Employee Informational Session Fair Labor Standards Act (FLSA) Changes to The Law 1

What Changed and Who Changed It In May 2016, the U.S. Department of Labor revised a regulation that increased the salary threshold where employees are eligible to receive overtime. This was a major change to employee exemption criteria under the Fair Labor Standards Act (FLSA). The salary threshold which has been in place since 2004 increased from $455 per week (the equivalent of $23,660 annually) to $913 per week (the equivalent of $47,476 annually). Automatic increase of salary threshold has been established to occur every three years with the first one scheduled for 2020 at approximately $51,168. Faculty, teachers and coaches with a primary responsibility of instruction remain excluded from the FLSA salary requirement and will remain exempt. The regulations specify the change in exempt to nonexempt status, based on the new threshold, must be in effect as of December 1, 2016. WNMU plans to implement these changes by November 15, 2016, in order to ensure compliance with the December 1, 2016 effective date. 2

What Changed and Who Changed It Cont’d FLSA established three tests that must be met in order for an employee to be exempt from overtime pay eligibility. If you meet the duties test but not the salary level test, then you must be eligible to earn overtime: Duties Test - the employee’s job duties must primarily involve executive, administrative, professional, computer or outside sales duties (also known as “white collar” duties). Salary Basis Test - the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed; Salary Level Test - the amount of salary paid must meet a minimum specified amount ($913 per week). Exempt vs Non-exempt - these terms refer to the eligibility to earn overtime. Compensation at an hourly rate does not define the job role. Professional staff can be compensated at an hourly rate of pay without a change to job duties or levels of authority and responsibility. Non-exempt employees are eligible to earn overtime Exempt employees are not eligible to earn overtime 3

What Does this Mean for WNMU? This is a change to federal law and WNMU must comply with it. Approximately 85 employees will be affected by this change. Implementation will cost WNMU approximately $172,000. Supervisors will have to start managing overtime. Overtime is not currently budgeted for positions converting to non-exempt. Employees will need approval for overtime before they work it. Explore reallocation of duties. Consider strategies such as flexible schedules. 4

Fair Labor Standards Act Benefits for employees (FLSA) Benefits for employees 5

Benefits for Employees Work life balance with the work week limited to 40 hours per week Work breaks of 15 minutes for each 4-hour segment of the work period. Because these breaks are paid, employees are required to remain at the job site. These breaks may not be added to meal breaks or to adjust start and stop times of the work day. Meal breaks, which are not compensated and therefore on your own time Compensatory time Compensation: non-exempt employees are eligible to be paid time-and-a-half for hours worked over 40 in a work week 6

Impact to Employees No changes in duties, responsibility or authority – the job duties and responsibilities will not change with a conversion to nonexempt. The change is to eligibility for overtime. Customer service may be impacted. Stricter office hours, and less flexibility to stay late to assist customers Professional non-exempt employees do not need to submit a timesheet, but will continue to receive a salary. Non-exempt employees must be paid for overtime unless they agree to comp time. Employees must manage their time and seek approval for overtime before they work it. Cultural Changes and Morale Moving to non-exempt may feel like a demotion Less flexibility Focus on time management and streamlining processes 7

Travel – Planes, Trains and Autos (Fact Sheet #22) Attendance at lectures, meetings, training programs and similar activities need not be counted as working time only if four criteria are met, namely: it is outside normal hours, it is voluntary, not job related, and no other work is concurrently performed. Principles which apply in determining whether time spent in travel is compensable time depends upon the kind of travel involved. Home to Work Travel: An employee who travels from home before the regular workday and returns to his/her home at the end of the workday is engaged in ordinary home to work travel, which is not work time. Home to Work on a Special One Day Assignment in Another City: An employee who regularly works at a fixed location in one city is given a special one day assignment in another city and returns home the same day. The time spent in traveling to and returning from the other city is work time, except that the employer may deduct/not count that time the employee would normally spend commuting to the regular work site. Travel That is All in a Day's Work: Time spent by an employee in travel as part of their principal activity, such as travel from job site to job site during the workday, is work time and must be counted as hours worked. Travel Away from Home Community: Travel that keeps an employee away from home overnight is travel away from home. Travel away from home is clearly work time when it cuts across the employee's workday. The time is not only hours worked on regular working days during normal working hours but also during corresponding hours on nonworking days. Time spent in travel away from home outside of regular working hours as a passenger on an airplane, train, boat, bus, or automobile is not considered work time. 8

Fair Labor Standards Act (FLSA) next steps 9

What are the Next Steps? Conversion Plan Details Implementation Plan Conversion Date by November 15, 2016 Convert Grade 21 and below exempt to non-exempt with exceptions Implementation Plan Notification to affected employees and supervisors Salary adjustments Implement new Pay Plan New process for professional staff overtime approval Communicate and Train Frequently Asked Questions under News & Events on the Human Resources page of the WNMU web site: http://hr.wnmu.edu/news/ 10

Department of Labor Links The below list of resource links has been printed and included as supplemental documents. DOL Website – Final Rule https://www.dol.gov/featured/overtime Guidance for Higher Education Institutions https://www.dol.gov/whd/overtime/final2016/highered-guidance.pdf Fact Sheet #17A (note: not updated by DOL yet) https://www.dol.gov/whd/overtime/fs17a_overview.pdf Fact Sheet #17G (note: not updated by DOL yet) https://www.dol.gov/whd/overtime/fs17g_salary.pdf Fact Sheet #22 https://www.dol.gov/whd/regs/compliance/whdfs22.pdf Questions and Answers from the General Information Overtime Webinars https://www.dol.gov/whd/overtime/final2016/webinarfaq.htm National Association for College Admission Counseling http://www.nacacnet.org/issues-action/LegislativeNews/ComplianceCenter/Documents/overtimepay_admissions_2015.pdf http://www.nacacnet.org/issues-action/LegislativeNews/ComplianceCenter/Documents/OvertimePayFinal2016.pdf 11

Questions? 12