1. Fair Labor Standards Act (FLSA) Education May 2005 Revised February 2006

2. Todays Facilitators Jami Painter, University Office of Human Resources – painterj@uillinois.edupainterj@uillinois.edu Campus Human Resources Representative Joyce Winn, University of Illinois at Chicago, Academic Human Resources - jwinn@uillinois.edu jwinn@uillinois.edu Debi Stone, University of Illinois at Urbana- Champaign, Academic Human Resources – debstone@uillinois.edu debstone@uillinois.edu Patti Sims, University of Illinois at Springfield, Human Resources – sims.patti@uis.edusims.patti@uis.edu

3. Todays Objectives To provide education about the Federal FLSA law and regulations. To provide an overview of the Universitys review process. To provide a summary of the impact on affected employees. To provide an overview of the reporting and record retention process for employees changing from exempt to salaried non-exempt status.

4. FLSA – Background Fair Labor Standards Act (FLSA) Established in 1938 by the Department of Labor (DOL) Purpose Establishes standards for: Minimum Wage Overtime Pay Child Labor DOL first issued exempt status regulations in 1940 Last modification in 1954 Recent regulation revisions effective August 23, 2004 Section 541 (29 CFR 541 et al) – White Collar Exemptions

5. FLSA - Background FLSA generally requires that employees be paid: At least federal minimum wage of $5.15 per hour (Illinois law is $6.50 per hour) Overtime premium pay of time-and-one-half of the employees regular rate of pay for all hours worked over 40 in a workweek for employees in hourly non-exempt status. Overtime premium pay of one-half of the employees regular rate of pay for all hours worked over 40 in a workweek for employees in salaried non-exempt status.

6. White-Collar Exemptions White-collar exemptions allow for exemptions from these requirements. Salary Test 1.Employee must be paid at least a certain compensation level; 2.Employee is paid on a salary,rather than hourly, basis; and Duties Test 3.Employee performs certain exempt duties.

7. White Collar Exemption Requirement #1 (Salary Test) Salary level Minimum paid must = $455 per week or more. If paid less than $455 per week, cannot be exempt even if he/she meets the duties test. If paid $455 per week or more, can be exempt only if he/she also satisfies the duties test. Salary cannot be prorated based on FTE.

8. White Collar Exemption Requirement #2 (Salary Test) Form of payment Employee must be paid a flat salary, not by the hour (Academic Monthly Salary) Employee must regularly receive a predetermined amount that cannot be reduced because of variations in the quantity or quality of work performed

9. White Collar Exemption Requirement #3 (Duties Test) FLSA, Section 12(a)(1) provides exemption from minimum wage and overtime pay for bona fide employees in the following areas: Executive Administrative Professional Outside Sales Highly Compensated Section 13(a)(17) also exempts certain computer employees.

10. University Review Two cross-campus committees formed Summer of 2004. Academic Civil Service Representatives from University Human Resources, Campus Human Resources, Legal Counsel, Provosts Offices Seyfarth Shaw Attorneys, LLP

11. Civil Service Review Salary Test All exempt Civil Service employees satisfied the salary test ($455/week) based on Banner report Duties Test All Civil Service classifications were examined for duties test compliance. In depth review of job descriptions, SUCSS classifications, and work performed was conducted for several classifications. Some of these included: Space Administrator III Graphic Designer II Assistant Program Director Admissions and Records Officer II Events Administrator Information Supervisor Budget Analyst I

12. Civil Service – Duties Test Selected classification review State Universities Civil Service System classification review against FLSA regulations Job description review against FLSA regulations Interviews with supervisors/department heads to evaluate work performed against FLSA regulations All Civil Service classifications currently classified as Exempt met the duties test for FLSA exemption.

