County Delegation Asks Congress to Alter Overtime Law : Labor: They say court rulings allowing salaried workers to sue for back overtime pay could devastate local government.

San Diego officials Wednesday asked a congressional panel for relief from federal labor laws originally intended for hourly employees that allow salaried municipal executives and administrators to file for millions of dollars in back overtime pay.

County Supervisor Leon Williams was one of several state and local government representatives who argued that a series of “fuzzy” court rulings had blurred the distinction between salaried and hourly workers and spawned a growing number of lawsuits seeking retroactive pay from government employers.

The Department of Labor estimated the back pay liability could total “in the billions” nationwide and prove “disastrous” for state and local governments already facing severe budget problems.

San Diego County has already lost two such overtime lawsuits and expects similar outcomes in two pending cases. Williams warned that if the law is not changed, San Diego County alone may be liable for a potential $23 million in back wages.

Those dire predictions were called “hysterical” by labor union witnesses, including Jonathan Haitt, general counsel of the Service Employees International Union, which won a court battle with San Diego County over the classification of deputy probation officers.

The unions claim public employers are simply trying to avoid costly overtime provisions by pushing legislation that would remove “salary tests” that have been used by the Labor Department to determine which workers can be exempted from the rules spelled out in the federal Fair Labor Standards Act.

Rep. Austin J. Murphy (R-Pa.), chairman of the subcommittee on labor standards, seemed sympathetic to the unions’ argument and several times directed pointed questions to Williams and other government witnesses over the fairness of government pay policies.

But near the end of the 3 1/2-hour hearing, Murphy offered a possible compromise. Rather than push for the broader reforms sought by state and local governments, Murphy suggested that he would go along with an annual salary cutoff figure of about $50,000 to $60,000 to determine workers’ exempt status.

John Sansone, deputy county counsel who accompanied Williams to Washington, told Murphy that the county would be willing to consider such a solution.

After the hearing, Williams felt he had made progress in changing Murphy’s view of the issue.

“He went from not understanding our problem to understanding it a little bit,” observed Williams. In 1985, the U.S. Supreme Court said that the Fair Labor Standards Act could be applied to state and local governments. Since that time several court rulings have refined various technical points.

But a U.S. 9th Circuit Court of Appeals ruling in July, 1990, in a case from Kern County, sent shock waves through many state and local governments.

The decision said that any group of employees “subjected to” deductions in their pay--even if none were made--were not exempt from the overtime provisions.

Virtually all public employers are prohibited--some by constitutional requirements--from paying for time not worked. So any pay policy that allowed “docking” of pay, even for absences of less than a day, transformed salaried workers into hourly workers, the court reasoned.

The court’s jurisdiction includes California, Arizona, Alaska, Hawaii, Idaho, Montana, Nevada, Oregon and Washington.

The Supreme Court let the ruling stand in January, 1991, opening the door to a number of lawsuits across the country.

The Labor Department agreed with public employers, who complained that the court ruling could be ruinous to their recession-battered budgets. The department issued a ruling clarifying the court ruling’s impact in future cases, but new legislation is needed to make the policy retroactive.