The following information provides our campus community with information regarding an important federal compensation update. The Department of Labor (DOL) has made changes to the Fair Labor Standards Act (FLSA), which controls the federal rules and regulations for compensation of hourly (overtime eligible) and salaried (non-overtime eligible) employees: https://www.dol.gov/whd/overtime/final2016/
This federal change in the FLSA will impact an estimated 4.2 million employees who are currently salaried in the United States and will become effective Dec. 1, 2016.
What is the FLSA?
The Fair Labor Standards Act (FLSA) is the United States federal wage and hour law, administered by the US Department of Labor. It establishes the minimum wage and overtime pay affecting employees. Everyone is covered under the FLSA but some employees are exempt from FLSA regulations and some are non-exempt. The FLSA requires that one-and-one-half times the regular rate of pay in overtime be paid for all hours worked over 40 in a work week for non-exempt employees.
What is changing?
The U.S. Department of Labor recently announced changes to rules regarding how employees are classified under the FLSA. The most significant rule change affects the minimum salary an employee must make before being classified as exempt or salaried. The current salary threshold is $455 per week or $23,660 annualized. Effective December 1, 2016, the threshold will increase to $913 per week or $47,476 annualized.
Who will the rule affect?
If an employee’s rate of pay is below the new minimum salary level ($913 per week/ $47,476 annualized), that employee must be classified as non-exempt.
What is the difference between exempt and nonexempt?
Exempt employees are typically salaried employees and are excluded from overtime; non-exempt employees are compensated on an hourly basis for their work and therefore eligible for overtime. Exemption is based on qualifying for all three of the following tests:
1. Salary Basis Test – an employee must be paid on an annual salary basis
2. Salary Level Test – an employee must meet the salary threshold amount that is currently $455.00 per week or $23,660.00 annualized (after December 1, 2016 - $913.00 per week or $47,476 annualized)
3. Standard Duties Test – an employees’ primary job duty must involve the kind of work associated with exempt executive, administrative, or professional employees.
Does this mean that all employees with salaries less than $47,476 annualized will receive a raise to that level?
Not necessarily. Human Resources is reviewing all of the rule changes to determine whether employees will need to be re-classified as exempt or non-exempt depending on the position and qualifying tests mentioned above.
If I am changed from salaried to hourly, what happens if I need to work beyond 40 hours in a week to complete my work?
Non-exempt or hourly employees are eligible for overtime wages if they work more than 40 hours in one week. Supervisors will work closely with all employees to determine work hours and whether overtime is necessary.
Will my hours be limited?
Supervisors of non-exempt or hourly employees will work closely with their direct reports to determine work hours and whether overtime is necessary. Non-exempt or hourly employees will need to track all hours worked on a daily basis so that the College can comply with applicable laws.
What else will change for those re-classified as non-exempt or hourly?
Non-exempt (hourly) employees are required to record their hours worked on a daily basis and submit those hours bi-weekly. Non-exempt (hourly) employees are also paid bi-weekly rather than monthly. Employees who are re-classified from an exempt position to a non-exempt position will not lose their benefit entitlements.
How does this affect a 9, 10, or 11 month employee?
o be considered exempt, an employee must be paid $913 per week during the actual months worked of their appointment. Faculty appointments will not be affected, as teaching professionals are exempt from overtime due to the nature of their work.
Who determines whether a position is exempt or non-exempt?
Human Resources will perform a position analysis to determine if the position meets the qualifying tests for exemption.
What is a position analysis?
A position analysis is a questionnaire designed to collect detailed information about the duties and responsibilities of a position. The collected job data will be used to help evaluate the position for appropriate classification, ensuring that there is a consistent approach.
Who will complete a Position Questionnaire?
Human Resources will identify positions that will need to be reviewed. Once identified, employees and their supervisors will be contacted. Both the employee and the supervisor will receive a Position Questionnaire to complete along with the most recent job description on file. The completed questionnaire will need to be returned to Human Resources for review.
When will an employee be notified if their position has been identified for review?
Human Resources anticipates notifying affected employees in September 2016.
When will a decision be made on an employee’s position?
Human Resources anticipates that decisions will be made by the end of October 2016.
Who may I contact if I have any other questions about the new FSLA ruling?
Please contact Ann Hayes, director of human resources and TIX coordinator at ext. 6416.