13. Academic Review Salary Test Banner report identifying all Academic employees compensated below the $455/week minimum Total number of Academic employees University wide not meeting salary test = 152 UIC – 90 UIS – 17 UIUC – 45

14. Academic – Duties Test Duties Test Banner report identifying all Academic employees (job titles and positions) Review conducted of all Academic positions. In depth review (job descriptions reviewed and interviews with supervisors/department heads) based on legal counsel recommendations and peer institution reviews, for the following positions: Assistant Coaches Resident Directors Graduate Assistants

15. Academic – Duties Test Results The following positions met the duties test for FLSA exemption: Assistant Coaches Resident Directors Some individuals in these positions may not have met the salaries test, and therefore, cannot be classified as FLSA exempt.

16. Graduate Assistants – Duties Test Results The following assistantship positions met the duties test for FLSA exemption: Teaching Assistants (TA) Research Assistants (RA) Para-Professional Assistants (PGA) TA, RA, and PGA positions primary role is that of student, not employee, so the salary test is not required.

17. Graduate Assistants – Duties Test Results Graduate Assistants (GA) did not meet the duties test and must be classified as salaried non- exempt Re-classification as salaried non-exempt employees will be effective 8/16/05 Approximate number of GAs University wide not meeting duties test for 2004-2005 Academic year = 756 UIC – 173 UIS – 160 UIUC – 423 2005-2006 Academic year totals for GAs may vary

18. Final Review - Counts Civil Service – Zero employees will be changed from exempt to salaried non-exempt based on the salary and duties test. Academic Professionals (AP) 152 employees will be changed from exempt to salaried non-exempt status based on the salary test. Zero employees will be changed from exempt to salaried non-exempt based on the duties test. Graduate Assistants (GA) – 756 employees for the 2004-2005 Academic year would have been changed from exempt to salaried non-exempt status based on the duties test.

19. Salaried Non-Exempt Employees What will change? Eligibility for overtime compensation Tracking hours worked When will the change be effective? On August 16, 2005, the following will occur: Exempt Indicator on NBAPOSN in Banner changed by Campus HR for individuals identified from the review who are going from exempt to salaried non- exempt status Academic Professionals not meeting salary requirement begin tracking hours Graduate Assistants (GAs) begin tracking hours

20. Eligibility for Overtime Compensation Paid predetermined salary on a monthly basis (Academic Monthly Payroll) Eligible for overtime pay at one-half the hourly rate for all hours worked over 40 for each workweek Compensatory Time Monetary Compensation

21. Compensation Compensatory Time Employees discretion Used at one-half time the number of hours worked over 40 At time of termination/separation, paid out all unused compensatory time at one-half the regular hourly rate at the time of termination/separation Balances and usage maintained within the unit Maximum compensatory time accumulation allowed = 240 hours

22. Compensation Monetary Compensation Paid at one-half the regular hourly rate (full- rate may be found on NBAJOBS, Job Detail Screen, Rate field) Paid in the form of an adjustment on the job that the overtime was worked, following the end of the pay period in which the overtime was worked Overtime paid in increments of 15 minutes for hours worked over 40 in a work week 0-7 minutes = 0 8-22 minutes = 15 (.25) 23-37 minutes = 30 (.5) 38-59 minutes = 45 (.75)

23. Overtime Payment Overtime compensation in the form of pay Process as an adjustment Earning code = ADD Include dollar amount on monthly job Comment field = FLSA OT Adjustment must be processed and paid within 13 days of the end of the pay period Job Aid to assist with performing an adjustment can be found at http://www.obfs.uillinois.edu/jobaids/DTE_Pay rollAdjustments.doc http://www.obfs.uillinois.edu/jobaids/DTE_Pay rollAdjustments.doc

24. Tracking Hours Academic Salaried Non-Exempt employees will track hours on the FLSA Salaried Non- Exempt Academic Timesheet (Excel spreadsheet) Form is available in NESSIE, HR Forms section, at https://nessie.uihr.uillinois.edu/cf/index.cfm?it em_id=161 https://nessie.uihr.uillinois.edu/cf/index.cfm?it em_id=161 Form may be downloaded and saved to personal desktop/folder for each employee.

