Recent Revisions to the FLSA Overtime Regulations What They Mean for USU

What is the Fair Labor Standards Act (FLSA) The Fair Labor Standards Act (FLSA) is an established federal law. It was enacted in 1938 to protect American workers by making them eligible to be paid for any hours worked beyond 40 hours in a workweek. The FLSA established  a federal minimum wage  overtime pay  youth employment rules  recordkeeping requirements

Recent Changes to the FLSA  The Department of Labor (DOL) is charged with enforcing and interpreting the FLSA. As part of this duty, the DOL enacts rules to implement the FLSA, including rules for eligibility for overtime.  This summer, the DOL announced changes to the FLSA Overtime Rule that will impact the criteria used to determine eligibility for overtime.

Department of Labor Summary of Final Rule According to the DOL, changes to the overtime rule were made to:  Put more money into the pockets of American workers – or give them more free time.  Prevent a future erosion of overtime protections and ensure greater predictability.  Strengthen overtime protections for salaried workers already entitled to overtime and provide greater clarity for workers and employers.  Improve work-life balance.  Increase employment by spreading the work.  Improve workers’ health.  Increase productivity.

Why Does This Matter?Why Does This Matter?  The DOL’s recent revision of the overtime rule expands the number of employees eligible for overtime.  Approximately 500 current USU employees who are exempt from overtime will now be converted to non- exempt and eligible for overtime.  To track earned overtime these employees will now be required to track and report hours worked.

What Does It Mean to Be Non-exempt vs. Exempt  Non-exempt Employee:  Must be paid the minimum wage and overtime pay/ compensatory time for any time worked beyond 40 hours in a given week; and  Entitled to award of compensatory time accrued at a rate of one and one-half hours for every hour worked beyond 40 hours in a week  Exempt Employee:  Not entitled to the protections of the FLSA  Not entitled to overtime pay/compensatory time

What is Required to Exempt Employees of Overtime To exempt employees from overtime payments, the following requirements must be satisfied: 1.The employee must be paid a salary of $913 each week; 2.The salary level must be $47,476/year or higher; and, 3.If requirements #1 and #2 are met, the employee’s job responsibilities must satisfy the duties test.

The Salary TestThe Salary Test  Effective December 1, 2016, the salary test to determine eligibility for overtime changes from  $455 per week to $913 per week; and,  $23,660 per year to $47,476 per year.  The salary threshold is not prorated based on FTE; it is based on actual paid salary.  The new overtime rule includes a mechanism to change the salary threshold every three years.

Applying the Overtime Rule at USU

Overtime Pay & Compensatory Time  As a public institution, USU may compensate overtime- eligible employees through the use of compensatory time off (or “comp time”) in lieu of cash overtime pay.  Each department has the flexibility on how/when comp time will be used and when to pay overtime. The decision must be communicated to the employee ahead of the work being performed.  In most cases, the maximum number of compensatory hours that can be saved before payment or time off must be given is 120 hours (15 days).

Understanding the Weekly Salary Threshold  Benefited positions that are paid less than $913 per week, will be converted to non-exempt beginning December 1,  Non-benefited positions will also be impacted by the new rulings and will need to be offered at an hourly rate rather than a flat amount if paying less than $913 per week.  Reducing the FTE of an exempt employee may drop their weekly salary rate to an amount below the minimum of $913 per week, converting them to non-exempt.  Academic Advisors have a slightly different salary threshold of $ per week (42,580).

Reporting Time and LeaveReporting Time and Leave The current way of recording hours worked and leave is changing for benefited non-exempt employees. A new electronic system – ServiceNow will require: 1)Supervisors to establish an employee work schedule 2)Employees to record weekly any exceptions to the schedule and report leave taken 3)Supervisors and employees to approve exceptions and leave recorded weekly

System Roll-OutSystem Roll-Out  Now through September 2016 – Departments not using ServiceNow for leave may begin requesting access to the online leave system by visiting ‘Setup Department For Leave’.  September 21, 2016 – Business Services employees will be trained on the new exception time reporting part of the system.  October 10, 2016 – Business Services employees will begin assisting supervisors to input all non-exempt employee schedules in the system.  October 22, 2016 – Non-exempt employees can begin using ServiceNow to record both leave and exception time.  October 29, 2016 – Non-exempt employees can begin submitting weekly timesheets using ServiceNow.

