Changes to the Fair Labor Standards Act 10/19/2016 Changes to the Fair Labor Standards Act Management Information UCF Human Resources October 2016

10/19/2016 Why are we here? Let’s start with this video from the Department of Labor that explains the new ruling on overtime pay.

Today’s Agenda Overview of the Fair Labor Standards Act (FLSA) 10/19/2016 Today’s Agenda Overview of the Fair Labor Standards Act (FLSA) What is Changing? Specific Guidelines for Higher Education Items to Note Next Steps Through this presentation, we will concentrate specifically on the new salary threshold provision of FLSA. – considering this is the biggest change in the law. With the items to note, we will discuss topics that managers/supervisors need to be made aware of including training needs in regards to timekeeping, leave accrual changes and other items.

Overview of the Fair Labor Standards Act (FLSA) 10/19/2016 Overview of the Fair Labor Standards Act (FLSA) First, a very brief overview of the Fair Labor Standards Act (or FLSA).

Overview of the Fair Labor Standards Act (FLSA) 10/19/2016 Overview of the Fair Labor Standards Act (FLSA) First enacted in 1938, FLSA is a Federal Wage and Hour law that provides employees with wage and hour protections. FLSA establishes minimum wage, overtime pay, child labor standards, and recordkeeping requirements affecting both full and part-time workers. (Cover the slide) Although FLSA covers a variety of wage and hour issues, the new ruling specifically addresses changes in regard to overtime eligibility.

“Exempt” vs. “Non-Exempt” 10/19/2016 “Exempt” vs. “Non-Exempt” An “exempt” position is not eligible for overtime pay. A “non-exempt” position is eligible and must receive overtime pay for any hours worked above 40 hours in one work week.

Determining Exemption Status 10/19/2016 Determining Exemption Status FLSA is comprised of three tests that determine if an employee is eligible (non-exempt) or exempt from overtime pay: Duties Test Salary Basis Test Salary Level Test

10/19/2016 Duties Test The employee’s job duties must primarily involve executive, administrative, professional, computer or outside sales duties (also known as “white collar” exemptions).

10/19/2016 Salary Basis Test The employee must receive a predetermined, fixed salary that is not subject to reduction due to variations in quality or quantity of work performed. (Cover the slide) In other words, the employee’s salary doesn’t fluctuate from week to week based on their productivity or hours worked.

10/19/2016 Salary Level Test The employee must be paid a minimum salary as determined by the FLSA.

10/19/2016 What is changing?

Salary Level Increases 10/19/2016 Salary Level Increases The current salary level for overtime eligibility was set in 2004 at $455 per week ($23,660 per year). As of December 1, 2016 the new FLSA salary threshold has been set at $913 per week ($47,476 per year). (Read bullets) There is another category for highly compensated employees, however this provision doesn’t apply to any positions at UCF. The threshold for HCE is currently 100,000 and is changing to 134,004. The rule is the HCE must be paid the minimum threshold of $913 a week and perform at least one exempt duty. 26.1 Pay period = $47,659

10/19/2016 Automatic Updates The salary threshold will now be reviewed and adjusted every 3 years beginning January 1, 2020. The salary standard is equal to the 40th percentile of weekly earnings of full time salaried worker in the lowest wage Census Region. The Department of Labor will publish updated rates at least 150 days before the effective date. The lowest wage Census Region is currently the South. Up until now, the salary threshold requirement has not had any automatic adjustments. In fact, it hasn’t changed since 2004 UCF’s market review & salary ranges based on 25th percentile, average, median, and 75th percentile. Because of the 3 year review cycle, employees could theoretically move from exempt to non-exempt, back to exempt, and so on as raises are earned and the threshold is updated.

10/19/2016 What is not changing?

What is not changing? Base rate of pay Job Title 10/19/2016 What is not changing? Base rate of pay Job Title Benefits including FRS and medical coverage. (Read bullets) Market reviews on request after January.

Specific Guidelines for Higher Education 10/19/2016 Specific Guidelines for Higher Education The Department of Labor has added some unique provisions that apply to higher ed.

10/19/2016 Teachers Any teacher, not just higher ed teachers are considered exempt from overtime. The salary threshold does not apply. Teachers are exempt if their primary duty is teaching, tutoring, instructing, or lecturing. Teachers include professors, Adjunct instructors, and teachers of skilled and semi-skilled trades and occupations.

Graduate and Undergraduate Students 10/19/2016 Graduate and Undergraduate Students Students engaged in research under a faculty member’s supervision in the course of obtaining a degree are not subject to overtime. (Cover the slide) These students are considered to be in an educational relationship, not an employment relationship and are not subject to overtime. Differentiate between GRA, GTA and GA.

