Tex. Supreme Court holds definition of “authorized leave” is limited to paid leave but City’s definition of salary is preempted.

City of Houston v. Bates, et al,  08-16-11, ___ SW3d ___, (Tex. June 28, 2013).

This is a pay dispute involving retired firefighters for the City of Houston Fire Department (“HFD”). The firefighters brought two claims asserting 1) improper deductions related to overtime pay and 2) improper definitions of “salary” for termination pay purposes. The trial court found for the firefighters and the court of appeals affirmed. The Texas Supreme Court affirmed as to the termination pay issue but reversed as to the overtime pay.

Upon retirement the firefighters sued alleging the City docked their overtime pay  (what the Court characterized as a “debit dock”) and improperly excluded “premium pay” from the calculation of their salaries. With regard to the debit dock, utilizing a 72-day work cycle, HFD scheduled fire fighters to work one of four shift schedules. In any one shift schedule, a fire fighter would work eighteen 24-hour shifts throughout the 72-day work cycle. HFD required fire fighters to work additional 24-hour shifts, called “debit days,” each work cycle, which increased at times of staff shortages. To encourage attendance HFD designated the last eight hours of each debit day eligible for overtime. HFD required a fire fighter to be physically present to get overtime pay. Upon retirement two of the firefighters had their paychecks deducted for previously overpaid overtime. The overtime pay the City deducted related to debit days the City allowed them to either “ride out” or related to vacation leave.  It’s undisputed the officers did not physically work those days. But the firefighters claim they were on “authorized leave” under §142.0017 of the Texas Local Government Code which requires such leave be included in calculating the number of hours within a 72-day work cycle.

Regarding the termination pay calculation, the City allowed firefighters to accumulate unused sick and vacation leave. In most cases, civil service laws require accumulated vacation and sick leave to be valued at the fire fighter’s “salary” at the time the fire fighter accumulated the leave. See id. §§ 143.115(b), .116(b). This lump-sum payment is often referred to as termination pay.  However, the City, by ordinance, excluded certain types of premium pay including educational incentive pay and assignment pay from the definition of “salary” for purposes of calculating termination pay.

For the analysis of the debit day issue, the Texas Supreme Court sought to determine whether the Legislature intended the phrase “any other authorized leave” in §142.0017(e)(2) to encompass only other forms of paid leave, which is the City’s position. After a detailed statutory construction analysis, the Court agreed with the City and held “authorized leave” encompasses only other forms of paid leave, not approved unpaid leave.

The Court disagreed with the City regarding the proper calculation of “salary” for termination pay purposes. The City ordinances which excluded certain types of premium pay are preempted by civil service laws. Again after a detailed statutory analysis the Court held the term “salary” includes all forms of premium pay, including those which were discretionarily given.

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