Athletic Departments to be Challenged by the FLSA’s New Regs

Sep 1, 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.
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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