United States Department Of Labor Fair Labor Standards Act (FLSA) Changes to the Overtime Regulations

The Fair Labor Standards Act (FLSA) The FLSA is a federal law enacted in 1938 – thereafter amended Congress found that labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers was bad for commerce. The purpose of the law is to eliminate such conditions. The FLSA establishes minimum wage, overtime pay, recordkeeping, equal pay for equal work and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.

Terms: Non-exempt versus Exempt In Colorado state employment these terms have TWO meanings Whether or not the job is part of the state classified personnel system. (Classified or Exempt) Whether or not the job is subject to the minimum wage and overtime provisions of the FLSA. (FLSA Exempt or FLSA non-Exempt) A job in the state classified system can be either non-exempt or exempt from the FLSA. A job outside the classified system can be either non-exempt or exempt from the FLSA. Prior to this update all positions outside the Classified system have been exempt because they met one of the exemption criteria and the salary threshold. This presentation covers only exemption under FLSA.

Fair Labor Standards Act (FLSA) All jobs at Adams State are subject to FLSA (non-exempt) UNLESS they meet certain FLSA tests to be exempted The Salary Test: fail this test and the job is non-exempt The Duties Test: pass the salary test, then must meet the duties test to be exempt Executive Administrative Learned professional Computer professional Creative professional Outside sales Exempt jobs must be paid on a salary basis, not influenced by quality or quantity

The updated regulation takes effect December 1, 2016 The Salary Test FLSA TEST Prior to 12/1/16 As of 12/1/16 Salary Test $23,600/Year ($455/Week) The current salary level is about the 20th percentile of full time salaried workers Salary test last updated 2004 $47,476/Year ($913/Week) Sets salary level at the 40th percentile of full time salaried workers in the lowest wage census region; the “south” Automatically updates the salary level every three years (2020 next) The updated regulation takes effect December 1, 2016 Fail the salary test and the position is “non-exempt” and subject to overtime (with some limited exceptions).

The Duties Test NO change to the duties test in the new regulations. FLSA TEST CURRENT STATE NEW REGULATION Duties Test Defines "primary duties" qualitatively - most important parts of the job – not strictly time based NO change to the duties test in the new regulations. Executive primary duty is managing the enterprise, or managing a customarily recognized department must customarily and regularly direct the work of at least two or more FTE employees; and must have the authority to hire or fire other employees, or the employee’s suggestions & recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight. Administrative primary duty is performance of office/non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. Professional primary duty is work requiring advanced knowledge, predominantly intellectual in character and requiring the consistent exercise of discretion and judgment; the advanced knowledge must be in a field of science or learning; and the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

Specially FLSA Exempted Jobs Teachers (primary duty is imparting knowledge) Lawyers (primary duty is practicing law & certified/licensed) Doctors (primary duty is practicing medicine & certified/licensed) Outside Sales (as defined by FLSA) Highly compensated employees Current rule is over $100,000 annually, with reduced duties tests Computer Professionals (programmers/analysts) Must meet the salary test

Higher Education Specific FLSA Exemptions Teachers are not subject to the salary level test for exemption Coaches and Assistant Coaches may fall under the teaching exemption, if their primary duty is instructing athletes how to perform their sport Academic administrative personnel whose primary duty is performing administrative work directly related to academic instruction, if paid on a salary basis and salary equal to the entry salary for teachers Generally eligible are: department heads, academic counselors & advisors, academic intervention specialists, those administering testing programs, those assisting with academic problems. Specific position matches may be determined.

What does it meant to be FLSA Exempt? Paid for carrying out the responsibilities of position Normally do not have to keep track of hours worked for pay purposes. Often keep track of “time and effort” for grants or other effort tracking purposes Latitude to work varied hours, sometimes less than 40 and sometimes more than 40 hours per week Are not compensated for overtime Pay cannot be “docked”, if absent less than 8 hours Are paid on a salary basis (same amount regardless of hours or quality of work)

FLSA Exempt Work Hours Expectations Work Hours and Overtime Compensation Policy Language regarding expectations for FLSA Exempt employees: “Exempt employees (Executive, Professional and Administrative) are not eligible for overtime pay or compensatory time for hours worked beyond 40 in a workweek. Such employees are expected to work the hours necessary to complete quality assignments in a timely manner, are paid a salary, not an hourly wage, and are not covered by the minimum wage and overtime compensation for hours worked in excess of 40 hours per work week.” “FLSA Exempt employees shall not be granted extra pay for hours worked in excess of 40 hours in a workweek, as their pay takes into account the necessity for the employee to work a reasonable amount of overtime. However, in unusual situations, in which and exempt employee is required to work significant amount of overtime, for an extended period of time, an appointing authority may grant discretionary administrative leave or other incentives but such awards shall not be tied to hours worked.”

