Changes to the Fair Labor Standards Act 4/23/2018 Changes to the Fair Labor Standards Act Management Information UCF Human Resources November 2016

4/23/2018 Why are we here? Let’s start with this video from the Department of Labor that explains the new ruling on overtime pay. 1975 = 62% Today = 8% Intent Planning/implementing culture

Today’s Agenda Overview of the Fair Labor Standards Act (FLSA) 4/23/2018 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. 2. 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) 4/23/2018 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) 4/23/2018 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” 4/23/2018 “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 4/23/2018 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 If the position fails even one of these 3 tests, the position is non-exempt.

4/23/2018 Duties Test The employee’s job duties must primarily involve executive, administrative, professional, computer or outside sales duties (also known as “white collar” exemptions).

4/23/2018 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.

4/23/2018 Salary Level Test The employee must be paid a minimum salary as determined by the FLSA.

4/23/2018 What is changing?

Salary Level Increases 4/23/2018 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

4/23/2018 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.

4/23/2018 What is not changing?

What is not changing? Base rate of pay Job Title 4/23/2018 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 4/23/2018 Specific Guidelines for Higher Education The Department of Labor has added some unique provisions that apply to higher ed.

4/23/2018 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 4/23/2018 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 4/23/2018 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.

4/23/2018 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

4/23/2018 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

4/23/2018 Items to Note Management needs to be aware of other issues that could arise when former exempt employees become non-exempt.

4/23/2018 Timekeeping 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.

Compensatory Time Phase Out 4/23/2018 Compensatory Time Phase Out Compensatory Overtime and Special Compensatory time will be phased out, with payouts of remaining balances being paid out June 30, 2018. During this phase-out time, supervisors should encourage employees to use their banked compensatory time before other types of leave.

USPS Exempt to non-exempt effective 11/18/2016 Leave and Overtime USPS Exempt to non-exempt effective 11/18/2016 Grandfathered group 6.77 to 6.00 annual leave hours (new) Maximum payout - 352 annual leave hours Year End Rollover – in excess of 352 annual leave hours rolls into sick leave balance Personal Holiday (new) Bereavement Leave (new) Eligible for overtime pay (new) New hires (current structure) 4.00, 5.00 or 6.00 hours annual leave hours based on years of service Maximum payout - 240 annual leave hours Year End Rollover – in excess of 240 annual leave hours rolls into sick leave balance Personal Holiday Bereavement Leave Eligible for overtime pay With feedback from VPs and approvals from Millican Hall, the structure of leave accruals has changed. As you can see on the screen, current USPS Exempt employees moving to a non-exempt category will see a decrease in their annual leave accrual from 6.77 hours biweekly to 6.00 hours biweekly. You will now be eligible for one Personal Holiday a year, and bereavement leave. The reason for the reduction in leave accruals is due to the fact that you are now eligible for overtime pay. You will keep you annual leave maximum payout and rollover based on 352 hours.

Leave and Overtime Continued A&P Exempt to non-exempt effective 11/18/2016 Grandfathered group 6.77 to 6.00 annual leave hours (new) Maximum payout - 352 annual leave hours Year End Rollover – in excess of 352 annual leave hours rolls into sick leave balance Personal Holiday (new) Bereavement Leave (new) Eligible for overtime pay (new) New hires (new structure) 6.00 hours annual leave hours Maximum payout - 240 annual leave hours Year End Rollover – in excess of 352 annual leave hours rolls into sick leave balance Personal Holiday Bereavement Leave Eligible for overtime pay This slide is for the A&P employees who are going from Exempt to Non-exempt. You will see a decrease in your annual leave accrual from 6.77 hours biweekly to 6.00 hours biweekly. You will now be eligible for one Personal Holiday a year, and bereavement leave. Again, the reason for the reduction in leave accruals is due to the fact that you are now eligible for overtime pay. You will also keep your annual leave maximum payout and rollover based on 352 hours.

4/23/2018 Dual Compensation Non-exempt employees performing a secondary job at UCF must report all hours worked on their timesheet. Hours worked from a secondary job could result in overtime. There are about 24 exempt employees going to non-exempt that are also receiving dual comp.

After-Hours Electronic Access 4/23/2018 After-Hours Electronic Access Checking work email and responding to work related texts after-hours is considered working and non-exempt employees must be paid for all time accessing these electronic mediums. 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. Re-think timing of emails and texts to employees. If you are working late and must send emails to non-exempt employees, consider using the “Delivery Delay” option in Outlook.

4/23/2018 Lunch Breaks Non-exempt employees should have an “interruption free” lunch. Employees may spend their lunch time at their desk, however answering the phone or returning emails are both considered work and must be approved and compensated. Try to encourage your non-exempt employees to leave the work area during their lunch time.

4/23/2018 Work Distribution Ensure there is not an unequal distribution requiring some employees to constantly work longer hours and possibly be subject to overtime when the non-exempt peers don’t receive any extra pay. 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.

Travel and On-Call/Call-Back Procedures 4/23/2018 Travel and On-Call/Call-Back Procedures These practices have not changed, but change in exempt status could result in unforeseen overtime. . The travel and on-call/call-back procedures have not changed, but should be reviewed with the former exempt employee if their position requires travel or on-call/call back responsibilities. Schedule or work distribution adjustments may need to be implemented.

4/23/2018 Next Steps

Training Supervisor Training Affected Employee Training 4/23/2018 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. Employee training sessions begin Nov 1st 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 a special session that cover these changes. Enrollment for these sessions is also through myUCF and will be held on Nov 2nd, Nov 7th, and Nov17th.

Review Practices Electronic Access Workload Distribution 4/23/2018 Review Practices Electronic Access Workload Distribution Travel and On-Call Requirements Dual Comp 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. Non-exempt employees receiving dual comp may need to either have their schedule adjusted or forego the secondary job if overtime is not approved.

4/23/2018 Additional Resources

http://hr.ucf.edu/ This Just In Human Resources Updates 4/23/2018 This Just In Human Resources Updates *New* 2016 FLSA Changes

US Department of Labor Final Rule: Overtime 4/23/2018 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

4/23/2018 Questions?

After-Hour Electronic Access 4/23/2018 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 4/23/2018 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.