Presented by: Emily A. Swanson, Esq. of Thomas Pollart & Miller LLC* *Please note: Lasater Martin PC as of December 27, 2016

Presented at the 2016 AVCA Convention

Columbus, Ohio

Saturday, December 17, 2016 at 2 p.m.

Surviving in Today’s Litigious

Society: Pro-Active Advice for

Legal Compliance

WHO AM I?

PRACTICE AREAS

Workers’ Compensation

Insurance Law

Liability Defense

Subrogation & Recovery

Employment Law

Appellate

Contracts

EXPERIENCE

Ms. Swanson focuses her legal practice in the realm of civil litigation including insurance law, liability defense, subrogation and recovery, employment law,

workers’ compensation defense and appellate. Primarily, Ms. Swanson’s focus remains on defending employers, businesses and youth sports’ organizations

against an assortment of legal claims, including general liability matters, administrative reviews and governing associations’ claims.

Consistently recognized by the youth sports community as a national legal expert on hot-button issues within the community, such as misclassification of coaches,

tort and workers’ compensation liability, and association contracts, Ms. Swanson travels the country speaking, lecturing and representing various organizations with

regard to legal compliance and administrative review issues. Currently, Ms. Swanson serves as panel counsel for the Rocky Mountain Region of USA Volleyball.

Additionally, Ms. Swanson serves on the Board of Directors for the Rocky Mountain Region USAV.

A former collegiate Division 1 volleyball and track athlete, who has coached club, high school and college and directed and run clubs for the last 11 years, Ms.

Swanson has the rare and unique perspective of what truly happens behind the scenes of a club and inside the gym. She has been a coach with USA Volleyball’s

High Performance program for the last five years, including a recent selection to coach the Select A1 National Program at USAV’s High Performance Championships

in Ft. Lauderdale in 2016.

After moving from Texas to Denver to attend school at the University Of Denver Sturm College Of Law, Ms. Swanson graduated in the top 12% of her Class.

Following her graduation, she began working as attorney and financial analyst for Promontory Financial Group where she worked on government mandated

reviews of foreclosure actions. Ms. Swanson then worked as an attorney for the Colorado Education Association where she was responsible for 120+ plaintiff class

action lawsuit representing teachers against the Colorado Public Employee’s Retirement Association (PERA). Ms. Swanson then began with Tschetter Hamrick Sulzer,

PC where she broadened her experience defending and litigating employment law cases and appeals. Ms. Swanson continued gaining experience with Bachus &

Schanker, LCC where she handled over 150 cases and assisted on large, complex litigation caseload before electing to join Thomas Pollart and Miller LLC.

CONTACT INFORMATION

Before December 26, 2016:

Eagswanson@gmail.com

Cell: 832-819-3007*

After December 26, 2016:

Lasater & Martin PC*

Work: 303-730-3900

Can also call my cell or email above.

*Lasater Martin is a multi-jurisdictional law firm with offices in multiple states. Therefore, the firm has

the ability to represent organizations from all over the country with very little issue regarding

attorney licensing and admissions.

TOPICS COVERED: • Best Practices for Dealing with Pesky Parents

• Employee Misclassification

• New Wage & Hour Laws

Caveat with regard to the following things addressed: All

issues vary from state to state and are incredibly fact

specific. This means the answer could be different for

every single person in this room. Employer Misclassification

and Wage and Hour issues have both federal and state

implications. Additionally, depending on the classification

of your business (non-profit, for-profit, etc), the laws can

vary from state to state with regard to the protections

given and potential for liability. If any of these things

concern you, YOU NEED TO CONSULT AN ATTORNEY

WITH YOUR SPECIFIC FACTUAL SITUATION.

The Necessary Evil: Parents Contracts:

• Too much versus too little: things that you want in

your contract versus things that you want implied

via actions.

• Do you have the ability to unilaterally change

certain conditions? Ex: team, coach, position, etc?

• What is the contract conditioned on? Is this

properly spelled out?

• What happens in the case of a breach?

• No-pay, No-play lists? Mandatory? Regional?

• Are the conditions as to what the payment is

specifically going to and what the mutual

understanding regarding payment is unequivocally

spelled out?

• Provisions as to what happens when a change to

the contract is made?

• Understand enforceable vs. deterrent

• Recognize legal duty to mitigate damages

• Binding arbitration?

