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Joan McKenna, Editor
The Fair Labor Standards Act: Recent
Revisions To Federal Overtime Regulations
Not long ago, a poor and
struggling school district in Mississippi, in an effort to
continue to scrape by on funding that barely covered its
basic expenses, informed all of its employees that they were
exempt and would not be paid overtime. But two school
secretaries believed the school district was unfairly
denying them overtime pay. They saved two years’ worth of
employment records and took those records to an attorney.
The attorney took the secretaries’ claim to court.
Ultimately, twenty-two other school district employees
joined in the overtime suit, claiming that the school
district had unlawfully denied them overtime pay. Within
two years of the filing of the lawsuit, the school district
had agreed to pay $500,000 to settle the matter.
Reportedly, the district’s legal bills were even higher than
what they had paid to settle the lawsuit.
In the wake of that
successful litigation, some 6,000 claims under the federal
overtime law ultimately were filed in Mississippi, and the
litigation spilled over into neighboring states. Reportedly,
school districts in Mississippi alone have been liable in the
last few years for in excess of $15 million as a result of these
lawsuits.
Because of that wave of
litigation, school administrators and board members have
realized that they can no longer afford to remain in the dark
about the requirements of the federal law governing overtime
payment to most employees– the Fair Labor Standards Act.
The Fair Labor Standards
Act
The federal laws and
regulations governing minimum wage and overtime requirements are
complex and often confusing, for both the layperson and legal
professional alike. While the Federal Labor Standards Act, 29
U.S.C. § 201 et seq. (“FLSA”) provides the skeletal
framework of federal law on the payment of wages and hours
worked, much of the meat of the federal requirements resides in
regulations promulgated by the United States Department of Labor
pursuant to the FLSA. An area of intense interest to powerful
constituents representing both labor and management, efforts to
revise the regulations have been largely unsuccessful, and thus,
the regulations have undergone little change since their
original enactment in 1949, about a decade after the passage of
the federal overtime law.
The Fair Labor Standards
Act was New Deal-era legislation enacted in 1938 in response to
the Great Depression. Its purpose was two-fold. As late as
1935, there were workers in the economy who were routinely
working between 60 and 70 hours per week. Furthermore,
unemployment levels were high in the wake of the Depression.
The FLSA was designed both to limit the length of an individual
worker’s workweek, and also to encourage the hiring of more
workers. It was designed to enhance the quality of life of
workers and to boost employment levels in the United States. By
making it expensive to employ a single individual for more than
40 hours a week, the FLSA encourages employers not only to limit
an individual worker’s hours, but to the extent that more work
must be done, to hire a second worker into the workforce.
For covered employers and
employees, the FLSA establishes a minimum hourly wage; requires
employers to pay workers an additional amount for hours worked
over 40 in a workweek; regulates the use of child labor;
prohibits discrimination in wages on the basis of sex, and
requires employers to maintain certain records and make certain
reports. Where there has been an alleged violation of the law,
employees may sue their employers to recover unpaid minimum or
overtime wages, damages, attorneys fees and costs. Employees
may also sue employers who discriminate against them or fire
them because they file a complaint or testify in such a
proceeding. The Secretary of Labor may also sue non-complying
employers. A willful violation of the FLSA is a criminal
offense, and an employer who willfully violates the law may be
prosecuted by the Attorney General.
Coverage under the FLSA is
comprehensive. The law covers essentially all businesses
engaged in commerce, or in the production of goods for commerce,
and these phrases are broadly construed under the law. According
to the USDOL, more than 80 million American workers are covered
by the FLSA. Pre-schools, elementary and secondary schools are
specifically defined as employers within the coverage of the
act.
While coverage under the
FLSA is very extensive, there are certain specific exemptions to
the minimum wage and overtime requirements of the Act. There are
actually 11 categories of workers that are exempted under the
statute, including for example, those who work for recreational
businesses and babysitters. However, the broadest exemptions are
the so-called “white collar” exemptions. The “white collar”
exemptions cover three major categories of workers:
·
Executive employees
·
Administrative employees and
·
Professional employees.
