The Catholic University of America

Summary of Federal Laws

Employment

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Miscellaneous Employment Laws

Fair Labor Standards Act of 1938 (FLSA)

29 U.S.C. § 201 et seq.; 29 CFR Part 500 et seq.; 29 CFR Part 785 (hours worked)

Establishes minimum hourly wage. (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:

  • Duties test
  • Salary level test and
  • Salary basis test.

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. 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 Test on Independent Contractors: Administrator's Interpretation No. 2015-1, Issued July 15, 2015*

Possibly issued in connection with the rise of new business models, such as Uber, this is a DOL test for summarizes the position DOL's Wage and Hour division has taken in entering into agreements with states and the IRS on how to handle Employer misclassification. The heart of the DOL position is stated here, and focuses on more than control, which is the heart of the IRS /common law test. The end result is that a worker dependent for economic survival on the employer will be an employee, and a person in business for him or herself will be an independent contractor.

 

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. A worker who is economically dependent on an employer is suffered or permitted to work by the employer. Thus, applying the economic realities test in view of the expansive definition of “employ” under the Act, most workers are employees under the FLSA. The application of the economic realities factors must be consistent with the broad “suffer or permit to work” standard of the FLSA. 

 

Update on FLSA final overtime rule injunction and litigation: The 5th Circuit issued an order granting the U.S. Dept. of Labor's request for expedited appeal briefing in the State of Nevada v. U.S. DOL case listed below. The court granted the DOL's request for an extension on the time to file a reply brief to June 30th, 2017.  For more see the HR Daily Advisor

State of Nevada v. U.S. DOL, U.S. Dist. Court, (E.D. Texas) Case 4:16-cv-00731, (11-22-16), Appeal filed by State of Nevada, et al. v. Labor, et. al, 5th Circuit, Dec. 1, 2016, and stay denied by Nevada v. U.S. DOL, 2017 WL 26079, E.D. Tex., Jan. 3, 2017. 

In this decision the federal district court in Texas blocked the implementation of the overtime rule scheduled to go into effect 12-1-16, issuing a preliminary injunction.  The court's reasoning was it needed more time to determine if the rule exceeded the authority held by the Department of Labor. This position was being argued by various groups opposing the new rule. 

The specific issue was did the  DOL exceed its authority by going beyond defining the duties of executive, adminstrative and professional employees, and also adding a minimum salary level. From the opinion at page 13: 

With the Final Rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test. Consequently, the Final Rule does not meet Chevron step one and is unlawful. The Department’s role is to carry out Congress’s intent. If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.

 

Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, Final Rule, 80 Fed. Reg. 32391, May 23, 2016.

This rule is effective Dec. 1, 2016. Under this final rule, white collar employees subject to the salary level test earning  less than $913 per week (or $ 47,476 per year for a full time worker) will not qualify for the EAP exemption, and therefore will be eligible for overtime, irrespective of their job duties and responsibilities. Employees earning this amount or more on a salary or fee basis will qualify for exemption only if they meet the standard duties test, which is unchanged by the final rule. See the summary on the DOL web page for more. The DOL web page also includes Guidance for Higher Education Institutions on Paying Overtime under the New Rule.  The salary level and salary basis requirements do not apply to bona fide teachers. See 29 CFR 541.303(d), .600(e) and to the extent that a postdoctoral fellow’s primary duty is teaching, higher education institutions can classify such an employee as exempt from overtime. Postdoc research fellows who do not have teaching as a primary duty must meet the salary level test.

See the American Council on Education Issue Brief on the new FLSA Overtime Rule.* (May 26, 2016)

See also the CUPA/NCAA White Paper on Payment of Coaches and AthleticTrainers under Federal Law
Note on part time employees: 

Some employers also mistakenly believe that the EAP [executive, administrative, professional] regulations limit their ability to permit white collar employees to work part-time or job share.*FN: As the Department has previously explained, there is no special salary level for EAP employees working less than full time. See 69 FR 22171. Employers, however, can pay white collar employees working part-time or job sharing a salary of less than the required EAP salary threshold and will not violate the Act so long as the salary equals at least the minimum wage for all hours worked and the employee does not work more than 40 hours a week. See FLSA 2008-1NA (Feb. 14, 2008). See also section IV.A.iv.

Wage and Hour Claims

The elements of an FLSA claim are: 1) plaintiff was employed by defendant during the relevant period; 2) plaintiff was engaged in commerce or employed by an enterprise engaged in commerce or the production of goods for commerce that had annual gross sales of at least $500,000; and 3) the defendant failed to pay plaintiff minimum wage and/or overtime pay. Source: 8th Cir. Model Civ. Jury Instr. § 10.01 (2011)

Reasonable Break Time for Working Mothers, Request for Information from the Public, 75 Fed. Reg. 80073 (Dec. 21, 2010) The Request for Information contains the Department’s preliminary interpretations of the law’s requirements on issues such as unpaid break time, reasonable break time, provision of space for expressing breast milk, notice to the employer and enforcement. See the DOL resource page on this law.

