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Sick leave buy-back compensation is FLSA "pay"
February 10, 2006 by Ross Runkel at LawMemo
Sick leave "buy-back" monies should be included in an employee's "regular rate of pay" under the Fair Labor Standards Act (FLSA), says the 8th Circuit. Acton v. City of Columbia (8th Cir 02/08/2006).
(The 6th Circuit holds to the contrary. Featsent v. City of Youngstown, 70 F.2d 1456 (6th Cir 1995).
Section 207(e) of the FLSA provides that "all remuneration for employment paid to, or on behalf of, the employee" must generally be included in the employee's regular rate of pay.
The employer had a program whereby employees could buy back certain unused sick leave. The court held that "sick leave buy-back monies constitute remuneration for employment" under Section 207(e) and should thus be included in an employee's "regular rate of pay."
The court relied in principal part on 29 CFR Section 778.223, which addresses whether monies paid to employees for remaining on call are excluded from the regular rate of pay under Section 207(e)(2). The court observed that "[t]he plain language of the regulation makes clear that all monies paid as compensation for either a general or specific work-related duty should be included in the regular rate." Based on that observation, the court then reasoned that "[t]he critical question before this court is whether sick leave buy-back monies compensate the [employees] for some specific or general duty of employment." The court determined that the answer to that question is "yes," stating "the primary effect of the buy-back program is to encourage [employees] to come to work regularly over a significant period of their employment tenure." Recognizing consistent attendance to be a general duty of employment, the court reached its ultimate conclusion that sick leave buy-back monies constitute remuneration for employment under Section 207(e).
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Editor: Ross Runkel, Professor of Law Emeritus. email Ross@LawMemo.Com, Phone 503-399-8028. Copyright LawMemo, Inc.
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