THE FAIR LABOR STANDARDS ACT: AN OVERVIEW

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1 THE FAIR LABOR STANDARDS ACT: AN OVERVIEW MATERIALS BY: ALLISON SCHAFER, LEGAL COUNSEL/DIRECTOR OF POLICY PRESENTED BY: CHRISTINE SCHEEF, STAFF ATTORNEY NORTH CAROLINA SCHOOL BOARDS ASSOCIATION July 2013

2 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.

3 This presentation is copyrighted by the North Carolina School Boards Association. Unauthorized copying or distribution is prohibited.

4 SCOPE OF FLSA Sets minimum wage. Requires overtime pay for certain employees. Requires equal pay for women. Sets child labor standards.

5 WHO IS COVERED BY THE FLSA? Employees Not all employees are entitled to overtime Not all employees are entitled to minimum wage

6 WHO IS NOT COVERED BY THE FLSA? Elected officials (including school board members) Volunteers Independent contractors Trainees (e.g., student teachers)

7 VOLUNTEERS

8 MUST BE BONA FIDE Individuals who perform Not employed by the school hours of service for a public agency for civic, charitable, humanitarian reasons, without promise, system to perform the same type of services as those for which the employee proposes to volunteer expectation or receipt of compensation for services rendered (other than expenses, reasonable benefits, or nominal fee)

9 PURDHAM V. FAIRFAX CO. SCHOOL BOARD 4 th Circuit case in 2011 Plaintiff worked 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

10 I S S U Was plaintiff an employee entitled to overtime wages for his services as the golf coach, or was he a volunteer? E

11 MR. PURDHAM CLAIMED: Entitled to overtime pay, Contract and state law because he is an dictate that he is an employee employee He never considered Too late for Board to himself a volunteer, claim he is not an therefore he is an employee employee Performs the same types of duties in his regular job as in coaching job

12 COURT 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

13 COURT CONCLUDED (CONT D): Contract and state law are not relevant issue is controlled by FLSA Duties in regular job and coaching job are not same Paid a nominal fee Although the board previously paid overtime, board was just trying to comply with FLSA in uncertain environment Stipend is fixed, rather than based on time, effort, or productivity Stipend is less than minimum wage and salary

14 INDEPENDENT CONTRACTORS 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.

15 EMPLOYEES EXEMPT V. NONEXEMPT

16 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.

17 C A T E G O R I E S Executive Administrative Professional Highly compensated

18 EXECUTIVE EMPLOYEES Must be compensated on a salary of fee basis, with a salary of at least $455 per week or $23,660 per year Must customarily and regularly direct the work of two or more other employees Primary duty must include managing the enterprise or a recognized subdivision Must have the authority to hire, fire, or promote or have their recommendations be given special weight

19 ADMINISTRATIVE EMPLOYEES 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.

20 PROFESSIONAL EMPLOYEES 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.

21 HIGHLY COMPENSATED EMPLOYEES 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.

22 NONEXEMPT EMPLOYEES Every employee who For each hour worked does not fall within in excess of 40 during one of the exempt a week, the employee categories is entitled must be paid time and to the minimum wage a half or provided and overtime compensatory time. provisions of the FLSA.

23 NONEXEMPT EMPLOYEES 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.

24 MINIMUM WAGE 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.

25 HOURS WORKED 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)

26 WORKWEEK 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).

27 VOLUNTARY WORK 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.

28 MEAL PERIODS 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.

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

30 ON-CALL TIME 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 oncall time is not compensable.

31 TRAINING 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.

32 TRAVEL TIME 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.

33 OVERTIME 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.

34 COMPENSATORY TIME 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.

35 COMPENSATORY TIME 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.

36 EQUAL PAY REQUIREMENTS 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.

37 RECORD KEEPING REQUIREMENTS 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.

38 NONEXEMPT EMPLOYEE RECORDS 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.

39 EXEMPT EMPLOYEE RECORDS Must also include the following information. Salary and wages, including the amount and date paid; and The basis for classifying the employee as exempt.

40 FLSA VIOLATIONS WHAT SANCTIONS MIGHT BE IMPOSED?

41 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.

42 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.

43 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 th Cir. 2012)

44 12-STEP COMPLIANCE CHECKLIST

45 COMPLIANCE CHECKLIST 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.

46 COMPLIANCE CHECKLIST 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

47 COMPLIANCE CHECKLIST 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.

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