Force Account Labor and Equipment Costs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	4464
Applicant	Berkeley County
Appeal Type	Second
PA ID#	015-99015-00
PW ID#	GMP 117592/PW 249
Date Signed	2022-04-08T16:00:00

Summary Paragraph

Hurricane Dorian caused severe winds, rain, and flooding in South Carolina, including Berkeley County (Applicant), from August 31 to September 6, 2019.  The Applicant used force account labor (FAL) to perform emergency protective measures, the costs of which FEMA prepared Grants Manager Project 117592 to document.  On August 26, 2020, FEMA issued a determination memorandum denying $581,556.30 in claimed FAL overtime costs, stating that the Applicant’s pay policy was discretionary.  The Applicant appealed, asserting that its pay policy was not discretionary.  FEMA issued an RFI seeking documentation tying the Applicant’s claimed costs to eligible emergency work, to which the Applicant responded.  FEMA denied the Applicant’s appeal, finding that the documentation did not permit FEMA to determine whether the non-exempt FAL performed eligible emergency work, and that the pay policy was discretionary as to exempt FAL.  The Applicant, in its second appeal, states that its pay policy is not discretionary and that all claimed work is eligible emergency work.    

Authorities and Second Appeals

• Stafford Act § 403(a).
• 44 C.F.R. §§ 206.225(a), 206.228(a)(2)(iii).
• PAPPG, at 19, 21, 24, 58, 139.
• Brevard (County), FEMA-4337-DR-FL, at 3; Dep’t of Transp., FEMA-4068-DR-FL, at 5; City of Sweetwater, FEMA-1345-DR-FL, at 3.

Headnotes

• The PAPPG states that only overtime labor costs tied to the performance of eligible emergency work are eligible for reimbursement.
  • The documentation the Applicant provided does not permit FEMA to verify that the claimed costs are directly tied to the performance of eligible work.

Conclusion

The appeal is denied as the Applicant has not demonstrated that its force account labor costs can be tied to the performance of eligible work.

Appeal Letter

Appeal Analysis

Background

Hurricane Dorian caused severe winds, rain, and flooding in South Carolina, including Berkeley County (Applicant) from August 31 to September 6, 2019.[1]  The Applicant requested Public Assistance funding for emergency work performed by its force account labor (FAL), including activation of an Emergency Operations Center, positioning of emergency barricades and detour signage, establishment of five shelters, provision of sand and sandbags to residents for flood fighting, pre-positioning of an emergency medical shelter, construction of a temporary dirt access road, pre-staging of a high water rescue team, and traffic control monitoring.  On

August 26, 2020, FEMA issued a determination memorandum denying $581,556.30 in claimed FAL overtime costs because the Applicant’s pay policy authorizes it to make exceptions or waive the policies included in the manual when, in its discretion, such exceptions are necessary to achieve the best provision of services, and that the unrestricted ability to waive the manual makes it discretionary.

First Appeal

The Applicant appealed in a letter dated September 23, 2020, requesting $581,556.30 in FAL overtime pay.  The Applicant stated that the pay policy in effect at the time of the disaster meets FEMA requirements and is not discretionary.  The Applicant argued that when the County Council declared a state of emergency, it compelled the payment for hours worked in accordance with the policy.  The Applicant asserted that both its policy and the Fair Labor Standards Act (FLSA) require compensation for all overtime hours paid for non-exempt employees and that it would be liable in a civil suit if it did not comply.  The Applicant also stated that FEMA has awarded FAL overtime based on the same policy in two prior disasters.  The South Carolina Emergency Management Division (Grantee) forwarded the appeal with its support in a letter dated November 17, 2020.

FEMA issued a request for information (RFI) to the Applicant and Grantee on June 29, 2021:

• Seeking timesheets, daily activity logs/reports, and payroll records and/or similar spreadsheets detailing names and titles for each employee in order to establish eligibility for overtime pay based on the Applicant’s pay policy for whom overtime was claimed;
• Stating that documentation should specify whether each employee is exempt or non-exempt, and include the rates of pay, hours, dates, location where eligible emergency work was performed, and a description of the eligible emergency work performed; and,
• Noting documentation should also distinguish between overtime pay, regular pay, and those employees that utilized emergency leave pay.

The Applicant responded to FEMA’s RFI on July 29, 2021, clarifying its personnel designation for exempt, full-time, and temporary employees, providing its interpretation of its emergency leave policy, stating where in its documentation work locations could be found, and identifying eligible work activities.  The Applicant attached its policy manual, historical cost summary, timesheets, and labor summary identifying the costs by employee type.

