Top 5 Mistakes Charter Schools Make In Paying Their EMployees March 21, 2017 24th Annual California Charter Schools Conference Wendy L. Tucker, Esq. Procopio, Cory, Hargreaves and Savitch LLP 525 B Street, Suite 2200, San Diego, California 92101

Why is Wage and Hour A Concern? Change In Labor Commissioner’s Position on Charter Schools New Court Decision Huge Financial Impact

Error # 1 - Misclassifying Employees Exempt v. Non-Exempt Two Part Test Wages Monthly salary of $3,640/$3,466.67 Duties JOB TITLE DOESN’T MATTER! California Wage Order 4-2001 Professional – credentialed, engaged in teaching. Executive – true management, supervising at least 2 employees, hires/fires, etc. Administrative – works on management policies, or administration of school or department/subdivision thereof.  

Most Common Misclassifications Non-credentialed teachers Credentialed employees performing non-credentialed duties Highly paid employees

Hypothetical Mr. Johnson is a gym teacher at a charter school who also coaches a school sports team at night and on the weekends. He does not have a credential. He is paid a salary of $5,000 per month. The School fires Mr. Johnson because he’s continually late or absent. Angry over being fired, Mr. Johnson files a wage claim.

Exposure Unpaid Overtime - 5 hours week $12,980,77 ($28.85 x 1.5 x 5 hours x 20 weeks for 3 years) Penalties for Failure to Pay Overtime $4,000.00 Penalty for missed meal and rest breaks ($28.85 x 2 hours per day x 3 days a week x 30 weeks x 3 years) $15,579.00

Exposure Penalties for Inaccurate Wage Statements $4,000.00 Waiting Time Penalties $6,924.00 School’s Attorney’s Fees $50,000.00 Employee’s Attorney’s Fees $50,000.00 GRAND TOTAL: $143,483.77

Error #2 - Calculation of Daily or Hourly Rate For Exempt Employees Payment of Partial Weeks Payment for use of Sick Leave or Vacation Calculation of Final Pay

Education Code Does Not Apply! Cannot divide contract salary by number of work days Formula: Annual salary divided by 52 weeks = weekly rate divided by 40 hours per week = hourly rate To get annualized salary, multiply monthly salary by twelve Daily rate” in charter schools is not the same as in school districts. School districts - Education Code Section 45041; 29 CFR § 541.602. Charter schools - DLSE Enforcement Manual; Labor Code § 515(d).

Error # 3 - Most Common Pay Errors For Hourly Employees Timekeeping Meal and Rest breaks Stipends Meetings Travel One employee with two jobs Split Shift

Error # 4 – Improper Pay-Related Timing Requirements Monthly v. Semi-Monthly Payroll Timing of Pay Periods Date of Payday Date of Final Paycheck Non-Exempt Employees – Twice monthly, generally. May also choose to pay weekly, biweekly or semimonthly by designating paydays in advance but payment must nevertheless be made within seven (7) calendar days of the end of the pay period. Education Code authorizes school districts (not charter schools) to provide once monthly pay for classified employees. Exempt Employees – One monthly pay authorized by Labor Code and Education Code.  

Hypothetical Charter School pays its teachers on an twelve month basis from August through July. Charter School decides not to renew the contracts of nine teachers. Charter school pays them their last paycheck in July per the twelve-month schedule. Problem?

Gateway Community Charters v. Heidi Spiess Charter School violated requirement to pay all wages due and owing upon termination. Spiess was awarded: $640 Wages $128 Liquidated Damages $105.20 Interest $8,538 Waiting Time Penalties Total: $9,411.20

Error # 5 – Improper Deductions and Offsets Mistakes in pay Lost or unreturned equipment Employee loans Advances on Sick Leave or Vacation Pay Deductions from Final Pay Withholding of Final Pay

Questions? Please feel free to contact me. Thank you! Questions? Please feel free to contact me. Wendy L. Tucker, Esq. Partner Wendy.Tucker@procopio.com 619.525.3845