FLSA Arbitration Update - SEC Will Not Appeal


In NTEU's latest national victory for SEC employees, in December a federal Arbitrator ruled that all Securities Compliance Examiners in grades 11, 12 and 13 are now eligible to receive higher pay rates for their overtime work. Under the Arbitrator's decision, these employees are also eligible for back pay and damages. The SEC has elected not to appeal this decision to the Federal Labor Relations Authority. The agency has commenced the process of re-classifying affected employees to FLSA non-exempt status, but is not yet certain when this process will be completed.

This case began on November 5, 2002, when NTEU filed a grievance with the SEC alleging that the agency had improperly exempted a number of positions, including Securities Compliance Examiners, from coverage under the Fair Labor Standards Act (“FLSA”). The SEC’s classification of the positions as "FLSA-exempt" caused employees working in these positions to receive compensatory time or overtime pay at a "capped" rate. The SEC’s classification decision may also have caused these employees to receive no compensation at all for time that may have been compensable under the FLSA.

On September 27-29, 2006, NTEU presented its case regarding the Securities Compliance Examiners in Grades 11-13 to Arbitrator Joseph M. Sharnoff. The SEC had previously agreed to reclassify Securities Compliance Examiners in grades 7 and 9 to FLSA coverage, effective in April 2006. In a well-reasoned decision received by NTEU in December 2008, Arbitrator Sharnoff agreed with the Union that the SEC had improperly exempted these employees under the FLSA. To review the decision, please visit the Chapter’s website.

Because the SEC has decided not to appeal the Arbitrator's decision, the change to FLSA coverage will mean that, going forward, the overtime provisions of the FLSA will apply to these Securities Compliance Examiners in Grades 11-13. They will be entitled to choose between receiving time-and-a-half their regular rate of pay or one hour of compensatory time off for each overtime hour worked. The SEC will no longer be permitted to require them to take compensatory time. In addition, under a previous agreement between NTEU and the SEC, these employees are entitled to back pay and additional damages. These calculations will likely take several months. Chapter 293 will keep you posted regarding these payments. The Union urges all Securities Compliance Examiners in Grades 11-13 to maintain accurate records of all overtime that they are required to work.

The SEC is also considering whether to reclassify employees in four other positions at the agency: Internet Surveillance Specialist (Grade 12); ARP Specialist (Grades 12, 13, 14); Investor Assistance Specialist (Grades 12,13); and Market Surveillance Specialist (Grades 12, 13, 14). No final decision has been made on these positions.

In March 2008, NTEU and the SEC were able to reach a settlement under which the agency agreed to reclassify a number of other positions under the FLSA and pay those employees back pay and damages. DOI will be making the payments of back pay and the SEC will be making the liquidated damages payments. The agency currently anticipates that these payments will be issued at the end of January to employees in the following affected positions: Administrative Program Specialist (Grade 9); ARP Specialist (Grades 9-11); Budget Analyst (Grade 9); Case Management Specialist (Grades 9-11); Contract Administrator (Grade 9); EDGAR Operations Assistant (Grade 9); General Supply Specialist (Grade 9); Internet Surveillance Specialist (Grade 9-11); Investor Assistance Specialist (Grades 9-11); Legal Instruments Examiner (Grades 8-9); Market Surveillance Specialist (Grades 7-11); Paralegal Specialist (Grades 7-13); Program Analyst (Grades 8-11); Program Information Specialist (Grades 9-11); Program Support Assistant/Specialist (Grade 9); Regulation Specialist (Grade 11); Research Assistant/ Specialist (Grades 7-9); Research Specialist (Grade 11); Securities Compliance Examiner (Grades 7-9); Securities Regulation Specialist (Grades 9-11); Space Management Specialist (Grades 9-11); and Telecommunications Specialist (Grade 9).