By Greg Scholand
Greg Scholand is an Assistant Editor at Athletic Management. He can be reached at firstname.lastname@example.org.
Athletic Management, 17.3, April/May 2005, http://www.momentummedia.com/articles/am/am1703/overtime.htm
If there’s one attribute that just about all college coaches have in common, it’s a tireless work ethic. Most feel it’s not about how many hours they put in, it’s about how much they can do to make their team successful.
However, when the U.S. Congress approved a set of sweeping changes to the Fair Labor Standards Act (FLSA) last August, it presented a new challenge to many assistant coaches and their athletic departments. Now, anyone who makes less than $23,660 per year, or whose duties do not meet an updated standard for exemption from the overtime rules, must be paid overtime wages whenever they work more than 40 hours a week. That includes part-time coaches, and even those who would work for nothing.
The new regulations are in place to protect employees from exploitation—to ensure that those who put in long hours are fairly compensated. But in the world of college athletics, they have created a sizeable headache for which there is no simple remedy. And as athletic departments seek out ways to bring themselves into compliance, some fear that the new rules threaten to change the culture of coaching.
Since 1938, the FLSA has set the minimum wage, determined overtime regulations, and established record keeping methods for all U.S. employers. It defines overtime as any work beyond 40 hours per seven-day period, and mandates that non-exempt employees be paid time-and-a-half whenever they work overtime.
Exempt employees never need to be paid overtime, but to qualify as exempt, three conditions must be met. An employee must: earn at least $23,660 per year, or $455 per week; be paid on a salary, not hourly, basis; and have primary job duties that are considered exempt.
The standards come with one notable exception. Workers who are classified as teachers or academic administrators do not have to meet the minimum salary requirement. Teachers can be paid any amount, and academic administrators (which include athletic-academic advisors and those who oversee an academic department) must earn only the minimum salary for teachers at their institution to be eligible for exemption.
The biggest change in the August 2004 update is an almost threefold increase in the minimum exempt salary, which was previously $8,060 annually, or $155 per week. "The main impact of the changes will most likely be on workers who were making somewhere between the old threshold and the new one," says Scott Bearby, Associate General Counsel for the NCAA. "If someone was previously considered exempt and their salary is above the new standard, they probably still are."
Also important, however, is a change in how much of any employee’s job must consist of exempt work for the employee to qualify as exempt. Before, coaches who performed some exempt duties were thought to satisfy the requirement for exemption as long as their salary was high enough. Now, a "primary duty" test is used to determine who, based on the work they perform, can legally be considered exempt.
The FLSA defines a primary duty as "the principal, main, major, or most important duty that the employee performs." Because that definition is so worker-specific, a job title alone is not enough to classify someone as exempt. Individual job descriptions must be used to determine what the person’s primary duty is, and whether that duty can be considered exempt work.
"The FLSA distinguishes between what someone’s primary duty is and what they spend most of their time doing, because they’re not always the same thing," Bearby explains. "A good analogy is the manager of a fast food restaurant. They might spend a significant part of their day at the stove cooking food, but it’s not their primary duty. They’re primarily there to manage other employees and keep the restaurant running. Likewise, in the athletics realm, a coach’s primary duty is running his team, but that doesn’t mean he can’t spend some of his day in the equipment room counting shoulder pads."
In general terms, whether a primary duty is considered exempt depends on whether it includes the exercise of independent judgement, is performed with freedom from direct supervision, involves supervising other employees, or requires specialized training. For example, assistant coaches who create schedules, make purchasing decisions, and perform public relations work for a team could qualify as exempt because they are making discretionary judgements. An offensive coordinator in football, while he may be supervised by the head coach, could qualify if he oversees the work of other coaches. An assistant coach who also serves as a team’s certified athletic trainer may qualify as a professional because of his or her specialized training. (To find out more about the FLSA’s exempt classifications, see "Resources" below.)
The exempt duties requirement is very subjective, since there are several categories of work that are considered exempt, and each category is defined by broad guidelines, not specific rules. Therefore, whether a coach’s duties make him or her exempt must be decided on a case-by-case basis and supported by the sometimes-complicated FLSA definitions. For that reason, Bearby says it is essential to rely on your institution’s human resources professionals and legal counsel to judge who may be declared exempt.
