Pilots fall under gray area in overtime rules

 - July 24, 2007, 9:11 AM

In the April 23 Federal Register, the Department of Labor (DOL) issued what it called “FairPay” rules that will take effect on August 23. The DOL states, “Under the new FairPay rules, workers earning less than $23,660 per year–or $455 per week–are guaranteed overtime protection.”

However, company paymasters or anyone having to do with payrolls by whatever title might want to take a hard look at what the DOL has to say in its preamble to FairPay. On the Internet, go to www.dol.gov, click on “FairPay Overtime Rules,” and then, on the right side, click on “Preamble” and scroll down to page 36 of 71 pages and refer to the section entitled “Pilots.” This is what the section says:

“Most pilots are exempt from Fair Labor Standards Act overtime requirements under section 13(b)(3) of the Act, which exempts ‘any employee of a carrier by air subject to the provisions of title II of the Railway Labor Act.’ Thus, pilots who are employed by commercial airlines are exempt from overtime under 13(b)(3). However, the status of other pilots, such as pilots of corporate jets, is determined under 13(a)(1), and has been the subject of recent litigation.

“The Department has taken the position that pilots are not exempt professionals. We have maintained that aviation is not a ‘field of science or learning,’ and that the knowledge required to be a pilot is not ‘customarily acquired by a prolonged course of specialized intellectual instruction.’ See Wage and Hour Opinion Letter dated Jan. 20, 1975: In re U.S. Postal Service ANET and WNET Contracts, 2000WL1100166, at *7 (DOL Admin. Rev. Bd.).

“A contrary result was reached in Paul v. Petroleum Equipment Tools Co., 708 F.2d 168 (5th Cir. 1983). In Paul, the 5th Circuit allowed the learned professional exemption for a company airline pilot who held an airline transport pilot (ATP) certificate, a flight instructor certificate, a commercial pilot certificate, an IFR rating and was authorized to fly both single and multi-engine airplanes. The court examined the Federal Aviation Authority [sic] regulations setting forth the requirements for
the licenses and ratings, finding the combination of instruction and flight tests sufficient to satisfy the requirement of a prolonged course of specialized instruction despite its distance from campus.”

Despite Paul, the Labor Department continued to assert that pilots are not exempt in Kitty Hawk Air Cargo, Inc. v. Chao, 1004 WL 305603 (N.D. Tex. 2004) (Service Contract Act case), supported by the decision in Ragnone v. Belo Corp., 131 F. Supp. 2d 1189, 1193-94 (D. Ore. 2001), holding that a helicopter pilot was not exempt under 13(a)(1).

However, the district court in Kitty Hawk, relying on Paul, ruled on January 26 that the pilots at issue did in fact meet the requirements of the professional exemption. In addition, a number of commenters to the proposed FairPay rule argue that the Department should reconsider its position on pilots. Such commenters note that aviation degrees are now available from a few institutions of higher education. Further, pilots must complete classroom training, hours of flying with an instructor, pass tests and meet other requirements to obtain FAA licenses. Because of the conflict in the courts, and the insufficient record evidence on the standard educational requirements for the various pilot licenses, the Department has decided “not to modify its position on pilots at this time.”

To be decided by experts on the subject of overtime rules is whether what the Department of Labor states as the guideline for overtime pay–$23,660 per year, or $455 per week–applies to pilots and, in particular, to corporate jet pilots.

It is not exactly unusual for a government agency that does not have a primary responsibility for aviation matters but does have some minor regulatory role to play to make decisions that do have some effect on those they feel obliged to regulate. The IRS in its initial decisions on time-sharing operations and the Transportation Security Administration in prohibiting GA use of Ronald Reagan Washington National Airport come to mind.

What appears to be usual, however, is the reluctance of those government agencies to accept how the real world of aviation functions. At this point, company paymasters will have to resolve how FairPay will apply to pilots on their payrolls.