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HomeMy WebLinkAbout48-85 RESOLUTION (5)• 1 RESOLUTION NO. 48-85 SCANNED - A RESOLUTION URGING CONGRESS 10 AEOFT A BILL EXEMPTING STATE AND LOCAL EMPLOYEES FROM THE FAIR LABOR STANDARDS ACT (FLSA). WHEREAS, the Fair Labor Standards Act (FLSA) has been held by the United States Supreme Court to apply to compensation paid by States and local governments to their employees to the extent that application of the FLSA does not interfere with the federalism -based freedom of States and local governments; and, WHEREAS, existing compensation and job scheduling arrangements and agreements best serve the public needs of the City of Fayetteville, Arkansas and both City officials and City employees wish to retain that system. NUR, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF FAYEZTEVILLE, ARKANSAS: Section 1. That the Board of Directors hereby urges the entire Arkansas Congressional Delegation, as well as the Chairman of the Subcommittee on Labor Standards of the House Education and Labor Corrmittee, and the Subcommittee on Labor of the Senate Labor and Human Resources Committee, to each endorse and introduce the proposed bills attached hereto as Exhibits "B", "C" and "D" and insert them in the Congressional record along with the fact that if one of these bills is not adopted it will cost the City of Fayetteville, Arkansas thousands of dollars per year in overtime costs plus a large sum in changing City records to meet FLSA requirementS:' Section 2. A copy ,of this resolution and the attached bills shall be forwarded to the National Institute of Municipal Law Officers, 1000 Connecticut Avenue, N.W., Washington, D.C. 20036. PASSED AND APPROVED this 21 day of APPED;)R By. • -(_\ • Jr!, • 4AITE§T.4: Clerk May , 1985. • PROPOSED LEGISLATION EXEMPTING ALL STATE AND LOCAL GOVERNMENT 7 EMPLOYEES FROM THE ELSA An Act to amend the Fair Labor Standards Act of 1938 to exclude from coverage employees of States and political subdivisions of States. Section 1. This Act may be cited as the Fair Labor Standards Act Amendments of 1985. Section 2. Whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the section amended or repealed is a section or provision of the Fair Labor Standards Act of 1938 (29 U.S.C. §§201-219). Section 3. Section 3(e)(2)(C)1 is repealed. Section 4. Section 3(x)2 is amended by striking the words "the government of a State or political subdivision thereof" and striking the words "a State or a political subdivision of a State; or any interstate governmental agency." Section 5: This Act shall be effective as of February 19, 1985. 129 U.S.C. §203(e)(2)(C). 229 U.S.C. §203(x). EXHIBIT 8 PROPOSED LEGISLATION CODIFYING THE SECRETARY OF LAROR'S EXEMPTION REGULATIONS An Act to amend the Fair Labor Standards Act of 1938 to exclude from coverage certain emoloyees of States and political subdivisions of States. Section 1. This Act may be cited as the Fair Labor Standards Act Amendments of 1985. Section 2. Whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the section amended or repealed is a section or provision of the Fair Labor Standards Act of 1938 (29 U.S.C. §§201-219). Section 3. Section 3(e)(2)(C)*1 is amended by striking the final "." and substituting therefor the following: adding the following: 11 • (iii) who oerforms the following functions: schools, hospitals, fire prevention, police protection, sanitation, public health, parks and recreation, libraries, museums. and" and Section 4. This Act shall be effective as of February 19, 1985. *1 29 .S.C. §203(e) (2) (C). EXHIBIT C ,PROPOSED LEGISLATION DIRECTING THE SECRETARY OF LABOR TO CONTINUE7ITO ENFORCE HIS EXEMPTION REGTILATIONS Section 1. This Act may be cited as the Fair Labor Standards Act Amendment of 1985. Section 2. The Secretary of Labor and the Administrator of the Wage and Hours Division of the Department of Labor are hereby directed to retain and continue to enforce the regulations issued on December 21, 1979, 44 Federal Register 75630, now codified as Title 29, Code of Federal Regulations §§775.2-775.4, from February 19, 1985 until such time as Congress and the President have had an opportunity to consider the scope of the coverage under the Fair Labor Standards Act of 1938, 52 Stat. 1060, as amended, for employees of nonfederal public agencies and have given further direction to .1 the Secretary and Administrator. Section 3. This Act will be effective as of February 19, 1985. • EXHIBIT D • MEMORANDUM FOR ALL NIMLO MEMBERS ON A PROPOSED LEGISLATIVE AND LITIGATION REPSONSE TO GARCIA v. SAN ANTONIO METROPOLITAN TRANSIT AUTHORITY The February 19, 1985, decision by the Supreme Court of the united States in Garcia v. San Antonio Metropolitan Transit Authority, Nos. 82-1913 and 82-1951, has caused a great deal of uncertainty for municipal attorneys, local government personnel managers and others involved in determining the scope and method of compliance with the federal requirements for overtime pay in the Fair Labor Standards Act. Resolution of the uncertainty in favor of full compliance by all state and local governments for all employees (except those managers and administrators exempt under the same rules long ap- plied in the private sector) will be too costly. When we presented National League of Cities v. Usery to the Supreme Court in 1975, an International City Management Association estimate was given to the Court that compliance then among cities over 10,000 in population would cost well over Si billion per year. Considering inflation and the increase in the public sector work force in the intervening decade, an estimate of a $1.5 billion annual cost of full compliance would not be unrealistic. To get specific figures, ICMA is preparing a new and undated estimate of the cost of