The white-collar
exemptions were originally designed to cover a small group of
highly paid individuals in managerial positions. However, as
the minimum salary level to qualify for these exemptions had not
been raised in decades prior to the enactment of the recent rule
changes, the exemptions are now covering far more employees than
originally intended.
The exemptions expressly
include school administrators and teachers within the purview of
the white-collar exemptions. 29 U.S.C. § 213(a). Because most
school administrators and teachers are covered under one of the
three exemptions, they are thus not eligible for overtime pay.
Non-teaching jobs with school divisions, including for example
bus drivers, janitorial workers and school secretaries, are
non-exempt workers who are eligible for overtime.
The employment of teachers,
administrators and other school employees, like that of all
employees, is governed by the FLSA and the regulations
promulgated under it. With a recent trend of litigation against
school employers for FLSA violations, and with some six million
workers employed by public elementary and secondary schools
around the nation, the education community is now much more
closely following changes and trends in the development of
federal wage and hour law, and is much more alert to the
potential impact of such changes on educators and all workers in
the education setting.
In particular, the white-collar exemptions
implicate teachers and school administrators. Therefore, the
recent revisions to the regulations governing the white-collar
exemptions had the potential to impact school employees.
The process by which the latest revisions to the
regulations governing the so-called “white-collar”
exemptions to the FLSA was no exception to the historical
difficulty in updating the regulations. However, the current
impetus to revise the regulations arose from widespread
agreement that the exemptions as they stood were woefully
out of date.
In 1996, the U.S. General Accounting Office (“GAO”)
conducted a major study of the white-collar exemptions and
found that virtually all constituents, employer and employee
groups alike, agreed that the regulations were sorely in
need of updated. Partly in response to the GAO study
conducted in 1996, at the end of March of 2003, the U.S.
Department of Labor proposed regulations to amend the
criteria for determining who is a white-collar employee
exempt from the overtime requirements of the FLSA.
The need for change was underscored by the difficulty on the
part of employers in determining whether their employees
fell within a given white-collar exemption or did not. The
regulations themselves as well as the court decisions
interpreting them were confusing and often contradictory.
Overtime lawsuits were on the rise, with a 229 percent
increase in FLSA litigation since 1997.
By the closing date for the 90-day comment period for the
original proposal on June 30, 2003, the DOL had received
more than 78,000 comments on the proposed regulations—the
largest number ever received on a DOL proposed rule change.
The proposal was met with a storm of criticism from
employee-related groups. More than a year later, the DOL
revised the regulations in light of the feedback provided.
Many of the changes proposed in the original regulations
were abandoned in the final regulations.
The Final Regulations
The final regulations accomplished several goals. They
consolidated provisions that used to be spread throughout
the regulations and other agency guidance documents into one
regulatory section. The final regulations also replace the
two different tests for each exemption that existed for the
executive, administrative, and professional exemptions with
a single streamlined test for each. But each test still
evidences two basic requirements for employees to be exempt:
(1) the exempt employee must perform designated exempt
duties, and (2) the employee must be paid on a salary basis.
The New Tests
To qualify for the executive exemption, an employee
must:
• Have a primary duty of management of the enterprise in
which they’re employed or a customarily recognized
department or subdivision thereof;
• Customarily and regularly direct the work of two or more
other employees; and
• Have the authority to hire or fire other employees (or
their suggestions and recommendations on the hiring, firing,
advancement, promotion or other change of status of other
employees must be given particular weight).
To qualify for the administrative exemption, an
employee’s primary duty must include:
• Performing office or non-manual work that’s directly
related to the management or general business operations of
the employer or the employer’s customers; and
• The exercise of discretion and independent judgment with
respect to matters of significance.
To qualify for the professional exemption, an
employee must perform duties that primarily:
• Require knowledge of an advanced type in a field of
science or learning customarily acquired by a prolonged
course of specialized intellectual instruction; or
• Require invention, imagination, originality, or talent in
a recognized field of artistic or creative endeavor.
