Steve Rawson

PANC – April 30, 2024

The Fair Labor Standards Act: Refresher and New Rules

THARRINGTON SMITH, LLP

Today’s Agenda

FLSA Basics

New Rules from the DoL

Coaches and Volunteers

Practical Tips

Hypotheticals/Scenarios

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Obligatory Disclaimer

This is an informational presentation about general legal issues, not specific legal advice on any given case or individual. Answers to questions should be considered responses to general topics or hypothetical scenarios. Please contact your Board’s attorney for specific legal advice on individual matters.

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FLSA Basics

From 30,000 feet…

• Provides a minimum hourly wage for covered (“non-exempt”) employees.

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• Requires payment to non-exempt workers of overtime or compensatory time at a time and a half rate for hours worked over 40 in a given workweek.

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• Requires employers to record the hours of non-exempt employees.

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FLSA Basics

Noncompliance Penalties

• Can include double wage damages.

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• The employer pays attorney fees if the employee wins.

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• $1000 penalty for each willful violation.
• DoL recovered over $234 million in 2021 alone!

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• The statute of limitations is two years, extended to three for willful violations.

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A variation on the “Wedding Game”

Who has had the employee with the most accumulated comp time before HR took action?

FLSA Basics

Exempt Employees

• “Professional” employees, including teachers, media coordinators, school psychologists

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• “Administrative” employees, including assistant principals, who also are exempt as professionals

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• “Executive” employees

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• “Highly Compensated” employees
• “Computer” employees

FLSA Basics

What makes someone exempt?

• Meeting the salary threshold, and…
• Supervisory duties and/or discretion in performing duties often are central to deciding whether an employee is exempt.
• “Administrative” exemption does not apply to clerical, bookkeeping, or other “administrative staff”
• “Executive” exemption does not apply to every supervisor
• “Computer” exemption does not apply to every IT employee

Audience Participation:

Who are your Executive / Administrative / Professional Employees?

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FLSA Basics

Non-Exempt Employees

• Teacher assistants
• Custodians
• Media assistants
• School bus drivers
• Clerical employees
• School nurses, if L.P.N.
• Anyone else who does not meet the test for executive, administrative, or professional employees.

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Who is (usually) non-exempt?

• Hourly workers (not dispositive).

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• Workers whose jobs did not require advanced training.

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• Workers who do not exercise significant independent judgment in the course of their duties

FLSA Basics

What Counts as “Work Time”?

• Emergency work (and possibly travel) time. DOL takes no position on whether travel to the regular jobsite for emergency work is compensable. However, time required for an employee to travel “a substantial distance” on an emergency call may be compensable.

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• Time spent in adjusting grievances between employer and employee, when the employee is required to be on the premises.

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• Make ready or stand-by work time.

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FLSA Basics

What Counts as “Work Time”?

• Meal periods if the employees are not free to leave or the time is too short to be useful for employees.

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• Meal periods of 30 minutes or more generally are not compensable, if the employee is not assigned any duties during the period and is free to leave.

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• Rest periods of 20 minutes or less.

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• On-call time when liberty is restricted.

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• Time spent awaiting medical attention at the employer’s direction during normal work hours.

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FLSA Basics

What Counts as “Work Time”?

• Time spent in civic or charitable work at the employer’s request.

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• Travel from job site to job site during the workday.

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• Overnight travel away from home. If the travel is as a passenger, the employee’s time is compensable during the employer’s regular working hours (applied also to Saturday and Sunday). If the employee elects to drive, the compensable time is actual driving time, or the time that would have been compensable had the employee used public transportation.

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FLSA Basics

What Counts as “Work Time”?

• Meeting attendance required by the employer.

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• Training given by employer designed to improve the employee’s job performance. Training offered by an independent provider and taken on the employee’s own initiative is not compensable.

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FLSA Basics

FLSA Basics

There is no such thing as “voluntary” work in one’s regular capacity

Approved Overtime and “Voluntary” Work

• If the employer “suffers or permits” employees to work outside regular hours, the time is compensable.

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• Policies stating that overtime work must be authorized does not insulate the employer from liability for compensable time.

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• The employer must affirmatively prevent employees from working extra hours.
• Discipline is allowed for excessive “voluntary” work
• But still must pay for the overtime

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FLSA Basics

“But I thought we could…”

Common Employer Mistakes

• Assuming that the employee is not entitled to overtime because he/she worked the time “voluntarily” and without expecting pay.

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• Pro Forma timesheets.

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• Assuming that an employee loses rights because he/she chose not to record time.

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• Failing to record work performed at home (e.g., contacting substitutes) is time worked for FLSA purposes.

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FLSA Basics

“But I thought we could…”

Common Employer Mistakes

• Failing to compensate employees for required attendance at meetings, which may be time worked.

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• Required training often will be time worked.

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• Failing to consider FLSA implications of coaching contracts.

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• Assuming that a “salaried” employee is exempt.

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• Not taking compliance seriously.

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FLSA Basics

Overtime just got REAL!

New Dept. of Labor Rules - Overtime

• New thresholds for exempt / non-exempt classification
• Impact: More employees will qualify for overtime / comp time
• Before July 1, 2024: $684 per week ($35,568/yr)
• After July 1, 2024: $844 per week ($43,888/yr)
• After Jan 1, 2025: $1128 per week ($58,656/yr)
• After July 1, 2027: TBA based on formula

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FLSA Basics

Bring back the old rules…

New Dept. of Labor Rules – Ind. Contractors

Return to the “Economic Reality” factors:

• Opportunity for profit or loss based on managerial skill.
• Investments by the worker and the potential employer.
• Degree of permanence of the relationship.
• Nature and degree of control.
• Extent to which the work performed is an integral part of the potential employer’s business.
• Skill and initiative.

