Athletic Programs and the Fair Labor Standards Act

By Lee Green

Recently, school districts across the country have been facing an explosion of wage-and-hour litigation involving athletics personnel. Interscholastic sports teams historically have tended to rely on low-salaried, stipended and volunteer personnel, many of whom are full- or part-time school employees in other capacities, to fill many head coach, assistant coach and event support positions. Since 1998, hundreds of districts have been sued by their own athletics personnel for violations of the federal Fair Labor Standards Act (FLSA). Most of the cases involved claims for unpaid overtime in situations where the plaintiff's primary job work-hours were 40 or fewer, but when combined with additional athletics program duties, the total work-hours exceeded 40 and entitled the employee to time-and-a-half compensation for the overage. In 2004, revisions to the FLSA dramatically expanded the number of athletics personnel entitled to overtime benefits and significantly increased the potential liability of schools.

The FLSA requires that "non-exempt" employees receive overtime or compensatory time when they work in excess of 40 hours in a week. The key determination for the employer is whether a particular employee is "non-exempt" or "exempt." Three criteria must be satisfied for an employee to be classified as "exempt." First, the employee must be salaried as opposed to receiving hourly pay. Second, the employee must earn at least $23,660 per year ($455 per week). Third, the employee must fit into one of the four categories of exempt job duties -- executive, administrative, professional or highly compensated employee.

Before the August 2004 FLSA revisions, exemption required an income of only $8,060 annually ($155 per week), therefore all but the lowest paid individuals could qualify as exempt if they satisfied the other two criteria (salaried and exempt job duties). Now, however, schools must reassess all those employees who were previously exempt and have annual earnings between the old $8,060 threshold and the new $23,660 threshold. Nationwide, because of the high number of school staff members who earn more than the old exemption amount but less than the new qualifying amount, and who also serve in some role in the school's athletics programs, the financial exposure of districts to FLSA claims has increased significantly.

The following is a non-exhaustive list of the common categories of school district employees who the U.S. Department of Labor (DOL), under most circumstances, considers to have exempt job duties: superintendents, assistant superintendents, district-level program directors, district-level athletics directors, principals, assistant principals, athletics directors, teachers, counselors, nurses with an R.N. degree and certified athletics trainers.

The following is a non-exhaustive list of the common categories of school district employees who the DOL, under most circumstances, considers to have non-exempt job duties: bookkeepers, bus drivers, cafeteria workers, custodians, maintenance workers, media assistants, receptionists, school resource officers, secretaries and teacher's aides.

Most FLSA claims involve school district employees in one of these "non-exempt" categories who also serve in some role in the athletics program such as an assistant coach, sports event supervisor, ticket seller or ticket taker, concessions worker, public-address announcer, scoreboard operator, scorebook keeper, shot-clock operator, or the like. If the "non-exempt" employee's cumulative working hours for primary job duties plus athletics-related duties exceed 40 in a week, the employee must be paid overtime or receive compensatory time off. Even in those cases when the "non-exempt" employee's athletics-related hours do not result in cumulative work hours in excess of 40 for a week, the employee must be paid straight-time for the sports-related duties at a rate at least equal to the minimum wage.

The classification of employees as "exempt" or "non-exempt" is highly subjective with regard to the third above-described criteria -- exempt job duties -- and this determination should be made by experienced school district counsel who is familiar with both the FLSA's "primary duty" test and applicable state labor law, which in some jurisdictions may impose stricter requirements than the federal law.

The burden of proof in FLSA cases is not on the plaintiff to show that statute has been violated, but instead on the employer to establish that it has complied with all of the mandates of the law. The DOL presumes that an employee is "non-exempt" unless it can be conclusively established by the employer that all three criteria for exemption are present, thus any borderline determinations should be resolved in favor of non-exemption.

If in violation of the FLSA, the employer will be liable for unpaid overtime for the previous two years in non-willful-actions cases and up to three years in willful-actions cases, in addition to the possibilities of liquidated damages equal to the back pay owed (thus effectively doubling the award to the plaintiff) and attorney's fees. The DOL may also pursue criminal penalties in willful-actions cases.
FLSA provisions do not apply to independent contractors, trainees, volunteers or activities considered occasional and sporadic.