full compliance, and we eagerly await it for use in the course of action proposed below. The remainder of this memorandum explains the issues settled, and the issues left unresolved, in Garcia. It explains the posi- tion of the federal Labor Department in enforcing the Fair Labor Standards Act, and the necessity of a combined program of legis- lative and litigation activity to give effect to the federalism - based protections of state and local governments which the Court reaffirmed in Garcia. The Issues In Garcia The only issue presented in Garcia was whether local transit workers constitutionally could be covered under the Fair Labor Standards Act. An affirmative answer to that question did not require overruling National League of Cities v. Usery, 426 U.S. 833 (1976). Therefore, Garcia, in overruling National League, stands for more than a declaration that transit workers are suhject to federal overtime regulation, and, what Garcia stands for has produced great uncertainty among local government lawyers and administra- tors. This uncertainty can be resolved only by legislation or further litigation under the Fair Labor Standards Act. Some have seen Garcia as declaring that local governments no longer have a special status, or a special protection from federal government regulation or interference, based on the federal struc- ture of the government as set out in the Constitution. That is not what the Court said in Garcia. Quite the contrary. In rejecting the "traditional government function" test for such federalism - based protection, the Court in Garcia reaffirmed the broad federal- ism principles of National League in these words: "Our examination of this 'function' standard applied in these and other cases over the last eight years now persuades us that the attempt to draw the boundaries .7 -2- of state regulatory immunity in terms of 'traditional governmental function' is not only unworkable but is inconsistent with established principles of federalism, principles on which National League of Cities pur- ported to rest. That case, accordingly, is overruled." Slip op., at 2. What the court in Garcia did was to reject a ludicially-created governmental -proprietary distinction as a workable method of enforc- ing the Constitution's federalism. The Court then rejected any history -based test for the federalism protection. Finally, the Court concluded that whatever test was developed should not be judge-made at all. The Court said: "The problem is that neither the governmental/proprietary distinction nor any other that purports to separate out important governmental functions can be faithful to the role of federalism in a democratic society. The essence of our federal system is that within the realm of autho- rity left open to them under the Constitution, the States must be equally free to engage in any activity that their citizens choose for the common weal, no matter how un- orthodox or unnecessary anyone else -- including the judi- ciary --deems state involvement to be. Any rule of state immunity that looks to the 'traditional', 'integral,' or necessary' nature of governmental functions inevitably invites an unelected federal judiciary to make decisions about which state policies it favors and which ones it dislikes." Slip op., at 17. The Court then considered whether meaningful standards could be set out for Congress to use in preserving the federalism guaran- tees for state and local governments. The Court here threw up its judicial hands, refusing to specify rules for Congress to follow: "We are convinced that the fundamental limitation that the constitutional scheme imposes on the Commerce Clause to protect the 'States as States' is one of process rather than one of result. Any substantive restraint on the exercise of Commerce Clause powers must find its justification in the procedural nature of this basic limitation, and it must be tailored to compensate for possible failings in the national political process rather than to dictate a 'sacred province of state autonomy.'" Slip on., at 25. This passage has been criticized as an abdication by the Court of its power and responsibility of judicial review of congressional action, first established in Marbury v. Madison. That was the argument of San Antonio in seeking rehearing in Garcia, but that rehearing was denied on April 15. This passage has also been interpreted as a negative declara- tion that there is no federalism -based protection for state and -3 -- local governments, either from the Fair Labor Standards Act, from federal labor legislation generally, or from federal leaislation grounded in the Commerce Clause. This reading of Garcia is in- correct, as the Court's restatement of the refusal to impose judicial standards makes clear: "Of course, we continue to recognize that the States occupy a special and specific position in our constitu- tional system and that the scope of Congress' authority under the Commerce Clause must reflect that position. But the principal and basic limit on the federal commerce power is that inherent in all congressional action -- the built-in restraints that our system provides through state participation in federal governmental action." Slip op., at 27. What the Court actually declined to do in Garcia is best expressed in an earlier passage from the Court's opinion: "We doubt that courts ultimately can identify principled constitutional limitations on the scope of Congress' Commerce Clause powers over the States merely be relyina on a priori definitions of state sovereignty." Slip op., at 19. When these aspects of Garcia are put together, the decision can be read as expressing confidence in Congress' ability to exer- cise its responsibility to preserve federalism. The opinion also can be read as refusing to