WHAT IT IS, HOW IT IS CHANGING, AND HOW IT IMPACTS BARGAINING THE FAIR LABOR STANDARDS ACT MNA Fall Conference 2015 Robert T. Schindler (248) Lusk Albertson and on Download this presentation:

PURPOSE OF THE FLSA Regulates the time and manner of employee wages, hours worked and payments. Creates minimum wage and overtime standards. Prescribes rights and responsibilities. Requires pay and hours record keeping.

FLSA COVERAGE Employee Anyone that the employer “suffers or permits” to work. 29 USC § 203(g). All individuals who spend time “in physical or mental exertion (whether burdensome or not) controlled or required by employer... primarily for the benefit of the employer of his business” Tenn. Coal v Muscoda Lodge, 321 US 590 (1944). Has been referred to as one of the broadest definitions in the law.

WHO ISN’T AN EMPLOYEE? Volunteers Performs hours of service for a public agency for civic, charitable or humanitarian reasons, without promise, expectation or receipt of compensation. May be paid expenses, reasonable benefits, or a nominal fee (no more than 20% of what employee would be paid).

WHO ISN’T AN EMPLOYEE? Volunteers (cont.) Offer services freely and w/out pressure or coercion, direct or implied from employer; and Is not otherwise employed by the same public agency to perform the same type of services as those for which the individual proposes to volunteer. Two Parts: same agency and same services. Parent volunteering in activities directly involving their child’s education and participation not a violation of FLSA.

WHO ISN’T AN EMPLOYEE? Independent Contractors Extent of investment in equipment and facilities; Opportunity for profit or loss; Degree of control exercised over them; Permanency of the relationship; Skill required of the individual; Degree of independent initiative, judgment or foresight exercised. No factor is controlling – joint status possible.

WHO ISN’T AN EMPLOYEE? Students and Trainees/Interns Students are not employees if work is part of educational process. No employment relationship found where students required to perform cafeteria duties. Bobilin v Board of Ed, 403 F Supp 1095 (D Haw, 1975).

WHO ISN’T AN EMPLOYEE? Students and Trainees/Interns (continued) Trainee/Intern : Similar to that in vocational school/program; For benefit of trainee; No employees displaced; Employer derives no immediate advantage ; Trainee not necessarily entitled to job afterward; Both employer and trainee understand no entitlement to wages.

WHO ISN’T AN EMPLOYEE? Others Not Deemed Employees Appointed or elected members of Board of Education; Any personal staff members of an elected or appointed Board of Education official;

EXEMPT STATUS The FLSA creates exemptions for administrative, executive, or professional employees. If an employee is exempt, the minimum wage and maximum hour requirements do not apply to them.

EXEMPT STATUS To be considered exempt, an employee must generally meet a two part test: Minimum salary requirement Responsibility requirements

RESPONSIBILITY REQUIREMENTS – EXECUTIVE EMPLOYEES Management of the employment enterprise or a recognized division or subdivision thereof; Customarily and regularly directs the work of two or more employees; and Has the authority to hire or fire, or whose suggestions and recommendations as to the hiring, firing, advancement promotion or change of status is given particular weight.

RESPONSIBILITY REQUIREMENTS – ADMINISTRATIVE EMPLOYEES Primary Duty: Office or non-manual work directly relating to management policies or general business operation of the school or its constituents or work directly related to academic instruction or training. Must generally utilize discretion and independent judgment; carry out major functions; formulate, interpret, or implement management policies or operating procedures.

ADMINISTRATIVE EMPLOYEES This exemption generally includes superintendents or a head of an elementary or secondary school, assistant responsible for administration of matters such as curriculum, quality and methods of instructing, accounting, human resources, etc., academic advisors, and school resource officers.

RESPONSIBILITY REQUIREMENTS – PROFESSIONAL EMPLOYEES Professional Exemption Primary Duty: work requiring knowledge of an advanced type in a field of science or learning customarily acquired by prolonged specialized study Simple certification process generally not deemed sufficient Requirement of a college degree not enough on its own

PROFESSIONAL EMPLOYEES Teachers specifically designated professionals. Teachers who possess an elementary or secondary certificate qualify for the exemption. Substitute teachers, even if not degreed or certified, are exempt as long as “primary duty is teaching and imparting knowledge” Student teachers do not qualify – Trainee/Interns Generally also includes guidance counselors, accountants in the business office, school board attorneys, school psychologists, and school nurses.

HIGHLY PAID EMPLOYEES Highly Paid Exemption Compensation - $100K per year Must perform any one or more of the duties or responsibilities of an executive, administrative or professional employee

RESPONSIBILITY REQUIREMENTS – COMPUTER EMPLOYEES Primary Duty (50%) must consist of one or more of the following: Application of system analysis techniques and procedures; Design, development, documentation, analysis creation testing or modification of computer systems or programs; Design, documentation, testing creation or modification of computer programs related to machine operating systems; or A combination of the aforementioned duties, the performance of which requires the same level of skills. Employees must have attained a level of skill to warrant independent work and discretion.

EXEMPT STATUS SALARY REQUIREMENTS Proposed regulations from the U.S. Department of Labor seek to change the salary thresholds for exempt workers Purpose is to recapture “misclassified workers” and pay them overtime US DOL estimates 5 million Americans are “misclassified” as exempt Salary threshold has not been changed since 2004

EXEMPT STATUS SALARY REQUIREMENTS Current Salary Requirements Compensated on a salary or fee basis – consistent wages – of $455 per week ($23,660 per year), or not less than $27 per hour for computer employees. Proposed changes Must be compensated at the 40th percentile of weekly earnings for full-time salaried workers Using 2013 data, $921 per week (which is $47,892 annually for a full-year worker) Department estimates that a 2016 level may be about $970 a week (or $50,440 a year).