On November 10, 2021, the FEMA Region IV Regional Administrator denied the Applicant’s appeal.  FEMA found that overtime hours for non-exempt employees, totaling $466,150.28, were potentially eligible for PA funding, in accordance with FEMA requirements.  However, FEMA found that the documentation the Applicant provided did not contain information allowing FEMA to determine whether non-exempt employees performed eligible emergency work or routine tasks associated with their typical work responsibilities.  As a result, FEMA denied this claim.  FEMA also denied the claim for overtime for exempt employees, finding that the Applicant’s pay policy is discretionary and that FLSA does not require the payment of overtime for exempt employees. 

Second Appeal

The Applicant appeals in a letter dated November 29, 2021, seeking funding for the FAL costs denied on first appeal.  The Applicant asserts that its pay policy is not discretionary, as it was required by the state and federal disaster declarations, and reiterates that FEMA has approved prior projects under the same policy.  The Applicant states that all work claimed is eligible emergency work, arguing that it dismissed all employees not required for emergency response.  The Grantee forwarded the appeal to FEMA with a letter expressing its support on January 25, 2022.

 

Discussion

FEMA is authorized to provide PA funding for emergency protective measures, a type of emergency work, necessary to save lives, to protect public health and safety, and to protect improved property.[2]  Only costs tied to the performance of eligible work are eligible.[3]  When an applicant’s permanent (budgeted) employees perform emergency work, only overtime labor is eligible for reimbursement through the PA grant program.[4]  To support eligibility of FAL costs claimed, the Applicant should submit, for each individual, their name, job title and function, type of employee, days and hours worked, pay rate and fringe benefit rate, description of work performed with a representative sample of daily logs / activity reports, representative sample of timesheets, fringe benefit calculations, and pay policy.[5]  The burden to fully substantiate an appeal with documented justification falls exclusively on the applicant and hinges on the applicant’s ability not only to produce its own records, but to clearly explain how those records support the appeal.[6]

In support of its claim, the Applicant provides documentation including a payroll summary, underlying payroll sheets organized by department, and in its appeals and RFI response, a description of the emergency work it performed.  The information the Applicant provided, however, lacks documentation such as timesheets, daily logs, or activity reports that would permit FEMA to verify the claimed overtime hours were tied to the performance of eligible emergency work.  The Applicant’s summary assertion that all employees who continued working did so in relation to the threat of the disaster does not tie its costs to the performance of eligible work.  Because FEMA cannot tie the Applicant’s claimed FAL costs to the performance of eligible work, the costs are denied.[7]

 

Conclusion

The Applicant has not demonstrated that its force account labor costs can be tied to the performance of eligible work.  Therefore, this appeal is denied.

 

[1] The President declared it a major disaster on September 30, 2019.

[2] Robert T. Stafford Disaster Relief and Emergency Assistance Act § 403(a), Title 42 United States Code § 5170b(a) (2018); Title 44 Code of Federal Regulations (44 C.F.R.) § 206.225(a) (2018); Public Assistance Program and Policy Guide, FP 104-009-2, at 19 (Apr. 2018) [hereinafter PAPPG].. 

[3] PAPPG, at 21.  Eligible emergency protective measures and associated costs include, but are not limited to, transporting and pre-positioning equipment and other resources for response, emergency operation center related costs, emergency access, evacuation and sheltering, and security, such as barricades, fencing, or law enforcement.  See Id., at 58.

[4] 44 C.F.R. § 206.228(a)(2)(iii) (stating the straight- or regular-time salaries and benefits of a grantee's or applicant's permanently employed personnel are not eligible in calculating the cost of eligible emergency protective measures, except for those costs associated with host state evacuation and sheltering); PAPPG, at 24. 

[5] PAPPG, at 139.

[6] FEMA Second Appeal Analysis, Brevard (County), FEMA-4337-DR-FL, at 3 (Dec. 8, 2021); FEMA Second Appeal Analysis, Dep’t of Transp., FEMA-4068-DR-FL, at 5 (Aug. 5, 2016); FEMA Second Appeal Analysis, City of Sweetwater, FEMA-1345-DR-FL, at 3 (Aug. 15, 2017).

[7] Because the documentation the Applicant provided does not permit FEMA to verify that the claimed costs are directly tied to the performance of eligible work, the pay policy is not addressed.