An independent contractor is an outside agent who contracts with the school district to perform some task and who is not under the district's control regarding the physical details of the work. A full-time bus driver for a charter company who on his own time works part-time for the school district driving teams to away games would not be entitled to overtime from the district under the FLSA.
A trainee is someone working during a mandated orientation or probationary period. For instance, a student teacher who serves as an assistant coach for a sports team would be considered a trainee and would not be entitled to overtime under the FLSA.

An employee may volunteer without pay under the FLSA only if 1) the service is offered freely and voluntarily and without any express or implied coercion by the employer; 2) no compensation other than a nominal fee is paid; and 3) the volunteer duties are dissimilar from the employee's regular job duties.

A school should paper its trail regarding the "freely and voluntarily" criteria by requiring non-exempt employees to sign a volunteer agreement attesting that participation is without coercion or relation to the person's regular employment at the school. Even with the use of such a document, allowing non-exempt employees to volunteer involves the risk of a later dispute whether participation was truly voluntarily or rather was coerced through subtle pressure or an implied threat of tangible job detriments for non-participation.

The FLSA "dissimilar duties" requirement for volunteers is subjective and it is often difficult to assess whether the volunteer is providing services sufficiently unlike his regular job duties. For instance, a full-time school bus driver employed by the district cannot volunteer to drive sports teams to away games, but it would be acceptable for the bus driver to volunteer as an assistant coach. A full-time cafeteria worker may not volunteer to manage the concession stands at athletics events, but it would be acceptable for the worker to volunteer as a ticket taker. A full-time school bookkeeper cannot volunteer to maintain the books for a sports booster club, but would be permitted to volunteer as a scorekeeper at games.

In evaluating the similarity of a volunteer's primary job duties to athletics-related activities, the DOL relies on the classifications of occupations in the O*Net System published by the Employment and Training Administration (ETA). If the primary job duties and athletics-related services fall into the same O*Net category, they are to be considered too similar to permit unpaid volunteerism under the FLSA. Information regarding the O*Net System and access to the database are available online at <www.dol.eta.gov/programs/onet>.

It is also important to note that employees cannot waive their rights under the FLSA. Even if an employee is voluntarily willing to perform no-compensation services similar to his or her primary job duties, the FLSA applies and the employee must be paid for the hours worked and must be paid overtime for the hours worked in excess of 40 in a week.

The FLSA allows employees, at their discretion, to perform occasional and sporadic work for which they must be compensated, but for which their hours do not have to be used in computing overtime. The DOL considers an activity occasional and sporadic if it is not a regularly scheduled assignment; it is performed solely at the employee's option; and it involves duties dissimilar from the employee's regular job duties. Occasional and sporadic service differs from volunteer service in that the volunteer can receive only a nominal fee (expenses), whereas the occasional and sporadic employee is being paid for the activity.

A written FLSA Compliance Policy should be created at the district level with the input of counsel who is familiar with both the federal statute and applicable state labor law. The policy should identify the workweek (the seven-day period subject to the overtime parameters), define whether employees need authorization to work overtime, and state whether overtime will be compensated with pay or with compensatory time off. If written authorization to work overtime is required or if compensatory time off will be incorporated into the policy, documents that will be signed by the employee and retained by the district should be created for these options.

An important component of the FLSA Compliance Policy is the determination of the methodology of timekeeping for the cumulative work hours of all non-exempt employees (timesheet or timeclock or other technology-based options). Schools often lose FLSA lawsuits because of an inability to demonstrate a compliant timekeeping system with which the burden of proof could be satisfied to prove that the employee did not work the claimed overtime (remember that the defendant-school carries the burden of proof in FLSA cases).

Lee Green is an attorney and a professor at Baker (Kansas) University, where he teaches courses in sports law, business law and constitutional law. He may be contacted at <Lee.Green@BakerU.Edu>.