The Fair Labor Standards Act (FLSA) is a deceptively simple statute: all eligible school employees who work more than 40 hours in a workweek must receive overtime pay. But what exactly is “time worked,” and which employees are eligible for overtime pay?
Every school district supervisor and administrator needs a basic working knowledge of these core requirements of the FLSA. The benefits of supervisory training are twofold. First, it ensures that all eligible employees receive fair compensation. Second, it protects the school district from costly claims that may arise due to noncompliance. When a school district fails to pay overtime wages, the employee may be entitled to double back pay, plus attorney’s fees and court costs. This article will provide an overview of the FLSA’s core requirements pertain- ing to overtime pay. It will focus in particular on what time is considered “time worked” for which the employee is entitled to overtime pay.
Who is eligible under the FLSA?
The FLSA classifies employees either as “exempt” or “non-exempt.” Exempt employees are salaried employees who are not entitled to overtime pay. Exempt employees receive the same salary no matter how many hours they work in a workweek. Non-exempt employees receive the full protection of the FLSA. They are entitled to an overtime premium of one and one half times their regular hourly rate of pay for all hours worked in excess of 40 hours in a workweek. School districts and other public employers also have the option of offering compensatory time (paid time off) in lieu of overtime pay.1
A person’s non-exempt status is determined by his or her actual job duties. Job titles do not determine exempt status. All employees should be treated as non-exempt unless they qualify under a specific exemption authorized by the FLSA. The stat- ute exempts “executive,” “administrative,” and “professional” employees (the so-called white-collar exemptions). Under cur- rent regulations, to qualify for an exemption, employees must perform certain job duties involving discretion, judgment, or higher learning and must be paid a salary of $455 per week. (The salary requirements do not apply to teachers.)
The “executive” exemption generally applies to employ- ees with hiring and firing authority and whose primary duty is managing the enterprise or managing a customarily recognized department or subdivision of the enterprise. See 29 C.F.R. § 541.100. The “administrative” exemption generally applies to individuals whose primary duty is the performance of office or non-manual work directly related to the management or gen- eral business operations of the district and whose primary duty includes the exercise of discretion and independent judgment with respect to “matters of significance.” 29 C.F.R. § 541.200. This exemption encompasses a wide range of management posi- tions, such as those involving finance, accounting, purchasing and procurement, marketing, personnel management and human resources, and computer network, Internet and database admin- istration. This exemption applies to superintendents, principals, their assistants who are responsible for the administration of such matters as curriculum, quality, and methods of instructing, and academic counselors.
The “learned professional” exemption applies when the employee’s primary duty is the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; the advanced knowledge must be in a field of science or learning; and the advanced knowledge must be customarily acquired by a pro- longed course of specialized intellectual instruction. 29 C.F.R. § 541.300-.301. School district examples include a classroom teacher, a school attorney, registered nurse, and a certified public accountant. A teacher is an employee whose primary duty is “teaching, tutoring, instructing or lecturing in the activity of imparting knowledge and who is employed and engaged in this activity as a teacher in an educational establishment by which the employee is employed.” 29 C.F.R. § 541.303. “Those faculty members who are engaged as teachers but also spend a consid- erable amount of their time in extracurricular activities such as coaching athletic teams or acting as moderators or advisors in such areas as drama, speech, debate or journalism are engaged in teaching.” 29 C.F.R. § 541.303(b). Substitute teachers also may qualify for the professional exemption if the “duties” test is satisfied. See DOL Opinion FLSA2008-7.
