Fair Labor Standards Act Update November 29, 2016 Presented by: Sheila Wright, Compensation Manager - Human Resource Services

What is the FLSA? Act that establishes: Minimum Wage (MT $8.05 - $8.15 eff. January 1, 2017) Overtime Recordkeeping Child Labor

How Overtime Status is Determined Executive Exemption: To qualify, the employee must: Be compensated on a salary basis at a rate not less than $455/wk; 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.

How Overtime Status is Determined Administrative Exemption: To qualify, the employee must: Be compensated on a salary basis at a rate not less than $455/wk; 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).

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 $455/wk; 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.

Exempt Employees Classified Staff Contract Administrators Contract Professionals Faculty Graduate Students

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.

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.

Overtime Overtime hours are any hours worked over 40 in a work week. At UM, overtime for most union covered staff is generally defined as anything over 8 hours per day/40 hours per week as established by negotiated collective bargaining agreements. Overtime for all other overtime eligible employees is anything over 40 hours per week.

Comp Time Comp time is overtime. Comp time are hours you accrue to be used at a future date instead of being paid overtime wages in a specific pay period. You can accrue up to 240 hours of comp time maximum.

Comp Time – Continued Management does NOT have to allow comp time accrual – overtime can be paid each pay period. Overtime eligible employees who terminate with a comp time balance must be paid in full for those hours.

Flex Time Flex time is when an employee asks a supervisor for a schedule change in order to attend to a personal matter. Example: You ask to work an hour extra on Monday in order to attend a personal appointment on Friday of the same week.

Flex Time vs Comp Time Flex Time Comp Time Boss, I want to adjust my schedule this week. Sure Employee, That is fine with me. Employee, Can you work extra hours this week as comp time? Sure Boss,

FLSA Update Timeline March 2014 – Presidential Memorandum July 2015 – Notice of Proposed Rulemaking May 18, 2016 – Final Rule Published December 1, 2016 – Final Rule Effective Date

Original Implementation Plan The effective date for the update was slated for December 1, 2016. The minimum salary threshold was expected to automatically update every three years. Next salary update anticipated to be approximately $51,168 effective Jan. 2020.

The Change $134,004/yr $100,000/yr Current Proposed $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) $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

Latest Word November 22, 2016 – Texas Judge issues injunction. Federal Judge Amos L. Mazzant, III, of the Eastern District of Texas, agreed with the plaintiffs that: The new regulations were unconstitutional. Doubling the minimum salary abandoned the “duties test” actually contained in the FLSA. The automatic increase every three years indexed to inflation is illegal. 

What Next To ensure that the University of Montana is able to follow the laws that govern how employees are paid under the FLSA, Human Resource Services is working with the Office of the Commissioner of Higher Education to review our plans.   We are still preparing for an implementation in the event the injunction is repealed.

Affected MUS Contract Employees The requirement that employees must be exempt from overtime was 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 HRS by December 1, 2016.

Affected Letter of Appointment Employees 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, an 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 HRS by December 1, 2016.

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

Recording Time for Hourly Paid Contract Employees Contract employees are paid in equal payments. Example: An employee working 1.0 FTE with a base salary of $48,000/year gets paid $4,000/mo. with averaged hours of 173.33. If the employee continues to simply work 40 hours/week, the employee will continue to be paid $4,000/mo.

Recording Time for Hourly Paid Contract Employees Contract employees who work more or less throughout the year will receive more or less each month based on the hours worked. Example: An employee working .5 FTE with a base salary of $48,000/year gets paid $2,000/mo. with averaged hours of 86.67. Additional hours worked will be added and any overtime or leave hours will be recorded.

Recording Time for Hourly Paid Contract Employees November Day Date Work Hours Earn Code Monday 31 4   14 8 28 Tuesday 1 15 29 Wednesday 2 16 30 Thursday 3 17 10 20 REG Friday 6 18 11 5 OT 7 21 22 9 23 24 12 25 7  LWOP

Recording Time for Hourly Paid Contract Employees Hourly Rate = 23.076923 Regular Hours 86.67 2000.00 Non-OT Hours 27.00 623.07 Total Regular Hours 113.67 2623.15 Leave w/Out Pay 7.00 161.54 Overtime Hours 5.00 173.08 2634.69

Recruitment Requests Salary ranges must be submitted with recruitment paperwork. Letters of Offer must be submitted to HRS 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 HRS prior to offer of employment.

Questions Contact: Sheila Wright, Compensation Manager Sheila.wright@umontana.edu or 243-4225