Question of Entitlement to Fair Labor Standards Act Overtime

GAO was asked to determine whether certain power systems dispatchers employed by the Department of Energy (DOE) were entitled to retroactive overtime compensation under the Fair Labor Standards Act (FLSA). In 1977, the power marketing functions under the Department of the Interior were transferred to DOE and, at that time, power systems dispatchers were exempt from overtime pay under the Act. DOE reviewed an Office of Personnel Management (OPM) determination which held that hydro-electric system controllers employed by Interior were nonexempt under the Act. Therefore, DOE determined that power systems dispatchers were nonexempt under the Act. Overtime payments began in October of 1979, but no retroactive overtime payments were made. GAO held that a change in classification of employees from exempt to nonexempt under the Act was not limited to future application, but could be retroactively effective under certain circumstances. Therefore, retroactive payments based on a DOE determination of nonexempt status may be made to the extent which OPM determines that the dispatchers' duties were nonexempt during the retroactive period. The bar to FLSA retroactive payments was modified to allow employees who were erroneously classified as nonexempt to receive back pay under the statute. However, OPM must determine the status of employees for all of the retroactive period in question and make payments only for the period of the employees' nonexempt status. Claims for retroactive pay are subject to the 6-year statute of limitations.