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MONTHLY NEWSLETTER: SEPTEMEBER 2007 ISSUE
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AN OUNCE OF PREVENTION IS WORTH A POUND OF CURE
BY MIKE PADGETT
BINGHAM MCHALE LLP
PUBLISHED IN: INDIANA CHARTER SCHOOLS TODAY, WINTER 2005
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Perhaps the most violated employment law on the books is the Fair Labor Standards Act (FLSA). At its core, the FLSA is relatively simple. It’s the federal law that requires payment of the minimum wage ($5.15 per hour) and payment of overtime (time-and-a-half) for time worked in excess of 40 hours per week. However, large groups of employees are exempt from the FLSA’s coverage and, as a result, are not entitled to overtime payments. The difficulty employers encounter with the FLSA is in classifying employees as exempt or non-exempt. While errors in classifying employees can quickly lead to large back pay liability, this risk can be avoided by a simple review of your classifications.
In the case of schools, classification of some positions is academic (pun intended), while others present a closer call. For example, principals are clearly exempt under the FLSA’s exemption for administrative employees. Teachers are exempt under the professional employees exemption. As with all of the “white collar” exemptions under the FLSA, the administrative and professional exemptions require payment of wages on a salary basis (at least $455 per week), such that the employee receives the same salary whether working more than 40 hours in a week or less than 40 hours. On the other hand, an hourly maintenance employee is clearly not exempt under the FLSA and is entitled to overtime payment for hours worked over 40 in a week. That employee does not perform an executive, administrative or professional function and is not paid on a salary basis.
The closer call in a school setting involves office and clerical staff. While we often think of these staff members as “administrative employees,” job titles alone do not determine their status under the FLSA. In order to meet the FLSA exemption for administrative employees, these individuals must perform “administrative functions directly related to academic instruction or training.” In other words, their work must be related to academic operations and functions, rather than the school’s business operations. An academic counselor assisting students with classroom issues and administering testing programs performs work directly related to academic operations and may be classified as exempt. A bookkeeper responsible for paying the school’s bills and maintaining the checking account is not performing work related to academic functions and, therefore, is not exempt under the administrative exemption (and likely not exempt under any other FLSA exemption).
Classification issues can also arise in a school in the case of teachers’ assistants. The FLSA regulations make clear that an individual engaged to perform classroom instruction under a teachers’ certificate is exempt under the professional exemption. On the other hand, an employee assigned to assist in the classroom that does not perform instructional duties and is not required to have any formal certification is not exempt from the FLSA.
Whether an employee is exempt or non-exempt is important because it determines whether the employee is entitled to overtime. And because of the remedies provided by the FLSA, this determination is critical, even in settings where employees typically do not work a great deal of overtime hours. The FLSA permits employees to recover unpaid overtime wages for a period going back two years. It doesn’t stop there, however. As an additional incentive to employers to properly classify their employees, the FLSA permits an employee to recover twice the amount of wages owed for the past two years. On top of twice the back wages owed, the employee is entitled to attorneys’ fees incurred in pursuing a claim for back wages. Finally, a single employee’s successful claim for overtime wages typically requires back payment to all other employees performing the same or similar duties.
In order to avoid large back pay liability, it is important to routinely assess whether employees are properly classified as exempt or non-exempt under the FLSA. Too often, employees are improperly classified from the start or their duties evolve to the point where re-classification is necessary. A simple review of your classifications could be the ounce of prevention that holds back the FLSA’s several pounds of cure.
Mike Padgett is an attorney with Bingham McHale LLP in Indianapolis and represents several Indiana charter schools.
Phone: 317-968-5402 Email: mpadgett@binghammchale.com
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