The FLSA Playbook Part 1 The Xs and Os of Wage and Hour Law

Transcription

1 The FLSA Playbook Part 1 The Xs and Os of Wage and Hour Law Andrew T. Phillips aphillips@vonbriesen.com Christine V. Hamiel chamiel@vonbriesen.com Milwaukee Madison 411 East Wisconsin Avenue Suite 1000 Milwaukee, WI

2 2

3 FLSA Litigation Forecast Perfect Storm New exemption regulations Fights for minimum wage hikes at state and federal level Well-publicized regulatory focus on misclassifications and independent contractor High profile litigation 3

4 Memorandum of Understanding DOL and DWD January 20, 2015, the DOL and DWD signed a Memorandum of Understanding with the goal of protecting employees Collaborative effort and commitment by the DOL and the DWD to work together to prevent violations of wage and hour law Provides that the agencies will: Conduct joint investigations Coordinate respective enforcement activities and assist each other with enforcement Make referrals of potential violations of each other s statutes Exchange information Agreement has a 3 year duration 4

5 Touchdown!! DOL s Bold Proclamation 2016 will be the year enforcement hits its peak! 5

6 Penalty Flag! The Costs of Non-Compliance Cost for non-compliance is substantial Remedies include back pay, reinstatement, or even promotion Schools may be hit with liquidated damage penalties in an amount equal to the amount of back pay owed to an employee

7 Penalty Flag! Penalties Under FLSA Penalties under the FLSA may be civil or criminal in nature, or both Civil Repeated and willful violations may result in an additional fine of $1,100 per repeated or willful violation. Criminal If violation is willful or in reckless disregard of the FLSA: Fines range up to $10,000 per violation Imprisonment for up to six (6) months Or both

8 Penalties Under Wisconsin Wage & Hour Law Less severe than FLSA, but no less burdensome DWD may require a school district to audit its own payroll practices or the DWD may conduct its own audit to vet wage violations Violation requires school district to pay the wages due and owing to an employee: May be required to pay up to 100% in increased wages Criminal penalties of $500; Imprisonment of up to ninety (90) days; Or both May proceed as class action

9 Two primary requirements: FLSA What is Required? 1. That employers compensate their hourly employees at no less than the prevailing federal minimum wage (currently $7.25/hr.) 2. That employers pay a rate of one and one-half times the employee s normal hourly rate for all hours worked in excess of forty (40) in a week for nonexempt employees

10 Non-Exempt Enjoy all of the protections provided by the FLSA Generally paid on an hourly basis and are entitled to receive overtime equal to time and one-half for all hours worked over 40 hours in a workweek.

11 Exempt Classifications Minimum wage and overtime requirements do not apply, provided that certain underlying conditions are met. To qualify for an FLSA exemption, employees generally must meet certain tests regarding their job duties, and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status. In order for an exemption to apply, an employee s specific job duties and salary must meet all the requirements of the DOL s regulations. There are several classifications of employees that fall under the FLSA exemptions, including executive, administrative, professional, computer employee, outside sales, and highly compensated employees. As a general matter, such exemptions are narrowly construed.

12 Primary Duties Test In order to claim an employee as exempt, the employee s primary duties must fit within the duties of one of the exempt classifications. Primary duty is defined as the principal, main, major or most important duty that the employee performs. This determination must be made on a case-by-case basis considering all of the facts in a particular case, and placing major emphasis on the character of the employee s job as a whole.

13 Primary Duties Test Factors The regulations list a number of factors that a court may consider when determining the primary duties of a position, including, but not limited to: the relative importance of the exempt duties as compared with other types of duties; 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 the wages paid to other employees for the kind of nonexempt work performed by the employee.

14 Primary Duties Test, con t. The amount of time spent performing exempt work versus nonexempt can be a useful guide in determining whether exempt work is the primary duty of an employee. Thus, employees who spend more than 50% of their time performing exempt work will generally satisfy the primary duty requirement. This 50% distinction is not a bright line rule, however.

