1. FLSA Overtime Rule Changes
Chief Human Resources Officer

2. Meeting Objectives Briefly review FLSA rule changes & terminology
Update on FLSA legal challenge
FLSA determination process
Changes to University Classification Policy
Impact to employees
New and revised policies
Timesheet Review

3. Background/Overview

4. FLSA Regulations Establishes minimum salary & overtime standards
Establishes overtime threshold
Specifies record-keeping requirements
Distinguishes between covered employee (non-exempt) and excluded employees with a Duties Test
The FLSA has been in effect since 1938.
It’s a 20th century law living in a 21st century
business environment.

5. FLSA Terminology Exempt Employees Non-exempt Employees
Paid on a fixed salary basis regardless of hours worked.
Not eligible for overtime.
Job duties must meet one of the FLSA exemption tests.
Based on work performed, not job title.
Paid on a fixed salary basis up to 40 hours.
Eligible for overtime.
Must record time.
Cannot work off the clock.

6. DOL RULE MAKING CHANGES
Agency action not Congressional action

7. Primary Change – Salary Threshold
Old Overtime Rule
New Overtime Rule
Salary threshold: $23,660 annual or $455 week
Highly Compensated Individuals (HCIs): $100,000 annual
No automatic adjusting
Salary Threshold: $47,476 annual or $913 week
HCIs: $134,004 annual
Salary threshold reviewed every 3 years beginning in 2020
Effective date of new overtime rule: December 1, 2016
Implementation date at W&M: November 25, 2016

8. Estimated Automatic Increases
Year
Minimum Salary Level
2017
$47,476
2020
$51,168
2023
$55,148
2026
$59,437
2029
$64,060
2032
$69,042
2035
$74,411

9. Remember…
Salary Test alone does not make you exempt. You must meet the Duties Test also.

10. Uncertainty
Two federal lawsuits were recently filed in an attempt to stall or halt the implementation of the new FLSA Overtime rules:
21 states led by Nevada and Texas filed a Complaint for declaratory and injunctive relief in federal court in Texas, claiming the new rule violates APA rulemaking procedures and the Constitution.
50 business groups claiming the new salary threshold is so high, that it effectively removes the exemption for entire categories that were previously exempt.

11. How will the DOL respond?
December 1 effective date
Secretary Perez issued a statement expressing his confidence in the legality of the final rule and criticizing the lawsuits as “obstructionist tactics”
Unclear whether these lawsuits will delay the effective date or if the DOL will extend the date
Proceeding as planned unless and until there is definitive judicial, legislative or regulatory action

12. How will W&M respond? Reclassifying due to salary
Reclassifying due to duties
No new budgetary support for OT
$45,500 merit pool threshold
New policies pending
Overtime must be absorbed by existing budgets

13. Class & Comp Process

14. FLSA Determination Process is Made by HR
STEP 1: Salary Basis Test
Is the employee paid at least $913 per week ($47,476 annual) and is there an exception?
Step 2: Exemption Applicability
Does the employee meet any of the following exemptions?
Teaching
Executive
Administrative
Professional/Creative
Computer Professional
Outside Sales
YES
YES
EMPLOYEE IS EXEMPT NO NO
EMPLOYEE IS NON-EXEMPT
EMPLOYEE IS NON-EXEMPT

15. What You Need to Know
Most exempt positions below the salary threshold become overtime eligible
Exempt positions above the salary threshold who do not meet the duties test become overtime eligible
If position is currently exempt and remains exempt, employee will experience no change
Exemption status change is not a demotion
Non-exempt employees will benefit from overtime eligibility

16. FLSA and Higher Education
Duties Test does not apply to Instructional Faculty
Certain teaching and graduate assistant positions are not affected
Some athletic coaches, assistant coaches, and trainers if primary duty is instructing
Compensatory time option (for public universities) to offset OT expense

17. Administrative Duties

18. Administrative Duties
Whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

19. Discretion and Independent Judgment
Factors include, but are not limited to whether the employee:
Provides consultation or expert advice to management
Is involved in planning long term or short term business objectives
Investigates and resolves matters of significance on behalf of management
Represents the company in handling complaints, arbitrating disputes, or resolving grievances
Formulates, affects, interprets, or implements management policies or operating practices
Can commit the employer in matters that have significant financial impact, and/or negotiate and bind the company
Waive or deviate from established policies and procedures without prior approval
The comparison and evaluation of possible courses of conduct, and after considering the possibilities, acting or making a decision