set limits on Congress' striking the federalism balance, but retaining the judicial power to review and strike down an unconstitutionally placed balance. That judicial determination will depend, not on a priori definition of sovereignty, but on the financial and qualitative impact of a particular federal regulation on state and local governments. Otherwise put, a billion dollar cost was unconstitutional in National Leaaue, and we are con- fident the Court, faced again with a similar impact, would strike. similar federal legislation down on federalism grounds again. The impact of FLSA coverage is not simply one of cost. In order to avoid unnecessary overtime cost, state and local govern- ments will have to change schedules and other features of provid- ing government services. Many of the service areas with the greatest overtime cost - and, thus, the greatest dislocation in service delivery - are those most critical to citizens and resi- dents. Police and fire protection fit this pattern, as do such seasonal emergency services as snow removal and flood control. Moreover, an increased cost for these services will necessarily force governments to eliminate other services, such as summer youth employment, altogether. Put together, the nature of this unconstitutional federal interference can be measured in dollars• rather than merely by functional labels. That approach is neces- sary, because the Supreme Court has rejected claims of state immunity from small interference in very important functional areas. Massachusetts v. United States, 435 U.S. 444 (1978). (state police aircraft). However, the critical nature of the -4- functions affected most by FLSA coverage, and the qualitative impact of the power of state and local government officials to decide for themselves what services to provide and how to provide them, still. will be important in any legislative or litigation advocacy. Issues Left Unresolved After Garcia One thing the Court did not consider in Garcia was the fact or ✓ alidity of the exercise by Congress of a federalism -based halance under the Fair Labor Standards Act itself in areas other than transit. Under section 602 of the 1966 Amendments to the Act, Congress has delegated to the Secretary of Labor (and the Secretary's Admini- strator of the Wage and Hour Division) the power to publish rules filling in the gaps in the Act. With respect to state and local governments, the Secretary and Administrator have done so, in 29 C.F.R. Part 775. Those regulations declare many important and costly functions of state and local government exempt from the Act on constitutional grounds. The functions are: schools and hos- pitals, fire prevention, police protection, sanitation, public health, parks and recreation, libraries, and museums. 29 C.F.R. §775.4. Other government functions are declared not exempt and, t herefore, sublect to the overtime provisions of the Act. 29 C.F.R. §775.3. Transit is one of the non-exempt functions. These regulations were not considered by the Court in Garcia, because only the transit function was before the Court. The Court did note that the regulations took a position with respect to transit which was consistent with the position taken in the Garcia case itself by the Secretary of Labor: that a federal requirement that transit workers be paid overtime is not unconstitutional, in light of the long history of private operation of what are now municipal transit systems. Slip op., at 6. No other mention of t he regulations was made. Therefore, the Part 775 regulations are in effect now and they have not been invalidated by the Court in Garcia. Indeed, as to transit workers, the holding in Garcia is consistent with the balance struck in the regulations between exempt and non-exempt local government functions. We view the Part 775 regulations as precisely that legislative •and administrative balance of the federalism -based protection of state and local government operations against the federal regulatory interest in which the Court expressed confidence in Garcia. Department of Labor Position It would be a simple matter for the Secretary of Labor to leave his Part 775 regulations in place for state and local govern- ments to rely on. While that would not bar suits directly by employees, which are authorized under the Act, the Secretary's enforcement position has been persuasive to courts in deciding employee suits as well. However, officials of the Labor Depart- ment have indicated that they believe that Garcia removed their power under the Act to implement the federalism protections of the Constitution by determining certain functions of state and local government to be exempt from the Act. • • -5- We believe that this view of the Secretary's delegated power under the Act is incorrect. But, we expect the Secretary to act on this view. Under 29 C.F.R. §775.2, the Secretary is required to give 30 days notice of his intention to revoke or amend his Part 775 regulations. We expect that notice shortly. Thus, liti- gation will be necessary to preserve the protection and balance of the Part 775,regu1ations. Attached to this paper as Exhibit A is an expanded Analysis of the Powers of the Congress, the Department of Labor and the Courts to Preserve a Federalism -Based Exemption of State and Local Government Employees From The Fair Labor Standards Act. That analysis is the premise of the combined legislative and litigation strategy outlined below. Proposed Litigation and Legislation The most immediate, and most necessary, form of judicial relief is an injunction preserving the Part 775 regulations until their ✓ alidity, and the power and obligation of the Secretary to enforce t hem, can be determined. A prayer for such an injunction is not ✓ ipe until the 30 -day notice has been