Compensation
HR 14.0
Consistency in compensation and paid time off assists Archdiocesan school leaders to treat their employees with greater fairness and equity, to ensure compliance with all Federal, State and local laws and regulations, and to enable the flexibility that school leaders need to maximize the staffing of their schools.
Purpose:
A goal of the Department of Catholic Schools is to establish a more consistent approach to compensation and leave administration throughout the schools of the Archdiocese.
Commentary/Procedural Points:
I - LEGAL/REGULATORY
The primary law governing employee compensation is the federal Fair Labor Standards Act (FLSA). The FLSA was enacted in 1938, and among other matters, establishes the federal minimum wage and overtime pay requirements. Maryland law augments the FLSA and frequently establishes a minimum wage rate that differs from the federal rate. (See the Appendix for the latest Maryland minimum wage schedule.)
There are two categories of employees identified in the FLSA:
a) Employees who are covered by the Provisions of the FLSA are referred to in the law as Nonexempt employees… these employees generally are paid on an hourly rate basis, and must be paid one and one-half times their regular rate of pay for hours worked in excess of 40 hours in a workweek; and,
b) Employees who are not covered by the overtime provisions of the FLSA are referred to in the law as Exempt employees… these employees are generally paid on a “salary basis” (as this term is defined in the regulations) and not by the hour.
Exempt employees are not entitled to overtime pay. Also, because Exempt employees are paid on a salaried basis, their pay cannot be “docked” in amounts less than a full day’s pay. Because the leave systems available for use in schools allow employees to utilize leave in less than daily increments, docking of an exempt employee’s pay is rare. Additionally, the following are categories of staff who are not covered (Exempt) in any way by the FLSA:
Clergy and religious who are working in a ministerial capacity are not considered “employees” and are not subject to the overtime rules of the FLSA.
All Teachers, (including substitute teachers, tutors, and teachers who are not yet certified,) are covered by the Professional exemption regardless of pay level. This exemption does not apply to teaching assistants/aides.
Coaches who work in schools and spend much of their time teaching student athletes the rules and fundamentals of their respective sports are also considered as “teachers” and are exempt regardless of pay level.
Employees whose primary duty is performing administrative functions directly related to academic instruction in a school can meet the minimum salary requirement for exemption if they are paid a salary at least equal to the entrance salary for teachers at their school.
A - Exempt or Nonexempt?
A two-step process is used to determine whether an employee is covered by or exempt from the overtime provisions of the FLSA.
Step One – Salary Test:
The Salary Test determines if the position is eligible for consideration for exemption.
If a position salary does not meet or exceed the current Federal minimum salary requirement of $35,568 per year or $684 per week, the position is determined Nonexempt and no further review is undertaken.
If the position salary meets or exceeds the minimum salary requirement, further review under Step Two must be undertaken.
Step Two – Duties Test
If the Salary Test indicates the annual/weekly salary meets or exceeds the minimum requirement, the work of the employee is then reviewed to determine if the position qualifies for exemption from the FLSA. The most common exemptions applicable to schools are the Administrative exemption, the Professional exemption, the Executive exemption, and the Computer Employee exemption. If one or more of the exemption categories applies to a position with a salary meeting or exceeding the minimum salary requirement, then the position is considered Exempt, i.e., it is not covered by the FLSA overtime rules.
Regardless of salary level, employees who do not meet the Duties Test are Nonexempt. The assistance of the AOB Human Resources staff should be sought when applying the Duties Test for exemption.
B - FLSA CLASSIFICATION OF TYPICAL SCHOOL POSITIONS
The following school positions with primary duties making the position Nonexempt, (regardless of salary level) are:
Accounting Clerk/Accounts Payable or Receivable Clerk
Administrative Assistant/Secretary
Before Care/Daycare/After Care Worker
Bookkeeper
Cafeteria Worker
Custodian/Janitor/Housekeeper/Maintenance Worker
Health Room Assistant (includes L.P.N. and Nursing Aides)
Instructional/Teaching Assistant or Aide
Lunch Room Coordinator/Monitor
Office Manager
Receptionist
Security Guard
Screening Coordinator
Tuition Coordinator
These positions are paid on an hourly basis, only for work performed or for paid time off.
