Memo 10

Overtime Compensation

The Education Code has long required that classified employees of school and community college districts be compensated at one and one-half times their regular rate of pay for "overtime." The Code generally defines overtime as any time worked in excess of eight hours per day or 40 hours per week, although different definitions are set up for four day, 40 hour workweeks. The Education Code permits school and community college districts to exempt certain "management" employees from these overtime provisions.

In 1985, the U.S. Supreme Court held that the Fair Labor Standards Act (FLSA) applied to schools and other public agencies. Subsequently, Congress passed legislation modifying the impact of the court decision and delaying its effective date until April 15, 1986. In January of 1987, the Department of Labor adopted regulations regarding the application of FLSA to employees of state and local governments.

Generally, FLSA and federal regulations require that all employees who work in excess of 40 hours in a workweek must be compensated at one and one-half times the regular rate of pay for all such excess hours. Although teachers and instructors are categorically exempt from these overtime provisions, and other public school employees are exempt if they meet other criteria (see Attachment 2), FLSA applies to all non-exempt employees. In addition, we note the following additional significant impacts of FLSA overtime provisions:

1. Your ability to give employees "comp time" as payment for overtime is restricted. Compensatory time off (CTO) for FLSA overtime can be accrued (up to 480 hours for safety officers and 240 for all others) only if the following conditions are met:

a. For employees with a recognized representative, use of CTO in lieu of overtime pay must be pursuant to the provisions of a collective bargaining agreement, memorandum of understanding, or other agreements between the employer and the employees’ representative.

b. Unrepresented employees, those hired on or before April 15, 1986, are bound by the then existing policies or procedures relating to CTO. For employees hired after April 15, 1986, each employee must knowingly and voluntarily agree to accept CTO in lieu of overtime pay and be informed that CTO received may be preserved, used, or cashed out consistent with the provisions of federal law (e.g., see 4, below).

c. Any employee who accrues CTO must be permitted to use it within a reasonable period after he or she has requested to do so, unless its use at that time will unduly disrupt the operations of the employer. (Note: The Education Code’s requirement that CTO must be used within 12 months of its accrual still applies. However, the "reasonable" period within which the employee has a right to use CTO will always be much shorter since the request must be granted unless it would be "unduly disruptive").

2. FLSA "overtime" differs from Education Code “over-time." Most importantly, under federal law, only hours in excess of 40 in one week count as overtime. By contrast, state law (Education Code Sections 451043, 88003) also defines any hours in excess of eight in a given workday as overtime. In addition, FLSA rules defining "hours worked" for purposes of overtime are narrower than state law governing classified employees’ overtime. The federal rules do not include holidays, vacations, CTO, other paid leave, or hours spent voluntarily substituting or "trading time" with another employee in the same class.

3. Certain hours of moonlighting and volunteer employees do not count as overtime. The FLSA, as amended, permits public agencies to exclude from overtime calculations those hours worked by many moonlighting employees or employees who volunteer to do extra work. Specifically, you may exclude hours which are worked solely at the employee’s option and which are on an occasional or sporadic part-time basis in a different capacity from his or her regular position. You may also exclude those hours of volunteered unpaid service as long as the work performed is not the same or similar as the work regularly performed for the agency. For example, a full-time custodian who works on a part-time occasional basis (whether on paid or unpaid basis) as a scorekeeper at a football game need not be paid time and a half for that additional work.

4. Under FLSA, one-time bonuses may have to be factored into overtime pay. Rules regarding the computation of overtime pay under FLSA may require, for example, inclusion of one-time bonuses or payments to employees made pursuant to collective bargaining agreements. Such payments should not be agreed to without prior consultation with this office.

5. FLSA overtime provisions cannot be waived by either individual or collective bargaining agreements. FLSA prohibits the waiver of its provisions by either an employee or an employee organization. In addition, an employee’s right to overtime compensation is not impaired by an employer’s announcing that overtime is not permitted or that it will not be paid unless authorized in advance. If an employee works unauthorized overtime (including working during an unpaid lunch hour or taking work home at night), he may be disciplined for insubordination, but he must be paid.