Injuries & Liability: • DOCUMENT, DOCUMENT, DOCUMENT

• Update your liability carrier ASAP if it requires

medical treatment—importantly, they can deny

coverage if never notified

• Typical Statute of Limitations is 2-3 years, so you need

to keep documentation on file for a minimum of the

SOL date

• Require updates regularly

• Restrictions. Please comply!!!!

• Releases

Coaches & Liability • You are liable for your coaches behavior, PERIOD.

• Document any corrective action taken or incidents acted on

• If you do not act from day one, liable for every additional

action after.

EMPLOYEE MISCLASSIFICATION • What is employee misclassification and how does it relate to the club volleyball world?

According to both federal and state law, employers are required to correctly classify each worker as either an “employee” or

“independent contractor.”

You are the employer. Your coaches and various other individuals are the workers. Most issues arise from issues with the

classification of the coach.

Most clubs (wrongfully) classify their coaches as independent contractors. Very few choose the “employee” route. However, a

true independent contractor is someone that is running a separate business.

• Why is this even an issue?

Misclassified employees lose workplace protections, face an increased tax burden, receive no overtime pay, are not protected by

anti-harassment or discrimination laws, and are often ineligible for workers’ compensation insurance. Misclassification also

causes federal, state and local governments to suffer revenue losses as employers circumvent their tax obligations.

While some employers misclassify their workers as independent contractors in effort, often times employers misclassify their

employees intentionally in order to reduce labor costs and avoid paying state and federal taxes.

A study once found that the Department of Labor lost nearly $200 million in tax revenue per year due to misclassification.

Companies that misclassify their workers have an advantage over other law-abiding competitors because they can lower their

labor costs by as much as 40%.

EMPLOYEE MISCLASSIFICATION COSTS OF CLASSIFICATIONS

EMPLOYEE INDEPENDENT CONTRACTOR

Employer and worker each pay 7.65% of

payroll for FICA and FUTA. Employer

generally makes payroll deductions.

Same with state and/or local tax.

Worker pays entire 15.3% self-

employment rate and is generally

responsible for a self-employment tax

when filing their yearly taxes. Same with

state and/or local tax.

Employer pays workers’ compensation

taxes.

Worker responsible for insurance or their

own costs arising from a workplace injury.

Employee is covered under employers

liability insurance as an “agent” if

employees behavior results in any tort

related injury to a 3rd party while working

Employee is solely liable for any tort

caused to a 3rd party while on the job.

One expert calculated that if a worker earned $31,200 a year before taxes, they would be left

with $10,660.80 if paid as an independent contractor and $21,885.20 if paid as an employee.

EMPLOYEE MISCLASSIFICATION WHY YOU SHOULD CARE AND PAY VERY CLOSE ATTENTION TO THIS TOPIC:

• Because it was becoming such a widespread issue, the U.S. Department of Labor awarded $10.2 MILLION in grants to 19 states to assist in

their efforts to combat employee misclassification. President Obama’s 2017 budget request includes $10 million in funding to continue helping

states combat worker misclassification. People are starting to pay attention!

• The law, most often times, does not recognize that handy “Independent Contractor Agreement” you had all of your coaches sign. It is vital to

understand that the majority of the time this document has absolutely no role in a proper legal determination. (Bonus Tip #1: many

documents you think are binding, important or instrumental in letting you off the hook have absolutely zero enforceability! The idea that

anything you “contract” to is binding is one of the most common misconceptions out there.)

• Not only does proper worker classification determine whether or not the employer has legal obligations under the law for various things, but

more importantly, there are a variety of consequences for misclassifying or attempting to misclassify a worker as an contractor.

• Youth sports organizations are being audited more frequently by federal and state agencies, and have been fined tons of money because

the IRS determined they had misclassified their coaches. Google Fredericksburg Area Soccer Association’s misclassification mess if you want

more details.

• New laws are going into effect Dec. 1, 2016 that further your obligations to your employees, and if you’re misclassifying your coaches in

violation of the FLSA, your liability goes up!

WHERE DOES EMPLOYEE MISCLASSIFICATION COME INTO PLAY?

1. FEDERAL INCOME TAX LAWS

2. FEDERAL FAIR LABOR STANDARDS ACT

3. FEDERAL DISCRIMINATION LAWS

4. STATE INCOME TAX LAWS

5. STATE WORKERS’ COMPENSATION LAWS

6. STATE & FEDERAL TORT LAW

7. STATE UNEMPLOYMENT ISSUES

8. FEDERAL AFFORDABLE CARE ACT

EMPLOYEE MISCLASSIFICATION HOW DO I KNOW WHICH ONE IS “PROPER” FOR MY CLUB?

