When Congress first enacted the Fair Labor Standards Act (FLSA) in 1938, it allowed only cash compensation for overtime. For many years, courts ruled that compensatory time off was an illegal form of compensation for overtime hours worked.

In 1985, in the wake of the Supreme Court’s decision in Garcia v. San Antonio Metropolitan Transit Authority, which upheld the application of the FLSA to cities and counties, Congress amended the FLSA to address the financial concerns that the FLSA imposed upon states and their political subdivisions by requiring the payment of overtime compensation. One of the 1985 amendments was to add a new section, 207(o) to the FLSA which allowed a limited form of compensatory time off.

Since 1985, courts have struggled with what Section 207(o) mandates about an employee’s right to use compensatory time off. The statute itself is quite brief, and says only that an employee who has accrued compensatory time off and who has requested to use the time “shall be permitted to use such time within a reasonable period after making the request if the use of the compensatory time does not unduly disrupt the operations of the public agency.”

In particular, the phrases “reasonable period” and “unduly disrupt” have proven difficult for courts to interpret. For example, if a police officer makes a request on January 1 to use compensatory time off, does the phrase “reasonable period” mean the time period from the date the compensatory time is requested up until the specific dates requested to be used as compensatory time? Or, as employers often argue, does the phrase “reasonable period” mean the time period between the date an employee makes a request and the dates when the employer can reasonably grant the request?

The difference in the two interpretations is not insignificant. Under the first interpretation, an employer would be required to grant the specific days off requested by the employee unless it could show that granting those days off would unduly disrupt its operations. Under the alternate interpretation, an employer need not grant the specific days off requested by the employee so long as it allowed the employee alternate days off within a reasonable period after the employee first requested to use compensatory time off.

Precisely this dispute played out in the United States District Court for the Northern District of Chicago in a case involving the compensatory time off practices of the Chicago Police Department. The City argued that Section 207(o) of the FLSA did not require it to grant specific compensatory time off dates requested by employees. According to the City, it was not required to even consider the specific date requested by officers, and it had the latitude to deny a request to use compensatory time off without determining whether granting the request on the specific date would unduly disrupt the employer’s operation.

The City’s argument was not without support. Two federal courts that had previously considered the issue, Houston Police Officers’ Union v. City of Houston, 330 F.3d 298 (5th Cir. 2003) and Mortensen v. County of Sacramento, 368 F.3d 1082 (9th Cir. 2004), had rendered decisions that roughly supported the City’s arguments. Three other courts had gone a different direction, and had held that an employee would be entitled to use compensatory time off on the specific date requested unless the employer could show undue disruption of its operations. Beck v. City of Cleveland, 390 F.3d 912 (6th Cir. 2004); Canney v. Town of Brookline, 2000 WL 1612703 (D.Mass. 2000); DeBraska v. City of Milwaukee, 131 F. Supp. 2d 1032 (E.D.Wis. 2000).

The Chicago Court sided with the police officers, and held that employees had the right to use compensatory time off on the specific dates requested unless an employer could show undue disruption. The Court relied heavily on the Department of Labor’s regulations and opinion letter in reaching its conclusion: “The DOL has indicated that ‘reasonable period’ includes an obligation on the employee to give adequate notice if he/she wants to use compensatory time on a particular day. The concept of reasonable notice is helpful, since it highlights the respective burdens upon the parties. Using this framework, once the plaintiff makes a request for compensatory time off, if it is made with reasonable notice, then the burden shifts to the employer to either grant the request, or to show why granting it would be ‘unduly disruptive.’ But, if the compensatory time off request is without reasonable notice, then it is axiomatic that such a request would be unduly disruptive to operations if granted, and the employer need not satisfy that burden.”

The Court underlined its disagreement with the Houston and Mortensen cases by focusing on the “undue disruption” requirement in Section 207(o): “Public employers who choose to award employees compensatory time instead of paying them cash for their overtime work have an obligation to allow employees to use that compensatory time. That obligation is tempered by two statutory exceptions: That the employee’s requested time off be within a reasonable period after the request is made, and that the use of compensatory time on a certain date does not unduly disrupt operations. However, Mortensen (as did Houston before it) failed to apply the undue disruption analysis in considering whether an employer may deny an employee’s request for compensatory time off on a specific date. In doing so, Mortensen and Houston improperly altered the balance between obligation and exemption that Congress struck, and authorized employers to deny compensatory time off requests for a reason otherthan provided in Section 207(o).”

The Court then was required to determine what the phrase “unduly disrupt” meant. The City cited its minimum staffing levels, arguing that to grant employees compensatory time off that would lower staffing below the minimum levels was necessarily an “undue disruption.”

The Court specifically held that Section 207(o) requires an employer to pay overtime to other employees to fill in for absent employees if the employer chooses to maintain minimum staffing levels: “In deciding whether a police officer’s compensatory time off request should be honored, the City will not seek out a replacement officer to keep staffing at acceptable levels. Moreover, the City refuses to authorize the payment of overtime in order to induce officers to act as replacements. These practices are flatly contrary to the DOL regulations, which explain the need to pay one employee overtime in order to allow another employee to use compensatory time is not sufficient to meet the undue disruption standard.”

The police officers in the Chicago case simply sought the declaration from the Court that the City’s compensatory time off practices violated the FLSA, and did not request any monetary damages. The Court’s opinion concludes by ordering the City and the police officers to discuss a procedure to determine “appropriate injunctive relief consistent with this opinion.”

Heitmann v. City of Chicago, 2007 WL 2739559 (N.D. Ill. 2007).

NOTE: It is seeming more and more inevitable that either the Congress or the United States Supreme Court will have to wade into the issue on the proper interpretation of Section 207(o). At present, whether and how employees are able to use compensatory time off varies tremendously depending upon which federal court has ruled in the area. Such an inconsistent application of the law is not likely to continue indefinitely.

This article appears in the November 2007 issue