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Federal Workplace Initiatives Eroding State and Local Government Authority

(Replaces 1995 statement on "Fair Labor Standards Act: Implications for State and Local Governments")

Background

The federal government -- both Congress and the Administration -- has, on occasion, proposed and/or adopted legislation or regulations that erode the independence of state and local governments. These actions undermine the governing authority granted to state and local governments by the Tenth Amendment to the U.S. Constitution by controlling the relationship between public sector governments (as employers) and their employees. Additionally, these actions affect the ability of state and local governments to manage their employees. Two examples of federal initiatives that directly impact the relationship between state and local government employers and their employees are the Fair Labor Standards Act (FLSA) and the Occupational Safety and Health Act (OSHA).

FLSA. State and local governments were originally assumed to be exempted from FLSA. However, a 1983 Supreme Court case, Garcia v. San Antonio Metropolitan Transit Authority, specifically addressed the application of FLSA to state and local governments and declared that the law did apply to governments. Congress passed amendments in 1985 which delayed application of the overtime provisions of the Act until April 15, 1986. Public sector executives and administrators, who are relatively highly paid individuals, were intended to be exempt from the time-and-a-half overtime pay requirements of FLSA. However, the salary basis and duties tests of FLSA conflict with public accountability statutes and administrative duties, causing many public sector executives and administrators to claim rights to overtime pay.

Since the initial application of FLSA regulations to the public sector, court cases have awarded these high-level employees large settlements or retroactive overtime pay and the number of lawsuits from these administrators is increasing. The existing liability for many states and localities is in the millions of dollars and the potential liability from additional court cases will strain governments' budgets, possibly threatening the financial viability of some jurisdictions.

In accordance with the Unfunded Mandates Reform Act of 1995, the U.S. Advisory Commission on Intergovernmental Relations (ACIR) has studied federal mandates and recommends repeal of the provisions of FLSA that extend coverage to state and local governments. ACIR has raised questions over the intrusiveness of the federal law into matters that fall exclusively within the jurisdiction of a state and local government, i.e., employment policies for their own employees. ACIR also contends that the public accountability of elected officials and the collective bargaining powers of employee unions will provide adequate protection for workers.

Federal OSHA. While federal OSHA, as written, does not currently apply to state and local governments, initiatives have surfaced in Congress that would extend the federal OSHA statutes and regulations to public sector employers. Some states and localities have voluntarily adopted the federal OSHA standards by choosing to apply federal OSHA to all employers in their state. Most other states and localities have developed safety programs tailored to address the specific safety needs and hazards of each jurisdiction. Dismantling state OSHA laws, regulations, and enforcement agencies would be very costly for these governments. Furthermore, there has been no analysis demonstrating that federal OSHA would provide a safer environment for public employees than worker safety programs already provided through existing bargaining agreements or state and local laws.

GFOA Position

The Government Finance Officers Association (GFOA) supports repeal of FLSA's applicability to the public sector because of the inapplicability of the salary basis test and the duties test to government employers as well as the continued exemption of state and local governments from the purview of OSHA. Application of FLSA and the potential application of OSHA are two examples of the federal government imposing costly regulations without evidence of problems in the public sector. Additionally, GFOA strongly urges the U.S. Congress and the Administration to uphold the governing authority of states and localities. State and local governments should, at a minimum, be able to set the laws and regulations most appropriate for their own employees.

Adopted: May 21, 1996