Court Rejects Vermont Overtime Appeal

MANHATTAN (CN) - Vermont did not waive sovereign immunity by removing a lawsuit by state employees to federal court, the Second Circuit ruled, affirming dismissal of the case.

"Plaintiff's argument misunderstands the difference between the applicability of a federal statute to a state enacting lawful obligations upon the state, and the state's amenability to a private entity's suit to enforce such an obligation," Judge Pierre Leval wrote for a three-person panel. "There is no doubt that the FLSA [Fair Labor Standards Act] applies to Vermont and creates a legal obligation on Vermont to pay its employees in accordance with the statute's terms. Nonetheless, Vermont's sovereign immunity - unless waived or forfeited - bars suit by a private entity seeking to enforce the FLSA's terms."

The decision Wednesday ensures that no court will hear the merits of the case, which alleged that Vermont's deductions from salaried workers' paychecks meant that they ewre actually hourly workers eligible for overtime back pay.

More than 700 former and current Vermont state employees brought the lawsuit over reductions Vermont employees saw in their weekly pay for taking partial absences in excess of their accrued leave.

The employees argued that the pay reductions indicate that they are not paid on a salary basis, under federal law, and that they therefore are entitled to overtime pay.

Since Vermont removed the case to federal court, the workers contended that the state had waived its 11th Amendment immunity from federal suit.

Leval and his colleagues agreed but found nevertheless that Vermont did not waive its general sovereign immunity.

"It would be unfair to allow a state which is liable in its own courts to remove a suit from its own courts to federal court and thereby escape all liability on the ground that the federal court lacks power to impose liability on the state," the 23-page opinion states. "On the other hand, neither logic nor precedent supports the proposition that a state waives its general state sovereign immunity by removing an action from state court to federal court."

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