Are Child-Care Workers Eligible for Overtime as Teachers?

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By Ben Kegley

“I should be paid overtime for any hours I worked over 40 a week,” said Sam, a child-care center employee.

“Even though you worked more than 40 hours this week, I'm not required to pay overtime because teachers are exempt from overtime eligibility,” said Stephanie, director of the center.

FACTS: A child-care company used an affiliated staffing agency to hire employees. For five years the child-care center hired more than a 100 employees through the agency. The employees were responsible for child care, lesson planning and teaching reading and math.

The Labor Department's Wage and Hour Division investigated the child-care company three times over six years. All three investigations concluded that the day-care center violated parts of the Fair Labor Standards Act.

The employer relied on a timecard system to track employee hours. The timecards revealed that employees frequently worked more than 40 hours a week. However, employees were only paid a regular rate for all hours worked.

The investigators told the employer that hours worked in excess of 40 a week were to be compensated at a rate of one and one-half times the regular rate of pay. Investigators also provided written and verbal guidelines for complying with the FLSA on multiple occasions.

After the third investigation, the Labor Department determined that there were recordkeeping, overtime, minimum wage and late-payment violations under the FLSA. The department filed a lawsuit against the employer.

A federal district court ruled in favor of the department and ordered the employer to pay $92,402 in unpaid wages and interest. The employer appealed the ruling.

ISSUE: Did the employer owe back wages for overtime under the Fair Labor Standards Act?

DECISION: The employer owed back wages, a federal appeals court said in affirming the district court ruling.

The district court found that the child-care center qualified as a preschool, which meant its employees were covered under the FLSA. The court said that the child-care center qualified as a preschool because it established a curriculum, employed lesson plan coordinators, referred to employees as teachers and advertised that the child-care center taught reading and math.

The employer challenged its classification as a preschool. The employer also claimed that if it were classified as a preschool, then its employees were exempt from overtime compensation as teachers.

The appeals court rejected the argument that the employees were exempt as teachers because the employer did not offer this argument in the original trial, instead taking the opposite stance. Preschools also are named entities covered by the FLSA, the court said.

The appeals court also ruled that the district court was correct in classifying the employer as a preschool. The court cited an opinion letter by the Wage and Hour Division and rulings by the Sixth and Tenth Circuits that classified custodial-care providers as preschools.

The district court also was correct in calculating damages, the appeals court said. The court determined that the methods used by the Labor Department were sufficient to provide a conservative and accurate determination of wages owed.

The employer's records were inadequate and the timekeeping system was confusing, the appeals court said. Additionally, the employer frequently offered new, contradicting arguments regarding how the Labor Department erred, the court said ( Perez v. Contingent Care LLC, 2016 BL 109369, 8th Cir., No. 15-1074, 4/7/16 ).

POINTERS: The FLSA has an overtime exemption for teachers at elementary or secondary schools (29 U.S.C. Section 213(a)(1)). The day-care center did not qualify as an elementary or secondary school. Although its employees were classified as teachers, they still were eligible for FLSA overtime compensation.

Under the FLSA, employers are required to keep complete and accurate records of all employee hours and wages (29 U.S.C. Section 211(c)). Because the employer's records were incomplete and inadequate, it was unable to provide evidence that the Labor Department erred in its determination of wages owed.

In cases with incomplete evidence of the exact hours worked by employees, courts may award damages based on reasonable estimates of hours worked and wages owed. The appeals court relied on precedent and cited a Supreme Court ruling to support its decision.

“The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee’s evidence,” the Supreme Court said. “If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate” ( Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687, 1946).

For more information, see PAG's “Public-Sector Employees: Special FLSA Rules” chapter.

By Ben Kegley

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This analysis illustrates how courts resolve pay-related disputes. The names and dialogue are fictitious.