Since most athletic departments would prefer to avoid the hassle and expense of paying coaches overtime, they usually look to classify coaches as exempt. This is only possible, of course, if the salary and duty requirements can be met. The most likely candidates for exemption are coaches who have oversight responsibilities (almost all head coaches), and assistants who double as recruiting coordinators, academic counselors, teachers, or administrators.
But what about the typical assistant coach who helps run practices, assists the head coach during games, and does some recruiting? If the person’s salary is less than $23,660 and they’re not a teacher or academic administrator, the answer is simple—they’re non-exempt. If their salary is above $23,660, the answer is less clear, since it depends on the actual duties they perform.
It’s often a fine line that separates exempt from non-exempt work. For instance, when an assistant coach helps with recruiting, is he or she evaluating athletes using his or her own independently established criteria and making significant judgments to determine which athletes will be offered scholarships? If so, that work could be considered exempt. On the other hand, if the assistant coach is applying the head coach’s criteria to evaluate recruits, or following pre-set guidelines, that is non-exempt work.
"Sometimes the exemption status can be different even among people holding the same position, so there isn’t always an easy answer," Bearby says. "Among two people with the title of assistant coach at the same school, there might be one who is exempt and one who isn’t, based on what is expected of them and what specific tasks they perform for their program."
Any time an assistant coach is going to be declared exempt from overtime, putting his or her primary duty in writing is the key to FLSA compliance. Thus, maintaining accurate, up-to-date job descriptions is a central part of the process. If an employee’s exempt status is ever challenged, this documentation will be the athletic department’s first line of defense against liability.
"It’s important to document an employee’s job description for several reasons," explains Bearby. "A job description establishes on paper exactly what someone’s primary duty is. It also demonstrates that the employee understands and agrees with what their job is, and that’s just good employment practice. And finally, the Department of Labor looks much more favorably on a document that was created before a complaint was filed, as opposed to one created as a rationale defending your practices after a complaint. There is a certain amount of good faith carried with a document drafted before any investigation."
An adequate job description for an exempt employee doesn’t need to be lengthy or elaborate, but it should provide enough information about the employee’s duties to make it clear that they fit the requirements for exemption. "The Department of Labor allows a lot of flexibility in preparing job descriptions, because it recognizes that employers use a variety of tools to determine what workers do," Bearby says. "Allocating percentages of time isn’t required, but could be helpful for showing the primary duty, as could defining a person’s level of authority by tying it into comparable positions in other departments on campus. Things like that help to make the exemption defensible if there is ever a labor challenge."
Because there is so much subjectivity involved in whether job duties fit exemption criteria, Bearby heavily emphasizes the need for human resources and legal counsel to lead the process. "The complete book of labor regulations is probably a little thicker than the NCAA manual, so there are a lot of things that need to be considered, and unfortunately there isn’t a lot of guidance relative to athletics in higher education," he says. "There definitely needs to be legal and human resources input when making good-faith determinations of whether or not someone should be exempt."
THE NEWLY NON-EXEMPT
When coaches’ primary duties or salary level preclude them from exemption under the new FLSA rules, making the transition to non-exempt status can be difficult for both employer and employee. Athletic departments who have faced the issue have come up with a variety of approaches.
The easiest way to ensure compliance without making major budgetary changes is simply to set an hourly rate for assistant coaches and mandate that no one works more than their scheduled hours, up to 40 per week. This method is legal as long as the hourly rate is above minimum wage, which varies by state. As one might expect, however, it isn’t popular with the coaches.
At Rollins College, the athletic department adopted this approach when it realized that almost all of its assistant coaches would be non-exempt under the new rules. "We now require our assistant coaches to submit timesheets every other week verifying that they don’t work more than the hours they’re scheduled for," says Athletic Director Phil Roach. "By limiting the amount of time they spend with us, we can make sure they stay within the guidelines of their pay scale and don’t trigger overtime."
Before the new rules took effect, assistant coaches at Rollins had been paid with a stipend for the entire season, and they were free to set their own hours. Now, they are asked to budget their time to ensure that they don’t exceed the weekly allotment.
"All of our assistant coaches have been very disappointed by this," Roach says. "They feel like they can’t do the things they want to do for the team and spend the hours they feel are necessary to do their best. But we’ve had to tell them this is the law, and we’re going to comply with it."
