Municipal workers have been protected by the FLSA since the Supreme Court’s landmark 1985 decision in Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528 (U.S. 1985) (though public sector employers are permitted to pay premium overtime via compensatory time rather than cash wages under 29 U.S.C. § 207(o)). However, as evidenced by a recent federal court decision, FLSA exemptions still apply to public sector employees who meet the applicable exemption standards. Krumholz v. Northport, 2012 U.S. Dist. LEXIS 95393 (E.D.N.Y. July 10, 2012).

In Krumholz, a federal judge on Long Island (Judge Joseph F. Bianco) ruled that the Treasurer for the Village of Northport was properly classified as an exempt administrative employee based on her undisputed performance of the following duties:

  • Supervising and reviewing the work of the payroll clerk and the accounts payable clerk;
  • Signing off on the work of the persons whom she supervised;
  • Making final determinations as to what was accurate;
  • Autonomy in respect to those she supervised and reliance on her own judgment as to supervision and training;
  • Authority to sign checks;
  • Authority (along with the Village’s Mayor) to open banking accounts;
  • Reviewing others' work, assisting others with their work, performing bank reconciliations, making sure items were being posted properly in the ledger, making journal entries, correcting miscoding of accounts, and recording items of depreciation;
  • Supervising the drafting of the Village budget and reporting directly to the Commissioner of Finance, who was a member of the Board of Trustees;
  • Serving as department head for the line of employees under the Treasurer;
  • Authority to decide  where to invest the Village's excess money, using her judgment to make the decision and get the best interest rate for the Village.

“It is uncontroverted,” wrote the Court, “that, as the Village Treasurer, [Plaintff] had, inter alia, (1) responsibility for drafting the Village's budget, (2) the authority to open bank accounts and act as sole check signatory for checks under $5,000, and (3) supervisory authority over the work of the person in charge of accounts payable and the person in charge of payroll.” The Court observed is was also “uncontroverted that plaintiff had the power to decide where to invest the Village's excess money.” In Judge Bianco’s view, this established “as a matter of law, that [plaintiff’s] primary duties were ‘the performance of office or non-manual work directly related to the management or general business operations’ of the Village, and ‘include[d] the exercise of discretion and independent judgment with respect to matters of significance.’ (Quoting 29 C.F.R. § 541.200(a)(2)-(3).) Having disposed of the FLSA claim providing for federal jurisdiction in the case, the court declined to consider the Village’s counterclaim against her for converting in excess of $100,000 (which she alleged was owed her based on untaken “comp time”). 

Municipalities must be recognize and ensure compliance with their obligations under federal and applicable state and local wage-hour laws, and the unique rules pertaining thereto.