published in the Federal Register, and an injunction will lose its usefulness if the effec- t ive date of the revocation of the regulations has passed. There- fore, we must be prepared to file a case in a United States District Court as soon as the 30 -day notice of revocation is given, and to have a hearing on the injunction before the 30 days expire. The theory of such a case will be legally simple, and is as follows. The Part 775 regulations follow the procedure which the Court anticipated in Garcia. It is of no consequence that the regulations were initially issued under Court Order in National League, or that National League has been overruled. The regula- t ions represent the Secretary's expert assessment that some local government functions can, and some cannot, constitutionally be cov- ered under the overtime provisions of the Act. For the Secretary to refuse to strike a federalism balance at all is inconsistent w ith the constitutional analysis of the Court in Garcia. It is true that Congress could have struck such a federalism balance itself in the Act. We expect the Secretary in the suit to make this point. Therefore, we must show the District Court that Congress has been asked, and has declined, to codify the Part 775 regulations into the Act, or to enact an even broader exemp- t ion for state and local governments. We can do this by having two forms of bills to amend the Act introduced in Congress. Forms of amending legislation are attached to this paper as Exhibit B -D. Exhibit B repeals all coverage of state and local government employees, effectively undoing the 1974 Amendments to the ELSA. Exhibit C codifies the Part 775 regulations, and Exhibit D directs the Administrator to countinue to enforce the regulations until amending legislation can be considered by Congress. If any form o f legislation exempting state and local government employees from FLSA coverage or preserving the Part 775 regulations is e nacted, that will constitute a complete victory. However, we must he prepared to litigate if the Congress does not act, even if inaction is based on simple inattention. We will then be pre- pared to argue from Congress' likely inaction on either bill that Congress, quite consistently with the Act, has relied on the -6- • enforcement of the Secretary. Therefore, revocation of the regu- lations must be enjoined as there is no other way to preserve the premises of the Court in Garcia: that the Congress and its delegee, the Secretary, will preserve federalism in the very structure of the Fair Labor Standards Act. While the theory of such a post -Garcia case is legally simple, it is factuallly complex, just as National League was. In publish- ing the Part 775 regulations, the Secretary relied on the analysis of the Supreme Court in National League, as to the impact of the Fair Labor Standards Act on certain government functions listed in §775.4, and expressed the balancing test for all exempt functions In the language of National League. Now, National League has been overruled, and our task will be to demonstrate to the Court in this new case that, as a matter of fact, the Secretary's determinations were correct. That is, we must show that the exempt functions listed in S775.4 are those for which compliance with the overtime provisions of the Act would be the most costly, and for which local governments over 3 centuries have worked out unique local scheduling arrangements. To make this showing in defense of the validity of the §775.4 exemptions, we must demonstrate two things: (1) the cost of paying overtime in these exempt areas, and (2) the valuable arrangements which would be upset if local governments changed work schedules to avoid overtime. We made this demonstration in National League and won the case. We can do so again, but only if we make a similar factual showing. The factual showing would be similar to that made in National League, as to both cost, 426 U.S., at 846, and FLSA-forced changes in personnel practices, 426 U.S., at 846- 848; the figures and anecdotes which found their way into the Court's opinion came from a survey of participating local govern- ments such as we propose here. The questionnaire attached to this memorandum as Exhibit E will help each local government which wishes to participate in the litigation organize its facts in a way which will maximize the chances of obtaining the injunction and of preserving a federalism -based protection from the Act and from other federal labor regulation of state .and local governments. Some of the political organizations of state and local govern- ments and their officials are working on the post -Garcia problem, but not on a course of action calling for continued exemption of state and local government employees. These organizations are concentrating their efforts, with the Congress, the Executive Office of the President and the Department of Labor, to obtain a grace period for full compliance and full coverage of state and local government employees. That is very good, and will serve state and local governments if an exemption from coverage cannot be obtained. If the President or the Department has the power to grant a "grace" exemption period for compliance they have the power to keep the regulations in Part 775 in effect. We, however, are not convinced that "grace" exemption can he obtained, along the lines of the case we have described above. If local govern- ment attorneys don't organize such a legislative and litigation solution as is suggested herein no one else will. As a first step, we urge all state and local governments to contact their congressional delegations to urge enactment of a form the Legislation attached as Exhibits 13, C and D. If legislation is not enacted, local governments must consider litigation.