The creative professional exemption applies when the em- ployee’s primary duty involves the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor. 29 C.F.R. § 541.302. Another common exemption is the “computer employee” exemption. This exemption applies to individuals who are employed as a computer systems analyst, computer programmer, software en- gineer or other similarly skilled worker in the computer field, who perform certain specified high-level computer functions, and who make either $455 per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour. 29 C.F.R. § 541.400. Additional information regarding classification of employees as exempt or non-exempt is available on the website of the U.S. Department of Labor.2
Restrictions on Exempt Employees
Deductions from pay generally disallowed: Exempt employees must be paid on a “salary basis.” Being paid on a “salary basis” means an employee regularly receives a prede- termined amount of compensation each pay period. 29 C.F.R. § 541. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work. The general rule is that exempt employees will receive their full salary for any week in which they perform any work, regardless of the number of days or hours worked. (Exempt employees do not need to be paid for a workweek in which they perform no work.) If the employer makes deductions from an employee’s predetermined salary, then the employee is no longer paid on a “salary basis” and there is a risk to the district that overtime will need to be paid.
Exceptions to the no-deductions rule: Deductions from pay are permissible when an exempt employee is absent from work for one or more full days for personal reasons other than sickness or disability; for absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide sick leave plan or policy; to offset amounts employees receive as jury or witness fees, or for military pay; for penalties imposed in good faith for infractions of safety rules of major significance; or for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions. The school district also is not required to pay the full salary for weeks in which an exempt employee takes leave under the Family and Medical Leave Act.
The FLSA also allows school districts to make deductions for partial-day absences so long as the employees are paid ac- cording to a “pay system established by statute, ordinance, or regulation, or by a policy or practice established pursuant to principles of public accountability,” under which an employee accrues personal leave and sick leave. 29 C.F.R. § 710. This “public accountability” exception recognizes that local govern- ments are accountable to taxpayers and that taxpayers believe that employees should be paid only for time actually worked. This exception requires the local government to prove that its policy “is consistent with the government’s efforts to maintain a precise accounting of its employees’ hours for reasons that extend beyond calculating an appropriate salary.” Demos v. City of Indianapolis, 302 F.3d 698, 703 (7th Cir. 2002) (upholding city policy that required docking for partial-day absences; state law generally prohibited non-working employees from receiving compensation, and the city also had a written code of ethics that prohibited the city from paying people who had not worked). The Texas Education Code’s paid leave program is an example of a pay system that qualifies under the “public accountability” provision. See Tex. educ. code § 22.003.
Effect of extra payments beyond the regular salary: Al- though exempt employees are not entitled to extra pay for working more than 40 hours in a week, nothing in the FLSA prohibits paying exempt employees extra compensation for “overtime” hours. See Bass v. City of Jackson, Miss., 2013 WL 5199866 (5th Cir., Sept. 17, 2013) (“Paying [exempt] employees an hourly rate for work done beyond a regular schedule does not defeat the executive or administrative exemption.”) (citation omitted).
The Overtime Rule
General overtime rule: All non-exempt employees who work more than 40 hours in a “workweek” must be compensated at a rate “not less than one and one half times the regular rate at which he is employed.” 29 U.S.C. § 207(a) (1). The school district can adopt any workweek it desires (e.g., Sunday through Saturday or Monday through Sunday) as long as the week con- sists of seven consecutive 24-hour days. 29 C.F.R. § 778.105. Because the focus of the FLSA is the 40-hour “workweek,” overtime pay is not required simply because an employee works more than eight hours in a single day. So long as the employee does not exceed 40 hours in a week, there is no requirement for overtime pay. 29 C.F.R. § 778.102.
The FLSA also does not prohibit school districts from avoid- ing overtime by sending employees home after they worked 40 hours in a workweek. For example, if an employee works 10 hours a day on Monday, Tuesday, Wednesday, and Thursday, a district may avoid overtime liability that would accrue on Friday by informing the employee that he or she does not need to work on Friday. This practice is lawful under the FLSA.
What hours are compensable time?
The FLSA defines “employ” to mean “suffer or permit to work.” 29 U.S.C. § 203(g). When work is not requested, but is “suffered or permitted” by the supervisor, the time is com- pensable. The Department of Labor has provided guidance on a number of work situations that will constitute “time worked”:
Waiting Time: The key question is whether the employee was engaged to wait (which is work time) or whether the employee was waiting to be engaged (which is not work time).