School positions with primary duties making the position Exempt from the FLSA regardless of salary are: Teacher, Substitute Teacher, Tutor, and Coach (regardless of pay level)
Principal
Assistant Principal
Provided the salary test is met/exceeded, school positions with primary duties making the position Exempt from coverage of the FLSA are:
Academic/Guidance/School/College Counselor
Business Manager
Admissions Director
Nurses (B.S. degree in Nursing or R.N. only)
Technology Coordinator/Specialist
Campus Minister
Athletic Director and Assistant Athletic Director
Athletic Trainer
C - Employees with Multiple Jobs
Situations where an employee works more than one job in the same entity in the Archdiocese are particularly challenging. Determining the primary duties is an important part of dealing with employees with multiple jobs.
Employees with multiple jobs within the same AOB entity:
A teacher in a parish school also provides after school care for the parish school after care program. As previously indicated, teachers are exempt regardless of salary level. Conversely, before/after care workers are typically nonexempt. Since the employee performs exempt and nonexempt work, the primary duty must be identified. In most cases, teaching is the primary duty and the employee would be exempt from FLSA overtime regulations. (See Calculating overtime pay rates at c. below.)
An employee works as a parish secretary for 25 hours per workweek and as an after care worker in the parish school for 20 hours per week. Both positions are nonexempt. In this example, the employee would be working 45 total hours in a workweek for the same employer, with 5 of the hours worked being overtime work that is compensable at the time and one-half pay rate. (See Calculating overtime pay rates at c. below.)
Nonexempt Employees with multiple jobs where hourly rates for each job differ. Nonexempt employees who work multiple jobs with each job having a different rate of pay must receive overtime pay calculated on the basis of a weighted average of the two rates. To calculate the regular hourly rate upon which overtime pay must be based, the earnings from all hourly rates within the week in which the overtime is worked are added together. That total is then divided by the total number of hours worked at all jobs. The result is the “weighted average” regular hourly rate of pay, upon which overtime pay is based.
Example 1: a nonexempt maintenance employee regularly works 20 hours per week for the parish and 20 hours per week for the parish school; for overtime purposes, the school and parish are considered joint employers. The employee works for $18.00 per hour in the parish job, and $15.00 per hour in the job with the school. The employee works 45 hours in a workweek due to a flood in the parish center, 5 hours of which are to be paid at the overtime (time and one half) hourly rate. The following calculation must be accomplished:
Step 1: Calculate the Total # of hours:
Entity Hourly #Hours Workweek Pay
Parish $18.00 X 25 = $450.00
School $15.00 X 20 = $300.00
TOTAL 45 $750.00
Step 2: Determine the average regular hourly rate:
$750.00 ÷ 45 total hours worked = $16.67 regular hourly rate
Step 3: Calculate the additional amount per hour (one half) for overtime pay:
Average hourly rate of $16.67 X .5 = $8.34 per hour
Step 4: Calculate Overtime Pay:
5 hours X $8.34 per hour = $41.70
Step 5: Determine total workweek pay:
$750.00 base pay + $41.70 overtime pay = $791.70
Example 2: a nonexempt instructional aide works 37 hours per week for the school and 10 hours per week as a nonexempt aide in the school’s after-care program; the school and after-care program are considered the same employer. The employee is paid $15.00 per hour for the instructional aide job in the school and $12.00 per hour in the job with the after-care program. The following calculation must be accomplished:
Step 1: Calculate the Total # of hours:
Entity Hourly #Hours Workweek Pay
School $15.00 X 37 = $555.00
After-care $12.00 X 10 = $120.00
TOTAL 47 $675.00
Step 2: Determine the average regular hourly rate:
$675.00 ÷ 47 total hours worked = $14.36 regular hourly rate
Step 3: Calculate the additional amount per hour (one half) for overtime pay:
Average hourly rate of $14.36 X .5 = $7.18 per hour
Step 4: Calculate Overtime Pay:
7 hours X $7.18 per hour = $50.26
Step 5: Determine total workweek pay:
$675.00 base pay + $50.26 overtime pay = $725.26
II – WORK SCHEDULES AND PAY CYCLES
Employee Work Schedules are Critical to Pay
All school employees should have a fixed work schedule that defines the usual days and hours in which the employee is expected to work. This is an integral part of the school planning and budgeting process and can be a significant factor in the determination of the employee’s compensation, paid time off and, in many cases, the employee’s eligibility for benefits. The school calendar outlines the planned classroom days as well as the days in which some or all of the school’s staff will not be required to work during the academic year; the calendar should identify the days for which employees will be paid and the days that will not be paid (e.g., paid holidays, teacher professional development days, Winter and Easter breaks, scheduled half-days, summer schedule work days and hours for 12-month staff, etc.) For nonexempt staff, the established employee work schedule and the designation of paid and not paid days are especially important. NOTE: Full-time work is normally considered to be 40 hours per work week.
