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California still “researching the legal basis” for grabbing athletic inspector $
By Zach Arnold | February 8, 2013
To read all CSAC-related articles, dating back to May 2012, CLICK HERE.
A primer
The hatchet man/fixer that the Department of Consumer Affairs is using in 2013 to go after California State Athletic Commission inspectors for time-and-a-half payments is a man named Jeff Sears. Sears has been around at the Department of Consumer Affairs for years in Human Resources. He’s a money man/communicator.
In April of 2007, CSAC Assistant Executive Officer Susan Lancara and Jeff Sears sent out memos to inspectors about issues relating to travel reimbursement. Time-and-a-half pay for full-time state employees who also worked as athletic inspectors remained a constant. It’s important to note the issues regarding travel reimbursement because the Department of Consumer Affairs last year, in a horribly ill-advised ploy, tried to reclassify inspectors and take away travel reimbursement for some inspectors. In essence, creating a caste system for lead inspectors versus traditional inspectors for travel reimbursement. Not everyone being treated equally if you’re a full-time state employee.
In March of 2010, the California Department of Personnel Administration (via labor lawyer Casey Tichy) sent DCA lawyer James Maynard a memo stating that full-time state employees who work as athletic inspectors are, by law, entitled to a time-and-a-half rate (overtime) under the Fair Labor Standards Act. The FLSA, which is Federal law, acts as a floor and not a ceiling for labor law. State labor laws that go above and beyond FLSA standards are considered superior in terms of enforcement. The memo from Tichy cites established legal opinions/case law citations backing up the time-and-a-half rate payment to inspectors.
This is important to note for several reasons.
- One, George Dodd being blamed as the fall guy at CSAC for the time-and-a-half issue is not his fault. He was following orders from the state of California.
- Two, the March 2010 memo was issued and enforced at CSAC via DCA. The recent letters of confiscation that the Department of Consumer Affairs sent to top athletic inspectors like Mohammad Noor demand that Noor and 17 other athletic inspectors pay back overtime wages that they were given by DCA… for the year 2010. DCA hasn’t even sent out letters of confiscation for overtime paid in 2011 and 2012.
The letters of confiscation given to 18 CSAC athletic inspectors last month are based on a trumped up legal opinion crafted by Cal HR (California Human Resources) and given to the Department of Consumer Affairs. The phony legal opinion touted by DCA is a complete U-turn from the 2010 labor memo they received, as the ‘new’ legal opinion ignores all California state labor laws and instead claims that the FLSA (Fair Labor Standards Act) is the ceiling and not floor when it comes to paying athletic inspectors time-and-a-half. In other words, DCA got a ‘new’ legal opinion to tell them what they wanted to hear so that they could confiscate overtime money from athletic inspectors after the budget problems at the California State Athletic Commission blew up in their face and became a big media story.
To compound the ass-covering over what has happened at CSAC, the Bureau of State Audits produced a fraudulent audit of CSAC’s athletic inspectors by basing their calculations on the 2012 phony legal opinion from CalHR as opposed to the 2010 memo sent from a state labor lawyer about time-and-a-half payments.
It is this phony legal opinion that the Department of Consumer Affairs is now basing their letters of confiscation on, attempting to garnish wages or collect cash from 18 CSAC athletic inspectors. As we previously reported, DCA gave the 18 athletic inspectors a time period of 15 days to either agree to have their wages garnished or to come up with a payment plan for the overtime cash. The 15 day time period being pushed by DCA is an arbitrary time limit, not a legally enforceable time limit. According to Mohammad Noor, February 8th (today/Friday) is when DCA will attempt to confiscate money from the 18 athletic inspectors.
As a result of the letter of confiscation, Noor resigned as CSAC’s top athletic inspector. According to a memo we’ve obtained (on background), Noor has warned other athletic inspectors about DCA screwing up the calculations of salary payments to athletic inspectors for prior months. He noted that such a challenge from the inspectors would stop the automatic confiscation process on February 8th.
However, there is a new twist to the story that complicates matters further for the Department of Consumer Affairs and could set the stage for a major litigation battle between DCA and CSAC’s athletic inspectors.