Newberry College uses a similar strategy with its assistant coaches, and they were equally disappointed with what they saw as a cap being imposed on their productivity. To help them make the necessary adjustments, Athletic Director Andrew Carter talked to his assistant coaches about getting the most out of the hours they were working.
"We’ve told them that they can’t exceed 40 hours of work in a week, but along with that came a discussion about what constitutes work," Carter says. "I said, ‘Let’s differentiate between being here 40 hours per week and working 40 hours per week. If you spend an hour and a half during your day talking to people in the cafeteria or making personal phone calls, that’s fine, but that’s not work time.’ And actually, it’s helped them to think more about how they plan and coordinate their time. We don’t expect them to be working every minute they’re here, but if they know they’re spending five hours every week doing other things, we tell them that time shouldn’t count."
At Southeastern Louisiana University, the athletic department is taking a more flexible approach to the 40-hour work week for its non-exempt coaches. They are allowed to work overtime, but rather than increasing their paychecks, the time accumulates as leave hours, which they can spend later on.
All non-exempt assistant coaches now electronically clock in and out every day through the university’s automated timecard program, by swiping their ID card at a station on campus or using their office computer. The system keeps track of their work time, and whenever they exceed 40 hours in a week, the extra time is added up in a "leave bank" at a rate of 1.5 hours per real hour. Because this policy accounts for the equivalent of time-and-a-half in accumulated leave time, it is an acceptable way to compensate employees for overtime work.
At some point, most likely during their team’s off-season, the assistant coaches will take mandatory time off to release the overtime hours they’ve accumulated. "We have some assistant football and basketball coaches who have as many as 150 to 200 leave hours because of all the time they’re putting in," says Frank Pergolizzi, Athletic Director at SLU. "Once their season is finished, we’re going to be sending them on vacation for a few weeks. We’re looking to have everyone taken care of before we start the next academic year."
While this method allows the assistant coaches to put in extra hours, they are still encouraged to limit overtime as much as possible. "We tell them to control their hours the best they can," says Pergolizzi. "If they work 60 hours one week, we ask them to try and cut it down to 20 the next week. It’s created a whole new level of bureaucracy and record keeping that we didn’t have in the past, and while it’s been difficult on some of the coaches, they’ve done a good job of using their time wisely."
Another way to transition salaried or stipend-based employees to non-exempt status is recalculating their former earnings to an hourly wage. The conversion process requires considerable effort, but this method allows coaches to work more overtime hours without causing major budget implications.
When Franklin Pierce College chose to calculate hourly wages for all its non-exempt coaches, the first step was determining how many hours each coach had been putting in. "We asked our coaches to provide us with the estimated hours they worked, week by week, over the course of the past year, so that we could get an idea of their total hours," says John Mims, Vice President for Finance and Administration. "It was understandably difficult for some of them, so we asked them to use their schedules as a guide. We’d ask them to estimate: How many hours were you there on game nights? How much time did you usually work before, during, and after practices? What did you do on days when you recruited, and for how long?"
Tabulating hours when coaches traveled with their team was especially complicated. "If they went away and came back on the same day, then all of their time, including bus time, was compensable," Mims explains. "We decided for overnight travel that all waking hours away from home were compensable, but that sleeping time was not. And for multiple-day trips, the time spent en-route on flights or bus rides was only compensable if it occurred during normal business hours, which is part of the FLSA’s definition of work-related travel."
After coaches submitted their estimates, the school’s finance office calculated the total compensable hours they had worked during the previous year, figuring in time-and-a-half after 40 hours per week. Since all of Franklin Pierce’s coaches had been on a stipend system, their stipend amount was divided by their adjusted total hours to determine an hourly wage. Thus, if they work roughly the same number of hours this year, once overtime is applied, their earnings should be nearly the same.
For a few coaches who worked the most hours or had stipends on the low end of the pay scale, their hourly rate worked out to less than $5.15, and those employees were brought up to minimum wage. But even in those cases, the total difference will be within a few hundred dollars of their former stipend.
While the coaches can work overtime and receive almost the same amount of money as before, Mims says the psychological impact of the transition was very negative. "These are people who see coaching as something they enjoy, and they had never really thought about how much they were being paid," he says. "But when it was put into a dollar amount, one of them said, ‘I could make this much working at McDonald’s.’ It made them feel like they weren’t performing a valuable service for the college, and they associated it with being given a lower status as employees.