25. FLSA Salaried Non-Exempt Academic Timesheet Report total hours worked per day Automatic Calculations Hours worked over 40 in each workweek Number of hours due to employee in the form of comp time or overtime payment for each monthly pay period Employee and Supervisor signature required on all timesheets in which overtime hours were accrued Units may choose to collect employee timesheets and signatures for all months for documentation and retention purposes Spreadsheet/paper form retained in the unit

26. FLSA Salaried Non-Exempt Academic Timesheet

27. Hiring Salaried Non-Exempt Academic Staff DART calculator will be available to determine if employee meets the minimum salary test Administrative Applications section in DART FLSA exemption status should be determined BEFORE a verbal or written offer is made Unit enters annual salary and number of months of service; calculator displays weekly salary Until calculator is available, units may manually determine the weekly salary by using this formula: Annual Salary / # Mo Paid / 4.333 = Weekly Salary

28. Hiring Salaried Non-Exempt Academic Staff Banner Position Creation and Maintenance Exempt Indicator defaults from the p-class Confirm Exempt Indicator box in NBAPOSN is not checked If checked, uncheck the field Employees utilizing same p-class may have different FLSA exemption statuses because of weekly salary

29. Banner FLSA Indicator Campus Human Resources will fix FLSA Indicator for Academic employees identified during the review Beginning August 16, 2005, units will be responsible for ensuring FLSA status is correct (UIC and UIUC only)

30. Academic Exempt Reporting Applies to the following employee groups: Academic Professionals (AP) who meet the $455 salary requirement Faculty Teaching Assistants (TA) Research Assistants (RA) Para-Professional Assistants (PGA) Post-Doc Research Associates/Interns

31. Academic Exempt Reporting Report absences in four (4) and eight (8) hour increments only. Part-time Academic employees report in half- and full-day increments based on their work schedule. Example: an employee who works six hours per day would report in three and six hour increments. Employees may not accumulate time over multiple days to reach the 4 and 8 hour increments. Example: an employee who is absent two hours on Monday and two hours on Tuesday does not report four hours of absence. Absences of less than 4 or 8 hours per day are not reported against vacation or sick leave usage. Exempt employees are still expected to be available for customers/clients and perform their work responsibilities above and beyond the normal University workweek, in order to fulfill their professional responsibilities.

32. Summary No Civil Service employees will be changed from exempt to non-exempt All Academic Professional employees not meeting the minimum salary requirement ($455/wk) and all Graduate Assistants (GAs) will be changed from exempt to salaried non-exempt status effective August 16, 2005 Academic Professionals not meeting salary requirement and all GAs will begin tracking hours on FLSA Salaried Non- Exempt Academic Timesheet August 16, 2005 Units responsible for determining FLSA exemption status and verifying FLSA Indicator in Banner August 16, 2005 (UIC and UIUC only) Exempt Academic employees report absences in 4 and 8 hour increments only (full- and half-day for part-time employees)

33. Online Resources FLSA Information and Resources https://hrnet.uihr.uillinois.edu/dart-cf/index.cfm?Item_id=2734 https://hrnet.uihr.uillinois.edu/dart-cf/index.cfm?Item_id=2734 FLSA Salaried Non-Exempt Academic Timesheet (NESSIE HR Forms, Policy/Labor, and Leave sections) https://nessie.uihr.uillinois.edu/cf/index.cfm?item_id=161 https://nessie.uihr.uillinois.edu/cf/index.cfm?item_id=161 Pay Adjustment Job Aid http://www.obfs.uillinois.edu/jobaids/DTE_PayrollAdjustments.doc http://www.obfs.uillinois.edu/jobaids/DTE_PayrollAdjustments.doc 2006 Payroll Schedule http://www.obfs.uillinois.edu/earnings/2006payrollschedule.xls http://www.obfs.uillinois.edu/earnings/2006payrollschedule.xls DART Administrative Applications https://eas.admin.uillinois.edu/eas/servlet/EasLogin?redirect=http s://hrnet.uihr.uillinois.edu/dart-cf/admin/index.cfm https://eas.admin.uillinois.edu/eas/servlet/EasLogin?redirect=http s://hrnet.uihr.uillinois.edu/dart-cf/admin/index.cfm

34. Fair Labor Standards Act QUESTIONS?