs have failed to cite any statutory or regulatory authority for their argument.
In fact, the plaintiffs' argument is contrary to the governing regulations. First, § 541.118(a) requires that the predetermined amount constitute "all or part " of the employee's compensation. 29 C.F.R. § 541.118(a) (emphasis added). Thus, at the very least, it is clear that the regulations do not prohibit increases in compensation because of the quality or quantity of work performed. Indeed, the principal regulation contemplates the possibility of such increases. Moreover, any doubt as to whether compensation may be paid in addition to salary is removed by § 541.118(b), which expressly provides that "additional compensation besides the salary is not inconsistent with the salary basis of payment." 29 C.F.R. § 541.118(b). Relying upon § 541.118(b), several courts of appeals that have addressed the issue have properly concluded that an employer does not lose the executive exemption merely because it provides compensatory time to its employees in addition to a fixed salary. See Michigan Ass'n of Gov't Employees, 992 F.2d at 84 n.3; York, 944 F.2d at 242.
Instead of addressing the potential applicability of § 118(b), the plaintiffs have directed the court to the Third Circuit's opinion in Brock as support for their position. In Brock, employees literally punched in and out on a time clock to record their hours worked. Further, although employees were "guaranteed" a minimum salary of $ 250 per week, they were not paid if they did not work at least 40 hours in a week. However, most employees easily met the $ 250 minimum, then received an hourly wage for additional time worked. See Brock, 846 F.2d at 181-82.
The Brock court found that the $ 250 minimum guarantee was a mere sham, and that the employees were actually paid by the hour. Id. at 184. This was based on the fact that the employees' actual take home salary varied tremendously and in exact correlation with the hours worked by the employee. Id. In other words, under Brock, "employees are not paid on a salary basis if the predetermined amount is so far below their actual compensation (calculated on an hourly basis) that the minimum is 'nothing more than an illusion.'" Michigan Ass'n of Gov't Employees, 992 F.2d at 84 n.3 (citing Brock, 846 F.2d at 183).
The facts in the present case are clearly distinguishable from those in Brock. In the present case, the Commanders' salaries are not the illusory salaries criticized in Brock, but rather are consistent. The parties have stipulated that "employees of the Philadelphia Police Department receive an annual salary which is paid on a bi-weekly basis." (Stip., P 20). The Commander plaintiffs themselves testified that they receive the same amount of pay each week regardless of the hours they work. (Defendant's Motion, p. 64. n.69) (setting forth deposition testimony). All of the evidence in the instant case indicates that Commanders receive a set salary predicated on their rank and tenure, not a highly variable amount predicated on the number of hours worked during the week. Thus, Brock is not controlling. In accordance with the reasoning set forth in Michigan Ass'n of Gov't Employees, the Court holds that the plaintiffs in Counts III and IV, that is, the Commander plaintiffs, meet the salary basis test.
2. The Duties Test
Each Commander plaintiff argues that his primary duty is not management, and that, accordingly, he is not an "executive employee". The Third Circuit has found the DOL's regulations to be instructive in defining the term "primary duty". See Guthrie, 722 F.2d at 1144. In Guthrie, the court cited § 541.103 as the defining standard. See id. Under Guthrie,
"a determination of whether an employee has management as his primary duty must be based on all the facts in a particular case. The amount of time spent in the performance of the managerial duties is a useful guide in determining whether management is the primary duty of an employee. In the ordinary case it may be taken as a rule of thumb that primary duty means the major part, or over 50 percent of the employee's time. Thus, an employee who spends over 50 percent of his time in management would have management as his primary duty. Time alone, however, is not the sole test, and in situations where the employee does not spend over 50 percent of his time in managerial duties, he might nevertheless have management as his primary duty if the other pertinent factors support such a conclusion. Some of these pertinent factors are the relevant importance of the managerial duties as compared with other types of duties, the frequency with which the employee exercises discretionary powers, his relative freedom from supervision, and the relationship between his salary and the wages paid other employees for the kind of nonexempt work performed by the supervisor."
Id. (quoting 29 C.F.R. § 541.103).
The current record does not enable the Court to determine, as a matter of law, whether the Commanders' "primary duty" is management. Whether a particular duty is managerial is a legal question "governed by the pertinent regulations promulgated by the Wage and Hour Administrator." Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 714, 89 L. Ed. 2d 739, 106 S. Ct. 1527 (1986). In contrast, the amount of time devoted to managerial duties, and the significance of those duties, present factual questions. See id. (concluding that deviation from 50% "rule of thumb . . . requires consideration of the factual circumstances for which a jury is more appropriate); Shockley, 997 F.2d at 26.
The City has offered generic job descriptions for each class of Commanders. The City has also offered the plaintiffs' deposition testimony, which would support a finding that the Commanders' actual duties are those set forth in their job descriptions. However, the Court cannot ascertain the percentage of work attributable from the evidence adduced by the City, nor can it determine each class of Commander's relative freedom from supervision or the relative importance of managerial duties as compared with other activities. These determinations must await a fuller airing of the evidence. Because the Court cannot determine whether Commanders meet the "duties test," it cannot determine, at this stage of the litigation, whether Commanders are exempt "executive employees" under Section 13(a).
G. Claims of Retired Commanders in Count IV
Alternatively, the City argues that it is entitled to summary judgment as to the claims of retired Commanders, which are contained in Count IV. The City argues that these employees have already been paid compensatory time in the form of salary at the time of their retirement, and that, accordingly, they are not entitled to any further relief. The City has not cited any authority for its argument. In any event, the City's argument is unpersuasive. Although the retired Commanders may well have received compensation for a portion of their compensatory time, it is not clear that they received all the compensation they were due. Accordingly, as in the case of the active Commanders, the retired Commanders' claims must be resolved at trial.
H. Liquidated Damages
The plaintiffs argue that they are entitled to summary judgment on the issues of liquidated damages, wilfulness, and attorney's fees under the FLSA. As the City correctly observes, the parties have agreed to bifurcate the issues of liability and damages. Presently before the Court are the parties motions for summary judgment regarding liability. Under the Scheduling Order currently in effect, the period for discovery as to damages has not ended. Thus, summary judgment on damages issues would be premature.
There is a genuine issue of fact as to whether the City adopted a 13-day work period pursuant to § 207(k). Further, there is a genuine issue of material fact as to whether the plaintiffs receive a daily 30-minute meal period, which should be deducted from their total number of hours worked. There is also a genuine issue of material fact as to whether, by preparing the daily roll call, sergeants and lieutenants "work" an extra fifteen minutes per day for which they receive no compensation. In addition, the existence of a genuine issue of material fact as to whether the Commanders' primary duty is management precludes the entry of summary judgment with respect to the Section 13(a) executive employee exemption. Finally, the plaintiffs have sought liquidated damages prematurely.
An appropriate Order follows.
AND NOW, this 7th day of September, 1994, upon consideration of the Defendant City of Philadelphia's Motion for Summary Judgment as to Liability, the Plaintiffs' Motion for Summary Judgment, the Defendant's response and the Plaintiffs' reply, IT IS HEREBY ORDERED that the Defendant's and the Plaintiffs' Motions are DENIED.
BY THE COURT:
HERBERT J. HUTTON, J.