1. Introduction to Compensation

2. Agenda Marquette University’s compensation philosophy
What is the Fair Labor Standards Act (FLSA)?
Definition and differences between exempt or nonexempt
How is exemption status determined by Human Resources
Implications of noncompliance with the FLSA
Administrative guidelines to create a brand new position and requesting job reevaluations

3. Total Compensation Philosophy
Align with Marquette’s mission
Meet the following objectives:
Mission driven
Internally equitable & externally competitive
Performance based
Valid & reliable
Consistent
Compensation Program
Ten compensable factors used to classify positions
Broadband structure
Band placement is determined by PEQ evaluation
Placement within the band is determined by the market

4. What do you know about…
FLSA?

5. Fair Labor Standards Act (FLSA)
Enacted in 1938
Federal law which governs minimum wage, overtime pay, recordkeeping, and child labor.
The Wage and Hour Division of the US Dept. of Labor enforces the FLSA.
Almost every employee in the US is covered under FLSA.
Covers
Overtime
Minimum Wage
Child Labor
Equal Pay
Recordkeeping
#3-except ee’s working for a small construction or independently owned retail companies

6. FLSA Continued
Employees are entitled to be paid at least the Federal minimum wage ($7.25 p/hour) as well as 1 ½ their regular rate of pay for all hours worked over 40 in a workweek, unless an exemption applies.
The most common FLSA minimum wage and overtime exemption applies to exempt employees who must perform executive, administrative, or professional duties.

7. Exempt and nonexempt
Employees who qualify as "exempt" are exempt from overtime regulations (and minimum wage laws), whereas "nonexempt" employees must be paid for every hour of overtime they work.
Non-exempt employees are normally required to account for hours and fractional hours worked.
Exempt employees must meet three tests for each exemption: salary level, salary basis, and job duties.
*All Business (11/7/2004)

8. Exempt and nonexempt Cont.
Exempt and nonexempt status has little to do with job titles and whether an employee is salaried or receives an hourly wage.
The legal definition of "exempt" and "nonexempt" has more to do with an employee's level of responsibility.
In general, the more responsibility and independence or discretion an employee has, the more likely the employee is to be considered exempt.

9. Nonexempt Requirements
Time worked recordkeeping
Time and day of week when workweek begins
Hours worked each day
Total hours worked each workweek
Basis on which wages are paid (i.e., per hour, piecework)
Regular hourly pay rate
Total daily or weekly straight-time earnings
Total overtime earnings
Additions to or deductions from wages
Total wages paid each pay period
Date of payment and pay period covered by payment

10. Exempt Requirements Three Tests for Exemption
Salary level—minimum of $455 per week or $23,660 annually.
Salary basis—regularly receives a predetermined amount of compensation each pay period.
Job duties
Executive: primary duty is management.
Administrative: performance of work directly related to general business operations and exercises discretion.
Professional: learned (requires advanced knowledge), outside sales (making sales away from employer’s place), highly skilled computer employees, creative (performance of work in an artistic or creative field).

11. Examples of nonexempt and exempt
Service maintenance employees
Office coordinators/associates
Nurses
Exempt
Professors
Business Operations Managers
Lawyers
Nonexempt ee’s: explain procedures, apply policy, are usually supervised
Exempt ee’s: create, interpret, and apply policy, decide what the org will do, and exercise discretion about significant matters.

12. Common FLSA Violations
Compensatory time off
Failure to pay for unauthorized hours worked
Failure to pay for all recorded hours
Inaccurate records
Comp Time Off—discuss meaning and MU Policy

13. Implications of noncompliance with the FLSA
Department of Labor representatives investigate wages, hours, and other employment practices.
Burden of proof is on the employer.
If violations are found, the employer may be subject to:
Pay back wages
In 2007, the Wage and Hour Division recouped over $220 million in back wages¹
Fines
Up to $10,000
Civil money penalty of up to $1,000 for each such violation
Liquidated damages
Attorney’s fees and costs
1. Automatic Data Processing, 2008

14. How does HR classify positions?
Review job—what is the primary purpose of the position and how do the duties fit with the purpose of the position?
Utilize resources—organization charts, compare to similar university (and/or external) positions and other educational institutions
Department of Labor and WI Department of Workforce Development guides and articles
May seek advice from third party agency or legal counsel

15. Position Procedures Creating a brand new position
Must receive verbal approval from the Dean, Provost or VP.
Requesting department sends a completed Position Evaluation Questionnaire (PEQ), and a Job Description to the Director of Compensation.
Human Resources will assign the job classification (according to FLSA requirements), position code, and market salary range.
Requesting job reevaluations
Can be made for individual position or whole department/college .
Requests can be made after 12 months or if significant changes to the position have been made.
Requesting department sends a completed PEQ and an updated Job Description to the Director of Compensation.
Human Resources will review classification and changes.

16. Questions….

17. Contact Information
Jennifer Burns Director of Compensation Lynn Mellantine Assistant Vice President of HR