Payroll and Fair Labor Standards Act
Some of the following information is pertinent only to Arizona school districts. Please see your auditor or consultant for additional information about its applicability to your organization.
Q: Can supervisors be held personally liable for FLSA violations?
A: Yes, generally courts have held that supervisors can and will be held personally liable for pay practices that violate the FLSA.
Is on-call time work time:
Q: Is on-call time considered work time and therefore subject to overtime?
A: Generally on-call time spent at the employer’s facility is time worked and time spent on-call at home is not considered work time. In addition, “waiting time” is considered work time particularly when the employee cannot use this time for their own benefit.
Is travel work time:
Q: Is travel considered work time and therefore subject to possible overtime regulations?
A: Travel away from the home community which keeps the employee away at night is considered out-of-town travel and time spent traveling during work hours is considered work time. However, time spent as a passenger on an airplane, train, boat, bus or automobile outside of regular working hours is not considered work time.
Charging unused leave pay to the federal program for a federal program employee:
Q: An employee who worked and was paid from a federal program resigns with unused leave. If a government's policy is to pay the employee for the unused leave upon termination, can the cost be charged to the federal program?
A: Uniform Guidance 200.431(b) indicates the cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable if all of the following criteria are met:
- They are provided under established written leave policies
- The costs are equitably allocated to all related activities, including Federal awards; and,
- The accounting basis (cash or accrual) selected for costing each type of leave is consistently followed by the non-Federal entity or specified grouping of employees.
When a non-Federal entity uses the cash basis of accounting, the cost of leave is recognized in the period that the leave is taken and paid for. Payments for unused leave when an employee retires or terminates employment are allowable in the year of payment.
Q: When is a meal considered a taxable reimbursement?
A: When an employee/board member receives meal reimbursement/per diem for a meal when there is no overnight stay and the employee travels less than 50 miles.These reimbursements should be coded as an expenditure in object code 6290 and social security, medicare, federal and state taxes should be withheld.
Paid holidays or overtime/double time for holidays:
Q: Under FLSA, are employers required to offer paid holidays or pay time and a half or double time for working on holidays?
A: No, these benefits are generally a matter of agreement between the employer and an employee. FLSA does not require payment of time not worked.
Tuition reimbursements for employees
Q: Should tuition reimbursements or educational assistance paid to employees be part of compensation?
A: Tuition reimbursements and educational assistance are excluded from an employee’s gross income as long as the reimbursements or assistance are less than $5,250 per employee during a calendar year. The excludable amount is not subject to income tax withholding or other employment taxes. Tuition reimbursements and educational assistance are excluded form an employees’ gross income as long as certain requirements are met:
- The employer must have a written plan;
- The reimbursements may be for undergraduate or graduate level courses;
- There is a dollar limitation of $5,250 per calendar year;
- The tuition is not required to be job-related assistance; and
- The policy must not discriminate in favor of highly compensated employees.
Paying for Courses for Teachers:
Q: Is a school district in violation of the State constitution’s “gift of public monies” clause if it pays for courses taken by teachers?
A: According to AG Opinion I80-219, a school district may pay for courses taken by its teachers because those courses upgrade the educational programs of the district.
Pay for a normal work day if workers sent home:
Q: Due to the lack of electricity, the cafeteria of a school was closed early and the employees sent home. Can the workers be paid for the normal work day since they were sent home by no fault of their own?
A: Hourly employees must be paid for the hours actually worked.
Violation of the "gift of public monies" clause:
Q: Is it a violation of the "gift of public monies" clause if a school district purchases awards and other items to recognize employee achievement?
A: The Attorney General concluded in a March 1997 opinion (I97-003) that an employee awards program recognizing achievement, length of service, and retirement provides a benefit to the public by encouraging efficiency and morale. Further, the value of this benefit would not be far exceeded by the expenditure of public funds, provided that the awards are of nominal value. Therefore a district can institute an employee recognition program and expend a nominal amount of public funds on plaques, pen and pencil sets, and other such mementos, without violating the "gift of monies" clause (Article IX, Section 7) of the Arizona Constitution.
Paying terminated employee his/her last pay check:
Q: When must a terminated employee be paid his/her last pay check?
A: State, not federal, law regulates when you must pay employees upon their termination. In Arizona, for an involuntary termination, the employee must be paid the earlier of 7 working days or the next regular payday. However, A.R.S.15-502 allows school districts 10 days from the date of discharge to provide payment to terminated employees. For a voluntary termination, the employee can be paid on the next regular payday.
Signing bonus for teachers:
Q: Due to teacher shortages, can a district offer a teacher a "signing bonus"?
A: In the opinion of an Arizona county attorney, governing boards have great discretion in the establishment of employee benefits that are in the best interest of the district. Such a payment is not a prohibited gift of public as long as it is provided for in Governing Board policy and is available to all. Things to avoid are payment to some, but not all teachers; offers of additional amounts not approved by the Board, and increases after contracts are signed.
T-Shirts for Staff:
Q. Are districts permitted to purchase T-shirts for staff?
A. Purchasing T-shirts for employees could be considered a gift of public funds. While the principal may ‘require’ they be worn on certain days, technically to be qualified as a uniform under the IRS rules and thus not included as wages, it cannot be clothing that could be worn for street wear. Meaning, if they can wear the clothing typically on the street, it would not qualify as a uniform under the IRS guidelines, which then leads Arizona to consider it a gift of public funds.
Q. Are districts permitted to provide nominal gifts to employees for recognition of years of service and/or retirement?
A. Attorney General Opinion I97-003 indicates that entities may purchase employee recognition awards if the awards are of nominal value.
Q.If a District includes liquidated damages in an employee’s contract and an employee breaks the contact, where should the monies be deposited?
A.The monies collected for liquidated damages should be deposited in Fund 565, Litigation Recovery.
The content of this page is for general information purposes only and does not constitute advice. Heinfeld, Meech & Co., P.C. tries to provide content that is true and accurate as of the date of writing; however, we give no assurance or warranty regarding the accuracy, timeliness, or applicability of any of the contents.