The simple answer is that unless you have previously consulted a lawyer, heard me speak on this issue before,

or are a lawyer yourself…you don’t. And even then…it’s not always an obvious answer. Lawyers get paid

because nothing is ever black and white in the law.

Depending on the various agency (either state of federal) or particular law that you are attempting to comply

with, the legal “test” and analysis varies. For example, the test for employee misclassification is different for

the IRS than it is for the State of Colorado Department of Labor & Employment. While there may be small

distinctions, the overall focus of every “analysis” centers on what is commonly known as the

RIGHT TO CONTROL test.

EMPLOYEE MISCLASSIFICATION

The IRS is arguably one of the most important agencies in which an employer has to comply with

proper classification standards. The IRS uses an 11 factor “test,” (other agencies use pretty much the

same variation of factors) which includes consideration of the following factors:

• Instructions the business gives the worker (very important in this context, sub-factors will be detailed later);

• Training the business gives the worker;

• The extent to which the worker has unreimbursed business expenses;

• The extent of the worker’s investment;

• The extent to which the worker makes services available to the relevant market (HUGE issue in this context, also

discussed later);

• How the business pays the worker;

• The extent to which the worker can realize a profit or loss;

• Written contracts describing the relationship the parties intended to create (IRS says least important factor);

• Benefits provided to the worker;

• The permanency of the relationship;

• The extent to which services performed by the worker is a key aspect of the regular business of the company.

NO EXISTENCE OR ABSENCE OF ONE FACTOR IS DETERMINATIVE!

EMPLOYEE MISCLASSIFICATION

INSTRUCTIONS THE BUSINESS GIVES THE WORKER:

Typically, employees, not independent contractors, are subject to the employer’s control

regarding certain things. Some things the IRS considers in weighing this factor include (but

are not limited to):

• Telling the worker when and where to do the work;

• What equipment or tools to use (or, the alternative, providing the tools);

• What workers to hire or to assist with the work;

• What work must be performed by a specified individual;

• What order or sequence to follow;

• NOTE: “Even if no instructions are given, sufficient behavioral control may exist if the

employer has the right to control how the work results are achieved. The key

consideration is whether the business has retained the right to control the details of a

worker’s performance or given up that right.”

EMPLOYEE MISCLASSIFICATION Things to consider regarding the practical application of the previous factor (instructions the business gives the

worker) to the club world:

• Does the club set the practice, tournament, and mandatory meetings schedule, thereby controlling “when and

where to do the work?”

• Does the club provide the equipment for the coach, including balls, coaching gear, ball carts, nets, etc?

• Does the club mandate what the coach has to wear to either or both practices or tournaments?

• Does the club assign the team and assistant coach?

• Does the club have some form of rules, policies, procedures, etc. that the coach must adhere to?

• Does the club have specific additional responsibilities for the coach? For example, having to submit a report

every month on each player, review film, stat the team, monthly player meetings, submission of goals, etc.?

• Does the club control the offense, defense, strategy, playing scheme, warmup drills, practice drills, etc.?

• Does the club mandate a training philosophy that the coach must adhere to? (Grills, gamelike, blocked, etc.)

• Does the club control the manner (outside of USAV and Safesport requirements) of communication with the

parents and athletes, social media rules or mandate certain behavior while traveling?

• Does the club control the coach’s decision making by requiring them to implement a certain consequence on an

athlete for specific behavior?

BOTTOM LINE: THE MORE AUTONOMY YOU PROVIDE YOUR COACH, THE LESS LIKELY THEY ARE TO BE

EMPLOYEES!!!!! This factor typically weighs in favor of EMPLOYEE status.

EMPLOYEE MISCLASSIFICATION TRAINING THE BUSINESS GIVES THE WORKER:

• Requirement to be IMPACT, SafeSport, CPR, Official and

Scorekeeping certified?

• Do you require mandatory “coaches training,” clinics, or any

form of continuing education?

• Do you have a mentorship/master coach program?

• Do you have a “Director of Coaching” that continuously

works with your coaches?

• Do you have mandatory coaches meeting where you

discuss systemic club/coaching issues and how to address

them?

Typically this factors goes in favor of EMPLOYEE STATUS.