Leave AccrualLeave Accrual  There will be a change associated with annual leave accrual for those employees changing from exempt to non-exempt.  Employees will accrue annual leave as outlined in USU Policy 345.  To ease the transition in 2017, employees impacted will be awarded the difference between the hours they will earn as non-exempt and the hours they would have earned as exempt.  The hours added will be use-it or lose-it at the end of  The hours will not be paid out as part of a leave settlement if they leave USU in 2017.

Next Steps for SupervisorsNext Steps for Supervisors  Employees and supervisors impacted by the change must complete training on the FLSA rules by December 1, Training will be offered through the USU Employee Learning Management System (ils.usu.edu) available September 1, 2016ils.usu.edu  Verify job descriptions are up-to-date – know what your employees are doing  Communicate that "off-the-clock" work, whether voluntary or involuntary, will not be allowed  Establish a process for employees to get pre-approval for all overtime hours  Beginning October 10, 2016, work with Business Services to set weekly schedules for all non-exempt employees in ServiceNow  Schedule time to approve weekly time records

FAQ’s When do the changes to the FLSA go into effect?  Although the final rule has been published, the changes will not go into effect until December 1, Will the final rule impact my position?  Employees who are currently exempt from overtime payment requirements and who earn $47,476 or more will not be impacted by the revised rule.  Certain types of positions are not required to meet the minimum salary threshold. These positions are limited and include teachers, physicians and lawyers.  All other employees who are currently exempt but earn less than $47,476 will be impacted by the revised rule. In those situations, employees will transition into overtime eligible positions.

FAQ’s (continued) How will my time be entered?  Employees will be required to track their time by recording exceptions to a standard 40-hour work week.  Employees and supervisors are expected to ensure that all time records are accurate and reflect all hours worked on a weekly basis.  Exceptions and weekly approvals will be done using ServiceNow. Will my schedule change?  No. While supervisors have the right, with proper notice, to adjust employee work schedules, we do not expect this change to have a significant impact to employee work schedules.  However, overtime eligible employees are expected to take an uninterrupted 30 minute or hour meal period.  In order to ensure that employees are not interrupted or expected to perform work during their meal period, we strongly encourage employees to leave their workspace during this time.

FAQ’s (continued) Can my supervisor adjust my schedule to avoid accruing overtime?  Yes. The university reserves the right to modify employee work schedules as needed, which may include adjusting start and stop times, based on the needs of the work unit.  In some cases, when employees work beyond their established schedules, supervisors may adjust work schedules to avoid the accrual of overtime.

FAQ’s (continued) If I earn less than $47,476, will my base compensation change as a result of the final rule?  No. While you will be eligible for overtime, we do not expect this change to increase or decrease employee base compensation. Will this change impact my benefits or leave?  All benefits will remain the same except leave accruals.  Employees converted to non-exempt will begin earning leave as outlined in policy 345.

Take Home MessagesTake Home Messages Changes are required in order for USU to be in compliance with FLSA and the DOL’s implementing rules. Approximately 500 USU employees will convert from exempt to non-exempt positions. Many more USU employees and their supervisors will be tracking and approving time. USU does not differentiate between exempt and non-exempt personnel other than time reporting. There is now only one employee association - Staff Employee Association.

Consequences of FLSAConsequences of FLSA Hours worked and leave time will be recorded in ServiceNow. Intended hours worked, comp time and overtime require a “pre-agreement” between the employee and supervisor. Actual hours worked and leave taken are approved each week by employee and supervisor. ServiceNow can be set up so that only exceptions to the normal work week are entered. Job duties may be shifted to another employee if comp time cannot be accommodated.