Summary of Federal Laws
Employment
Miscellaneous Employment Laws
Fair Labor Standards Act of 1938 (FLSA)
29 U.S.C. § 201 et seq.; 29 CFR Part 500 et seq.
Establishes minimum hourly wage. ($5.85 effective July 24, 2007; $6.55 July 24, 2008, $7.25 July 24, 2009) (Note that higher rates may apply in certain states, including the District of Columbia). The law also establishes overtime pay requirements for non-supervisory employees. Employees may not be required to work more than forty hours per seven-day week without overtime compensation at a rate of not less than one and one-half times their regular pay. Exemptions from the overtime compensation provision are provided for workers who are employed in bona fide executive, administrative or professional capacity. (See 29 U.S.C. § 213(a) (1)). Faculty and lecturers are covered under the category of "bona fide professionals". Under the FLSA regulations (29 CFR Part 541) to be considered an exempt executive, professional, or administrative employee, three tests must be satisfied:
Under the salary basis test, pay deductions for disciplinary violations are impermissible unless imposed "in good faith for infractions of safety rules of major significance" (29 CFR 541.603).
A work rule that allows for across the board (for both professional and non-supervisory employees) suspensions or deductions in pay may end up reclassifying professional employees as non-exempt workers, and subject the employer to liability for overtime. See Hahn Automotive case below. The Secretary of Labor is of the view that employees whose pay is adjusted for disciplinary reasons do not deserve exempt status because as a general matter true "executive, administrative, or professional" employees are not "disciplined" by piecemeal deductions from their pay, but are terminated, demoted, or given restricted assignments.
The FLSA also contains established recordkeeping and child labor standards. Posting and recordkeeping required. See the Dept. of Labor Poster Page for electronic copies of the required employment posters as well as an employer poster advisor (interactive). Certain executive, administrative and professional employees are exempt for the minimum wage and overtime requirements. Under the FLSA regulations (at 29 C.F.R. § 541.303 and 541.304. ), lawyers, doctors, and teachers are exempt without regard to whether they pass the salary test.
Employment of student workers is dealt with in 29 C.F.R. Parts 519 and 527. The hours worked provisions are contained in 29 C.F.R. Part 785. For general information see http://www.dol.gov.
Recordkeeping: University as an employer must keep payroll records for all employed, with employee’s name, address, sex, date of birth, occupation, hours worked each day, total hours worked each week, hourly rate of pay for any work week in which overtime is due, and total wages paid and deductions taken. The records which must be kept for bona fide executive, administrative, or professional capacity employees are set forth at 29 C.F.R. § 516.3. The employer must also keep certificates, collective bargaining agreements, and individual contracts, as well as sales and purchase records. Records above must be kept for three years. See 29 C.F.R. § 516.5. Records which must be kept for at lease two years include the basic employment and earnings records, wage rate tables, order, shipping and billing records, and records of additions to or deductions from wages paid. See 29 C.F.R. § 516.6.
FLSA: Professional Exemption for Computer Employees Dec. 14, 2006 Department of Labor Field Assistance Bulletin No. 2006-3. The gist of the bulletin is that the exemptions under Section 13(a)(1) of the FLSA and 13(a)(17) for computer employees are not meant to be mutually exclusive, but rather 13(a)(17) (added in 1996) was meant to be an additional express statutory basis for the computer employee exemption. See 29 CFR 541.400 et seq. for the general rules for computer employees.
Volunteer or Employee?
This summary of requirements for a volunteer relationship came from Gerard St. Ours, Associate General Counsel, Johns Hopkins University.
The principles that govern a volunteer relationship (and as applied by the U.S. Department of Labor) are as follows:
1. A person who intends his services to be voluntary and to be rendered without compensation from the entity is not an employee of the entity.
2. Bona fide efforts of individuals to volunteer and donate their services for activities of a humanitarian, public service, or religious nature where there is no expectation of payment do not create an employment relationship.
3. The fact that the volunteer is an employee elsewhere in the organization does not mean he cannot volunteer in a capacity that differs from his employment. However, where an employment relationship does exist, that relationship may not be waived; so, for example, a hospital's bookkeeper could not be treated as an unpaid volunteer bookkeeper for the hospital in the same week in which he is also an employee.
4. People who donate their time for civic or personal motives, without promise or expectation of compensation, at hours that suit their own convenience, are not employees for purpose of wage and hour laws.
5. Volunteers should not be utilized in ways that displace or replace regular employees in the performance of their normal duties.
Q & A: This question came from an Architecture prof, about student internships and employment rules.
Question: "It has long been my understanding that unpaid internships are illegal, except for congressional interns, or where credit is given in exchange for guided (not strictly independent) learning that happens during the internship and where no commercial benefit accrues to the employer (when they don’t make money off of the intern). Considering how often I see employers failing to pay interns or offering to hire them for unpaid positions, I want to check again. Can they be unpaid, even when not getting credit? Can a non-profit hire them without pay?
Here's the latest example. I got this offer in today’s e-mail, from a non-profit:
Dear Professor: I have an interesting, albeit unpaid, internship. We are developing a national standard on expected service life of capital assets (all types, from buildings to civil infrastructure to industrial). I need a student to compile a format of low, medium and high expected lives by facility type and subsystem (my staff and I just don't have time to do it). I think it would be a good resume builder. I envision one day per week or two half days.
Answer: The FLSA requires all employees to be paid at least the minimum wage. Whether or not a student intern is an *employee* for FLSA purposes depends upon a six factor test enunciated in a Supreme Court Case in 1947. (Walling v. Portland Terminal, 330 US 148).
Answer: The FLSA requires all employees to be paid at least the minimum wage. Whether or not a student intern is an *employee* for FLSA purposes depends upon a six factor test enunciated in a Supreme Court Case in 1947 (Walling v. Portland Terminal, 330 US 148).