In complying with FLSA, we advise each of you to do the following:

a. Remember that provisions of state rules and policies, or negotiated bargaining regarding overtime must still be followed, conflict with FLSA mandates.

b. Determine which employees may be exempt from state and federal overtime provisions (see Attachment 2). Make formal recognition of those categories of exempt employees. (A sample resolution for this purpose is included as Attachment 3.)

c. Ensure that all non-exempt employees have been notified that all overtime – including taking work home, working during lunch, or before and after regular work hours – must be authorized in advance, and that any variance from this procedure could result in discipline. (A sample notice is included as Attachment 4.)

d. Review present policies, rules, negotiated agreements, etc., regarding CTO to determine what your agency’s current and documentable procedures in this area are. Maintain accessible copies of those documents which show what your policies were on April 16, 1986.

e. If your current procedures do not permit or provide for the accrual of CTO and you desire such accrual, take either or both of the following actions:

1. For unrepresented employees, take appropriate action to either amend or modify current procedures or initiate new ones consistent with the needs of the agency (and, of course, federal and state law). (A draft policy regarding CTO for unrepresented employees is included as Attachment 5.)

2. For represented employees, if this office provides you with negotiation services, contact your agency’s negotiator. If this office does not provide you with negotiation services but you desire general advice in this area, feel free to contact one of our negotiators.

f. If your agency intends to grant CTO in lieu of overtime pay, ensure that all unrepresented new employees acknowledge, in writing, that as a condition of employment they must accept such CTO. (A sample notice is included as Attachment 6.)

g. Review your current methods of computing overtime to determine whether they should be modified to exclude hours volunteered or performed by employees in work unrelated to their regular position.

Attachment 1 answers a number of questions raised by our members regarding specific application of both Education Code and FLSA overtime provisions to school and community college districts. If you have any questions regarding this information provided above, or in the pages following, or regarding the application of either federal or state law to a particular situation, please feel free to contact this office.

Attachment 1

The following are a series of questions and answers we have been asked in the past regarding application of the FLSA to school and community college districts (and other public school employers). We hope that the answers to these questions will both address questions you have already asked yourself, as well as clarify how the Federal statutes and regulations are to be applied to particular cases. Our clients are cautioned that the answers to these questions apply only to legal (statutory and regulations) mandates; negotiated agreements may dictate different results if the employee is benefitted. If you have questions that are not answered below, if the facts involved with your question appear to differ from those presented, or if you otherwise require more information on this subject, please contact us.

Q. If a custodian employed as such for 40 hours a week is also employed by the district as either a certificated or noncertificated coach during the football season, do the hours of work performed as a coach need to be compensated as overtime?

A. No, as long as this coaching is on an occasional or sporadic basis.

Q. Assuming a full-time custodian is also employed on a year round basis as a part time bus driver and earns $5 per hour as a custodian and $10 per hour as a bus driver, what would be paid if he worked 40 hours as custodian and 10 hours as a bus driver?

A. He would be entitled to either $330 or $350, depending on which method of computation is used.

1. Normally, a weighted average is applied: (1) The total regular compensation (ignoring FLSA overtime premiums) is divided by total hours to obtain an average rate [(40 hours X $5) + (10 X $10) = $300 * 50 = $6 average rate]; (2) This is multiplied by l/2 to get the overtime premium of $3/hour; (3) This is $30 for ten hours or a total compensation of $330.

2. However, where both the employer and employee in good faith agree that the overtime attributable to the second (and unrelated) position will be paid at one and one-half times the regular rate for this additional work, the result will be $350 per week. (1 x $10 = $150 which is added to the $200 for regular 40 hours of equal work.)

3. Note: In this case it is better for the employer to use the normal method because the extra work is regularly paid at a higher rate. Where as extra work is normally paid at a lower rate, the second method benefits the employer. We suggest, however, that one method be used uniformly in a district.

Q. The District employs a custodian to work 40 hours per week and also permits him/her to live in a house on school district property at a reduced rental rate. It is understood by the employee and the district that the difference between the rental amount paid and the fair rental value of the property is to be considered as compensation for services performed by the employee outside of the normal workday and work week. Is this acceptable?