On-Call Time: An employee who is required to remain on call on the district’s premises is working while “on call.” An employee who is required to remain on call at home, or who is allowed to leave a message where he or she can be reached if needed, is not working in most cases. If the district places additional constraints on the employee’s freedom, the time could become work time.
Rest and Meal Periods: Rest periods of short duration, usually 20 minutes or less, are customarily paid for as working time. These short periods must be counted as hours worked. Unauthorized extensions of authorized work breaks need not be counted as hours worked when the employer has expressly and unambiguously communicated that the authorized break may only last for a specific length of time, that any extension of the break is contrary to the employer’s rules, and any ex- tension of the break will result in discipline. Bona fide meal periods (typically 30 minutes or more) generally need not be compensated as work time; however, the employee must be completely relieved from duty. A secretary who eats lunch at her desk and occasionally answers the phone is working.
Lectures, Meetings and Training Programs: At- tendance at work-related or work-required lectures, meetings, training programs, and similar activities generally is considered working time. Reading train- ing materials at home or completing online training at home also may be compensable “time worked.” See Department of Labor (DOL) Opinion FLSA2009-15; DOL Opinion No. FLSA2009-13.
Travel Time: Some travel time is compensable. For example, if a district employee who regularly works at a fixed location is given a special one-day assignment in another city and returns home the same day, the time spent in traveling to and returning from the other city is work time, except that the employer may deduct the time the employee would normally spend commuting to the regular work site. Regular “home-to-work” travel is not compensable time.
The Problem of Unauthorized Overtime Hours
Under the FLSA, an employee is entitled to overtime pay for any hours actually worked that a supervisor approved and for hours that the supervisor knew were worked, even if the overtime hours were not authorized or approved. Thus, if a supervisor knows that a non-exempt employee is working dur- ing lunch or taking work home, the employee will be entitled to overtime pay. Under the FLSA, the employee must show that the supervisor knew, or should have known, that the employee was working overtime. See Kellar v. Summit Seating Inc., 664
F.3d 169, 177 (7th Cir. 2011). The FLSA imposes an obligation on the employer to “exercise its control and see that the work is not performed if it does not want it to be performed.” 29 C.F.R.
§ 785.13. The employer “cannot sit back and accept the benefits without compensating for them.” Id. The mere promulgation of a rule against unauthorized overtime work is not enough. Id.
The problem of unauthorized work can be particularly costly for school districts. Consider the example of a staff member who routinely works on projects each weekend with the tacit approval of her supervisor. Most weekends, she works approximately four additional hours. Assume that, after two years, she has accrued
400 additional hours of work. Under the FLSA, the employee would be entitled to two years of double backpay.3
When a district discovers that an employee has worked extra hours and that the employee’s supervisor knew or should have known about the extra hours, the district should acknowledge the time worked and compensate the employee accordingly; however, the district also should counsel the employee and su- pervisor for non-compliance with district policy. To avoid the problem of unauthorized overtime hours, school districts must train supervisors to consistently enforce the policy against unau- thorized overtime. Supervisors must communicate the message that working extra hours without permission or “off the clock” is unacceptable and could result in discipline.
Employees with Two Jobs
The FLSA recognizes that there might be occasions when a non-exempt employee, without coercion, wishes to perform oc- casional extra work that is unrelated to their regular job. When an employee volunteers to perform work on an “occasional and sporadic” basis, and the work is different from the employee’s regular job, the district will not owe overtime pay for the ad- ditional hours. The additional work must be occasional and sporadic, not regularly scheduled. Additionally, the employee will be entitled to at least minimum wage for the extra hours worked. See 29 C.F.R. § 553.30.
