NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

AUER et al. v. ROBBINS et al.

certiorari to the united states court of appeals for the eighth circuit

No. 95-897. Argued December 10, 1996 -- Decided February 19, 1997

Petitioners, St. Louis police sergeants and a lieutenant, sued respondent police commissioners for overtime pay under the Fair Labor Standards Act of 1938 (FLSA). Respondents argued that petitioners were "bona fide executive, administrative, or professional" employees exempted from overtime pay requirements by 29 U.S.C. § 213(a)(1). Under the Secretary of Labor's regulations, that exemption applies to employees paid a specified minimum amount on a "salary basis," which requires that the "compensation . . . not [be] subject to reduction because of variations in the quality or quantity of the work performed." Petitioners claimed that they did not meet this test because, under the terms of the Police Department Manual, their compensation could theoretically be reduced (though this was not the department's general practice) for a variety of disciplinary infractions related to the "quality or quantity" of their work. Both the District Court and the Eighth Circuit disagreed with that assertion, holding that the salary basis test was satisfied as to all petitioners.

Held:

1. The "no disciplinary deductions" element of the salary basis test reflects a permissible reading of the FLSA as it applies to public sector employees. It is not apparent that the Secretary's interpretation of §213(a)(1) is rendered unreasonable, as applied to public sector employees, by the absence of other (non salary reduction) means of discipline, or by the peculiar needs of "quasi military" law enforcement organizations. The Secretary's approach must therefore be sustained, given §213(a)(1)'s grant of broad authority to the Secretary to "defin[e] and delimi[t]" the statutory exemption's scope. See Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-843. Respondents' procedural objection to the Secretary's failure to amend the disciplinary deduction rule in the wake of Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528, cannot be raised in the first instance in this lawsuit, but must be presented initially in a petition to the Secretary for amendatory rulemaking under the Administrative Procedure Act, 5 U.S.C. § 553(e). Pp. 3-6.

2. The Secretary has reasonably interpreted the salary basis test to be met when an employee's compensation may not "as a practical matter" be adjusted in ways inconsistent with the test. The standard is violated, the Secretary says, if there is either an actual practice of making deductions or an employment policy that creates a "significant likelihood" of them. Because the regulation's critical phrase "subject to" comfortably bears the meaning the Secretary assigns, his interpretation of his own test is not "plainly erroneous," and thus is controlling. Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 359. The Secretary's interpretation is not rendered unworthy of deference by the fact that it is set forth in an amicus brief; it is not a position adopted in response to litigation, and there is no reason to suspect that it does not reflect the Secretary's fair and considered judgment. Nor does the rule requiring that FLSA exemptions be narrowly construed against employers apply here; that rule governs judicial interpretation of statutes and regulations, and does not limit the Secretary's power to resolve ambiguities in his own regulations. Pp. 6-10.

3. The regulations entitle employers to preserve the exempt status of employees who have been subjected to pay deductions inconsistent with the salary basis test by reimbursing those employees and promising to comply with the test in the future, so long as the deductions in question were either inadvertent or made for reasons other than lack of work. Pp. 10-11.

65 F. 3d 702, affirmed.

Scalia, J., delivered the opinion for a unanimous Court.