Nonexempt staff are not salaried and, therefore, must be paid for the hours they actually work at an hourly rate. This includes any overtime hours worked in excess of 40 hours of work in a work week which, by law, must be paid at a rate of one and one-half times the hourly rate.
Example: John is a 12-month Nonexempt school maintenance worker who is scheduled to work an 8-hour day Monday through Friday. Thursday is a paid holiday and he is not required to work. A boiler problem occurs Friday and John must work for 8 hours on Saturday to fix the problem. John did not actually work on Thursday, so he is entitled 48 hours of pay at the regular rate (had Thursday not been a paid holiday, John would have worked 8 hours Thursday and would be entitled to 40 hours of pay at the regular rate and 8 hours at time and a half).
To accommodate summer scheduling for 12-month staff, schools can exercise the option to pay a nonexempt employee at the regular hourly pay rate for hours the employee does not work (subject to the 40-hour per work week overtime requirement.)
Example: Susan is a Nonexempt School Secretary who is a 12-month employee and works 40 hours per week during the school year. During the summer months, the school office is open only 20 hours per week and she is precluded from working a full 40-hour work week. The school is only obligated to pay Susan for the 20 hours she works each summer week, but she is available to work 40 hours. Although the school is not required to do so (by stating the summer schedule on the School Calendar at the beginning of the School Year,) the school elects to pay Susan for a full 40 hours for those summer weeks the office is open for the limited hours. Susan works for only 20 hours but is paid for 40 hours. However, when Susan wants to use a week of vacation leave during the summer, she will be charged for 40 hours of vacation leave for that week because she is being paid for 40 hours.
Treatment of 10-Month and 12-Month Employees
Generally, Federal law and regulations require that employees have the right to be paid for work that they perform within a reasonable amount of time. Rules established by the Internal Revenue Code place restrictions on employers which ordinarily disallow 10-month employees from being paid over 12 months.
a.) 10-month employees who can be paid over 12 months
The IRS has made a nationwide exception to its restrictions on paying employees in advance for Teachers based on their blanket exemption from the FLSA, which allows for Teachers the option to be paid on a 12-month basis. The IRS rules require that teachers who elect to be paid on a 12-month basis must do so in writing before the beginning of the school year. This election may be utilized in subsequent years unless the teacher changes the election at the beginning of a subsequent school year. Once a teacher exercises this option, it cannot be changed during the course of the school year. To avoid costly payroll errors that can occur with multiple pay situations, it is encouraged that schools providing pay to their teachers on a 12-month basis do so for all teachers on their staff.
b.) 10-month employees who must be paid on a 10-month basis
Because they are covered by the FLSA and are paid on an hourly and not on a salaried basis, Nonexempt employees who work only during the school year can only be paid on a 10-month basis. This includes all teaching aides/assistants.
Standardizing Pay Cycles
Schools generally use either a biweekly pay cycle, or pay their employees twice monthly. Because most regulations and legal requirements are based on a 7-day work week, the Department of Catholic Schools requires all Archdiocesan schools to adopt the biweekly
(14-day) pay cycle. Once the biweekly pay cycle is adopted, the Archdiocesan payroll system will best and most efficiently complete payroll activity on a single standard pay day every two weeks for all AOB schools. Human Resources will provide support to schools making the transition from twice monthly to biweekly pay and to a unified pay day for all schools.
III - PAID TIME OFF (PTO)
School employees who meet Archdiocesan eligibility requirements to be offered employee benefits are provided paid time off. The Leave Year for schools is July 1 to June 30. PTO is comprised of varieties of paid absence, which may include some or all of the following:
Paid vacation leave (12-month employees only)
Paid sick leave (Maryland requires a modest amount of paid sick leave is to be offered to most employees)
Paid personal time off
Paid holidays
Paid Vacation Leave (Benefit-eligible Employees)
The Principal makes the final decision on the accrual and use of vacation leave by 12-month employees who are benefit-eligible in the school within Archdiocesan Compensation Guidelines. A leave year may be either coincident with the school year or with a calendar year. The dispensing and tracking of vacation leave should be done on an accrual basis rather than by crediting employees with an annual “lump sum” of vacation leave at the beginning of the leave year. The use of planned vacation leave must be requested by the employee and approved in advance by the Principal or other designated approver.
