There have been two recent changes in the way the Department of Labor (DOL) handles wage issues. The DOL has issued new guidance on community member coaches in a recently published opinion letter. Additionally, the DOL has created a new nationwide pilot program called the Payroll Audit Independent Determination, or PAID Program, to resolve issues of backpay that stem from minimum wage errors, overtime miscalculation, and the misapplication of exempt status. Both of these developments could affect your district. Bobby and Tim discussed these issues during the NASBO conference this week in Lincoln. You can take a look at the slides from that presentation here.
Department of Labor Opinion Letter.
We usually see issues with minimum wage, overtime, and exempt status in the context of coaching or sponsor assignments. When coaching assignments are made to teachers, there are generally no overtime or minimum wage issues because the FLSA regulations specifically exempt teachers from overtime and “minimum salary” requirements. Issues arise when districts fill coaching positions with community members or non-exempt staff, such as paraeducators or custodians. The district generally seeks to pay whoever coaches the same amount as they would pay a teacher, regardless of their job type, or whether they work for the district in another capacity. Coaching assignments to hourly employees can create an overtime problem, as the hourly employees will work more than 40 hours per week performing both their primary job and their coaching job. School lawyers have been talking about the “coaching custodian” and the “sponsoring para” for years. Community member coaches can create a minimum wage problem, as the hours they put in could result in them receiving less than minimum wage for the total hours worked.
Recently, the Department of Labor has released a letter that simplifies this issue regarding community member coaches. In a nutshell, the new opinion letter establishes that coaching is teaching, and thus an exempt position under the FLSA. As an exempt position, “The school may pay its coaches who are exempt teachers as it deems appropriate.” The letter notes that while a teaching certificate is a clear means of identifying exempt employees, a teaching certificate is not required to receive the teacher exemption, and goes on to state coaches are exempt “if their primary duty is teaching and imparting knowledge to students in an educational establishment.”
However, this opinion letter does not alleviate the wage issues a district faces when hiring a classified, non-exempt member of the staff as a coach. The opinion letter makes it clear that the new guidance applies only to coaches whose primary duty is coaching. These community members are considered coaches who are “teaching” so long as they are not otherwise employed by the district in a different “primary duty.” For other classified staff, the DOL made clear that “[c]oaches whose primary duties are not related to teaching—for example, performing general clerical or administrative tasks for the school unrelated to teaching, including the recruitment of students to play sports, or performing manual labor—do not qualify for the teacher exemption.” While this helps with community member coaches, it does not do anything to alleviate the FLSA concerns present for non-exempt classified staff members who coach or sponsor district activities.
You can review the DOL’s description of the PAID program by clicking here. The PAID Program basically amounts to an FLSA self-audit which allows you to try to resolve any minimum wage or overtime issues with your past or present staff. The pilot program runs for the next six months. The purpose of the program is to resolve overtime and minimum wage issues quickly, without litigation, and to avoid the penalties and even potential crimes associated with involuntary DOL audits.
Your district is likely eligible for the program if is is not currently being sued for wage issues, has no pending DOL complaints or investigations, and has not used the program before. The steps to participate in the program are straightforward. The district must complete a compliance assistance review which consists of a series of tutorial videos and worksheets. Once this review is certified as completed, the district conducts a self-audit of the last two years of wage payments to search for potential violations. This audit is submitted to the DOL for review and approval.
The upside of the PAID program is that employees must sign a settlement with the district and the DOL in order to receive payment, and the DOL will not impose any other penalties or damages to finalize the settlement. By accepting the PAID program payment, the employee waives their FLSA claims. The downside is that any back wages that are owed must be paid by the next full pay period; the employee is not required to accept the settlement offer; and you could alert employees to any other wage issues that exist at the state or federal level. Finally, the PAID settlement does not resolve any state law claims the employee may have.
In its opinion letter, the DOL was careful to state that its opinion was limited to the specific facts presented in the request for guidance. The broad wording that was used to describe the coaching/teaching relationship makes us confident that community member coaches will be considered exempt employees by the DOL moving forward, but you should consult your legal counsel before making changes to either hour tracking or compensation practices for community member coaches. The decision to participate in the PAID program self-audit is one that districts should discuss with legal counsel as well, because it could end up causing more harm than good. Remember, you are always entitled to work with your legal counsel to conduct your own self-audit under the FLSA and make employment practice decisions on that basis. If you have questions about either of these new developments, you should contact Karen, Steve, Bobby, or Tim or your district’s attorney.