Student Resident Advisors 10/19/2016 Student Resident Advisors Enrolled Student Resident Advisors (RAs) are not eligible for overtime. Students enrolled in an educational program and receive reduced room and board charges or tuition credit for being an RA are also not eligible for overtime.

10/19/2016 Academic Advisors The duties of Academic Advisor positions fall under a special “Academic Administrative Personnel” exemption. Academic Advisor I positions will non-exempt unless the salary is over the threshold. All other levels of Academic Advising will become exempt. Administrative employees that are in higher educational institutions and that interact with students outside the classroom may be subject to a special salary threshold. Academic Advisors fall in this category. Acad Adv II; Asst/Assoc Acad Supp Svc; Dir Aca Supp Svs. Fac $30K = 769 Fac $40K = 1,026 37,969 = 727 33,750 = 647 $42,715 = 818

10/19/2016 Postdoctoral Fellows UCF will be compliant with the new rule in regard to post-docs. Part time post-docs will become non-exempt. We are working with Academic Affairs and the Office of Research on a plan and communication. We will either pay overtime or raise to the new threshold. More to come. 47,659

10/19/2016 Items to Note Management needs to be aware of other issues that could arise when former exempt employees become non-exempt.

After-Hour Electronic Access 10/19/2016 Timekeeping Comp Time Phase Out Leave Accrual Changes After-Hour Electronic Access Exempt employees going to non-exempt will now be required to keep track of all hours worked. They need to be trained and fully understand the timekeeping procedures for non-exempt employees. Comp time will be phased out, with payouts of remaining balances being paid out at the end of FY 18. During this phase-out time, supervisors should encourage employees to utilize comp time before other types of leave. Leave accruals and personal days are different for exempt and non-exempt employees. Newly non-exempt employees will earn 6 hours of personal leave each pay period and will also be eligible for a Personal Day and Bereavement Leave. Moving forward, non-exempt USPS new hires will accrue leave at the rate established rate based on years of service. A&P new hires under the threshold will accrue 6 hours per pay period. Many employees are accustomed to checking their emails and replying to calls and texts after hours. Supervisors are encouraged to review and adjust the work area practices and expectations of after-hour electronic use. I would suggest supervisors include in their after-hour emails a response is not needed until normal business hours. Because…. Once an employee responds, this is documented time worked.

Work Distribution Travel Policy On-Call Policy Dual Comp 10/19/2016 1. It is very likely you could have two employees working side by side performing the same duties, one being exempt and the other non-exempt. 2. Managers need to be cognizant of situations where the exempt employee may be working many extra hours to get the work done, while the non-exempt employee as a rule leaves on time. 3. On the other hand, if the non-exempt employee works longer hours, they could possibly earn more than the exempt employee due to overtime. 4. The travel policy has not changed, but should be reviewed with the former exempt employee if their position requires travel. Like the travel policy, the on call policy has not changed, but should also be reviewed with the employee if they are required to be on call. With dual comp. employees moving from exempt to non-exempt must be paid for any hours worked over 40 hours. This includes dual comp. All hours are must be traced on the timesheet and could result in overtime pay.

10/19/2016 Next Steps

Training Supervisor Training Affected Employee Training 10/19/2016 Training Supervisor Training Affected Employee Training HR Liaison Training Managers need to ensure all affected employees enroll in the HR training through myUCF. This training includes the changes in timekeeping requirements, OT approval requirements, leave accruals, electronic access and other items of note. Training sessions begin Oct 24th and run through Nov 7th There will also be changes in the ePAF system and the Recruitment process. HR Liaisons will be required to attend special sessions that cover these changes. Enrollment for these sessions is also through myUCF.

Review Practices Electronic Access Workload Distribution 10/19/2016 Review Practices Electronic Access Workload Distribution Travel and On-Call Requirements Managers need to review and when necessary, adjust practices on after-hours electronic access. They also need to look at the distribution of work. Are any of the affected employees or their peers constantly working extra hours? If so, the workload needs to be redistributed, or you will be responsible for paying overtime. If any of your affected employees are required to travel or be on call, review the UCF policies and adjust duties or scheduling if needed.

10/19/2016 Additional Resources

10/19/2016

US Department of Labor Final Rule: Overtime 10/19/2016 UCF FLSA Update US Department of Labor Final Rule: Overtime Link to Department of Labor Video UCF Training and Travel Pay Guidelines UCF On-Call and Call-Back Policy UCF Overtime Policies

10/19/2016 Questions?