According to multiple sources, an athletic inspector has had on-going dialogue with DCA money talker Jeff Sears. In one exchange to the athletic inspector, Sears claimed that DCA is researching the legal basis for how to confiscate money from athletic inspectors in regards to which state department they work for. He then cited GC section 19838 for the basis of overtime confiscation. Take note that the code section says the statute of limitations for confiscating overtime pay is three years.
Did I mention that Sears has supposedly put his words in writing?
A look at Government Code section 19838 produces text that leaves some room for ambiguity.
19838. (a) When the state determines an overpayment has been made to an employee, it shall notify the employee of the overpayment and afford the employee an opportunity to respond prior to commencing recoupment actions. Thereafter, reimbursement shall be made to the state through one of the following methods mutually agreed to by the employee and the state:
(1) Cash payment or payments.
(2) Installments through payroll deduction to cover at least the same number of pay periods in which the error occurred. When overpayments have continued for more than one year, full payment may be required by the state through payroll deductions over the period of one year.
(3) The adjustment of appropriate leave credits or compensating time off, provided that the overpayment involves the accrual or crediting of leave credits (e.g., vacation, annual leave, or holiday) or compensating time off. Any errors in sick leave balances may only be adjusted with sick leave credits.
Absent mutual agreement on a method of reimbursement, the state shall proceed with recoupment in the manner set forth in paragraph (2).
(b) An employee who is separated from employment prior to full repayment of the amount owed shall have withheld from any money owing the employee upon separation an amount sufficient to provide full repayment. If the amount of money owing upon separation is insufficient to provide full reimbursement to the state, the state shall have the right to exercise any and all other legal means to recover the additional amount owed.
(c) Amounts deducted from payment of salary or wages pursuant to the above provisions, except as provided in subdivision (b), shall in no event exceed 25 percent of the employee’s net disposable earnings.
(d) No administrative action shall be taken by the state pursuant to this section to recover an overpayment unless the action is initiated within three years from the date of overpayment.
(e) If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Section 3517.5, the memorandum of understanding shall be controlling without further legislative action, except that if the provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act.
So, what we have here is a case where the 18 athletic inspectors are challenging not only the method of confiscation for overtime payments, they are also now challenging the salary calculations by DCA in regards to payments made in prior months. The biggest ace in the hole on this front for the athletic inspectors is Mohammad Noor, who happens to work for the state of California’s Finance department as an auditor. It was DCA’s letter of confiscation over time-and-a-half money that led to Noor’s resignation from CSAC because such a letter can be viewed as a stain on his reputation, which would make his job at the Department of Finance difficult because he has to testify as a witness at trials and his reputation means everything.
With these challenges being posed to the Department of Consumer Affairs, they can either back off and give up their fruitless fight or they can set themselves up for a nasty, protracted legal battle in which all of their previous memos will be revealed in the discovery process and cost California taxpayers six-figures in legal fees for getting caught with their pants down.
Such a defeat would also likely result in someone at DCA getting fired, primarily in their legal department. If someone like Jeff Sears or DCA legal nitwit Doreathea Johnson is targeted and gets fired, they would lose their retirement pension with the state. That’s a much bigger deal for Johnson than Sears. The people in the Sacramento office will start turning on each other and look for job transfers to get the hell out of dodge.
Somebody’s about to get thrown under the bus.
The memos in question
First, the 2007 memo about what Athletic Inspectors who are full-time state employees can ask for regarding claims on their TEC (travel expense sheets).
CALIFORNIA DEPARTMENT OF CONSUMER AFFAIRS
MEMORANDUM
To: California State Athletic Commission staff
From: Jeffrey Sears, Classification & Pay Manager, Department of Consumer Affairs, Office of Human Resources
Subject: Salary and Mileage Compensation for Athletic Inspectors’ Travel
At the request of Commission management, the DCA Office of Human Resources and the Accounting Office have prepared the attached document, “Compensation and Mileage Guidelines for Athletic Inspectors.”
This document was developed to explain the compensation for both the salary and mileage to be paid to Athletic Inspectors in the performance of their required duties of attending events on behalf of the Commission.