What does it mean to be FLSA Non-exempt? Paid for hours worked (although we pay on a standard monthly basis) Are required to keep records of time worked in a work week (Saturday from 12:01 am through Friday 12:00 midnight) Must receive at least minimum wage for all hours worked Colorado minimum wage for 2017 is $9.30 per hour (2016 Federal is $7.25) Overtime compensation is required for time worked over 40 hours in a designated 7 day work week (leave time is not generally time worked) If worked, employee can not waive their rights to overtime compensation Special provisions allow us as a State agency to use “comp time” to compensate for overtime (in lieu of cash payment) Can still have a flexible schedule arrangement within a work week

FLSA Non-Exempt Work Hour Expectations Work Hours and Overtime Compensation Policy regarding expectations for FLSA Non-Exempt employees: Except for emergencies, no overtime may be scheduled without prior approval of second level supervisor or HR Supervisors are responsible for ensuring non-exempt employees do not work over 40 hours in a work week. Employees who voluntarily continue working before and/or after their scheduled shifts are entitled to overtime compensation for that time worked in excess of 40 hours. HOWEVER: If an employee continues to work hours before and/or after regular work time following notification that it is against policy, a formal corrective action should be issued by the supervisor.

FLSA Non-Exempt Work Hour Expectations Work Hours and Overtime Compensation Policy regarding expectations for FLSA Non-Exempt employees: If employee works more hours than the regularly scheduled shift, every effort should be made to schedule time off during that work week on an hour for hour basis. (Flex schedule during same work week.) If not possible to flex time during the same work week, earn overtime at time and a half, to be compensated with time off (Comp Time)…. Unless otherwise approved by VPAF. Comp time should be used as soon as practical and whenever possible within two months.

What counts as hours worked? Work an employee does on their normal work schedule Includes “to suffer or permit to work” = ALLOWED …for example, finishing a project after 5 PM or voluntarily coming in at 7 AM to work quietly (if normal schedule is 8-5) Work performed off the premises (at home or elsewhere) …for example, checking e-mail after hours and waiting for a response …or voluntarily working on a project at home at night Time in employer required training On-call time, if required to remain on the premises Travel for work

Non-exempt Travel When travel occurs during normal work hours, it is work time - even on unscheduled days (e.g. Sat. & Sun). If outside normal work hours and employee is a “passenger”, the travel time is NOT work time. If required to drive, it is work time. If offered public transportation, but employee requests to drive, may count either time spent driving or the time during normal working hours that public transportation would have taken. Any work performed while traveling is work time. Non-business meal periods, sleeping time and other free time on a trip is not work time.

Non-exempt – other considerations Paid holidays, vacation, sick, jury duty and other paid leave does NOT count toward hours worked for overtime in a work week If a non-exempt employee works on a paid holiday, then the day counts toward hours worked in that week for overtime Meal periods of 30 minutes or more, relieved from duty, are NOT work time On-call time: An employee who is required to remain on call on the employer's premises is working while "on call." An employee who is required to remain on call at home, or who is allowed to leave a message where he/she can be reached, is not working (in most cases) while on call. Additional constraints on the employee's freedom could require this time to be compensated.

What does all of this mean for Adams State employees?

Some employees will be impacted some won’t Teaching professionals are automatically exempted from the FLSA and are not impacted. Most classified positions are already FLSA non-exempt, and this will not change. Classified positions that are currently exempt meet the new salary threshold and will remain FLSA exempt.

It’s About Change, Not Employee Value The government issued these rules – how do we work within them? Change: some FLSA exempt employees will become non-exempt Change: some workplace practices & policies will change Continue to be professionals Continue to do the same valuable work Continue to have the same retirement, leave & insurance benefits

Additional Resources The following resources are available on the HR website at: http://www.adams.edu/administration/hr/form.php ASU Work Hours and Overtime Compensation Policy 2016 Fair Labor Standards Act (FLSA) Ruling FAQ: <Link> U. S. Department of Labor Fact Sheet #22: Hours Worked Under the Fair Labor Standards Act (FLSA): https://www.dol.gov/whd/regs/compliance/whdfs22.htm