THE EXTENT TO WHICH THE WORKER HAS

UNREIMBURSED EXPENSES: • Do you either pay for up-front, or reimburse the coach for travel

related expenses such as hotels, flights, food, gas, etc. for

tournament related expenses (especially out of town/state

qualifiers)?

• Do you reimburse any expenses related to continued education or

training? (CAP, Clinic Attendance, AVCA Convention, HP Clinic,

etc.)

• Do you reimburse or pay for up-front region and USAV

membership?

• Do you pay for the coach’s IMPACT fee?

• Do you pay for or reimburse any refereeing or scorekeeping clinic?

Depending on the answers to the above issues, this factor can go

EITHER WAY.

THE EXTENT OF THE WORKER’S INVESTMENT: An employee generally has no investment in the work other than his or her own time and

prior education. An independent contractor often has significant investment in the facilities

or tools they use in performing the service for someone else. However, a significant

investment is not necessary for independent contractor status.

• Do you provide the necessary tools, such as volleyballs, ball carts, nets, training tools,

camcorders, ipads, stat program memberships, etc?

Typically, this factor goes in favor of EMPLOYEE STATUS.

EMPLOYEE MISCLASSIFICATION THE EXTENT TO WHICH THE WORKER MAKES

SERVICES AVAILABLE TO THE RELEVANT MARKET: This is a HUGE factor, and is one of the biggest factors clubs are

almost never compliant with (for obvious reasons). “An independent

contractor is generally free to seek out business opportunities.

Independent contractors often advertise, maintain a visible business

location, and are available to work in the relevant market.”

• Do you restrict the right of your coach to associate, affiliate or

work for another club while coaching for your club?

• Do you make your coaches sign a “non-compete” agreement?

• Do you control or dictate any term related to the coach giving

private lessons?

This factor typically weighs in favor of EMPLOYEE STATUS.

HOW THE BUSINESS PAYS THE WORKER: The IRS states that “an employee is generally guaranteed a regular wage

amount. An independent contractor is usually paid a flat fee for the job.

However, it is common in some professions . . . to pay independent

contractors hourly.”

There seems to be no global consensus on how this is done from club to

club. Some clubs pay a set amount per season, others pay hourly, some

have a sliding scale with a base pay and incentives based on

performance. Also, some clubs have classified their coaches as ICs and

then refused to pay them their last paycheck because they “failed to

perform all requirements of the job, such as providing written stat sheets

after every tournament.”

Bottom line: this factor will have little, if nothing, to do with the

outcome. As such, this factor can go either way depending on your

structure.

THE EXTENT TO WHICH A WORKER CAN REALIZE A PROFIT OR LOSS: “Since an employer usually provides employees a workplace, tools, materials, equipment, and supplies needed for the work, and

generally pays the costs of doing business, employees do not have an opportunity to make a profit or loss. An independent

contractor can make a profit or loss.”

There are very few situations, if any, where clubs provide a structure that allows a coach to make a profit or loss. Therefore, this

factor typically weighs in favor of EMPLOYEE STATUS.

EMPLOYEE MISCLASSIFICATION

WRITTEN CONTRACTS DESCRIBING THE

RELATIONSHIP THE PARTIES INTENDED TO CREATE: The IRS states: “this is probably the least important of the criteria,

since what really matters is the nature of the underlying work

relationship, not what the parties choose to call it. However, in

close cases, the written contract can make a difference.” It is

important to note that if the worker was presented with a “take it

or leave it” agreement, it has less of a potential to be binding or

determinative.

As such, depending on the outcomes of the additional factors, this

factor usually has no bearing or weight given either way, but is a

good document to have on your side regardless, just in case.

WHETHER THE BUSINESS PROVIDES THE WORKER WITH

EMPLOYEE-TYPE BENEFITS: In the club world, this is obviously almost never the case. However, keep

in mind the argument could be made that the club provided the necessary

insurance (through membership if they paid for or reimbursed the expense)

and that the coach does, in fact, receive “vacation and sick” pay because

they are (in most cases) allowed to miss practice/tournament/meeting if

they are sick, an emergency arises, or they are out of town, all without

having their pay decreased.

In the most general sense, this factor typically weighs more for

INDEPENDENT CONTRACTOR STATUS.

THE PERMANENCY OF THE RELATIONSHIP: Typically, if the worker and employer intended to engage in a employment relationship for an indefinite period of

this, the worker is usually an employee. Independent contractors are typically employed for a specific duration or

project.

