It would seem like a simple question. If a public employee wants to use compensatory time off on a particular day, does the employer have to grant the day off? As straightforward as that question might seem, courts have tangled with the issue, and the Department of Labor (DOL) has recently withdrawn a proposed regulation that would have changed its long-held view on the issue.

Here’s the lay of the land. Comp time is and always has been an illegal form of compensation in the private sector. When the Supreme Court’s 1985 decision in Garcia v. San Antonio Metropolitan Transit Authority resulted in the FLSA being applied to cities and counties, Congress amended the FLSA to add a new Section 7(o) to the law. Section 7(o) allowed a limited form of comp time, but only in the public sector and only under some conditions.

One of those conditions dealt with the use of comp time. Section 7(o)(5) states that employees “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.” That wording gives us two standards: “Reasonable period” and “unduly disrupt.” But what do those standards mean?

The DOL filled in the gaps in 1987 when it issued regulations interpreting Section 7(o). According to 29 C.F.R. § 553.25, “When an employer receives a request for compensatory time off, it shall be honored unless to do so would be ‘unduly disruptive’ to the agency’s operations. Mere inconvenience to the employer is an insufficient basis for denial of a request for compensatory time off. For an agency to turn down a request from an employee for compensatory time off requires that it should reasonably and in good faith anticipate that it would impose an unreasonable burden on the agency’s ability to provide services of acceptable quality and quantity for the public during the time requested without the use of the employee’s services.”

The DOL’s regulation would seem quite clear, and one would think it solved the issue. And the first few courts addressing the issue all agreed that the regulation was within DOL’s authority to enact. But then confusion set in when two federal courts of appeals, in 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), rejected the DOL’s position. The Houston and Mortensen courts thought that Section 7(o) itself was completely clear, and that all an employer had to do was to grant a compensatory time day off within a reasonable period of the date the employee requested off.

Put another way, Houston and Mortensen say that if an employee requests November 15 off to attend his daughter’s wedding, the employer need not grant November 15 off, and need not have a reason for denying the request, so long as it grants another day off within a reasonable period of November 15. What does “reasonable period” mean to these courts? As far as Mortensen was concerned, any time within one year of the date requested off. Under Mortensen, the employer would be free to deny the request for November 15 off if it granted the employee the following April 22 off, without regard to whether the employee actually wanted April 22 off.

Then the next two federal appeals courts to weigh in on the issue, Heitmann v. City of Chicago, 560 F.3d 642 (7th Cir. 2009) and Beck v. City of Cleveland, 390 F.3d 912 (6th Cir. 2004), rejected Houston and Mortensen, and held that the DOL got it right. Under Heitmann and Beck, if the employee wants November 15 off on comp time, the employer must grant the request unless it can show that undue disruption to its operations would flow from granting the request. In addition, the fact that the employer will have to backfill for the absent employee with another employee on an overtime basis does not amount to an undue disruption sufficient to deny the comp time request.

Even complicating the matter more, on July 28, 2008, in the waning days of the presidential administration of George W. Bush, the DOL issued a proposed rule change that would have altered Section 553.25 to adopt the Houston and Mortensen standards. Even some employers, who very much supported the rule change, found the DOL’s notice of proposed rulemaking rather unusual. The Notice cited only Houston and Mortensen, ignored Beck entirely, and failed to recognize the decisions of several trial courts (including the trial court in Heitmann), that rejected the Houston and Mortensen approach.

The good news for employers on the DOL front proved evanescent. The DOL failed to act on the proposed regulation before the Bush Administration left office, and the proposed regulation lingered for more than two and one-half years.

The lingering stopped on April 5, 2011, when the DOL withdrew the proposed regulation and adhered to its previous position. Here’s how the DOL announced its decision:

“The Seventh Circuit’s Heitmann decision, which finds support in the Sixth Circuit’s decision in Beck, indicates that the appellate courts are not as uniform in their reading of section 7(o)(5) as the Department understood them to be at the time of the proposed rule. The Department now views the courts of appeals as being split on the proper interpretation of 7(o)(5), with the Sixth and Seventh Circuits requiring agencies to grant the specific leave requested absent undue disruption, and the Fifth and Ninth Circuits requiring agencies to grant leave within a reasonable time of the leave requested unless doing so would create an undue disruption.

“The Department believes that the better reading of section 7(o)(5) is that it requires employers to grant compensatory time on the specific date requested unless doing so would unduly disrupt the agency. The statutory reading set forth in Houston and Mortensen, which requires that the employer grant compensatory time within a reasonable period of the date requested, essentially nullifies the ‘unduly disrupt’ provision of 7(o)(5). See Beck v. City of Cleveland, 390 F.3d 912 (6th Cir. 2005) (“to grant the City the unlimited discretion to deny compensatory leave requests relieves the City of establishing the undue disruption requirement imposed by Congress’); DeBraska v. City of Milwaukee, 131 F. Supp. 2d 1032 (E.D. Wis. 2000). Accordingly, in light of the recent appellate decision, and in consideration of the extensive comments received on this section, the Department has decided not to finalize the proposed revision to section 553.25(c) and (d) and to leave the current regulation unchanged consistent with its longstanding position that employees are entitled to use compensatory time on the date requested absent undue disruption to the agency.”

Eventually, one of three things will have to happen to reconcile the conflict on the comp time issue. Either (1) Congress will amend Section 7(o) to make the issue clear, (2) the Supreme Court will take a comp time case and resolve the issue (it declined the employer’s request to hear Beck), or (3) the courts that decided Houston and Mortensen could say something like “now that the DOL has clearly weighed in on the issue, we see that we were mistaken and we’re adopting the DOL’s approach.” The troubling thing is that none of these three alternatives seem likely. Until then, the rules for comp time use will vary depending upon where in the country the employer is located.

The above article has appeared in a previous issue of Public Safety Labor News and has been reprinted courtesy of Labor Relations Information System. These articles are for informational purposes only.