Fair Labor Standards Act (FLSA)
What Does It Mean?
If you currently earn less than $47,476 annually and are exempt or in a grade where others in your same title could earn less than the threshold, here is what this change may mean:
- All hours worked on a daily basis will be captured via a time-keeping system – this means you will record time in and out each workday.
- Compensation will be paid on a bi-weekly basis instead of a monthly basis.
- All hours worked will be compensated, and overtime compensation will be paid as outlined in payroll policy.
This change in no way diminishes the value of employees’ work or the importance of their contributions to USG. The change of position from exempt to non-exempt is necessary to comply with the U.S. Department of Labor (DOL) regulations and provides employees with wage and hour protection afforded by the legislation. A change from exempt to non-exempt status will have no impact on pay grade, benefit elections, or your base hourly rate.
USG Human Resources adheres to DOL regulations and guidelines in evaluating the exempt or non-exempt designation of all staff and faculty positions. Additional details regarding the FLSA designations are provided below.
- Exempt Employee
- Not eligible for overtime.
- Must record exceptions to work (sick, vacation, jury duty, etc.).
- Non-Exempt Employee
- Eligible for overtime.
- Must record all hours worked in addition to absences.
- Non-exempt employees must be paid for all hours worked. Hours worked include all the time during which an employee is required to be on the employer’s premises, on duty, or at a prescribed workplace.
- Calculating Overtime
When calculating overtime, it is important to note that overtime is based on the number of hours worked in the workweek, not the pay period. Hours that are not actually worked (holidays, sick, vacation, etc.) do not count towards calculating overtime.
Overtime must be approved in advance by the supervisor. The supervisor may also adjust the schedule within the same work week to manage overtime.
Higher Education Specifics
- Many faculty members will be unaffected by the FLSA changes because they meet the FLSA's "teaching exemption." Some specialized faculty members who do not teach may be impacted (including those working part-time). Any specialized faculty reclassified to non-exempt will become overtime eligible (pre-approval of any overtime hours will be required) and will have new timekeeping procedures.
- Adjunct instructors may also be exempt as teachers if they are employed and engaged as teachers in an educational establishment, where their primary duty is teaching, tutoring, instructing or lecturing.
- Academic administrative personnel generally eligible for this exemption include: department heads; academic counselors and advisors; intervention specialists who must be available to respond to student academic issues; and other employees with similar responsibilities provided they are paid on a salary or fee basis of not less than the salary level, or be paid on a salary basis at least equal to the entrance salary for teachers in the same educational establishment. Institution HR departments will work with departments in determining whether or not this exemption applies and will be utilized.
- Most students working for USG institutions are hourly workers who do not work more than 40 hours per week. The Final Rule will not affect these students.
- Graduate teaching assistants who have teaching as their primary duty may qualify for the teaching exemption and may remain exempt under the Final Rule.
- Graduate and undergraduate students engaged in research under a faculty member’s supervision in the course of obtaining a degree are considered to be in an educational relationship with the school. As such, the department would not assert an employment relationship with either the school or any grantor funding the research. Thus, in these situations, the department will not assert that such workers are entitled to overtime. This is true even though the student may receive a stipend for performing the research.
- Enrolled student residential assistants receiving reduced room or board charges or tuition credits from USG are not generally considered employees under the FLSA, and therefore not subject to the FLSA’s wage and hour requirements.
Changing from Exempt to Non-Exempt
The most significant change associated with moving from exempt to non-exempt status is the change from being paid monthly to bi-weekly (every two weeks).
- Monthly – 12 pay periods per year
- Bi-weekly – 26 pay periods per year
Benefits (medical, dental, etc.) as well as parking deductions will be split between bi-weekly checks for non-exempt employees.
Non-exempt employees who are signed up for Flexible Spending Accounts, which are accounts designed to save money on taxes for health care or dependent care expenses, will not have to do anything. Their deductions will be recalculated automatically to be deducted in the remaining checks for 2016.
Employees enrolled in retirement savings plan should consult with their institution HR department to determine whether or not any action is required as a result of this change.
Flat additional deductions for taxes and retirement plans that were coming out monthly will need to be adjusted to prevent the same amount from coming out per check as a bi-weekly employee.
Generally, travel away from home is considered work time when it cuts across the employee's normal workday. This includes hours worked on regular working days during normal working hours as well as corresponding hours on nonworking days. Refer to institution and USG specific policies for details. Additional information is also available in DOL Fact Sheet #22 (Hours Worked Under FLSA)