Special Problem Areas

What Do I Do With…

“Dual Role” Employees

• Can employ “dual role” employees (example: TA / bus driver)
• Can be paid different rates for each role
• Overtime is based on TOTAL hours, irrespective of which role
• Calculate overtime based on weighted “blended rate”

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Special Problem Areas

What Do I Do With…

“Dual Role” Employees

How to Calculate Overtime for “Dual Role” Employees

• Works 30 hours as a TA at $25/hr, 20 hours as a bus driver at $15/hr
• Qualifies as non-exempt so overtime is required
• 10 total hours of overtime must be paid
• Weighted blended rate would be…
• (30x$25)+(20x$15) / 50 = $21/hr blended rate
• $21 x 10 hrs = $210 in overtime pay

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Special Problem Areas

What Do I Do With…

Digital and Telework Issues

• Constant access to work and technology creates risk of uncompensated work time
• If non-exempt employees are checking/responding to emails after hours, time could be compensable
• If non-exempt employees are continuing their workday at home, their commute time could become compensable

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Special Problem Areas

What Do I Do With…

Coaches

Must I pay overtime or comp time for coaches?

• Teachers and other exempt employees are not entitled to overtime or compensatory time.

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• Non-exempt employees must receive overtime or compensatory time for hours in excess of 40 during a given work week.

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Special Problem Areas

What Do I Do With…

Coaches

Can Non-Exempt Employees Volunteer as Coaches?

Under FLSA: Someone who works for a public employer can volunteer to perform services for the public employer if:

(1) The employee is not coerced, and

(2) the employee is not volunteering to perform the “same services” as those for which the employee is paid.

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Special Problem Areas

What Do I Do With…

Coaches

Can Non-Exempt Employees Volunteer as Coaches?

The determination will depend on the circumstances. However, the U.S. Department of Labor has indicated in an opinion letter that “building service workers, secretaries, food service workers, carpenters and similar support service workers” are not performing the same services when coaching sports or cheerleaders.

• BUT…DOL has issued an opinion letter stating that teacher assistants who coach may not be performing the same services while coaching.

Purdham v. Fairfax Co. School Board

• 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.
• He earned approximately $25 per hour for this position.
• He was paid a stipend of $2,114 for coaching, plus reimbursement for mileage, which amounted to approximately $6 per hour.
• The court concluded that he was a volunteer.

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Special Problem Areas

Special Problem Areas

What Do I Do With…

Coaches

When Non-Exempt Employees Are Paid to Coach…

• The employer must keep records of hours worked.
• The employer must pay minimum wage.
• The employer must pay overtime or offer compensatory time at time and a half, unless the coaching work is in a different capacity from regular work and is “occasional and sporadic.” (DOL has issued the opinion that athletic coaching is not occasional and sporadic, although cheerleader coaching may be.)

Practical Tips/Guidance

Check Board Policies

• Policy 7500 (Workday and Overtime)
• Sets length of workday
• Defines the workweek
• Defines overtime and comp times rules and limits
• Policy 7510 (Leave)
• Usually has a section on Compensatory Leave Use
• See also Benefits and Employment Manual (Section 9.1)

Practical Tips/Guidance

Keep Good Records!

• N.C. law permits school systems to prepay employees. G.S. 115C-316(a)(1).
• If you prepay, be sure that any additional time worked is compensated or banked as compensatory time.
• Do your time records reflect actual time worked?
• Notify all employees that time sheets must reflect actual time worked.
• Train employees on this point regularly.
• Audit time sheets.

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Practical Tips/Guidance

Keep Good Records!

• Train bookkeepers and others on record-keeping requirements, overtime rules and other aspects of the law.

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• Records must be maintained for a minimum of three years (or when released from all audits, whichever is later) under federal and state law.

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Practical Tips/Guidance

Train Supervisors and Employees

• Make required postings, but don’t rely on them to substitute for training.
• Review your FLSA policy and include it in employee handbooks with an emphasis on accurate timekeeping.
• Audit worksite records for obvious problems such as pro forma timekeeping.

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True or False? And why?

1. An assistant principal may earn comp time.

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• A custodian may volunteer to help out in a classroom for exceptional children.

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Hypotheticals / Scenarios

True or False? And why?

3. A TA may volunteer to coach.

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• Clerical staff may call for substitutes from home.

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Hypotheticals / Scenarios

True or False? And why?

5. If a non-exempt employee leaves work two hours early for a doctor’s appointment on a Friday, she may make it up the next Monday.

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• A clerical staff member may be expected to work until her work is complete.

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Hypotheticals / Scenarios

True or False? And why?

7. Non-exempt employees get paid for their lunch break.

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• Non-exempt employees may volunteer to arrive at work early or stay at work late as long as they clock in and out at their designated work times.

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Hypotheticals / Scenarios

True or False? And why?

9. It is at the principal or supervisor’s discretion whether to allow an employee to work overtime.

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• Clerical staff may take work home to finish while they watch TV.

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Hypotheticals / Scenarios

True or False? And why?

11. A non-exempt employee is only required to complete a time sheet for their established work hours.

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• Teacher assistants may volunteer to work at fall festival.

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Hypotheticals / Scenarios

True or False? And why?

13. If a TA works 30 hours in a work week and also drives a bus for 20 hours that same week, she is not eligible for overtime.

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• Attorneys earn overtime.

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• Teacher assistants are entitled to morning and afternoon breaks.

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Hypotheticals / Scenarios

• https://www.dol.gov/agencies/whd/compliance-assistance/handy-reference-guide-flsa

A Handy Resource