15 Categories of Employees Non-Exempt Employees: Custodial/maintenance workers Bus drivers Food service workers Secretaries Instructional assistance Exempt Employees: Administrators Learned professionals (social worker, school psychologist) Computer employees Teachers*

16 Categories of Employees - Exempt Executive Exemption Superintendent/District Administrator Associate/Assistant Superintendent Directors Administrative Exemption Principals Assistant Principals Curriculum Specialist Director of Pupil Services Supervisors of maintenance, transportation, food services, etc. Professional Exemption Teachers* Librarian Counselor Psychologist School Nurse Social Worker Physical/Occupational Therapist

17 Touchdown!! Special Teachers Exemption The Professional exemption specifically includes any employee with a primary duty of 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 (b) The salary requirements of 29 C.F. R do not apply to the teaching professionals. Schools may compensate teachers at a rate of less than $455/week and need not provide additional compensation to those teachers who also coach athletic teams and/or otherwise assist with extracurricular offerings.

18 Teaching Certification and the Teacher Exemption Possession of a teacher's certificate provides a clear means of identifying individuals within the scope of the exemption. Teachers who possess a teaching certificate qualify for the exemption regardless of the terminology (e.g., permanent, conditional, standard, provisional, temporary, emergency, or unlimited) used by the State to refer to different kinds of certificates.

19 Who Are Exempt Teachers? Regular academic teachers Teachers of kindergarten or nursery school pupils Teachers of gifted or disabled children Teachers of skilled and semi-skilled trades and occupations Teachers engaged in automobile driving instruction Home economics teachers Vocal or instrumental music instructors Note: those faculty members who are engaged as teachers but also spend a considerable 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. Such activities are a recognized part of the schools responsibility in contributing to the educational development of the student.

20 Teacher Exemption Any employee whose primary duty is teaching may be classified as exempt and may be paid on a salary basis. This includes part-time, substitute and hourly teachers. The minimum salary requirements of the FLSA do not apply. The exemption does not apply to teacher s aides, teacher s assistants or student teachers.

21 Qualifications for So-Called White Collar Exemptions Employees must perform certain types of work as their primary job duties (the duties test ) and generally be paid a minimum salary that is not subject to reduction because of variations in the quality or quantity of work performed (the salary basis test).

22 Administrative Exemption The Administrative Exemption also 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.

23 Touchdown!! Academic Administrative Exemption 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. Such academic administrative functions include operations directly in the field of education. Jobs relating to areas outside the educational field are not within the definition of academic administration.

24 Academic Administrative Exemption, con t. Employees engaged in academic administrative functions include: Superintendent; Any assistants responsible for administration of such matters as curriculum, quality and methods of instructing, measuring and testing the learning potential and achievement of students, establishing and maintaining academic and grading standards, and other aspects of the teaching program; Principal and any vice-principals responsible for the operation of an elementary or secondary school; Department heads in institutions of higher education responsible for the administration of the mathematics department, the English department, the foreign language department, etc.; Academic counselors who perform work such as administering school testing programs, assisting students with academic problems and advising students concerning degree requirements; and Other employees with similar responsibilities.

25 Penalty Flag! Academic Administrative Exemption, con t. Jobs which do NOT qualify for the Academic Administrative Exemption (because they are directly related to the field of education): Jobs relating to building management and maintenance Jobs relating to the health of the students Academic staff such as social workers, psychologists Lunch room managers or dietitians Note: Such work is not considered academic administration, but such employees may qualify for exemption under the regular administrative exemption or under other sections of the FLSA.

26 May I classify our District s secretarial staff as Exempt? Milwaukee Madison 411 East Wisconsin Avenue Suite 1000 Milwaukee, WI

27 27

28 Okay, I agree with you, but my Superintendent does not. What do I do? Milwaukee Madison 411 East Wisconsin Avenue Suite 1000 Milwaukee, WI

29 29

30 Okay, I got my Superintendent to see the light, but my Board does not agree. Now what? Milwaukee Madison 411 East Wisconsin Avenue Suite 1000 Milwaukee, WI