In DOL Opinion FLSA 2005-14, the DOL considered the situation of a full-time, non-exempt office assistant who wanted to perform the responsibilities of an exempt coordinator. The office assistant wanted to perform the coordinator’s duties in the evenings during her off-duty hours. The two positions were separate and distinct. The work performed as the coordinator would be more than occasional or sporadic. The DOL answered the following two questions:
(1) If an employee wishes to work two separate and distinct positions for a public employer, one exempt and the other nonexempt, can the employer treat the positions separately and therefore pay the employee for each position separately?
(2) If not, and an employee is hired for two separate and distinct positions, to which position is overtime pay suppose to be computed? In your situation, one posi- tion is nonexempt and the other is exempt. The exempt position is the higher paying position.
To answer these questions, one must analyze the employee’s “primary duty.” The term “primary duty” means the “principal, main, major or most important duty that the employee performs,” with the major emphasis on the character of the employee’s job as a whole. The “amount of time spent performing exempt work can be a useful guide in determining whether exempt work is the primary duty of an employee. Thus, employees who spend more than 50 percent of their time performing exempt work will generally satisfy the primary duty requirement. Time alone, however, is not the sole test….” 29 C.F.R. § 541.700(b). Based on these rules, if the primary duty of the employee is the perfor- mance of work as the exempt coordinator, the DOL opined that “the exemption(s) under Part 541 would apply. In that case, no additional compensation beyond the guaranteed salary required for exemption would be mandatory.” However, if the primary duties are duties performed as a non-exempt office assistant, then the exemptions under Part 541 would not apply, in which case “overtime is computed based on the combined total hours for both positions.”
In this situation, the public employer may not calculate overtime for each position separately, but must aggregate the total hours spent on both jobs in a workweek to determine the number of overtime hours worked. Once the combined total number of hours is determined, the rate of overtime pay due may be computed using either of two methods. One provision,
29 C.F.R. § 778.115, states that where an employee in a single workweek works at two or more different types of work for which different straight-time rates of pay (not less than the minimum wage) have been established, the regular rate for that week is the weighted average of such rates. That is, the earnings for all such rates are added together and this total is then divided by the total number of hours worked at all jobs. Pursuant to Section 7(g)(2) of the FLSA, an employer alternatively may pay an employee overtime at one-and-one-half times the bona fide rate applicable to the type of work being performed during the overtime hours. See 29 C.F.R. § 778.415-.421.
Volunteers and the FLSA
Because non-exempt employees are entitled to be paid for “time worked,” the FLSA protects employees from being com- pelled to “volunteer” their time on projects that are work-related. Under the FLSA, employees may not “volunteer” their time on school projects except in the following situations:
1. They are offering their services freely and without pressure or coercion;
2. The volunteer activity is different from their regular job
(i.e., it does not involve the “same type of services”); and
3. The individual performs the service without promise, expectation, or receipt of compensation for services rendered (however, a volunteer can be paid expenses, reasonable benefits, or a nominal fee to perform services).
See 29 U.S.C. § 203(e)(4)(A); 29 C.F.R. §§ 553.101, .103, .104, .106. The definition of “volunteer” should be applied in a “common-sense manner, which takes into account the total- ity of the circumstances surrounding the relationship between the individual providing services and the entity for which the services are provided.” Cleveland v. City of Elemdorf, 388 F.3d 522, 528 (5th Cir. 2004).
If the volunteer activity is the same as the employee’s regular work duties, then the employee will be owed compensation. In Knowlton v. Greenwood Indep. Sch. Dist., 957 F.2d 1172 (5th Cir. 1992), cafeteria workers were required to “voluntarily” serve meals, after hours and without pay, at school board meetings. Eventually, the employees filed suit. The district argued that the workers had served the meals voluntarily and were not entitled to compensation. The court disagreed that the activity was vol- untary; therefore, double backpay was owed to the employees.