The six factors which must be met to qualify as an intern and not an employee:
1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
2. The training is for the benefit of the trainee;
3. The trainees do not displace regular employees, but work under close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the completion of the training period; and
6. The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.
The highlighted two points above would seem especially relevant in light of the query you received.
See this DOL web page online at http://www.dol.gov/esa/whd/opinion/FLSANA/2004/2004_05_17_05FLSA_NA_internship.htm.
See also this HR blog for more on this topic. http://gneil.blogspot.com/2009/05/unpaid-interns-and-flsa-what-you-need.html
Final FLSA Overtime Regulations
69 Fed. Reg. 22121 (April 23, 2004)
On Friday April 23, 2004, the Department of Labor's new overtime regulations were published in final form. The new rules will be effective Aug. 23, 2004. The rules implement the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales and computer employees. These exemptions are often referred to as the "white collar" exemptions. Revisions to both the salaries and duties test were made by these regulations. Numerous changes were made after comments were collected on the proposed rule. Highlights of the new rules include the following:
Make at least $23,660 per year week paid on a salary or fee basis. Total annual compensation may also include commissions, nondiscretionary bonuses and other nondiscretionary compensation earned during a 52-week period.
Perform office or non-manual work; and
Customarily and regularly perform any one or more of the exempt duties of an executive, administrative or professional employee.
A safe harbor exists that allow an employee to claim the employee is exempt even when improper deductions are made if the employer has a written policy prohibiting improper pay deductions as provided in § 541.602, notifies employees of that policy and reimburses employees for any improper deductions, and the employer does not repeatedly and willfully violate that policy or continue to make improper deductions after receiving employee complaints.
Assistant Athletic Instructors
Dec. 1, 2008 letter from Acting Administrator of the Wage-Hour Division, U.S. Department of Labor, advising that "Assistant Athletic Instructors" (AAIs) at an institution of higher education with the duties described in the letter were exempt employees under the Fair Labor Standards Act (FLSA). Their teaching duties comprise at least 50% or more of their time and include instruction of physical health, team concepts, and safety. The AAIs work under the supervision of a head coach and are responsible for designing instructions for individual student-athletes and for team needs and have a great deal of independent discretion and judgment as to the manner and method of teaching.
Selected Recent Case Law:
In Takacs v. Hahn Automotive Corporation, 246 F.3d 776, (6th Cir. 2001) twenty-seven former managers and senior assistant managers brought suit under the Fair Labor Standards Act against the employer to recover overtime compensation. The Court held the managers were not salaried employees exempt under the FLSA from overtime pay requirements, due to the existence of a disciplinary policy that provided that employees, including members of management, were subject to suspension without pay for misconduct on the job, and in fact seven members of management were actually suspended without pay for disciplinary infractions. Key to the Court's finding was that not only did the policy specifically say management could also be suspended, but the employer had actually imposed suspensions on managers. The "window of correction " defense, which allows an employer to reimburse the exempt employee for the loss and promise to comply in the future, could not be utilized in this case as the Court found that the employer's policy was to make pay deductions from salaried employees, and thus there did not exist an objective intention to pay the employees in question on a salaried basis.
The Court also quoted the case of Auer v. Robbins, 519 U.S. 452 (1997), and distinguished the two cases. In the Auer case the window of correction defense was available. In Auer there was one instance of a deduction in pay against an officer who was paid on a salaried basis. The Court upheld the Secretary of Labor's interpretation of the regulation, which is that the standard is violated, if there is either an actual practice of making deductions or an employment policy that creates a "significant likelihood" of making deductions. In that case the Court noted: "A primary issue in the litigation unleashed by application of the salary basis test to public sector employees has been whether, under that test, an employee's pay is "subject to" disciplinary or other deductions whenever there exists a theoretical possibility of such deductions, or rather only when there is something more to suggest that the employee is actually vulnerable to having his pay reduced."
In finding against the employees seeking overtime pay in Auer, the Court adopted the interpretation of the regulation proposed by the Secretary of Labor, and stated as follows:
"The Secretary's approach rejects a wooden requirement of actual deductions, but in their absence it requires a clear and particularized policy--one which 'effectively communicates' that deductions will be made in specified circumstances. This avoids the imposition of massive and unanticipated overtime liability (including the possibility of substantial liquidated damages, see, e.g., Kinney v. District of Columbia, supra, at 12) in situations in which a vague or broadly worded policy is nominally applicable to a whole range of personnel but is not "significantly likely" to be invoked against salaried employees."
Resources
DOL FAQs on Furloughs and Other Reductions in Pay and Hours Worked Issues
FLSA Employee Rights Poster (udpated June 2007)
FLSA Opinion Letter 2005-29 (Aug. 26, 2005)
This August 2005 letter addresses the situation where an employee of an IHE is mainly non-exempt, but also teaches one or two classes on a part time basis. In the opinion the employee worked full time as a welder but also taught a welding course at night. The US Dept. of Labor concluded that the primary duty was the non-exempt position, and thus that the employee must be paid on an hourly basis for the teaching and preparation time for the class. The 13(a)(1) exemption for teachers does not apply.
FLSA: Payment of Assistant Coaches: Memo by the law firm of Gibson, Dunn & Crutcher addressing the payment of Assistant Coaches under the new rules. (see Dec. 1, 2008 letter above on Assistant Athletic Instructors)
Sample Fair Labor Standards and Wage Payment Act Policy on Deductions
3/13/09 links fixed and compliance partner added, old text removed mlo
compliance box links updated 6/3/09 rab
updated 8/14/09 by mlo to add FAQ by DOL on furloughs
Last Revised 27-Oct-09 10:27 AM.