Salary-Basis
The new minimum salary any employee must earn in order to
qualify for any of the exemptions is $455 per week. The
minimum salary for an employee to be considered exempt was
last increased in 1975. Under the previous regulations only
workers making the very lowest wages – specifically, those
making less than $8,060 per year – would be eligible for
overtime compensation regardless of the type of work they
performed. Under the new regulations, most employees who
make less than $23,660 per year are guaranteed overtime pay,
even if they perform exempt work.
In order to be paid on a “salary basis” within the new
regulations, an employee must regularly receive each pay
period, on a weekly or less frequent basis, a predetermined
amount constituting all or part of the employee’s
compensation. The amount may not be subject to deduction
because of variations in quality or quantity of work.
Generally, an exempt employee must receive the full salary
for any week in which the employee performs any work without
regard to the number of days or hours worked. 29 C.F.R. §
541.602(a). The revised language on salary basis retains the
former rule’s standards for determining when an employee is
paid a salary.
An exempt employee may also qualify for a particular
exemption if paid on a “fee basis.” An employee is
considered to be paid on a fee basis within the regulations
if he or she is paid an agreed sum for a single job
regardless of the time required for its completion. A fee is
generally paid for a job that is unique rather than pay for
a series of jobs repeated an indefinite number of times and
for which identical payment may be made repeatedly. 29 C.F.R.
§ 541.605(a). To determine whether fee payment meets the
minimum amount of salary required for exemption under the
regulations, the fee rate must be considered in light of the
time worked on the job. If the fee would amount to a rate of
at least $455 per week if the employee worked a 40-hour
week, the threshold for the exemption will have been met.
Under the example provided by the regulations, an artist who
is paid $250 for a painting that took the artist 20 hours to
complete would meet the exemption threshold, as at that
rate, the artist would earn $500 for a 40-hour week, or more
than the $455 minimum per week. 29 C.F.R. § 541.605(b). The
new regulations regarding fee basis payment contains no
substantive changes from language in the prior regulations.
The new regulations rectified a problem area in the previous
regulations regarding deductions for absences. Under the old
regulations, employers could not suspend employees from the
workplace for any less than a full week because doing so ran
the risk of violating the salary requirement and
jeopardizing an employee’s exempt status. Under the new
regulations, however, an employer may deduct pay for one or
more full days missed by an employee as a result of a
disciplinary suspension imposed in good faith for
infractions of written workplace conduct policies. Under the
example provided within the regulations, an employer may
suspend an exempt employee without pay for three days for
violating a generally applicable written policy prohibiting
sexual harassment. 29 C.F.R. § 541.602(b)(5).
Furthermore, the new regulations clarify the “window of
correction” provision that was in the prior version of the
regulations, and implements a new “safe harbor” provision.
Under the window of correction, isolated or inadvertent
deductions will not result in the loss of the exemption if
the employer reimburses employees for inadvertent
deductions, or deductions taken unintentionally, such as
through a clerical error. 29 C.F.R. § 541.603(a), (c). Under
the new “safe harbor” provision, if an employer has a
clearly communicated policy prohibiting improper pay
deductions and makes a good faith commitment to comply in
the future, the employer will not lose the exemption for any
employees unless the employer willfully violates the policy
by continuing to make improper deductions after receiving
employee complaints. 29 C.F.R. § 541.603(d).
Some critics of the revised regulations complained that
without a self-adjusting mechanism, such as salary figures
indexed for inflation, the regulations are guaranteed to
become out of step with the workforce again before the
passage of much time. And since the last time the salary
figures were adjusted was 1975, there is no reason to think
that there would not be another three-decade span before
minimum salary figures could be adjusted upwards again.
Nonetheless, the Department of Labor did not incorporate any
self-correcting mechanism into the revised regulations.
Regulations Addressed Specifically to School Employees
In the revised regulations regarding the white-collar
administrative exemption, there is specific language
addressing the inclusion of school administrators. Much of
this language is similar to language on school employees in
the last version of the regulations.
