THE FAIR LABOR STANDARDS ACT: AN OVERVIEW

T ^HE F ^AIR L ^ABOR

S ^TANDARDS A ^CT : A ^N O ^VERVIEW

July 2013

M^{ATERIALS BY}: A^LLISON S^CHAFER, L^EGAL C^OUNSEL/D^{IRECTOR OF} P^OLICY P^{RESENTED BY}: C^HRISTINE S^CHEEF, S^TAFF A^TTORNEY

N^ORTH C^AROLINA S^CHOOL B^OARDS A^SSOCIATION

Disclaimer

The information in this presentation is

informational only and does not constitute legal advice. No attorney-client relationship is created or intended through participation in this seminar or

through receipt or review of seminar

materials. For advice on specific matters, please

consult your board attorney or other legal counsel.

©This presentation is copyrighted by the North Carolina School Boards Association. Unauthorized copying or

distribution is prohibited.

S ^{COPE OF} FLSA



Sets minimum wage.



Requires overtime pay for certain employees.



Requires equal pay for women.



Sets child labor standards.

W ^{HO IS COVERED BY THE} FLSA?



Employees



Not all employees are entitled to overtime



Not all employees are entitled to

minimum wage

W ^{HO IS NOT COVERED BY THE} FLSA?



Elected officials (including school board members)



Volunteers



Independent contractors



Trainees (e.g., student teachers)

V ^OLUNTEERS

M ^{UST BE} “ ^{BONA FIDE} ”

 Individuals who perform

hours of service for a public agency for civic,

charitable, humanitarian reasons, without promise, expectation or receipt of compensation for services rendered (other than

expenses, reasonable benefits, or nominal fee)

 Not employed by the school system to perform the same type of services as those for which the employee

proposes to volunteer

P ^{URDHAM V} . F ^AIRFAX C ^O . S ^CHOOL B ^OARD

 4^th Circuit case in 2011

 Plaintiff worked 300-450 hours per year as a high school golf coach

 Regular overtime-eligible job was “safety and

security assistant,” a position not conditioned on his coaching assignment

 Paid a stipend of $2,114 for coaching, plus reimbursement for mileage

I S S U

E



Was plaintiff an employee

entitled to overtime wages for

his services as the golf coach,

or was he a volunteer?

M ^R . P ^{URDHAM CLAIMED} :

 Entitled to overtime pay, because he is an

employee

 He never considered himself a volunteer, therefore he is an employee

 Contract and state law dictate that he is an

employee

 Too late for Board to claim he is not an employee

 Performs the same types of duties in his regular job as in coaching job

C ^{OURT CONCLUDED} :

 Mr. Purdham is a volunteer

 Was motivated to

coach by love of golf and dedication to

student athletes

 Coaching v. another part-time job was a

“lifestyle choice”

 “Culture of high school athletics for coaches to consider themselves

volunteers”

 Board submitted 18 affidavits from other coaches who

considered themselves volunteers

C ^{OURT CONCLUDED} ( ^CONT ’ ^D ):

 Contract and state law are not relevant—

issue is controlled by FLSA

 Although the board previously paid

overtime, board was just trying to comply with FLSA in uncertain environment

 Duties in regular job and coaching job are not same

 Paid a “nominal fee”

 Stipend is fixed, rather than based on time, effort, or productivity

 Stipend is less than minimum wage and salary

I ^NDEPENDENT C ^ONTRACTORS

Factors to weigh in determining whether someone is an independent contractor:

 Degree of control exerted over the worker;

 Worker’s opportunity for profit or loss;

 Worker’s investment in his business;

 Permanence of the working relationship; and

 Degree of skill required to perform the work.

E

. N

E ^MPLOYEES

 There is a presumption that all employees are covered by the overtime provisions of the FLSA, unless the employer can prove otherwise.

 Employees who are protected by the overtime provisions are “nonexempt” employees.

 “Exempt” employees—high-level or professional employees who fit within one of the exempt

categories—are not entitled to receive overtime.