NOTE: Principals should identify the particular dates/times where it is inadvisable for staff to use leave due to work commitments (e.g., teacher-parent conferences, Catholic Education Week, etc.)
Vacation Leave Accrual (based on full-time employee work schedules)
Employee accrual of vacation leave is on the basis of years of service to the Archdiocese. The following outlines the framework for leave accrual.
Employee Years of Service
# of Weeks Vacation
Biweekly Vacation Accrual
1st to 3rd year:
# of Weeks Vacation: 3 weeks of vacation
Biweekly Vacation Accrual: .0576 per hour worked; maximum of 4.6154 hours per pay period
More than 3 years:
# of Weeks Vacation: 4 weeks of vacation
Biweekly Vacation Accrual: .0769 per hour worked; maximum of 6.1538 hours per pay period
Vacation Leave Carryover. Regarding the carryover of vacation leave from one year to the next, Schools have two options from which to choose:
OPTION 1 – Eligible employees may carry over no more than 80 hours of vacation leave into the next Fiscal Year,
OPTION 2 – Eligible employees may carry over no more than 40 hours of vacation leave into the next Fiscal Year,
NOTE: Vacation leave amounts will be prorated for those 12-month benefit-eligible employees working a less than full-time schedule.
Vacation Leave Usage
Upon approval of leave requests, vacation leave may be used in increments of full, and less than full workdays to allow employees to take the minimal amount of time off from workdays for personal matters. Vacation leave may not be used to cover those days identified in the school calendar where employees will not be paid (e.g., Christmas and Easter breaks.)
Paying Out Vacation Leave
Under Maryland law, unused vacation leave must be paid out to the employee when their employment is terminated. This means that the carrying over of unused vacation leave constitutes a financial obligation on the school’s balance sheet, and it is advisable to limit the amount of this obligation. Employees accruing vacation leave may be allowed to carry over unused vacation leave into the next leave year. The Archdiocese has placed limits on the unused vacation leave time that may be carried over at the end of the leave year and available for use in the next leave year to a maximum of 80 hours. Any amount of unused vacation leave from the previous leave year that exceeds 80 hours at the end of the leave year is no longer available to the employee.
NOTE: Schools that previously allowed an annual carryover of more than 80 hours of unused vacation leave should establish a plan to transition from the existing vacation leave carry over policy. One of two options are available:
1) At the end of the leave year, schools may pay out to the employee the value of the vacation leave hours remaining that exceed 80 hours; or,
2) Schools may establish a two-year transitional period in which employees are able to use their vacation leave to draw the balance of unused vacation to 80 hours by the end of the second leave year.
Paid Holidays
The Principal makes the final decision on the school policy regarding the paid holiday schedule. All Archdiocesan schools will provide paid holidays for benefit-eligible staff, to include, at a minimum:
Labor Day
Martin Luther King, Jr. Birthday
Thanksgiving Day
Day after Thanksgiving
Presidents Day
Good Friday
Easter Monday
Independence Day
Memorial Day
Christmas Day
Christmas Eve
Juneteenth
New Years Day
When a paid holiday falls on a Saturday, the observed paid holiday will be the Friday before the actual holiday; when a paid holiday falls on a Sunday, the observed paid holiday will be the Monday after the actual holiday. Employees who are not eligible for benefits do not receive paid holidays.
NOTE: Employees in Short-Term or Long-Term Disability status are not eligible to be paid for holidays. Employees who are not eligible for benefits are not eligible for paid holidays.
Paid Sick Leave
1. Maryland Sick and Safe Leave
The Maryland Healthy Working Families Act requires organizations that employ 15 or more employees to provide paid sick and safe leave to the employees who are regularly scheduled to work at least 12 hours per week (regardless of their eligibility for benefits.) The minimum sick/safe leave benefit is accrued at the rate of 1 hour for every 30 hours worked, for a maximum of 64 hours per year. Employees accrue .0333 hours of Sick and Safe Leave for every hour worked. With few exceptions, all school employees, including non-benefit eligible employees, are covered by this law. Excluded from the coverage of the law’s requirements are:
Independent Contractors;
Employees regularly scheduled to work less than 12 hours per week; and,
Employees younger than 18 years old at the beginning of the year.