Superintendents; Principals; School Administrators
Specifically, the new regulations state that the
administrative exemption includes employees “(1) compensated
for services on a salary or fee basis at a rate of not less
than $455 per week . . . exclusive of board, lodging or
other facilities, or on a salary basis which is at least
equal to the entrance salary for teachers in the educational
establishment by which employed; and (2) whose primary duty
is performing administrative functions directly related to
academic instruction or training in an educational
establishment or department or subdivision thereof.” 29
C.F.R. § 541.204(a). “Educational establishment” is defined
within the regulation to include elementary and secondary
school systems, institutions of higher education or other
educational institutions. 29 C.F.R. § 541.204(b). “Other
educational institutions” under the regulations include
special schools for mentally or physically disabled or
gifted children. Private and public schools, and profit and
non-profit schools are all treated the same for purposes of
the regulations. “Performing administrative functions
directly related to academic instruction or training” means
work related to the academic operations and functions in a
school rather than to administration along the lines of
general business operations. These functions must be
operations directly in the field of education. Examples of
employees who would fall within this exemption are provided
in the regulations. They include, among others: the
superintendent, assistant superintendents in charge of
curriculum or instruction, principals and academic vice
principals; and department heads in higher education
institutions. 29 C.F.R. § 541.204(c).
Teachers
The revised language pertaining to the exemption for
professional employees includes specific language regarding
teachers. According to the regulations, professional
employees may include “any employee with a primary duty of
teaching, tutoring, instructing or lecturing in the activity
of imparting knowledge and who is employed or engaged in
this activity as a teacher in an educational establishment
by which the employee is employed.” 29 C.F.R. § 541.303(a).
The regulations specifically list as examples regular
academic teachers, kindergarten or nursery school teachers,
teachers of gifted or disabled children, teachers of skilled
trades and occupations, driving and aircraft flight
instructors, home economics teachers and music instructors.
29 C.F.R. § 541.303(b).
Under this regulation, possession of an elementary or
secondary teacher’s certificate provides evidence that an
individual is one contemplated as within the scope of the
exemption. 29 C.F.R. § 541.303(c). Nonetheless teachers who
do not possess a certificate may be included within the
exemption if employed as a teacher by a school or school
system. Teaching professionals need not meet the minimum
salary requirements to fall within the professional
exemption. 29 C.F.R. § 541.303(d).
Athletic Trainers
Under the revised regulations pertaining to the professional
exemption, athletic trainers generally fall within this
exemption if they have successfully completed four academic
years of pre-professional and professional study in a
specialized curriculum accredited by the Commission on
Accreditation of Allied Health Education Programs and who
are certified by the Board of Certification of the National
Atheletic Trainers Association Board of Certification. 29
C.F.R. § 541.300(e)(8).
While the regulations regarding the executive exemption do
not specifically address school employees, examples of
school employees who may fall within the exemption include
department supervisors such as transportation supervisors or
food service managers.
School counselors
According to the new regulations, social workers and
psychologists are not considered to perform academic
administrative functions. Therefore, if a school counselor
will qualify as an exempt employee, he or she must meet the
general test for the administrative exemption. 29 C.F.R. §
541.204(c)(2). Likely, many school counselors will meet
those qualifications, as they are engaged in non-manual
work, and generally exercise discretion and judgment with
respect to matters of significance. As is always the case,
however, each position must be assessed with respect to its
own job duties.
School Resource Officers
As a general rule, school resource officers who perform job
duties that are substantially similar to those of a law
enforcement officer will not qualify for any of the “white
collar” exemptions, according to the new regulations. Under
the new regulations, the exemptions do not apply to police
officers, detectives, sheriffs, or others who perform
similar work. 20 C.F.R. § 541.3. To the extent that a school
resource officer’s duties involve substantially other kinds
of work, such an employee in theory may qualify for one of
the exemptions.