C A T E G O R

I E S



Executive



Administrative



Professional



Highly compensated

E ^XECUTIVE E ^MPLOYEES

 Must be compensated on a salary of fee

basis, with a salary of at least $455 per week or $23,660 per year

 Primary duty must

include managing the enterprise or a

recognized subdivision

 Must customarily and regularly direct the work of two or more other employees

 Must have the

authority to hire, fire, or promote or have their

recommendations be given special weight

A DMINISTRATIVE E ^MPLOYEES

 Must be compensated on a salary of fee basis, with a salary of at least $455 per week or $23,660 per

year

 Primary duty must include:

 Performing office or non-manual work directly related to management or performing working directly related to academic instruction and training; and

 The exercise of discretion and independent judgment with respect to significant matters.

P ROFESSIONAL E ^MPLOYEES

 Must be compensated on a salary of fee basis, with a salary of at least $455 per week or $23,660 per

year

 Primary duty must include either:

 Work requiring special knowledge or study, which is intellectual and includes the constant exercise of discretion and judgment; or

 Work requiring invention, imagination or talent in a recognized field of artistic endeavor.

H ^IGHLY C ^OMPENSATED E ^MPLOYEES

 Total annual compensation must be at least

$100,000;

 Duties must include one or more of the exempt responsibilities of an executive, administrative, or professional employee; and

 Primary duty must include office or non-manual work.

N ^ONEXEMPT E ^MPLOYEES

 Every employee who does not fall within one of the exempt categories is entitled to the minimum wage and overtime

provisions of the FLSA.

 For each hour worked in excess of 40 during a week, the employee must be paid time and a half or provided

compensatory time.

N ^ONEXEMPT E ^MPLOYEES

 Note that employees paid to work less than 40 hours per week who work extra time may have a claim for “straight time” for hours worked in excess of their normal workweek but less than 40 hours.

 This is in addition to a claim for overtime or

compensatory time when the employee works more than 40 hours during a week.

M ^INIMUM W ^AGE

 Current minimum wage is $7.25 per hour (both federal and

N.C.).

 The FLSA and N.C. labor laws both allow certain categories of employees to be paid at 85 percent of the minimum wage.

This includes full-time students, learners, apprentices and

disabled workers.

H ^OURS W ^ORKED

The FLSA requires that employees be compensated for all hours actually worked in a workweek,

including:

 Unscheduled hours.

 All time that a worker is required to be on duty, even if the time is not “productive.”

 Work performed at home or off-site (e.g., assistant calling substitute teachers from home before the workday begins)

W ^ORKWEEK

 An employee’s “workweek” consists of all time worked in a defined 24/7 period.

 By policy or procedure, school districts need to define when the workweek begins and

ends for all employees or for all categories of employees.

 For nonexempt salaried employees, the employment agreement should state the standard workweek

(40 hours or less).

“V ^OLUNTARY ” W ^ORK

 Employees who arrive early or stay late voluntarily must be paid for that time.

 Employers may not “suffer or permit”

an employee to “volunteer” to work extra time.

 An employee may not “volunteer to perform their regular duties off the clock without compensation.

M ^EAL P ^ERIODS

“Off the clock” if:

 The employee is relieved of all duties;

 The employee is free to leave the duty post; and

 The meal period is at least 30

minutes, subject to several special exceptions.

Note that coffee breaks and rest periods are compensable work time.

Not “off the clock if the employee performs any work during the meal period.

O ^N -C ^ALL T ^IME

 If an employee is required to remain at a

workplace or close by, such that the employee

cannot effectively use the time for personal reasons while on call, the employee must be paid for that time.

 If the employee is free to go about his or her normal life but is subject to being called to work, the on-

call time is not compensable.

T ^RAINING

 Time spent at an “in-service” training is normally compensable time.

 Training is not compensable if:

 Attendance takes place outside the employee’s regular working hours

 Attendance is voluntary;

 The employee performs no productive work during attendance; and

 The training is not directly related to the employee’s job.

T ^RAVEL T ^IME

 Travel to and from home is generally not

compensable, except when employees are called for an emergency and must travel a substantial

distance.

 Travel from one job site to another during the day

generally is compensable, except when the employee goes home first or is

otherwise free during the interim.

O ^VERTIME

 Overtime pay at the rate of 150 percent of the employee’s

“regular rate” of pay must be paid for all hours worked in excess of 40 during a given workweek.

 “Regular rate” of pay includes all salary, bonuses, and other pay.