"A couple of them even said they would rather be volunteers than worry about reporting their hours," Mims continues. "But we told them that’s not an option. You cannot have a volunteer take a position that had been paid in the past or that is normally paid work. That would essentially be eliminating a position and then creating an identical one for a volunteer, which is not legal. I listened to their concerns, and then explained to them why we had no choice but to follow the law."
As athletic departments have struggled to comply with the FLSA revisions, much of the frustration stems from a belief that these new regulations are ill-suited for the coaching profession. Most see the major impact not in terms of dollars and cents, but in lost time for coaches to spend working with athletes and furthering their own careers.
"Assistant coaches know coming in that you pay your dues and work hard, and that’s really the foundation of the profession," says Carter. "If someone puts in their time and does well, they earn the chance to go to the next level because they’ve proven that they can get it done. The next time I’m looking to hire an assistant coach, I’m sure some people will think twice about coming here if they know they can only work 40 hours a week. If they don’t think they’ll be able to do everything they need to do to be successful, they will probably look somewhere else."
Carter believes the problem is compounded by the fact that not every athletic department has taken FLSA compliance seriously. "I know some institutions are just saying that it’s not a problem until it’s a problem, believing that they won’t be sued," he says. "If you’re an assistant coach looking to work your way up, and you know that some schools will look the other way and let you work, which place would you choose?"
"A lot of people in the assistant coaching profession are young and it’s their first or second job experience," adds Roach. "When you limit how hard they can work, what you’re really doing is taking away an important growth opportunity."
Robert Hartwell, Athletic Director at Adelphi University, is also concerned about the impact on young coaches. "There are a lot of people who would volunteer to coach for nothing, because they’re in it to advance and improve themselves," he says. "When we take on people like that, it’s helping them to be here, and it’s helping us to have them. They just want to put in the hours and do all the nitty-gritty stuff to get a start and a good recommendation—to build up their resume so that some day they can become the next Coach K. Now we’re having to tell them it’s not an option."
Sidebar: The Risks
How important is it for athletic departments to review and analyze the new FLSA overtime legislation? As with any legal issue, ignoring it puts your school at risk for lawsuits. While the NCAA is not aware of any college coaches who have sued their institutions under the revised FLSA, a rash of suits at the high school level has proven that disregarding overtime laws can be costly.
Since 1998, an Arkansas-based law firm has been helping high school coaches and other employees involved with athletics to sue their school districts for unpaid overtime. To date, more than 250 districts around the country have been sued. (See "Working Overtime" in our August/September 2004 issue.) Although exemption issues are somewhat different at the college level, the threat is the same.
Sidebar: Let ’Em Teach
There is one simple way to make assistant coaches exempt, and that is to insist that they also teach. At the University of Nebraska-Omaha, all assistant coaches are also teachers, and because teaching is exempt work and it’s considered their primary duty, they are exempt from overtime pay. As a result, the athletic department didn’t have to change anything to become FLSA-compliant.
"Our assistant coaches all have instructional assignments, either teaching a class in our Health, Physical Education, and Recreation Department or tutoring in our academic resource room," says Susan Baumert, Director of Business for Athletics at UNO. "In addition, our assistant coaches manage our program’s graduate assistants, which means they have supervisory and decision-making responsibilities that are considered exempt work as well."
The 17 assistant coaches on UNO’s staff this year teach classes ranging from CPR instruction to principles of basketball to sports administration. It was existing department policy to hire only assistant coaches who had master’s degrees and would be able to teach, and Baumert says that made the compliance evaluation process simple.
"We had strict regulations already in place to make sure that we correctly identified exempt employees, so it was just a matter of reviewing those with our human resources department to ensure that they fit with the new rules," she says. "We found that they did."
The U.S. Department of Labor offers a Web site called FairPay, designed to help employers comply with the new FLSA regulations.
The National Association of College and University Business Officers (NACUBO) maintains an FLSA Resources page with articles, links, and downloadable documents outlining the FLSA revisions and offering guidance for higher education institutions.
The NCAA has produced a bulletin explaining how the new FLSA regulations apply to athletic departments, particularly with regard to paying assistant coaches. It outlines the various categories of exemptions and offers examples of how they might be applied to athletic department personnel.
Athletic Management’s August/September 2004 issue featured an article on how the FLSA affects high school athletics.