Impact of Other Revisions on School Employees
Some of the modifications in the definitions of key terms
and definitions within the tests for the exemptions have the
potential to make an impact upon school employees. For
example, whether an employee has a “primary duty” of a
certain type is substantially similar under the new language
as under the old language. Under each exemption, in order to
qualify as exempt, the employee’s primary duty must be an
activity involving exempt work. A primary duty is the
principal, main, major or most important duty that the
employee performs. In determining the employee’s primary
duty, all of the facts of a particular case must be
examined, including the relative importance of the exempt
work as compared to other work performed by the employee;
the amount of time spent performing exempt work; the
employee’s relative freedom from direct supervision, and the
relationship between the employee’s salary and wages paid to
other employees for the kind of nonexempt work performed by
the employee. 29 C.F.R. § 541.700(a). Generally, employees
who spend more than 50 percent of their time performing
exempt work will satisfy the primary duty requirement.
Employees who do not spend more than 50 percent of their
time performing exempt duties may nonetheless qualify as
exempt if other factors support the conclusion. 29 C.F.R. §
541.700(b). As to the impact of the definition on school
employees, according to one National School Boards
Association (NSBA) example, while it is common for a food
service manager to help prepare food or a bus driver
supervisor to cover routes if a driver is absent, under the
new regulations, school districts will continue to have to
balance the various factors at play in determining whether
an employee’s primary duty is performing exempt work.
As previously noted, an exempt executive employee is one
whose primary duty is management of an enterprise or
customarily recognized department. “Management” is defined
under the revised regulations as including but not limited
to activities such as interviewing, selecting and training
employees, setting and adjusting rates of pay and hours of
work, directing the work of employees and appraising
employees’ productivity and efficiency for the purpose of
recommending changes in employment status such as
promotions. 29 C.F.R. § 541.102. Activities included within
the definition of management for the first time in the new
regulations are “planning and controlling the budget” and
“monitoring or implementing legal compliance measures.” The
addition of these phrases could have the potential to bring
certain school employees with financial or legal
responsibilities within the executive exemption.
The revised regulations provide a definition of “particular
weight” in the context of whether an employee’s suggestions
and recommendations are given “particular weight” so as to
enable the employee to qualify as an exempt executive
employee. The previous version of the regulations contained
no definition of the term.
A number of groups providing commentary on the proposed
rules, including the NSBA, asked for clarification of the
phrase to address the treatment of administrators in public
school divisions, where only the school board itself may
ultimately hire or fire certain employees.
Thus, for example, under Virginia statutory authority, only
the school board itself may hire, fire, or suspend teachers
or place a teacher upon probation. Va. Code Ann. § 22.1-313.
The superintendent, however, makes recommendations to a
school board regarding the dismissal of a teacher or the
placing of such teacher on probation. Va. Code Ann. §§
22.1-309.
Under the new definition, whether an employee’s suggestions
and recommendations are given “particular weight” includes
consideration of factors such as whether it is part of the
employee’s job duty to make such suggestions and
recommendations, the frequency with which the employee’s
suggestions and recommendations are made or requested, and
the frequency with which they are relied upon.
In such an instance, it seems certain that the
recommendation of the superintendent would carry “particular
weight” as to personnel actions so as to meet the
requirements for a superintendent to qualify as an exempt
executive employee, since it is part of the superintendent’s
job duty to make such recommendations, any superintendent
does so regularly, and no doubt examination of actions based
upon a superintendent’s recommendations would show that most
school boards in Virginia frequently rely upon the
superintendent’s recommendations.
The definition goes on to note that an employee’s
suggestions and recommendations may still be deemed to have
particular weight even if a higher level manager’s
recommendation has more importance and even if the employee
does not have the authority to make the ultimate decision as
to the employee’s change in status. 29 C.F.R. § 541.105. In
its preamble to the final rule, the DOL noted that the
definition clarifies that an employee need not be the
ultimate decision-maker to qualify as an exempt executive
employee. Specifically, the DOL stated, “As the National
School Board Association comments, although state law may
vest the school board with the exclusive authority to
discharge an employee, such an action is precipitated by a
department supervisor who evaluates the employee’s
performance and recommends the action, and the
superintendent’s recommendation to the board is based on the
department supervisor’s recommendations. . . . such
employees may also qualify for exemption as administrative
or professional employees.”
Therefore, where the superintendent delegates many of the
functions of personnel management to an assistant
superintendent, it is quite likely that such assistant
superintendent himself or herself would also qualify as an
exempt executive employee, where such assistant is the one
who regularly makes preliminary recommendations to the
superintendent to take to the school board.