 If an employee has two different pay rates, overtime is based on a weighted average of the two rates.

 Overtime should be paid as soon as possible—usually in the pay period in which it accrues.

 In lieu of overtime pay, compensatory time may be provided at a rate of one and one-half hours for each hour worked in excess of 40 during a given workweek.

C OMPENSATORY T ^IME

 Public agencies may choose to provide

compensatory time in lieu of overtime pay, if they do so pursuant to an agreement or understanding arrived at before the work is performed.

 Employees may only accrue a maximum of 240 hours of compensatory time. After that, overtime must be paid.

 Employees must be allowed to use compensatory time on the date requested unless it would unduly disrupt the operations of the agency.

C OMPENSATORY T ^IME

 An employee who has accrued compensatory time must be paid for the time when the

employee leaves the school district.

 The payout must be at the current rate of pay, not the rate of pay when the compensatory time was earned.

E ^QUAL P ^AY R EQUIREMENTS

 The FLSA requires that women be paid on the same scale as men for similar work.

 Reasonable pay differences are permitted if they are not gender-related.

 A seniority system or merit system would provide a reasonable basis for

differences in pay.

R ^ECORD K ^EEPING R EQUIREMENTS

 Records must be kept for all employees, including basic information such as name, social security

number, and date of birth.

 Employers must also keep records related to rate of pay and hours worked.

 There are different record

keeping rules for nonexempt employees and exempt

employees.

N ^ONEXEMPT E ^MPLOYEE R ^ECORDS

 Must also include the following information.

 The employee’s workweek;

 The employee’s regular hourly rate of pay;

 The hours worked by each employee each workday and the total hours worked each week;

 Total earnings, including a reflection of earnings separated out by regular pay and overtime pay;

 Deductions from and additions to pay; and

 Pay period covered and date of employment.

E ^XEMPT E ^MPLOYEE R ^ECORDS

 Must also include the following information.

 Salary and wages, including the amount and date paid;

and

 The basis for classifying the employee as exempt.

W

?

FLSA V ^IOLATIONS

 May face litigation, brought either by the

employee or the Department of Labor, suing on behalf of the employee

 With a successful lawsuit, the employee could be awarded double the amount of back wages due, plus interest, as well as attorneys fees and costs.

 The Department of Labor may initiate a full investigation of employer’s practices.

 For repeated or willful violations, employers may be subject to a civil penalty of up to $1,100 per

violation.

 Department of Justice may prosecute persons criminally for willful violations.

 Possible sanctions are a fine of up to $10,000 and up to six months in prison.

 Generally, a two-year

statute of limitations applies;

however, the statute of

limitations is three years for willful violations.

 An employer may not retaliate against an

employee for complaining about an alleged violation of the FLSA.

 This includes complaints made orally or in writing.

Katsen v. Saint-Gobin Performance Plastics Corp.

(131 S. Ct. 1325).

 Makes no difference if complaint was filed formally with a court or agency or communicated internally to the employer. Miner v. Bostwick Laboratories, 669 F. 3d 428 4^th Cir. 2012)

12-S ^TEP C ^OMPLIANCE C ^HECKLIST

1. Classify employees as exempt or nonexempt.

2. Have a board policy on the workweek, overtime and compensatory time. Make sure all employees have access to and understand the policy.

3. Notify nonexempt employees of their expected hours in a workweek.

4. Have a good timesheet or other method of timekeeping.

5. Annually train supervisory staff on FLSA compliance issues.

C ^OMPLIANCE C ^HECKLIST

6. Train nonexempt staff on timesheets and overtime requirements.

7. Decide whether employees will be permitted to volunteer.

8. Have all nonexempt employees annually sign:

 A statement acknowledging that the employee has received the board’s policy on work time, review it and agreed to follow it, and

 An agreement that the employee will be provided compensatory time for any overtime worked

C ^OMPLIANCE C ^HECKLIST

9. Have supervisory, payroll and finance staff monitor weekly time records.

10. Keep FLSA-required records for nonexempt and exempt employees.

11. Post all required federal and state posters.

12. Consult with your board attorney about FLSA

compliance and make sure you work together to address any outstanding issues.

C ^OMPLIANCE C ^HECKLIST