1. Fair Labor Standards Act Update
Presented by:
Human Resource Services

2. 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.

3. 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).

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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

10. 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 DOL will post new salary levels 150 days in advance of their effective date, beginning August 1,

11. 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

12. 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?

13. 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

14. 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

15. 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

16. Impact To Employees Work hours managed carefully and recorded
Work performed only during work hours
Read/write , 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

17. 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

18. 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

19. 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?

20. Questions Contact: Sheila Wright, Compensation Manageror