This factor will be decided by what the contract with your coach states (issue to also be discussed in “Contract

Formation” later).

Typically speaking, this factor weighs in favor of INDEPENDENT CONTRACTOR STATUS, assuming you have a

contract that is standard within the club community.

EMPLOYEE MISCLASSIFICATION

THE EXTENT TO WHICH SERVICES PERFORMED BY THE WORKER ARE A KEY ASPECT OF THE REGULAR

BUSINESS OF THE COMPANY:

The more integral the service provided is to the regular business of the company, the more likely the worker is an

employee and not an independent contractor. This is because the more integral the services are, the more likely the

employer will have the right to direct and control the worker.

There is absolutely no question that the services provided by a coach are a “key aspect of the regular business” of the

club.

Therefore, this factor always weighs in favor of EMPLOYEE STATUS.

EMPLOYEE MISCLASSIFICATION

“So…I may have totally screwed this up and now I’m scared. What can happen and how do I

fix it?!”

EMPLOYEE MISCLASSIFICATION PENALTIES (IRS VIOLATION)

UNINTENTIONAL INTENTIONAL—IN ADDITION TO

$50 for each W-2 that the employer

failed to file because of the

misclassification

Increase in all penalties allowed for in

“unintentional” category.

Penalties of 1.5% of the wages, plus 40%

of the FICA taxes that were not withheld

from the employee and 100% of the

matching FICA taxes that the employer

should have paid. Interest also accrues on

these penalties daily from the date they

should have been paid

Criminal penalties of up to $1,000 per

misclassified worker and potential for 1

year prison sentence

A “Failure to Pay Taxes” penalty equal to

0.5% of the unpaid tax liability for each

month up to 25% of the total tax liability.

The person responsible for withholding

taxes could also be held personally liable

for any uncollected tax.

EMPLOYEE MISCLASSIFICATION WORKERS’ COMPENSATION LIABILITY

For example, in Colorado, if you’re a 501(c)(3), you must have certain documentation on file with

precise wording according to C.R.S. 8-40-202(2)(e)(II).

For everyone else who is not a 501(c)(3), if your coaches are found to have been employees, and you failed to properly

cover them with Workers’ Compensation insurance—the consequences can be drastic.

• Liable for potential penalties from the Colorado Department of Labor and Employment

• Liable for any injuries your coach sustains while in the SCOPE OF EMPLOYMENT. This

includes not only in your gym, but while driving to tournaments, during travel, and

sometimes in your parking lot.

But like…what about our insurance coverage? USAV Insurance? Building insurance? NO!

Liable for medical expenses, lost wages, penalties (increase of 50% in compensation!), disfigurement, and any impairment ratings.

Subject to fines from the Division of Workers’ Compensation for failure to insure, regardless if injury occurred

The DOWC can force you to close your business for a period of time (after hearing)

EMPLOYEE MISCLASSIFICATION TORT LIABILITY

Many states recognize the legal doctrine of Respondeat Superior—which basically means that if something happens due

to the fault of someone who is acting in the scope of their employment, the employer is liable (some exceptions apply).

This does not matter is 501(c)(3) or not.

For example:

If a coach is driving to a tournament, runs a red-light and hits and kills someone walking across the street (assume absolute

fault on coach for purposes of hypothetical), your business (or you personal, depending on how your club is structured) could be

all or partially liable for the death of the pedestrian because the coach was acting within his or her scope of employment

while driving to a tournament.

Instances in Colorado where employers have been held liable for the torts of their employees (regardless of initial classification):

• Church held liable for inappropriate sexual relations with minor by priest (due to negligent hiring and scope of employment)

• Apartment owner was held liable for employee’s negligent stabbing of a tenant’s child

• Employer liable for damage to hotel property caused by the employee

• Truck driver sexually assaulted hotel clerk while traveling for work (negligent hiring)

EMPLOYEE MISCLASSIFICATION

WHAT TO DO IF YOU NOW FEEL YOUR COACHES ARE EMPLOYEES AND NOT INDEPENDENT CONTRACTORS:

• Don’t panic.

• Consult an attorney. (I’m here for you).

• See if your state’s Department of Labor offers advisory opinions.

• If, after further review, your coaches still seem to currently be employees, change their classification ASAP.