The revised regulations contain a definition of work that is
“directly and closely related” to exempt work, which is
likewise considered exempt work. A definition of such work
was also included in the previous regulations. Under the new
definition, work that is “directly and closely related” may
include physical tasks and menial tasks that arise out of
exempt duties, and routine work without which the employee’s
exempt work cannot be performed properly. 29 C.F.R. §
541.703(a). The definition includes examples; one example
given is that ‘[a] teacher performs work directly and
closely related to exempt duties when, while taking students
on a field trip, the teacher drives a school van or monitors
the students’ behavior in a restaurant.” 29 C.F.R. §
541.703(b)(10).
Virginia Wage and Hour Law
While federal wage and hour law asserts by far the most
influence on an employer’s obligations with respect to
certain wage and hour issues, individual states, including
Virginia, do regulate some aspects of employee wages and
hours worked. For example, Virginia sets its own minimum
wage, as do some other states, with certain specific
exemptions from that minimum wage, however, the Virginia
minimum wage must not be less than the federal minimum wage.
Va. Code Ann. §§ 40.1-28.10, 40.1-28.9. Virginia law also
governs, for example, when employees must be paid, Va. Code
Ann. § 40.1-29, the employment of minors, §§ 40.1-70 to
40.1-100, and recognizes the right in certain specific
circumstances of an employee to refuse work on a day
considered by the employee to be the Sabbath. §§ 40.1-28.2
and 40.1-28.3. However, for purposes of determining the
eligibility of any particular school employee in Virginia
for overtime, only the federal law need be consulted.
The recent wave of school-based FLSA litigation began in
1998, when two school secretaries with the Oktibbeha County
School District in Mississippi sued the district, joined by
22 other non-exempt workers who had not been paid overtime.
The basis of the suit was the school district’s failure to
pay overtime to non-exempt workers. By the close of 1999,
the school district settled the case for $500,000, according
to published reports. Although the suits plaintiffs joined
with the school district in suing the employer’s insurance
carrier, the federal court found that the failure to pay
overtime was not covered by the district’s insurance.
Oktibbeha County School District v. Coregis Ins. Co.,
173 F. Supp. 2d 541 (N.D. Miss. 2001)
In the wake of that successful lawsuit, claims were filed
against 105 of the 152 school districts in Mississippi. Many
of the school districts proceeded to perform self-audits,
and to settle claims from groups of employees for hundreds
of thousands of dollars.
The wave of litigation then moved across the state line into
Alabama. As of early 2005, almost half of the school
districts in Alabama had been sued for FLSA violations.
According to the plaintiff’s firm that brought the first
lawsuit in Mississippi, it has affiliations with counsel in
ten other states. Overtime suits have been filed in
Arkansas, Florida, Georgia, Louisiana, Oklahoma, Tennessee
and Virginia, as well as in Alabama and Mississippi.
With respect to actions in Virginia, Maxine Hayward, a
custodian, filed a class action lawsuit in June, 2004
against the Chesapeake Public Schools alleging that she was
owed $8,000 in overtime dating back to 2001. In August,
2004, twenty current and former bus drivers, including
plaintiff Kenneth Cecil, sued the Norfolk Public Schools
saying they failed to receive at least $3,000 in overtime
pay per worker. Both cases were still pending as of late
January, 2005.
However, school employees seeking overtime from their school
district employers have not been successful in every state.
For example, in Smith et al. v. School District of
Greenville County et al., 03-2015 (D.S.C. April 14,
2004), a federal court dismissed 25 class action lawsuits
seeking overtime under the FLSA on grounds that the school
districts, as arms of the state, are entitled to Eleventh
Amendment immunity.
As a result of FLSA litigation, school districts had
already taken steps to ensure that they were in compliance
with the Fair Labor Standards Act.