A. Probably not under federal law and regulations. The value of "free rent" would be construed as an overtime bonus, which, because it is unrelated to the actual number of hours worked, would be rolled into the employee’s regular rate only. This means that the district would still be obligated to pay the employee one and one-half times his or her regular rate for any work actually performed and that the regular rate would reflect the rental value of this house.

If a district wishes to have an otherwise full-time employee reside on school grounds to "keep an eye on things," he/she must still be actually paid time and a half for any work performed in excess of 40 hours per week. He/she may either be charged fair market value for the housing, or rent lower than the fair market value, in which case the difference would have to be rolled into the employee’s regular rate, unless certain conditions are met.

In this latter case, the person should be employed as, for example, a "caretaker," in addition to his other duties, with the express understanding that the lodging is furnished for the convenience of the district and the employee is required to accept such lodging. The district must still pay the employee time and a half for any work actually performed or for time the employee is required to remain on school grounds by the district.

Q. A class is going on an overnight field trip. Must the teacher be paid overtime? If so, how much?

A. No. Teachers are exempt from FLSA, and an overnight field trip for FLSA purposes is merely an extension of their regular teaching duties.

Q. Is the aide to be paid overtime? And if so, how much?

A. The aide must be paid one and one-half times his/her regular rate for any hours worked in excess of 40 hours per week (or eight hours in one day) per state law. As to what constitutes an "hour worked" in this case, it is clear that if the aide were told at 5 p.m., after only eight hours worked, that he/she were off-duty until 8 a.m. the next day, and he/she was neither expected nor permitted to perform any duties (such as bed checks or being on call to help the teacher during the night), he/she would not be entitled to any overtime pay for the night.

However, if the aide is expected or permitted to continue to assist the teacher in supervising the children, he/she would have to be paid overtime pay for any such hours. In addition, if he/she is "on-call" during the night, he/she must be paid for any time actually worked because of such "calls" and will be entitled to overtime pay for the entire sleep period if such "calls" prevent him/her from getting a "reasonable night’s sleep." (It must also be noted that where the aide is, in effect, "on call" for a 24-hour period, he/ she must expressly agree that even duty-free meal service and sleeping time are excluded from the "hours worked".)

Q. May an aide go on a field trip on an unpaid status, volunteering his/her services during that time?

A. No. Because the services performed during the trip are essentially the same as those during the regular workday (i.e., assisting a certificated employee with those duties which do not require a credential).

Q. May a teacher’s aide volunteer to assist a different teacher outside of his/her regular work hours?

A. No. Because he/she is still performing the same duties.

Q. The only secretary working at the district office works an eight-hour day with one hour off at lunch. If during her lunch break, the secretary is required/expected/ permitted to answer the telephone since she is the only one in the office, does this now count as overtime?

A. Yes.

Q. A bus driver will be taking a bus on a field trip out of town. Upon his/her arrival at the motel where he/she and the children will be staying (at 5 p.m., the end of his/her normal day), he/she will be released and told to return Sunday morning at 10 a.m. He will then drive the bus from 10 a.m. until 2 p.m. on Sunday. How many hours of overtime must the bus driver be paid for?

A. Assuming he/she worked 40 hours by 5 p.m. on Friday, he/she must be paid for only four hours of overtime on Sunday pursuant to federal and state law.

Q. A custodian employed by the district 40 hours per week is also employed by the Associated Student Body to clean the gym after basketball games. Does the time spent cleaning the gym for the ASB count as district overtime?

A. Yes. Because, by law, the district exercises control over the ASB, the ASB and the district would be considered as one employer for this purpose.

Q. What if it were the booster club and not the ASB who paid for the janitor’s services in cleaning the gym after basketball games?

A. Probably the same result as above since the district probably exercises, to a certain degree, control over the booster club.

Q. What if the janitor volunteered to clean the gym after the basketball games?

A. Still the same result.

Q. A district security officer is also an employee of a private security firm owned and operated by the employee’s on-the-job supervisor. Does that employee’s time worked for the supervisor in a private capacity count towards the district’s overtime limits?

A. Probably not, but the janitor’s private employment may constitute a violation of Government Code section 1126 if the district has prohibited or elects to prohibit outside employment which may subject an employee to the control of another district employee. If the security firm performs any security functions on school grounds, this prohibition could extend to the firm’s owner as well.