We recognize that some of these guidelines may not be what you are used to administering; however, these are the compensation rules DPA has adopted for use in assignments where there is no fixed work location.
Please refer any questions you may have regarding the implementation of these guidelines to Susan Lancara, Assistant Executive Officer or Bill Douglas, Staff Services Analyst at 916-263-2195.
cc: Debbie Sullivan, Debbie Baumbach, Ginger Eisenbeisz
COMPENSATION and MILEAGE GUIDELINES FOR ATHLETIC INSPECTORS
GUIDELINES: Travel to/from a CSAC Event
State and Federal compensation rules for work-related travel are determined by whether an employee has a headquarters “office” location or whether the employee’s home is designated as their HQ.
Per the Department of Personnel Administration (DPA), since Athletic Inspectors do not go to work at a central “office” location or have a regularly scheduled work site, the employees are designated as having their “home as headquarters.”
On all “work days” (day in which an Inspector is scheduled to work an authorized CSAC event), the Inspector may claim all travel time and mileage for the entire round trip, regardless of the mileage, plus the actual time worked at the event.
EXAMPLE: If an Inspector spends 6 hours traveling to/from an event on a Saturday (300 miles round trip), s/he would be paid for all travel time (and mileage) plus the time spent working the event (5 hours). In this example, this would equal (11) total hours of compensation for the event.
NOTE: If an employee leaves home early to avoid traffic and gets to an event two hours before work is to commence, s/he would not be compensated for the two hours spent waiting to begin work.
DOCUMENTATION
For each event worked in a month:
1. Time reported on the automated HRIS system and employee timesheets should include:
Total hours (hours of travel plus hours of work)2. Travel Expense Claims (TEC, Std. 262) should indicate:
HQ address should be the same as employee home address
Round trip mileage from Inspector’s home address (as determined by Mapquest or Yahoo)
Per diem expenses (food, lodging, etc.) in accordance with State travel rules.QUESTIONS
Inspectors: Please direct questions on this information to the appropriate California State Athletic Commission (CSAC) headquarters staff person.
CSAC staff: Please direct questions to the appropriate DCA Accounting Office or Human Resources staff.
And now the March 2010 memo from the Department of Personnel Administration about time-and-a-half rates for full-time state employees who work as athletic inspectors. As we stated earlier, 2010 is year that DCA is now targeting for money from athletic inspectors. This DPA memo is why the AI’s were paid time-and-a-half in the first place.
MEMORANDUM
TO: James Maynard, Staff Counsel, Department of Consumer Affairs
FROM: Casey Tichy, Labor Relations Counsel, Legal Division, (916) 324-0512; FAX (916) 323-4723
SUBJECT: Athletic Inspector (PI) Overtime
QUESTION
Should certain permanent intermitten inspectors, who oversee and regulate boxing and mixed martial arts events during the evenings and on weekends, be paid overtime under the FLSA if they work full time for a different state agency during the State’s normal business hours?
BRIEF ANSWERS
Yes, these permanent intermittent inspectors must be paid overtime for all work performed in excess of 40 hours in a workweek because the State of California, and not its departments or agencies, is deemed the “employer” for purposes for calculating wages and overtime under the FLSA. Thus, under the FLSA, these permanent intermittent employees are considered to be working in two different capacities for one single employer: the State of California
FACTS
The California State Athletic Commission (“Commission”) utilizes permanent intermittent inspectors on the evenings and weekends to oversee and regulate boxing and mixed martial arts events. Inspectors work regularly, between 2-4 assignments per month. Each assignment is between 8-10 hours in length. Many of the inspectors also work for the State in some other capacity during normal business hours at such agencies as Department of Corrections & Rehabilitation, Employment Development Department, and Department of Consumer Affairs. Currently the Commission is paying any inspector who works full time for the State during the day, overtime for those hours worked as an inspector in the evenings and on weekends.
DISCUSSION
A. Generally, the State and Not its Individual Departments is Deemed the “Employer” For Purposes of Calculating Overtime.