EXEMPT STATUS SALARY REQUIREMENTS Proposed changes Threshold for highly compensated employees moved from $100,000 the 90th percentile of earnings for full-time salaried workers Approximately $122,148 annually Thresholds would be moved based on the articulated formula annually Important to note that under both the current and proposed regulations, the salary test does NOT apply to “teachers”

WHAT IS A “TEACHER” UNDER THE FLSA As noted earlier: The term "employee employed in a bona fide professional capacity"... means 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. Need not be a standard classroom teacher Certification may be evidence but not necessity or absolute evidence

PROPOSED REGULATIONS Published on July 6, 2015 Comment period ended September 4, ,044 comments received during that time period Timeframe for final regulations - ???

WHAT DOES IT MEAN IF AN EMPLOYEE IS NOT EXEMPT? Mandatory requirements of the law apply to that individual Minimum wage Maximum hours

WHAT DOES IT MEAN IF AN EMPLOYEE IS NOT EXEMPT? Hours Worked All working time is considered compensable under the FLSA whether or not is was expressly authorized by the employer if on employer’s behalf – “work not requested but suffered or permitted is work time.” 9 CFR § “On behalf of employer” is broadly construed.

MINIMUM WAGE Minimum Wages Federal Currently $7.25 per hour (since July 24, 2009). Also allows for $4.25 per hour for first 90 calendar days for workers under the age of 20. They must be raised to minimum wage after 90 days or when they reach 20 years old – whichever comes first. Student-Learner – student at least 16 may be paid 75% of minimum wage if employed in bona fide vocational training program and employer has received a special DOL certificate.

MINIMUM WAGE Michigan $8.15 per hour as of September 1, Goes up to $8.50 on January 1, 2016; $8.90 on January 1, 2017; $9.25 on January 1, 2018; Changes in wage do not take effect if unemployment rate is 8.5% or higher. Also allows for the $4.25 training wage for workers under 20 years old. Youth sub-minimum wage of 85% of state minimum for workers under 18 – current sub-wage is $6.93 per hour

MAXIMUM HOURS Overtime 1 ½ wage for all hours over 40 Blended average if employee works two jobs at different wages No compensation necessary for meal periods of 30 minutes or more, but breaks of 5 to 20 minutes generally with compensation Predominant benefit test

MAXIMUM HOURS Mandatory meetings are compensable unless: Attendance occurs outside employee’s regular work hours; Attendance is voluntary; Employee does non productive work while attending meeting/training; and Program, lecture, or meeting is not directly related to the employee.

FLSA DISPUTES When employee asserts they are underpaid it will be the burden of the employer to disprove assertion. This can be difficult without policies or timekeeping records.

WHAT DOES THIS MEAN FOR COLLECTIVE BARGAINING

FLSA AND BARGAINING Pitfalls to watch out for Salary Schedule Is it more cost effective to raise salaries? Do you need reopeners or formulas to avoid movement of the minimum salary threshold Overtime is 40 hours actually worked in a given work week – not more than 8 hours per day Contract right to 1 ½ time for other than is binding If employee is salaried but not exempt, hourly wage = weekly salary/40 Be sure to not call time other than lunch “duty-free”

FLSA AND BARGAINING Pitfalls and things to consider Contract language specifically prohibiting the working of overtime without expressed prior approval Employees cannot waive their rights under the FLSA FLSA hours worked standard relates only to actual hours worked Thus, a standard day is not necessarily evidence Sick or personal days do NOT count toward 40

FLSA AND BARGAINING Compensatory Time Must be granted at time and a half. Can only be used if previously agreed to. If employee is terminated they must be paid for unused comp time. Can accrue up to 240 hours of comp time (160 hours of actual work).

INDEPENDENT CONTRACTORS

On July 15, 2015, the DOL released Administrator’s Interpretation15-1 Subject: The Application of the Fair Labor Standards Act’s “Suffer or Permit” Standard in the Identification of Employees Who Are Misclassified as Independent Contractors. cation/

INDEPENDENT CONTRACTORS In order to make the determination whether a worker is an employee or an independent contractor under the FLSA, courts use the multi- factorial “economic realities” test, which focuses on whether the worker is economically dependent on the employer or in business for him or herself

INDEPENDENT CONTRACTORS The economic reality factors typically include: (A) the extent to which the work performed is an integral part of the employer’s business; (B) the worker’s opportunity for profit or loss depending on his or her managerial skill; (C) the extent of the relative investments of the employer and the worker; (D) whether the work performed requires special skills and initiative; (E) the permanency of the relationship; and (F) the degree of control exercised or retained by the employer

DUAL EMPLOYMENT Dual Employment The FLSA allows for the exemption of overtime pay for hours worked by non exempt employees that meet the following criteria: Work is solely at the employee’s option; Work is done occasionally or sporadically; and Work is done on a part-time basis for the same public agency in a different capacity from the employee’s regular employment.

DUAL EMPLOYMENT Employee’s Option: Employee’s decision must be made freely and without coercion, implicit or explicit by the employer, and the employee must be free to refuse to perform such work without justification or sanction. Occasional or Sporadic: Infrequent, irregular, or occurring in scattered instances. 29 CFR § (b). An activity may be occasional or sporadic even though it recurs seasonally (i.e., a holiday concert), but the activity is not occasional or sporadic if it occurs regularly (i.e., every week or every other week).

QUESTIONS?