2. Archdiocesan Paid Sick Leave Policy
Paid sick leave is provided on an accrual basis to all Benefit-eligible employees, and to all school employees who work at least 80 hours per month. The accrual of sick leave is prorated for employees who are regularly scheduled to work less than full-time. (This benefit meets the requirements for Maryland Sick and Safe Leave.) Sick leave will be accrued according to the following:
Employees scheduled to work 40 hours per week will earn 8 hours of sick leave per month worked.
Employees scheduled 35 hours per week will earn 7 hours of sick leave per month worked.
Employees scheduled 20 hours per week will earn 4 hours of sick leave per month worked.
Employees paid sick leave will accrue at a rate of .0462 hours for every hour worked (equivalent of 1 day per month). Sick leave may accumulate up to a maximum of 320 hours of sick leave; amounts of sick leave exceeding 320 hours will be forfeited. 10-month employees do not accrue sick leave during the 2 summer months. Sick leave does not accrue during absences of greater than two (2) or more weeks.
Unused sick (and sick or safe) leave is not compensable upon employment termination, however, employees are eligible to transfer unused accrued sick leave between locations participating in the Archdiocesan benefit plans. Employees who have terminated employment and have been rehired within 37 weeks must have their sick leave balances restored to the level accrued at the time of their employment termination. Schools should enact procedures under the Family Medical Leave Act (FMLA) for absences of eligible employees due to personal or family member illness or injury greater than 5 days. (Consult with Human Resources in the handling of all FMLA matters and the possibility of coverage under the Americans with Disabilities Act.)
Upon approval of a sick leave request, sick leave may be used in increments of full, and less than full workdays to allow employees to take the minimal amount of time off from workdays that they need for their own medical condition or for the care of a sick family member. Sick leave benefits for medical leave due to pregnancy are the same as sick leave benefits for other medical disabilities. It is appropriate to use sick leave for such matters as medical appointments and care of a family member, as appropriate.
Bereavement Leave
Benefit-eligible school employees are entitled to be paid leave in the event of a death in the immediate family. Typically, bereavement leave does not exceed 3 work days per bereavement instance. In situations where funeral and interment are being held out-of-state, the employee may be granted up to 5 days of paid bereavement leave at the principal’s discretion. "Immediate family" consists of spouse, parents, siblings, children and relatives residing with the employee.
One day of paid bereavement leave may be provided in the event of death of other relatives, with up to 3 days provided for out-of-state situations approved by the principal.
Personal Leave
Benefit-eligible school employees have 2 days of paid leave each school year for the conduct of personal business. If any personal leave remains unused by the end of the school year (or when terminating employment,), it will be forfeited and not cashed out.
Pay for Emergency Closures
From time to time, emergencies will occur that may close a school for a partial or complete school day. Some examples of emergencies causing school closures include but are not limited to: snow and other weather-based closures; and, building/facility emergency repairs (floods, power, water, etc.). In such cases, exempt and nonexempt employees who were otherwise scheduled to work and who are prevented from working by the emergency closure, are to be paid for the hours/days they would have otherwise worked.
Jury Duty/Court Leave
The schools of the Archdiocese encourage and support employees in fulfilling their civic responsibilities. Schools will provide paid time off to employees for performing jury duty or for serving as a witness under subpoena. Ordinarily, paid time off for these purposes will be provided for up to a maximum of five work days. Such paid time off exceeding five work days will be considered on a case-by-case basis by the Principal. While jurors are typically provided a stipend for the purpose of defraying their expenses for meals, travel, and parking, these amounts will not be deducted from the employee’s paid Jury Duty Leave.
References:
Fair Labor Standards Act
Family & Medical Leave Act
Maryland Healthy Working Families Act
Americans with Disabilities Act
Maryland Wage Payment & Collection Law
Maryland Minimum Wage and Overtime Law
FINAL JULY 1, 2020
APPENDIX
Maryland Minimum Wage (as of January 2022)
The State of Maryland has implemented a gradual increase in the minimum wage hourly rate, based on the number of employees of an organization to lessen the economic burden on small businesses and organizations.
The following is the current Maryland minimum wage rate schedule which is being phased in beginning January 1, 2020.