Athletic Departments to be Challenged by the FLSA's New Regs
From
Sports Litigation
Alert, Volume 1, Issue 14, September 10, 2004
When the human resources department at a major university sent out a
memo on August 18 to its staff and faculty about the Fair Labor Standards
Act, the department chose its words very carefully.
"In general, the new regulations will not have a significant impact on
positions across our campus," it read. True. But the exception to that summary
statement is a big one - the college athletic department.
Athletic directors face an administrative crisis, mostly over whether
their assistant coaches should now be paid time and half for hours spent
above the 40-hour work week under the recently passed amendments to the
FLSA.
The first test to determine whether assistant coaches are exempt from
the new regulations is whether their annual salary is more or less than
$23,660. Those who earn less and work more than 40 hours a week must be
paid an overtime rate for those additional hours.
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John Alan Doran |
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However, the more "interesting and challenging" questions will arise
with assistant coaches that earn more than $23,600, "because in these instances,
nothing is as cut and dried under the new regulations," said attorney
John Alan Doran of the
Phoenix office of Greenberg Traurig.
What makes an assistant coach earning more than $23,600 exempt from overtime
pay?
"Assistant coaches whose primary duties include academic administration
(e.g., serving as an academic advisor to players) or other administrative
work (e.g., recruiting, establishing game schedules, budgeting, marketing,
NCAA compliance and fundraising) may be exempt under the Administrative
Exemption," said Forrest Hunter, a partner in Alston & Bird's Atlanta office.
For coaches to be exempt, they must be required "to exercise discretion
and independent judgment with respect to matters of significance," continued
Hunter. "For example, assistant coaches whose primary duty is recruiting
should have authority over where to recruit, how to recruit, when to recruit
and who should be offered scholarships.
"If the assistant coach also supervises at least two other full-time
employees (such as other assistants or graduate assistants) and has substantial
input in the hiring or disciplining of those subordinates, that authority
could be a significant factor in establishing that the employee is exempt
under the FLSA's Executive Exemption.
"Finally, assistant coaches whose primary function is teaching rather
than coaching may be exempt under the FLSA's exemption for teachers and
other professionals."
Another grey area is whether or not one or more of the job requirements
above can be considered "the primary duty" of the assistant coach.
"One of the four factors the Department of Labor looks to in making this
determination is how much time an employee spends performing exempt work,"
said Jonathan Segal of the Philadelphia office of Wolf Block. "However,
while the percentage is important, it is not dispositive.
"This means that an assistant coach (or any other employee) might be
exempt even if the majority of his or her work was not exempt work, if the
most important or principal part of his or her job was exempt work. Of course,
the lower the percentage, the harder it will be for the employer to prove
that the exemption applies."
"The bottom line is that, in most cases, assistant coaches still will
not be exempt."
Kelly L. Hensley, a partner in the Los Angeles office of Sheppard, Mullin,
Richter and Hampton suggests that employers "can protect themselves in a
number of ways.
"First, they should conduct internal assessments of their job classifications
and other wage hour practices with competent labor counsel. Second, employers
should review all employment-related forms used in connection with the assistant
coaches and other employees classified as exempt. These forms include job
descriptions, evaluation forms, and other documents reflecting the duties
performed by the employees. In certain cases, the employer may be able to
feed more exempt duties and responsibilities to the employees in an effort
to make them exempt under the applicable laws."
Such actions are received well by the DOL, according to Mark Mallery
and Chris Moore, who are labor and employment attorneys in the New Orleans
office of McGlinchey Stafford. "Institutions, which show they made good
faith assessments of their employees' exempt status, will have credibility
with the Department of Labor if they decide to initiate an investigation,"
The attorneys noted.
Attorneys can take an even more proactive approach, noted Greenberg's
Doran, who is the outgoing president of the Arizona State Bar Association
Labor & Employment Section, by "seeking a formal written opinion from the
DOL, if the athletic department thinks it has a close case with respect
to an exemption question for an assistant coach."
All such steps should be considered, since the risks are high for an
athletic department that is failing to comply with the FLSA.
"Failure to correct the error simply allows the meter to run on back
pay damages, which are automatically doubled under the FLSA should the matter
proceed to litigation," said Doran.
For that reason and others, "we can expect to see more litigation in
the future in this area," said Susan N. Eisenberg of Akerman Senterfitt
in Miami. Some groups, such as the Mississippi-based group called "Schools
Litigation Group," have already mobilized, according the Jeffrey J. Wedel
of Squire, Sanders & Dempsey. "They have been actively pursuing litigation
in at least 9 states in the south, and are always looking for additional
litigation opportunities," said Wedel.
Going forward, athletic departments would do well to address the issue
through its hiring practices.
"While the new FLSA regulations raise questions about the exempt status
of assistant coaches, there has been a favorable development for athletic
departments that utilize graduate assistants," said Forrest, who has had
the Georgia Tech Athletic Association as a client among others. "The Department
of Labor recently clarified that it will not assert that an employer-employee
relationship exists between graduate research assistants and higher education
institutions. That is great news for colleges and universities because there
can be no overtime liability in the absence of an employer-employee relationship."
Regardless, "athletic directors should make communications of hiring,
selection, promotion, and pay policies, particularly overtime, a priority,"
said George Barford of Carlton Fields in Tampa. "To do nothing, is to allow
employee misunderstanding and the potential development of a general sense
among employees that they are not being treated fairly. That's never a good
situation for any responsible employer."
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