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Auer v. Robbins

Supreme Court of the United States · 1997 · Constitutional Law

Constitutional LawAdministrative LawLabor LawFLSAsalary-basis testexecutive administrative professional exemptionpublic-sector employeesdisciplinary deductions

Facts

Petitioners were sergeants and a lieutenant employed by the St. Louis Police Department who sought overtime pay under the FLSA. Respondents claimed petitioners were exempt as bona fide executive, administrative, or professional employees under regulations requiring, among other things, payment on a salary basis. Petitioners argued they were not paid on a salary basis because the police manual allowed disciplinary pay deductions for a range of rule violations related to the quality or quantity of work performed. The manual applied nominally to all department employees, and the record established one sergeant had received a one-time pay reduction under unusual circumstances as an alternative to termination for violating a residency rule.

Issue

Whether the Secretary of Labor's salary-basis test, including its bar on disciplinary deductions, is a permissible application of the FLSA exemption to public-sector employees. Also, whether employees are paid on a salary basis whenever deductions are theoretically possible, or only when there is an actual practice or a clear policy making such deductions significantly likely as a practical matter.

Rule

Because Congress did not directly address the precise question, the Secretary's application of the FLSA exemption is valid if based on a permissible construction of the statute. The Secretary's interpretation of his own salary-basis regulation is controlling unless plainly erroneous or inconsistent with the regulation; under that interpretation, pay is 'subject to' deductions only when, as a practical matter, there is either an actual practice of making deductions or a clear and particularized policy that effectively communicates a significant likelihood of deductions in specified circumstances. A one-time improper deduction under unusual circumstances does not necessarily destroy exempt status, and an employer may preserve exempt status by reimbursement and future compliance where the deduction was made for reasons other than lack of work.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

The Department of Labor files an amicus brief in overtime litigation involving salaried fire battalion chiefs in Phoenix, Arizona. The brief interprets a departmental regulation to mean that employees are paid on a salary basis unless, as a practical matter, they face deductions through either an actual practice or a clear policy making deductions significantly likely.

If the regulation's text can comfortably bear that interpretation, how should a court treat the agency's interpretation?

Explanation. The majority held that an agency's interpretation of its own regulation is controlling unless plainly erroneous or inconsistent with the regulation. It also held that an interpretation presented in an amicus brief may receive deference when it reflects the agency's fair and considered judgment rather than a post hoc rationalization. Because the phrase 'subject to' comfortably bears the agency's reading, deference is appropriate.