Nature of the Case
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Facts
Ps sued D for overtime pay under FSLA. A primary issue in the litigation unleashed by application of the salary-basis test to public-sector employees has been whether, under that test, an employee's pay is 'subject to' disciplinary or other deductions whenever there exists a theoretical possibility of such deductions, or rather only when there is something more to suggest that the employee is actually vulnerable to having his pay reduced. Ps in effect argue for something close to the former view; they contend that because the police manual nominally subjects all department employees to a range of disciplinary sanctions that includes disciplinary deductions in pay, and because a single sergeant was actually subjected to a disciplinary deduction, they are 'subject to' such deductions and hence non-exempt under the FLSA. The Court of Appeals rejected Ps’ approach, saying that 'the mere possibility of an improper deduction in pay does not defeat an employee's salaried status' if no practice of making deductions exists. In the Court of Appeals' view, a 'one-time incident' in which a disciplinary deduction is taken under 'unique circumstances' does not defeat the salaried status of employees. The key issue was the interpretation of the Department of Labor’s salary based test. The Supreme Court granted certiorari.
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