• If you feel you may have misclassified coaches for seasons in the past and have potential IRS liability, you

can choose to participate in the IRS’ Voluntary Classification Settlement Program. This program allows:

• Most all employers to voluntarily reclassify their workers as employees for future tax periods for

employment purposes.

• Under this program, an employer will pay 10% of the amount of employment taxes that would have

been due on compensation paid to the workers being reclassified for the most recent year, calculated

at a reduced rate.

• Employer will not be liable for any interest and penalties on the payment and WILL NOT BE AUDITED

FOR EMPLOYMENT TAX PURPOSES FOR PRIOR YEARS WITH RESPECT TO THE WORKER CLASSIFICATION OF

THE WORKERS. This essentially eliminates all potential liability for past misclassification (with regard

to IRS purposes ONLY).

BUT WAIT…THERE’S MORE!

Beginning on Dec. 1, 2016, new laws go into effect regarding overtime pay required for employees.

Since we have now determined that your coaching staff may be employees

and not independent contractors…this could affect you!

In March 2014, President Obama directed the Secretary of Labor to update the overtime regulations

to reflect the original intent of the Fair Labor Standards Act (FLSA). After review, it was announced

that the final rule will change to automatically extend overtime pay eligibility to 4.2 million

additional workers.

MINIMUM WAGE CONCERNS In Colorado, the minimum wage per hour for employees is $8.31.

This is something to remain cognizant of considering your coaches

and staff may actually be employees, and not independent

contractors, meaning they are entitled to minimum wage per hour.

For example: Many clubs pay their coaches a set amount for the season, running from November to late May

or June. However, given there are times with holiday breaks, let’s call it an even 7 months. For purposes of

this hypothetical, let’s assume your coach gets $4,500 for the season.

This equates to a monthly paycheck (gross) of $643. There’s many clubs in Colorado that in February 2016,

their teams competed in both Omaha and Crossroads. Omaha computes to a four day tournament (1 day of

travel there, 2.5 days of coaching, and travel back). 8 hours for travel first day, 16 hours of coaching for the

first two days, 4hours of coaching on the last day, and a 6 hour travel ride home—equating to 34 hours

worked just that weekend. For Crossroads, 16 hours for the first two days and 4 hours for the last, equating to

20 hours worked just that weekend. Add in the practice times (1 hour for planning and 2.5 hours for

practice/time spent with athletes and parents after) for 2x for 2 weeks and 3x for two weeks (weeks without

tournaments), this equates to 35 hours worked just for practices. Combine the hours for the month, and it

equates to 89 hours of coaching. Divide the monthly pay of $643 by 89 hours, and you’re only paying your

coaches $7.22 per hour, over a dollar less than required under Colorado law.

NEW OVERTIME LAWS

MAIN CHANGE:

• Increases the salary threshold for those entitled to overtime from $455 per week to $913 per week

($47,476 for a full-time employee).

WHY YOU SHOULD CARE:

Now, any member of your organization (coaches, directors, etc.) that earn less than $913 per week

(IMPORTANT: REGARDLESS OF HOW THEY’RE PAID—HOURLY, DAILY, SALARIED, ETC.), which equates to

roughly $22.83 per hour are AUTOMATICALLY entitled to overtime for hours worked over 40. If they are

“salaried,” hourly rates are determined using the salary calculated into hours.

Based on my calculations, a typical every-day coach spends about 20.5 hours “working.” This

includes 1 hour preparation for each practice, 2.5 hours for practice 3 days a week, and 10

hours for one tournament day. Note, this does not include any time spent with film study,

stating, attending any coaches meetings, meeting with parents, communications with athletes

and other staff, and covering any additional practices or duties.

SO MOST OF THE TIME, YOU’RE LIKLEY OKAY WITH REGARD TO YOUR COACHES. EXCEPT….

• What about those really long travel tournament weekends for

qualifiers?

• Coaches can have two practices that week prior to leaving for the

tournament, an entire 8+ hour day while traveling, and easily

three 10+ hour days while at the tournament and traveling back.

Well over 40 hours that week.

• What about nationals?

• Teams/Coaches are typically gone for a minimum of five days

that week

• What are your policies that dictate a coach’s behavior and

responsibilities while gone for travel?

• This could cause the coach to essentially be “required” to be at

work the entire time, making every hour over 40 overtime

required to be paid out at 1.5 times per hour over 40.

