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
Disclaimer
The information in this presentation is
informational only and does not constitute legal
advice. No attorney-client relationship is created
or intended through participation in this seminar or
through receipt or review of seminar
materials. For advice on specific matters, please
consult your board attorney or other legal counsel.
©This presentation is copyrighted by
the North Carolina School Boards
Association. Unauthorized copying or
distribution is prohibited.
SCOPE OF FLSA




Sets minimum wage.
Requires overtime pay for certain
employees.
Requires equal pay for women.
Sets child labor standards.
WHO IS COVERED BY THE FLSA?

Employees
 Not
all employees are entitled to
overtime
 Not
all employees are entitled to
minimum wage
WHO IS NOT COVERED BY THE FLSA?

Elected officials (including school board
members)

Volunteers

Independent contractors

Trainees (e.g., student teachers)
V OLUNTEERS
MUST BE “BONA FIDE”

Individuals who perform

Not employed by the school
hours of service for a public
system to perform the same
agency for civic,
type of services as those for
charitable, humanitarian
reasons, without promise,
expectation or receipt of
compensation for services
rendered (other than
expenses, reasonable
benefits, or nominal fee)
which the employee
proposes to volunteer
PURDHAM V. FAIRFAX CO. SCHOOL BOARD




4th Circuit case in 2011
Plaintiff worked 300-450 hours per year as a high
school golf coach
Regular overtime-eligible job was “safety and
security assistant,” a position not conditioned on his
coaching assignment
Paid a stipend of $2,114 for coaching, plus
reimbursement for mileage
I
S
S
U
E

Was plaintiff an employee
entitled to overtime wages for
his services as the golf coach,
or was he a volunteer?
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
COURT CONCLUDED:


Mr. Purdham is a

volunteer
athletics for coaches to
Was motivated to
consider themselves
volunteers”
coach by love of golf
and dedication to

“Culture of high school

Board submitted 18
student athletes
affidavits from other
Coaching v. another
coaches who
part-time job was a
“lifestyle choice”
considered themselves
volunteers
COURT CONCLUDED (CONT’D):

Contract and state
law are not relevant—
issue is controlled by
FLSA



Although the board
previously paid
overtime, board was
just trying to comply
with FLSA in uncertain
environment
Duties in regular job
and coaching job are
not same
Paid a “nominal fee”


Stipend is fixed, rather
than based on time,
effort, or productivity
Stipend is less than
minimum wage and
salary
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.
E MPLOYEES
EXEMPT V. NONEXEMPT



There is a presumption that all employees are
covered by the overtime provisions of the FLSA,
unless the employer can prove otherwise.
Employees who are protected by the overtime
provisions are “nonexempt” employees.
“Exempt” employees—high-level or professional
employees who fit within one of the exempt
categories—are not entitled to receive overtime.
C
A
T
E
G
O
R
I
E
S

Executive

Administrative

Professional

Highly compensated
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



Primary duty must
include managing the
enterprise or a
recognized subdivision
Must customarily and
regularly direct the
work of two or more
other employees
Must have the
authority to hire, fire,
or promote or have
their
recommendations be
given special weight
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.
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.
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.
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.
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.
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.
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)
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).
“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.
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.
Not “off the clock if the employee performs
any work during the meal period.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
FLSA VIOLATIONS
WHAT SANCTIONS MIGHT BE IMPOSED?




May face litigation, brought either by the
employee or the Department of Labor, suing on
behalf of the employee
With a successful lawsuit, the employee could be
awarded double the amount of back wages due,
plus interest, as well as attorneys fees and costs.
The Department of Labor may initiate a full
investigation of employer’s practices.
For repeated or willful violations, employers may be
subject to a civil penalty of up to $1,100 per
violation.


Department of Justice may prosecute persons
criminally for willful violations.
Possible sanctions are a fine of up to $10,000 and
up to six months in prison.

Generally, a two-year
statute of limitations applies;
however, the statute of
limitations is three years for
willful violations.



An employer may not retaliate against an
employee for complaining about an alleged
violation of the FLSA.
This includes complaints made orally or in writing.
Katsen v. Saint-Gobin Performance Plastics Corp.
(131 S. Ct. 1325).
Makes no difference if complaint was filed formally
with a court or agency or communicated internally
to the employer. Miner v. Bostwick Laboratories, 669
F. 3d 428 4th Cir. 2012)
12-STEP COMPLIANCE CHECKLIST
COMPLIANCE CHECKLIST
1.
2.
3.
4.
5.
Classify employees as exempt or nonexempt.
Have a board policy on the workweek, overtime
and compensatory time. Make sure all employees
have access to and understand the policy.
Notify nonexempt employees of their expected
hours in a workweek.
Have a good timesheet or other method of
timekeeping.
Annually train supervisory staff on FLSA compliance
issues.
COMPLIANCE CHECKLIST
6.
7.
8.
Train nonexempt staff on timesheets and overtime
requirements.
Decide whether employees will be permitted to
volunteer.
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
COMPLIANCE CHECKLIST
9.
10.
11.
12.
Have supervisory, payroll and finance staff monitor
weekly time records.
Keep FLSA-required records for nonexempt and
exempt employees.
Post all required federal and state posters.
Consult with your board attorney about FLSA
compliance and make sure you work together to
address any outstanding issues.