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.

Fact Sheet #71 : Internship Programs under the Fair Labor Standards Act (2010)

This fact sheet provides general information to help determine whether interns must be paid the minimum wage and overtime under the Fair Labor Standards Act for the services that they provide to "for-profit" private sector employers. See fact sheet for comments on need for further review of internships in non-profit sector.

But caution should be used in relying upon this Fact Sheet. See Glatt et al v. Fox Searchlight Pictures, et al. (C.A. 2nd Cir.) July 2, 2015. Interns who were unpaid and who were asked to perform a number of tasks unrelated to an educational purpose sued over the lack of pay. The court declined to grant deference to the DOL Fact Sheet, noting as follows:

We decline DOL’s invitation to defer to the test laid out in the Intern Fact Sheet. As DOL makes clear in its brief, its six part test is essentially a distillation of the facts discussed in Portland Terminal. DOL Br. at 11, 12, 21.
Unlike an agency’s interpretation of ambiguous statutory terms or its own regulations, “an agency has no special competence or role in interpreting a judicial decision."
State of N.Y. v. Shalala, 119 F.3d 175, 180 (2d Cir. 1997).
 

Note Shulman 7 factor test and 2nd and 11th Circuit adoption of 7 factor test and rejection of DOL 6 factor test. See Shulman below.

Six Part Test for Student Interns: According to the DOL, all six factors present means that an employment relationship does not exist under FLSA.  Below are the six factors annotated based on how they have been previously interpreted by DOL in a variety of court decisions. (as of May 2015)

 1. Extension of the Classroom Experience: Interpreted broadly by Wage and Hour Division of DOL. Work must constitute “the practical application of material taught in the classroom.”
• NOTE: The granting of academic credit alone does not guarantee that this criterion or any factor is present.

 2. Benefit to the Student: Should be relatively easy to satisfy if the student chose to participate in the Internship.

 3. Student does not displace regular employees: Look at specific facts and circumstances. If the student works a few hours during the week with light responsibility, there is most likely no problem. If the student works 25-35 hours/week with heavy responsibility, then it is worth further scrutiny. Also, whether individuals are let go when interns are hired could be a factor in the analysis.

 4. Employer derives no immediate advantage from activities of the Student: Other courts have recognized that the employer will necessarily derive “some” benefit from having an Intern and training them. Courts have also found that de minimus menial tasks do not pose a problem, if isolated. Here, the requirement seems to be guarding against a situation where an employer uses work by an Intern without any supervision or guidance, defeating the purpose of getting an educational opportunity. Case law suggests that if an employer needs to constantly supervise the student, even if the student’s work product is used by the employer, the benefit would not be “immediate.” Similarly, a student’s written work can be used if an employer revises/edits/collaborates with the student.

5. Student not entitled to job at conclusion: This does not mean an employer cannot hire a former student Intern, just that there can be no expectation of future employment.

6. Employer and Student understand not entitled to wages: This can be satisfied in the Agreement signed before the Internship begins.

Faculty supervising the interns must know, understand and comply with the above factors.

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.[1]

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.[2]

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. [3]

5. Volunteers should not be utilized in ways that displace or replace regular employees in the performance of their normal duties.[4]

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 website.

See also this HR blog for more on this topic.


[1] 1998 WL 1147729 (DOL WAGE-HOUR)

[2] 2000 WL 33126564 (DOL WAGE-HOUR), 1999 WL 1788160 (DOL WAGE-HOUR)

[3] 1998 WL 1147729 (DOL WAGE-HOUR)

[4] 1998 WL 1147729 (DOL WAGE-HOUR)

 


Q & A

Question: What happens if an undocumented worker (UW) is found to have worked for the University? Should they be paid? 

