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Second Appeal Analysis
PA ID# 131-99131-00; Northampton County, North Carolina
PW ID# 1357; Overtime Labor Policy
On September 18, 2003, high winds and rain caused by Hurricane Isabel (1490-DR-NC) caused power outages, road blockages, and widespread flooding throughout Northampton County, North Carolina. Initially, the Northampton County government (Applicant) assigned personnel to assist with the gathering of information from the affected areas and providing damage assessments to the appropriate State agencies. The Applicant also performed a number of emergency response measures, including blocking flooded roads, directing traffic, rescuing displaced or stranded persons, providing emergency personal care, providing power to emergency facilities, and securing vulnerable damaged sites or structures.
The Federal Emergency Management Agency (FEMA) prepared Project Worksheet (PW) 1357 to reflect the costs for the labor, equipment, and materials associated with the emergency response measures. FEMA determined that costs totaling $25,915.59 for the overtime labor of exempt employees responding to the emergency were ineligible for Public Assistance Program funding. FEMA also determined that the overtime labor costs ($4,356.93) and mileage costs ($812.60) for the damage assessment teams were ineligible.
On May 12, 2004, the Applicant appealed FEMAs determination to deny the costs for overtime labor by exempt employees and the damage assessment teams. The State of North Carolinas Division of Emergency Management (DEM) forwarded the appeal to FEMA on June 7, 2004. The Applicant claimed that in November 2002 it revised its personnel policies to authorize overtime pay in the case of a declared state of emergency or disaster for employees that are generally exempt. Because the change to the Applicants personnel policy occurred before the disaster, the DEM agreed that the overtime labor costs for the exempt employees should be eligible, in accordance with Response and Recovery Policy 9525.7 (D). However, the DEM recommended that the overtime labor costs for the damage assessment teams be denied, as the costs for this work are covered by the administrative allowance that FEMA provided to the Applicant. Specifically, Title 44 Code of Federal Regulations § 206.228(a)(2)(i) states that Pursuant to section 406(f)(2) of the Stafford Act, an allowance will be provided to the State to cover the extraordinary costs incurred by the State for preparation of damage survey reports, final inspection reports, project applications, final audits, and related field inspections
The Regional Director denied the appeal in a letter dated July 13, 2004. The letter stated that even though the Applicant had a policy in place regarding the exempt employees at the time of disaster, the policy does not specify that the costs would be paid if no declaration is forthcoming, nor does it provide documentation that the Applicant has paid these costs during non-declared incidents.
On August 6, 2004, the Applicant submitted a second appeal of FEMAs determination. The DEM forwarded this appeal to FEMA on September 3, 2004, but did not include a recommendation of determination. The Applicant asserted that FEMA policy allows reimbursement for costs in accordance with an applicants pre-disaster policies, and therefore, the overtime labor costs for exempt employees should be eligible. The letter states, there is no indication that Northampton Countys policy is inconsistent when applied to a Federal award or to its other activities. The Applicant also claimed that until the occurrence of Hurricane Isabel, no event had occurred that required the Applicant to implement the new personnel policy. With regard to the overtime labor costs associated with the damage assessment teams, the Applicant stated that they do not agree, but concur that the costs are not eligible and will be covered by administrative allowance.
The Applicants appeal of the overtime labor costs for exempt employees is based on the following Issues:
1) The change to the Applicants personnel policy occurred in November 2002, before the declared disaster. Response and Recovery Policy 9525.7 (D) states that straight time and overtime will be determined according to the applicant's written policies and labor union contracts in effect prior to the disaster.
2) No language in the personnel policy change specifies that the exempt employees would only be paid overtime following Federally declared events. The policy was not implemented before the occurrence of Hurricane Isabel because no other event had occurred following the policy change.
The appeal included the decision paper, dated November 12, 2002, that the Applicants Personnel Policy Committee prepared in seeking the approval of the Northampton County Board of Commissioners to amend the Policy for Overtime Pay. The decision paper recommended the following policy change: In the case of a declared state of emergency/disaster employees generally exempt under the Fair Labor Standards Act (FLSA), will be considered for overtime pay. The appeal also included undated meeting minutes from a Board meeting that showed that the Board voted to adopt the policy. From the review of this documentation, it is apparent that the policy was in place before the declared disaster.
The appeal further states that there is no indication that the policy is inconsistent when applied to a Federal award or to other events not Federally declared. However, in the Purpose statement of the November 12, 2002, decision paper, the Personnel Policy Committee recommends amending the policy in order to be eligible for FEMA reimbursement. The decision paper further states that there should be language in their policy that indicates exempt employees could be paid for overtime (the underline, apparently for emphasis, is present in the decision paper). Finally, the proposed amendment states that at the time of a disaster, employees will be considered for overtime pay. The language of the amendment does not indicate that the policy would be implemented in the same manner in any disaster or emergency event; on the contrary, the submitted documentation indicates that the Applicant has discretion with regard to the award of overtime pay. Therefore, it is not evident that overtime pay would have been provided had Federal funding not been available for Hurricane Isabel.
As the DEM pointed out in its June 7, 2004, letter, Office of Management and Budget Circular 8-87 Section C (1)(e) states that an Applicants policies must be consistent with policies, regulations, and procedures that apply uniformly to both Federal awards and other activities of the governmental unit. Since the policy in question was discretionary, the costs for the overtime labor of exempt employees are ineligible.
It has been shown that the policy allowing payment of overtime to exempt employees during an emergency or disaster was in place prior to the disaster declaration for Hurricane Isabel. However, the submitted documentation indicates that the Applicant has discretion with regard to the award of overtime pay. It is not apparent that overtime pay would have been awarded regardless of the availability of Federal funding; therefore, the costs for overtime pay are ineligible. The appeal is denied.