1. Fair Labor Standards Act (FLSA) Proposed Changes CALS May 24, 2016 Kelly Delforge, SPHR, SHRM-SCP Director, HR Solutions and Consulting Division of Human Resources

2. FLSA Background Duties Test - the employee’s job duties must primarily involve executive, administrative, professional, computer or outside sales duties (also known as “EAP” or “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; and First enacted in 1938, the FLSA established three tests that must be met in order for an employee to be exempt from overtime pay eligibility*: * Note: Faculty members whose duties consist primarily of teaching and attorneys and physicians are always exempt status under the FLSA. 1 1

3. Updates to FLSA Must be implemented by December 1, 2016 (UA implementation will be payroll beginning date of November 21, 2016) The minimum salary threshold for individuals to be exempt from overtime will increase from $455 per week ($23,660 annually) to $913 per week ($47,476). The total annual compensation requirement for highly compensated employees will increase to from $100,000 to $134,004. The minimum salary threshold will be automatically updated every three years to remain at the 40 th percentile of the overall labor market. 2

4. Impact to University Population Based on today’s population, approximately 2500 currently University exempt employees will not meet the higher proposed salary threshold of $913 per week. This represents about 280 within CALS. Those employees will: Become non-exempt; Be required to track and positively report all hours worked; and Qualify for overtime pay (or compensatory time) if they work more than 40 hours per week. 3

5. Next Steps The Division of Human Resources is working closely with appropriate internal partners (Office of the General Counsel, Office of the Provost, Financial Services Office, Payroll, Systems Control and Budget Office) to create a comprehensive implementation, compliance, and communication plan. Approach Appointed individuals will remain appointed (until we finalize a new campus-wide job architecture) Appointment letters will include language discussing possible changes to their employment status and pay type (hourly) Upon implementation of new regulations, impacted appointed employees will get new notice of appointments with hourly pay 4 Questions can be directed to your designated HR Partner or the HR Solutions Team at hrsolutions@email.arizona.edu. Please also visit the FLSA implementation website http://hr.arizona.edu/managers-supervisors/compensation/flsa-regulatory-change- implementation hrsolutions@email.arizona.edu http://hr.arizona.edu/managers-supervisors/compensation/flsa-regulatory-change- implementation

6. QUESTIONS? 7