FLSA Audits and Why They Matter for Your District

Every year you hear us talk about the importance of adhering to the Fair Labor Standards Act (FLSA) which includes provisions regarding minimum wage, overtime, classification of workers as exempt or non-exempt, and other wage and recordkeeping requirements.  You might be thinking “blah, blah, blah” as we drone on about these requirements, but the importance of compliance has increased this year as the United States Department of Labor (DOL) has announced it is increasing its focus on FLSA audits.  While these audits cooled down during the Trump administration, we anticipate to see a rise in FLSA audits with the Biden administration.  Additionally, wage and hour violations continue to be hot litigation in federal courts.  If you recall, failure to comply with the FLSA can have costly impacts for schools.  The DOL can impose civil penalties of up to $1,000 per violation; the Department of Justice can criminally prosecute for willful violations and impose fines up to $10,000 per violation; and employees may also file suit for back wages, liquidated damages, attorney’s fees and court costs. 

What can your district do to protect itself and ensure compliance? We recommend conducting a FLSA compliance audit.  A thorough FLSA compliance audit will review the following: employee job descriptions and classifications, employee time cards for regular and overtime pay calculations, dual rate issues, and recordkeeping requirements.  During the audit, your school should be asking itself questions such as: 

  • How do I compensate classified staff who coach? 

  • How am I calculating overtime for classified staff who work multiple positions?

  • Do I require staff to maintain proper time cards and records?

  • Do I classify staff as exempt when they should be non-exempt?   

Internal audits alert the district to compliance areas which need to be corrected.  Additionally, internal audits should be conducted annually.  A district must decide whether to conduct the audits in house or whether to involve the district’s legal counsel in the process.  In a 2020 case from the Fifth Circuit (Novick v. Shipcom Wireless, Inc., 946 F.3d 735 (5th Cir. 2020)), the U.S. Court of Appeals held that an internal FLSA audit conducted by an employer was allowable evidence for the jury to consider when evaluating FLSA claims that the employer misclassified employees for purposes of overtime requirements.  Schools should strongly consider involving legal counsel when conducting a FLSA compliance audit.  By doing so, a school may be able to assert the attorney-client privilege in court in order to protect the FLSA compliance audit report from disclosure.
 KSB School Law conducts on-site FLSA compliance audits.  Our audit service concludes with a written report to the district outlining areas of noncompliance and proposed remedies.  If you have any questions or would like to schedule a FLSA compliance audit, please don’t hesitate to call Karen, Steve, Bobby, Coady, Jordan, Tyler or Sara at (402) 804-8000, or send us all an email at ksb@ksbschoollaw.com