Volunteers may receive a “nominal” fee for their services without being deemed to be employees. 29 C.F.R. § 553.106(a) (allowing payment of expenses, reasonable benefits, or nominal fee without losing volunteer status). If the fee is not truly nomi- nal, then the individual would not be a volunteer but would be considered an employee who is protected by the FLSA. A fee is not nominal if it is a substitute for compensation or tied to productivity. The factors for making this determination include: (1) the distance traveled and the time or effort required of the volunteer; (2) the availability of a volunteer to provide services; (3) the basis (“as needed” or throughout the year) on which the volunteer agrees to perform services. See DOL Opinion FLSA2006-40. The DOL will presume that the fee paid is nominal so long as the fee does not exceed 20 percent of what the school would otherwise pay to hire a full-time employee for the same services. Id. at 4.
Given the unique nature of the public schools, the DOL has recognized some special circumstances involving volunteers. See Opinion No. FLSA 2006-40. For example, the DOL will permit a non-exempt employee to volunteer at his or her own child’s school. According to the DOL, the employee is not entitled to overtime pay for time spent on activities “directly involving the child’s education and participation.” Similarly, the DOL will permit a secretarial or clerical employee to perform volunteer services for the local PTA so long as the PTA is independent of the school district. The DOL also has commented on the practice of paying non-exempt employees a flat $10 or $20 for participating at extracurricular activities as chaperones, proctors, or crowd control monitors. According to the DOL, the district must analyze whether the fee constitutes a “nominal” fee using the factors described above. See Opinion No. FLSA 2006-40.
Another common FLSA issue is the treatment of wages of volunteer coaches. In some districts, coaches are exempt educators, but, in others, the coaches are volunteers who receive a nominal fee for their service. The treatment of coaches was examined in the recent case Purdham v. Fairfax County Sch. Bd., 637 F.3d 421 (4th Cir. 2011). In Purdham, the plaintiff was employed as a full-time, non-exempt “safety and security assistant” by a school district. For fifteen years, he also volun- teered as the high school golf coach. Plaintiff’s job as a security assistant was not conditioned on his coaching activities, and he was free to stop coaching at any time. As coach, the plaintiff supervised two teams, coached at daily practices and tourna- ments, responded to parent emails, arranged team finances, and oversaw community service and fundraising activities for team members. The golf coach estimated that he spent 400 to 450 hours annually on coaching activities. The school permitted the coach to work on coaching activities during his regular workday as a security assistant. Plaintiff was reimbursed for his coaching expenses and received a flat stipend of $2,114.00 for his volunteer service as a coach. The stipend for all coaches was the same regardless of team success or hours spent on coaching. (Most of the coaches at the district were salaried health and physical education teachers.)
After years of paying flat stipends, the school board became concerned about potential liability under the FLSA and decided to pay all non-exempt employees for overtime hours incurred while serving as coaches. Plaintiff was retroactively paid overtime wages for hours he spent on coaching duties for two school years. The school district further announced that, in the future, it would no longer permit non-exempt employees to coach extracurricular activities. Before the school district could implement its new policy, however, the Department of Labor issued an opinion let- ter that said that full-time, non-exempt employees, in fact, were properly deemed “volunteers” in connection with their coaching activities. Consequently, the district informed its employees that, in the future, it would not pay any overtime wages to employees who “volunteered” to coach. The golf coach sued. He argued that he was not a “volunteer.”
The court of appeals held that the plaintiff was a “volunteer” under the FLSA exemption applicable to public employment. The court rejected plaintiff’s argument that he never intended to be classified as a volunteer. The evidence showed that the plaintiff was motivated to serve, in significant part, by humanitarian and charitable instincts. He loved golf and loved coaching student athletes. The court also rejected plaintiff’s contention that his coaching stipend was more than a “nominal fee” permitted by law, as it was set regardless of his time and effort.
To avoid disputes pertaining to volunteer activities, districts should adopt policies and guidelines that prohibit non-exempt employees from volunteering for projects that are similar to their regular jobs and that prohibit supervisors from directly or indi- rectly coercing employees to volunteer for projects. The policy should provide guidance regarding the limited circumstances in which volunteers may receive a stipend or fee. Finally, districts should develop appropriate forms so that the district can prop- erly track volunteer projects and hours and ensure compliance with the FLSA.