31 31

32 Touchdown!! Compensatory Time Time off provided to non-exempt employees in lieu of paying overtime pay. Requirements: Employee receives time off at a rate of one and one-half hours for each overtime hour worked. Must be an agreement between a district and the employee to allow the use of comp time. 32

33 Comp Time What Does an Agreement Mean? The DOL has interpreted agreement to take the form of an express condition of employment where the employee: (1) knowingly and voluntarily agrees to it as a condition of employment; and (2) is informed that the comp time received may be preserved, used or cashed out consistent with the provisions of the FLSA. Courts have interpreted the agreement requirement broadly. A negotiated agreement between an employer and employee is not required. The agreement requirement is met by the employer telling the employees they will be paid comp time in lieu of premium overtime pay, and the employee agreeing to continue employment with the employer. A policy providing that a school district will provide comp time in lieu of overtime pay is sufficient to meet the agreement requirement. 33

34 Limits on the Accrual of Comp Time Limits on the Accrual of Comp Time School district employees are limited to a total of 240 hours of accrued comp time. Employers can set limits lower than 240 hours. Maintaining lower limits allows a district to better manage comp time and avoid the burdens of having to accommodate its use. 34

35 Employee Requests for Comp Time Use of Comp Time An employee must be permitted to use comp time within a reasonable period of time after it is accrued and may not be denied the use of comp time unless the request would unduly disrupt the employer s operations. The unduly disrupt standard is a high burden to meet mere inconvenience is insufficient. Must show a reasonable and good faith finding that the request would impose an unreasonable burden on the [district s] ability to provide services of acceptable quality and quantity for the public during the time requested without the use of the employee s services. 35

36 Use of Comp Time Employer Directed Use of Comp Time An employer may require an employee to use comp time. Employees cannot object to being sent home since they are being sent home with pay. Note: Requiring employees to use accrued comp time during noninstructional time or when students are not in school allows districts to manage comp time and helps avoid the problems created by employee requests to use comp time when use of the time would unduly disrupt operations 36

37 Payout of Accrued Comp Time Districts May Choose to Payout Accrued Comp Time Any Time During Employment Payments may be made at any time and at the regular rate earned by the employee at the time payment is made to the employee. Districts may elect to make an annual payout to employees for accrued comp time. Districts may elect to arbitrarily pay out accrued comp time at the employer s option. Districts Must Payout Unused Comp Time at Termination In the event of termination of employment, an employee must be paid for unused and accrued comp time at a rate of compensation not less than (1) the average regular rate received during the last three years of the employee s employment, or (2) the final regular rate, whichever is greater. Payments for accrued comp time may be made at any time at the regular rate an employee earns at the time payment is made. 37

38 Common leave categories: Sick Personal Bereavement Vacation Emergency Paid Time Off All encompassing Touchdown!! Paid Time Off 38

39 Paid Time Off, con t. Issue Areas: May employees be required to report the nature of why leave is needed? Must leave be allowed to accrue? Am I required to provide a payout for accrued, banked time off? Am I required to allow extended, unpaid leaves of absence? How do I handle abuse of leave? May an employee be terminated for abusing leave policies? 39

40 Liquidated Damages Question: Can a school district deduct liquidated damages from an employee s paycheck? 40

41 Liquidated Damages Provisions Many school districts include liquidated damages clauses in teacher and administrator contracts Must exercise caution in doing so! 3-Prong Test for Liquidated Damages Provisions Did the parties intend to provide for damages or for a penalty? Is the injury caused by the breach one that is difficult or incapable of accurate estimation at the time of contract? Are the stipulated damages a reasonable forecast of the harm caused by the breach? 41

42 Deducting Liquidated Damages Clearly define the damage amount in contracts and policies Clearly indicate that the district intends to withhold wages owed to an employee to offset liquidated damages Beware! A court may find a liquidated damages provision to be unenforceable which may set up a district for liability under wage and hour law! 42

43 QUESTIONS Milwaukee Madison 411 East Wisconsin Avenue Suite 1000 Milwaukee, WI

44 For more information, visit our website: Andrew T. Phillips Christine V. Hamiel Milwaukee Madison 411 East Wisconsin Avenue Suite 1000 Milwaukee, WI