Fair Labor Standards Act Update Presented by: Human Resource Services

How Overtime Status is Determined Executive Exemption: To qualify, the employee must: Be compensated on a salary basis at a rate not less than $913 per week; and Be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise (primary duty); and Customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and Have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

How Overtime Status is Determined Administrative Exemption: To qualify, the employee must: Be compensated on a salary basis at a rate not less than $913 per week; and Be performing office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers (primary duty); and includes the exercise of discretion and independent judgment with respect to matters of significance (primary duty).

How Overtime Status is Determined Learned Professional Exemption: To qualify, the employee must: Be compensated on a salary basis at a rate not less than $913 per week; and The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; and 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.

Overtime / Comp Time Overtime hours are any hours worked over 40 in a work week. At UM, overtime for staff is generally defined as anything over 8 hours per day as established by negotiated union agreements and policy. Overtime for contract employees will be over 40 hours. Comp time is overtime. The employee and employer have agreed to substitute the accrual of hours, to be used as time off at a future mutually agreeable time, in lieu of payment of actual wage dollars.

Comp Time – Non-exempt Accrual of comp time is at the rate of 1.5 hours for each hour worked and the employee can carry a balance up to 240 hours. Employees who terminate with a comp time balance must be paid in full for those hours.

Criteria for Administrator A senior administrator (i.e., President, Chancellor, Vice President, Vice Chancellor, Provost, Associate Provost, Dean); or Reports directly to a President or Executive Officer in an executive capacity.

Criteria for Professional Has the authority to represent the institution to the public; or Performs work requiring knowledge of an advanced type customarily acquired by, at a minimum, a Master's degree; or Is; (a) engaged in production or delivery of educational services as Principal Investigator in research; or (b) engaged in research with responsibility for designing projects, developing protocol, and writing and/or delivering final products.

Why the FLSA was Updated President Obama instructed the Department of Labor (DOL) in early 2014 to update the salary threshold The minimum threshold has not been evaluated since 2004 DOL published the final rule on May 18, 2016

Implementation The notification included an implementation date of December 1, 2016 The threshold will automatically update every three years. Each update will raise the standard threshold to the 40th percentile of full-time salaried workers in the lowest-wage Census region, estimated to be $51,168 in 2020. DOL will post new salary levels 150 days in advance of their effective date, beginning August 1, 2019.

The Change Through Nov. 30, 2016 Effective Dec. 1, 2016 $455/wk ($23,660/yr) Minimum Salary Threshold at any FTE $913/wk ($47,476/yr) * 40th percentile for FT salaried workers in lowest Census Region (currently the south) Must be employed in bona fide executive, administrative, professional, outside sales, select computer position or instructional position Job Duties No change $100,000/yr Highly Compensated Workers Office/non-manual work and one administrative or professional duty $134,004/yr * 90th percentile of FT salaried workers nationally

Budget Considerations Do I have funding available for overtime? If in the near term a reallocation of resources is required to meet the strategic priorities of the University, will I still have funding available for overtime? How will I pay overtime if someone working on a grant works more than 40 hours?

Proposed Plan for Affected MUS Contract Employees as of 7/14/16 The requirement that employees must be exempt from overtime will be suspended for the contract period ending June 30, 2017 All positions affected by the updated salary amount must have an updated Role Description (RD) turned in by January 31, 2017 Managers must have salary increase requests to HR by December 1, 2016

Proposed Plan for Letter of Appointment Affected Employees as of 7/14/16 Employees who still meet the duties test will continue on an LOA with special verbiage highlighting their eligibility for overtime In order to be hired on a LOA, the employee is typically not paid with current non-restricted funds All positions affected by the updated salary amount must have an updated Role Description (RD) turned in by January 31, 2017 Managers must have salary increase requests to HR by December 1, 2016

Recruitment Requests Salary ranges must be submitted with recruitment paperwork Letters of Offer must be submitted to HR prior to garnering signatures; template available All new MUS Contracts must be approved by OCHE prior to recruitment and hire is contingent upon final approval by OCHE All vacant MUS Contracts must receive final approval by OCHE prior to hire Recruitment exceptions must be discussed with HR prior to offer of employment

Impact To Employees Work hours managed carefully and recorded Work performed only during work hours Read/write email, make calls and perform tasks only during work hours Overtime earned for contracted employees will be paid for any hours worked over 40 in a workweek at a rate of time and one half Comp Time will be allowed for this hourly contract employee group

Hidden Cost of Non-Compliance This update is not optional Wage and Hour Division is the enforcer Penalties for non-compliance Back Wages If employee brings suit, back wages and attorney’s fees and court costs Willful violations subject to criminal prosecution and fines up to $11,000; subject to civil penalty of up to $1,100/violation

Next Steps Human Resources is: Communicating with management during information sessions Conducting initial meetings with managers to determine what departmental impacts are and what options may be available Working closely with OCHE to prepare and implement campus-wide communication and information for affected employees and their supervisors Assisting managers with their internal communication plan as needed

Management Considerations Who should I consider requesting an increase for? What are the ramifications of my decision regarding employee morale? When should I talk with my employees? Where should I make changes in my organization to continue to get the work done? Why should I consider spending additional money on increases or overtime? How will I find the budget now and in the future if I need it?

Questions Contact: Sheila Wright, Compensation Manager Sheila.wright@umontana.edu or 243-4225