20. Changes to University Classification Policy

21. Imp’t Policy Changes
Any exempt employee hired after 11/25/2016 at W&M will be considered “Professional”
Any non-exempt employee hired after 11/25/2016 at W&M will be considered “Operational”
Refer to Employee Classification Policy at

22. Grandfathering
Any current Professional employee who is an exempt employee and who is reclassified as non-exempt will be grandfathered as a Professional employee
No adverse impact to reclassified employees who become non-exempt
Continue to participate in ORP
Leave accruals will not change
Remain a Professional in all respects except overtime
When position is rehired, it will be reclassified as an Operational position

23. Employee Election
Operational Exempt employees will have an open enrollment period in early 2017 to convert to Professional status
If employee does not elect Professional status, position will be classified as Professional when incumbent leaves

24. Impact to Non-exempt Employees

25. FLSA Overtime Pay Pay for hours worked over 40 hours
Based on work week NOT pay period
W&M’s work week is Sunday – Saturday (Except for VIMS, Athletics & Police).

26. Increased Time Reporting Requirements
Non-exempt employees must be paid for all hours actually worked
Hours of work are tracked in Banner self-service
Logged hours should reflect actual time worked, regardless of location
Semi-monthly timesheets
Leave/holidays do not count towards 40 hours

27. What is “work?” Primary duties Some travel Employer required training
Break periods <15 minutes
Working lunch
Restricted On Call
& Texting
Working at home
Depends on the facts…

28. What don’t I get paid for?
Non-working lunch
Unrestricted on-call duty
Travel as passenger
Incidental or texting
Depends on the facts…

29. Travel Time Pay Non-compensable work time Compensable work time
Home-to-work travel or commuting
Compensable work time
Job site to job site
Travel during normal work hours
Travel outside normal work hours may be compensable if not the passenger
Work during commute may be compensable
Refer to Travel FAQs at

30. Meetings & Training for Non-exempt Employees
Attendance at non-mandatory meetings, lectures, training programs can ONLY be excluded from time if the following four criteria are met:
It is outside normal working hours
It is voluntary
It is not job related
No other work is concurrently performed

31. Relevant William & Mary Policies

32. Hours of Work Policy Exempt employees Non-exempt employees must
Required to work any hours necessary to perform the duties of the job.
Generally, exempt employees do not receive overtime, compensatory time, or additional pay for hours worked or travel time outside their regular schedule.
Responsible for accurately reporting use of any leave in the university’s record keeping time system. This time should be reported in hour increments.
Non-exempt employees must
Seek pre-approval of overtime from their supervisor.
However, employee’s failure to obtain approval does not obviate employer’s OT payment obligations.

33. Hours of Work Policy Provides supervisors with scheduling discretion.
Alternate work schedules are permissible.
Adjustments to schedules may be made within the same workweek to reduce or eliminate OT.
Failure to obtain prior approval is a violation of policy and may result in disciplinary action.
All verifiable overtime hours must be paid.
Non-exempt employees are neither expected nor required to read and respond to s outside of normal working hours

34. May non-exempt employees:
Volunteer to work off the clock?
Waive rights to overtime?
Track hours “off the record” and not enter hours in Banner self-serve?
Work at home without supervisor’s approval?
Work overtime without approval?

35. No!

36. Telework Policy Non-exempt employees may telework
Must have telework agreement on file in HR
Supervisor and employee must agree on a work schedule
Provide training to employee with respect to what is considered “work”
Increased supervisory responsibilities with respect to managing time

37. Comp Time and OT Leave Policy for Non-Exempt Employees
Overtime Leave
Employees must elect leave or pay. If no election, default to leave.
Employees may accrue up to 120 hours of Overtime Leave (1.5 hours per hour of OT)
Leave does not expire
Any OT above the 120 hours cap is paid as wages
Compensatory Leave
Earned hour for hour if employee is required to work on a holiday or when university is closed
All compensatory and overtime leave hours must be earned prior to use
Compensatory leave must be taken before any accrued vacation, personal, family or sick leave
Exempt employees do not receive overtime, compensatory leave, or overtime leave for additional hours worked.

38. On Call Policy Applies to hourly and non-exempt employees
Dep’t should notify the employee in writing if the essential functions of the employee’s job requires him/her to maintain an on-call status.
Employees receive 1 hour of on-call pay at their regular rate for each 8-hour of on-call status
Employee receives a minimum of 2 hours of on-call pay per call back
Otherwise, employee is paid for hours actually worked

39. Questions?
John M. Poma, Chief Human Resources Officer (757) Team Wren Team Griffin Team Osprey