DIRECTORS/OTHER STAFF If you have other individuals on staff, such as a club director, coaching director, master coach, etc—and

they make less than $47,476 a year (or $913 per week), YOU MUST PAY THEM OVERTIME FOR HOURS

WORKED OVER 40!!

This applies regardless of meeting any “exempt” status if they make under the threshold

amount required.

If they make over the threshold amount, but do not qualify as “exempt” employees

(white collar exemption), you still must pay them overtime—this portion of the law

remains unchanged.

EXEMPT EMPLOYEES

Known legally as a “white collar exemption” to the overtime wage and hour laws

To claim someone is exempt from overtime pay, they must meet the following three things:

• Be paid on a salary basis and not subject to reduction based on quality or quantity of work

• Their salary must meet the minimum salary requirements ($47,476 per year)

• Their primary duties must involve the kind of work associated with an executive,

administrative or professional employee.

PRIMARY DUTIES TEST EXECUTIVE

Primary duty must be managing the enterprise, or

managing a customarily recognized department or

subdivision of the enterprise.

Must customarily and regularly direct the work of

at least two or more other full-time employees or

their equivalent.

Must have authority to hire or fire other employees,

or suggestions regarding status changed must be

given particular weight.

ADMINISTRATIVE

Primary duty must be the performance of office

or non-manual work directly related to the

management or general business operations of

the employer or the employer’s customers

Primary duty includes the exercise of discretion

and independent judgment with respect to

matters of significance.

PROFESSIONAL

Primary duty must be the performance of work requiring advanced knowledge, defined as work

which is predominantly intellectual in character and which includes work requiring the consistent

exercise of discretion and judgment.

Advanced knowledge must be in a field of science or learning and must be customarily acquired

by a prolonged course of specialized intellectual instruction

HOW CAN WE COMPLY? COACHES

The majority of the time, this is not an issue since your coaches will rarely work over 40 hours per week.

However, it can and does happen, especially during Nationals and travel tournaments.

In those instances, you can:

• Pay your coaches overtime for the hours over 40 (figure out hourly rate—no less than minimum

wage!).

• Recommended: limit the duties and responsibilities of your coaches while away on travel

tournaments so that the work week will not exceed 40 hours. For example, the coach is only

responsible for the players while in the convention center/gym, and the team parent is responsible

for addressing all other issues outside of the playing arena. If you have your coaches on call

24/7, require them to do bed checks every night, require their participation in meals, etc.—those

are all hours that are considered compensable hours of employment.

• Use a “flextime” work arrangement calculation. This is a complicated set-up, so you should

contact an attorney to ensure legal compliance if you go this route.

HOW CAN WE COMPLY? DIRECTORS/OTHER

First, if the only Director/Manager/Other is the OWNER of the club, don’t worry about this. Just stick to

compliance with your coaches.

If you have full or part-time directors/others that are salaried (or some variation of pay), you need to pay

very close attention to this rule because they will often times work more than 40 hours per week. In

these cases, you have the following options:

• Increase the salary of that person (assuming they meet the aforementioned “duties test” to the new

salary level so that they may be exempt;

• Pay the overtime premium of 1.5 times the employee’s calculated hourly rate of pay for hours over 40;

• Reduce or eliminate overtime hours;

• If economical, hire someone on an hourly basis to cover the additional work over 40 hours at a lower

rate (in instances where you cannot reduce below 40);

• Reduce the amount of pay allocated to base salary (must meet minimum wage) and add pay to

account for overtime for hours worked over 40, to hold total weekly pay consistent;

• Use fluctuating work week calculations.

CLOSING ADVICE • Always CYA: When possible (and warranted), ALWAYS get things in writing. Follow up verbal

conversations with an e-mail detailing discussion;

• When in doubt, consult an attorney!!!!!

• Recognize that absolutely nothing you do insulates you from a lawsuit. Nothing.

• Understand today’s litigious society.

• Understand the difference between documents/contractual provisions that are enforceable and

those that are used as a deterrent.

• Be transparent and fair in every action you take.

• Do what is legal, not what is socially acceptable.

• Understand the balance of power between justice and money.

• Document injuries in a formal injury report and keep on file for a minimum of 3 years.

• If anyone is seriously injured (requiring a trip to the ER) or breaks/tears something, put your

insurance company on notice IMMEDIATELY.

• Keep through records of every major decision made regarding a player, coach or parent.

• Stop throwing good money after bad.

• Be proactive, not reactive.