The burden is on school district supervisors – not employees – to keep accurate records of all hours worked. In the event of litigation in which accurate records are not available, the employee will be permitted to testify about the hours that he claimed to have worked. In Anderson v. Mount Clemens Pottery Co., 328 U.S. 680 (1946), the U.S. Supreme Court held that an employee has carried his burden of showing hours worked by producing “sufficient evidence to show that amount and extent of that work as a matter of just and reasonable inference.” The burden then shifts back to the employer to produce evidence “of the precise amount of work performed or with evidence to [negate] the reasonableness of the inference to be drawn from the employee’s evidence.” Because it usually is difficult for an employer to produce evidence of the “precise” number of hours worked by an employee years earlier, this standard tends to favor employees.
Rather than risk the uncertainty of human memory, dis- tricts will be well-served by complying with the record-keeping requirements of the FLSA and by training supervisors so that they understand the requirements. FLSA requires employers to keep accurate records as to all employees. 29 C.F.R. § 516.2. Records in bold print are required to be kept only for non- exempt employees:
1. name in full, as used for social security purposes;
2. home address, including zip code;
3. date of birth, if under age 19;
4. sex and occupation;
5. time of day and day of week on which the employee’s work week begins;
6. regular hourly rate of pay and any workweek in which overtime compensation is due. The basis for the regular rate, and any exclusions therefrom, must also be explained;
7. hours worked each workday and total hours worked each workweek;
8. total daily or weekly straight-time earnings of wages due for hours worked during the workday or workweek;
9. total premium pay for overtime hours;
10. total additions to, or deductions from, wages paid each pay period;
11. total wages paid each pay period;
12. date of payment and the pay period covered by payment. Employers must preserve for a period of three years: all
payroll records, comp-time agreements, collective bargaining agreements, individual contracts, certificates and notices required under the Act, sales and purchase records. 29 C.F.R. § 516.5. Employers shall preserve for a period of two years: all time cards or time sheets, wage rate tables, order, shipping and billing records, and records of additions to or deductions from wages paid. 29 C.F.R. § 516.6. These records must be kept in a “safe and accessible” place and available for inspection by the Depart- ment of Labor within 72 hours of request. 29 C.F.R. § 516.7(a).
Finally, posters explaining the FLSA’s minimum wage and overtime provisions must be placed “in conspicuous places in every establishment where [covered] employees are employed so as to permit them to observe readily a copy.” 29 C.F.R. § 516.4. Posters must be placed where the district’s non-exempt workers can see them. The official poster may be downloaded at www. dol.gov/oasam/programs/osdbu/sbrefa/poster/main.htm.
The Fair Labor Standards Act serves the important public policy of ensuring that hourly wage workers receive a fair wage when they are called upon to work more than 40 hours in a week. The costs of non-compliance with the FLSA can be high, particularly when large numbers of employees in the same area are misclassified or fail to accurately report their time. Compliance with the FLSA is best achieved through periodic training of supervisors, dissemination of clear and simple poli- cies and procedures, consistent enforcement of those policies and procedures, and appropriate counseling and discipline when supervisors or employees are non-compliant.
1. In lieu of paying overtime compensation in cash, public employ- ers can chose to provide employees with compensatory time off (“comp-time”) in lieu of the cash compensation due the employee for overtime hours worked. 29 U.S.C. § 207(o)(1). The em- ployer must grant the employee one and a half hours of time off for every one hour of overtime worked. Id. For non-unionized employees, the comp time system must be established by “an agreement or understanding arrived at between the employer and the employee” and the employee’s decision to accept comp time must be “made freely and without coercion or pressure.”
29 C.F.R. § 553.23(c)(1).
3. In the case of “willful” violations, a three-year statute of limita- tions applies. 29 U.S.C. § 255.