For example, some school districts have simply prohibited
working more than 40 hours in a workweek for
non-professional employees. Schools are much less likely to
engage in what was always a common school practice of
employing the same non-certified worker in two different job
positions, if such employment creates the risk that the
worker will work more than 40 hours in a given week. For
example, the Akron School District in Ohio announced in May,
2004 that it would not be offering employees supplemental
contracts to coach or act as advisers for extra-curricular
activities, according to the Akron Beacon Journal. Likewise,
in May 2004, upon request of the North Carolina School
Boards Association, Congressmen Cass Ballenger and Richard
Burr submitted a letter to the Department of Labor
requesting clarification on when exempt school employees may
volunteer at events without subjecting their employers to
overtime liability.
Schools have also become much more careful about keeping
accurate records of time worked by non-exempt employees.
Where some school districts previously did not dock workers
who took personal time during the day for family obligations
or personal business, the districts have become more
by-the-book. Many school districts have
begun using time clocks to keep accurate records of time
worked by non-exempt employees. For example, the Birmingham,
Alabama school system installed a high-tech time clock with
hand-recognition technology to accurately record time worked
by non-exempt employees.
In Virginia, school divisions have been pouring over their
personnel practices and records and making changes in any
area they believe may have resulted in a legal violation.
The City of Portsmouth schools conducted an internal review
in late 2004 and determined that 6 of 90 coaches should
receive additional payment for unpaid overtime dating to
2002. After a similar review, Virginia Beach schools paid
hundreds of thousands of dollars to employees for overtime
worked supervising extracurricular activities. Beginning in
2005, Newport News will begin paying non-degreed substitute
teachers by the hour rather than a daily rate, and will give
preference in hiring to substitutes with degrees in hopes of
avoiding exposure to overtime liability.
The new regulations on the white-collar exemptions will not
have any impact on the types of situations that gave rise to
liability for overtime for non-exempt workers. However, the
refining of several definitions within the regulations, and
the clarification of the meaning of certain terms already
used in the regulations clarify which professional workers
were intended to be covered by which exemption.
In order for school divisions to best protect themselves
from lawsuits based upon the FLSA, school divisions should
thoroughly review their personnel policies and job
descriptions with special attention to the FLSA implications
of such policies and descriptions. School divisions should
make certain that they have clear and current descriptions
of the duties to be performed for each job classification.
As the regulations themselves note, a job title alone is
insufficient to establish the exempt status of an employee.
29 C.F.R. § 541.2. Reviews for accuracy of job descriptions
should be conducted on a regular basis, to ensure that the
actual jobs performed by employees have not changed
substantially from the corresponding written job
descriptions. Internal audits such as this are an excellent
way to ensure that the expectations of the school division
are carried out in each job category, and can be a small
preventative commitment to avoid an expensive error later.
The job description on its face should clearly support the
employer’s determination regarding whether a worker is
exempt or non-exempt, should the Department of Labor examine
such descriptions as part of an investigation.
School divisions should ensure that any jobs classified as
“exempt” that are paid on a fee basis meet the minimum pay
threshold for exempt work. When the fee is divided by the
time worked, and that hourly fee would amount to a rate of
at least $455 per week, the threshold for the exemption will
have been met.
Policies should make clear that for non-exempt workers, a
workweek is to be forty hours or fewer. Policies should also
mandate that time beyond forty hours in a week may only be
worked if approved in advance by a management-level
supervisor. In addition, school division policies should
place the duty upon employees to accurately record the time
that they’ve worked, and should communicate that the failure
to do so will be grounds for discipline up to and including
termination.
School divisions should implement policies to facilitate
availing themselves of the “safe harbor” provision within
the new regulations, which requires that the employer have a
clearly communicated policy prohibiting improper pay
deductions, that the employer cease making improper
deductions after receiving employee complaints, and that the
employer make a good faith commitment to comply with wage
and hour laws after having made an error. Likewise, school
divisions should enact policies that enable an exempt
employee’s pay to be docked for periods less than a week
without jeopardizing the employee’s exempt status where the
school division has in good faith placed the employee on
disciplinary suspension for infraction of written workplace
conduct policy.