According to the Department of Labor (DOL), the federal agency responsible for enforcement of the FLSA, generally the State, not its departments or agencies, is deemed the “employer” for purposes of FLSA wage calculations. (DOL Wage and Hour Opinion Letter, August 23, 1974.) Accordingly, the hours worked by state employees, holding multiple positions within the State must be counted in aggregate and the State must pay overtime for all hours worked in excess of 40 hours a workweek.
In this case the Commission employes permanent intermittent inspectors on the evenings and on weekends to oversee and regulate boxing and mixed martial arts events. These individuals also hold full-time positions with various other State departments. Thus, under the general rule, all hours worked by these permanent intermittent inspectors must be counted in the aggregate and the State must pay overtime for all hours worked in excess of 40 hours in a workweek.
B. Under Certain Circumstances Two or More State Departments May be Treated as Separate Employers for PUrposes of Calculating Overtime
Under certain circumstances, two or more state departments may be treated as separate employers under the FLSA. In several DOL opinion letters, the DOL discusses factors that would support a finding that two or more state departments are separate employers. These factors include: (1) whether the employers have separate payroll systems; (2) whether the employers have separate retirement systems; (3) whether the employers have separate budgets and funding authorities; (4) whether the employers are separate legal entities with the power to sue and be sued; (5) whether the employers deal with each other at arm’s length concerning the employment of the individuals in question; and (6) whether one employer controls the appointment of the officers of the other agency. See Wage and Hour Opinion Letters FLSA2006-21NA, FLSA2006-13 (Apr. 28, 2006), FLSA2003-2 (Apr. 14, 2003), FLSA2002-3 (June 7, 2002), and July 1, 1993 (copy enclosed). The DOL will look at the totality of the circumstances in a particular instance and make its determination on a case by case basis. (DOL Wage and Hour Opinion letter, dated October 10, 1985.)
Based on the information provided, the Commission has been paying these individuals overtime for the work performed for the Commission. Thus, paying these individuals at the straight time rate for work performed for the Commission would be a change in the status quo. Given that the policy behind the FLSA is to provide protection to “employees” rather than “employers,” there must be strong evidence that most, if not all, factors are present to support a change in a policy with respect to payment of overtime to these employees.
Applying the factors to this case, it is unlikely the DOL would find the test for separateness is met because California state departments have a common State payroll system and a common retirement system. (Id.) Although the remaining factors are more difficult to apply, arguably, California state departments also fail to meet the remaining factors that would support a finding of separateness. For instance, while each California state department has its own budget; all departments are also subject to provisions in the California State Budget. Simiarly, California state departments are separate legal entities and can sue and be sued in their own name in certain circumstances. However, State departments can also sue and be sued jointly as the State of California. Lastly, it is not clear from the facts presented, whether or not the departments involved in this case deal with each other at arm’s length with respect to these permanent intermittent employees.
Therefore, it is unlikely the test for separateness is met in this instance and thus these individuals are entitled to overtime compensation for all hours worked from the State of California in excess of 40 in a workweek.
C. Payment of Overtime
Whether, as here, the State of California, and not individual departments, will liekly be found to be the “employer”, calculation of overtime for an employee holding multiple positions within the State requires combining all hours worked in both positions during the workweek and paying overtime for all hours worked over 40. Under a longstanding Department of Perosnnel Administration (DPA) policy, the responsibility for payment of overtime falls on the “secondary” department, where the “primary” department has employed the employee in a full time capacity. Since the Commission is the secondary employer; it would be responsible for payment of the overtime compensation.
CONCLUSION
The DOL would likely find that these permanent intermittent inspectors are working in two employment capacities for a single employer, the State of California. As such, they are entitled to overtime compensation for all hours worked over 40 in a workweek. Since the Commission is the secondary employer, employing these individuals on a part-time basis, it is responsible for payment of the overtime compensation.
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[…] of Consumer Affairs, the bureaucratic behemoth led by Denise Brown and Awet Kidane was trying to “research the legal basis” for confiscating overtime pay given to inspectors… in 2010. Of course, as we pointed out, the […]
[…] analyst who wrote the memo on Monday, Jeff Sears, was the same person who admitted last February that the Department of Consumer Affairs was still “researching the legal basis” for trying to confiscate back pay to athletic inspectors who were paid time-and-a-half wages up to […]