Answer:  Yes, wage and hour law (FLSA and DC Wage and Hour Law) require payment. Several courts have held – and the Labor Department has issued definitive guidance – that employers must pay for work actually performed, even by UWs and even by UWs who were illegal at all times. In Galdames, et al. v. N & D Investment Corp., a 2009 federal case from Florida, the court ruled that UWs working in a laundry had to be paid under FLSA, notwithstanding their illegal status. Under similar facts a federal court in Missouri reached the same conclusion. In Lucas v Jerusalem Café, decided just last year, the court ruled that these UWs, who worked in a Kansas City restaurant, clearly had standing under the FLSA to receive back pay and OT, notwithstanding the fact that they were illegal at the time they were hired and throughout their employment (an attempt to pass off their status as “volunteer workers” also failed). The Secretary of Labor herself filed a brief in support of the UWs in this case, and her brief included this language: “The Department's longstanding position, articulated both before and after Hoffman Plastics v. NLRB, (U.S. Supreme Court, 2002), is that undocumented workers are entitled to minimum wages and overtime pay for hours worked under the FLSA. This position is grounded in the definitions of ‘employee’ and ‘employ’ under the Act, which contain no limitation based on immigration status, and in the fact that enforcing the FLSA on behalf of all workers regardless of immigration status is essential to achieving the purposes of the Act.”

In addition, published guidance from the Labor Department’s Wage and Hour Division includes this language: “The Department's Wage and Hour Division will continue to enforce the FLSA without regard to whether an employee is documented or undocumented.”

Resources

Structuring On-Campus Internships Under the FLSA, NACUANOTE Feb. 13, 2017. 

"Fireworks" in July 2016: or a Spring Surprise!!! The Impact of the Final DOL Overtime Regulations on Higher Education, by Dena Sokolow, Baker Donelson: Excellent Webinar online w/great overview of questions.

Shulman et al v. Collier Anesthesia and Wolford College, Case No. 14-13169, (C.A. 11) Sept. 11, 2015.

This is a case on whether or not nursing students who are already RNs and who perform internships as part of a Master's Degree must be paid (and receive overtime) for their clinical internships under the FLSA. The case begins as follows:


Upon receiving their master’s degrees, certifications, and licenses, Plaintiff Appellant student registered nurse anesthetists are legally able to put people to sleep. We have heard, though never ourselves experienced, that some legal opinions can do the same thing. We are hopeful that this one will not.

The district court considered the DOL six factor test and found the nurses not to be employees. The CA found the test used by the lower court to be outdated and not adequate for determining the primary beneficiary of a "modern-day internship for academic credit and professional certification."

The facts in this case were unique. Wolford College is a for profit college wholly owned by Lynda Waterhouse, who is also the Executive Director of Collier Anesthesia. The last four semesters of the program are mainly clinical experience. In the case, some, if not all of the clinical education was obtained at Collier Anesthesia Facilities. The students submitted evidence they were routinely scheduled to work for more than 40 hours per week.

The Court of Appeal cited Glatt, 791 F. 3rd at 384, which is the 2nd Circuit's reflection on the limitations of comparing modern internships to the facts in the Portland Terminal case, which is the 68 year old case that is  the basis for the test in the DOL handbook. The CA found long term intensive modern internships to be substantially different from the short term training class offered by the railroad in Portland Terminal.

The Court of Appeals opined the best way to determine the primary beneficiary is to focus on the benefits to the student while considering the manner in which the employer implements the internship program, and whether or not it takes unfair advantage of the student. The factors cited in Glatt were repeated here with approval. This is a seven factor test

 

The extent to which the intern and the employer clearly understand that there is no expectation of
compensation. Any promise of compensation, express or implied, suggests that the intern is an
employee —and vice versa.

The extent to which the internship provides training that would be similar to that which would
be given in an educational environment, including the clinical and other hands-on training provided
by educational institutions.

The extent to which the internship is tied to the intern’s formal education program by integrated
coursework or the receipt of academic credit.

The extent to which the internship accommodates the intern’s academic commitments by
corresponding to the academic calendar.

The extent to which the internship’s duration is limited to the period in which the internship
provides the intern with beneficial learning.

The extent to which the intern’s work complements, rather than displaces, the work of
paid employees while providing significant educational benefits to the intern.

The extent to which the intern and the employer understand that the internship is conducted without
entitlement to a paid job at the conclusion of the internship.

The case was remanded to the district court for further proceedings.

 

Northwestern University Exempt or Not Exempt Fact Sheet on FLSA ( w/worksheet)

FLSA Fact Sheet on Academic Counselors and Admissions/Enrollment Counselors*(NACAC) Summer 2015

 

ACE Amicus Brief April 3, 2014 in Glatt v. Fox Searchlight Pictures, Inc.
The ACE brief does not support either party but instead stresses the increasingly vital role internships and cooperative education play in postsecondary education.

NACUANOTES Vol. 9, No. 11: Internship and Externship Programs Under the Fair Labor Standards Act

NACUANOTES Vol. 9, No. 4:  New FLSA Amendment Requires Breaks for Nursing Mothers

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.

Sample Fair Labor Standards and Wage Payment Act Policy on Deductions
 

 

 

 6/5/2017 added update on FLSA final rule litigation