The recent wave of Fair Labor Standards Act litigation in
the South has lead to a new and heightened awareness of what
the Federal law requires. To the extent that plaintiffs’
counsel in these cases claimed to be motivated by a desire
to ensure the payment of overtime due to hourly school
workers, it seems that they have achieved that goal. This
has been largely due to voluntary compliance on the part of
school districts hoping to fend off litigation. It is good
advice to any employer to ensure accurate record keeping
procedures, and to conduct regular self-audits to ensure
compliance with both state and federal wage and hour laws.
At the same time as school districts, along with other
employers, are paying closer attention to the law’s
mandates, the executive branch and Congress have been
struggling to bring the regulations promulgated under the
law up to date. The 2004 revision to the white collar
exemptions should clarify some issues regarding when
particular workers qualify for an exemption. At the very
least, by increasing the minimum salary paid for an employee
to qualify for a white-collar exemption, the regulations are
no longer ludicrously out of date. It remains to be seen
whether the new regulations in practice create new problems
or areas of confusion of their own.
Nonetheless, with the amount of activity relating to the
Fair Labor Standards Act in recent years, it seems difficult
to imagine that this is the last we will hear on the topic.
Fair Labor Standards Act, 29 U.S.C. §§
201 et seq.
Particular sections of the U.S. Code may be accessed
through:
http://assembler.law.cornell.edu/uscode/
Va. Code Ann. Title 40.1-1 et seq.
A searchable version of the Virginia Code appears at:
http://leg1.state.va.us/
“DOL dubs new overtime regulations
‘FairPay Initiative,’” Virginia Employment Law Letter,
vol. 16, no. 5 (June 2004) at 1.
NSBA Comments on Proposed Rulemaking; 29
CFR Part 541, June 25, 2003.
Glenn Cook, “Overtime Overdue: School
Districts Are Paying Big Bucks To Settle Wage and Hour Claims,”
American School Board Journal Vol. 190, No.7 (July 2003)
http://www.asbj.com/2003/07/0703coverstory.html
Deirdre Fernandes, “Portsmouth Set to Pay 6
Coaches For Overtime Dating to 2002” The Virginian-Pilot,
at B2, Dec. 10 2000.
Angela Forest, “Adjustments for Labor Law
Continue” Daily Press at C1, Nov. 20, 2004.
Angela Forest, “School Hiring Policy
Changes” Daily Press at C1, Sept. 18, 2004.
Jonathan Grossman, “Fair Labor Standards
Act of 1938: Maximum Struggle for a Minimum Wage,” Monthly
Labor Review, June 1978, reprinted at
http://www.dol.gov/asp/programs/history/flsa1938.htm
David Lee Morgan Jr., “District Stops
Offering Hourly Employees Supplemental Contracts to Avoid
Overtime Pay Under FLSA,” Akron Beacon Journal, May 2004.
http://www.nsba.org/site/doc_cosa.asp?TRACKID=&VID=50&CID=445&DID=33848
Gary Young, “Overtime Suits 101,” The
National Law Journal (March 19, 2003)
http://www.law.com/jsp/article.jsp?id=1046833573507
“School Employees Get Extracurricular Pay”
Richmond Times-Dispatch, at B2, Aug. 9, 2004.
Lisa E. Sorenen, “How Will the New Fair
Labor Standards Act Regulations Affect Schools?,” Inquiry &
Analysis, (June 2004) at 1.
http://www.nsba.org/site/docs/11500/11494.pdf
Lisa E. Sorenen, “FLSA Litigation: Coming
to a School District Near You,” Inquiry & Analysis, (June
2003) at 1.
http://www.nsba.org/site/docs/34000/33980.pdf
Brian Tumulty, “Legal Crusader Helps
Wronged Workers Get Their Due,” Gannett News Service, Jan. 28,
2004
Employment Standards Administration Final
Rule, Defining and Delimiting the Exemptions for Executive,
Administrative, Professional, Outside Sales and Computer
Employees; Final Rule, 29 C.F.R. Part 541; 69 Fed. Reg. 22,121
(August 22, 2004).http://www.dol.gov/esa/regs/compliance/whd/fairpay/regulations.htm
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