The Fair Labor Standards Act (FLSA), which requires that all employees be paid minimum wage and overtime premium pay except those employed in bona fide administrative, executive, or professional positions, was enacted in 1938. It did not apply to public employees until 1985 when the U.S. Supreme Court held it applicable to public entities.  The United States Department of Labor (DOL) is tasked with issuing regulations to implement the provisions of the FLSA.

Last year, in an attempt to clarify and update rules dating back in some cases fifty years, the DOL issued new rules dealing with the exemptions to the FLSA. In order to  ensure that the City is in compliance with the new rules, it is necessary to do a complete audit of the City�s payroll practices, Memorandums of Understanding (MOUs), and employee classifications, which involves not only a review of each employee�s salary but also their duties.  This is beyond what staff in Financial Services, Management Services, and the City Attorney�s Office can do.

Peter Brown of the law firm of Liebert Cassidy Whitmore is a recognized FLSA expert.  The City Attorney�s Office desires to retain him to perform the FLSA audit.  The estimated cost of the audit is $35,000.

It is important that the City comply with the new rules.  Failure to do so could expose the City to potential liability for misclassification of employees.

Fiscal Impact

Funds to pay for the audit will come from Account Number 001.ND000.3001.1015 (Designated for BWP Competitiveness).

Recommendation

The City Attorney�s Office, the Financial Services Department, and the Management Services Department recommend that the City retain the services of Liebert Cassidy Whitmore to perform an FLSA audit. 

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