1. Risk Management Initiative:
Wage and Hour Issues for Employees and Supervisors Module
Office of the Vice President for Ethics and Compliance
Office of the Vice President for Human Resources
Welcome to the Wage and Hour Issues for Employees and Supervisors Module offered by the Office of the Vice President for Ethics and Compliance in conjunction with the Office of the Vice President for Human Resources as a part of the Risk Management Initiative.
Let’s begin with our learning objectives for this module.

2. Learning Objectives
Describe Purdue’s miscellaneous pay practices
Understand the provisions of Purdue’s overtime policy
State the difference between exempt and non-exempt employees
Explain the general provisions of the Fair Labor Standards Act (FLSA)
The goal of this training is to familiarize employees and supervisors with the provisions of the Fair Labor Standards Act including the difference between exempt and non-exempt employees and how it relates to Purdue’s overtime policy which encompasses information on defining hours worked. In addition, the module will provide you with information regarding Purdue’s miscellaneous pay practices.
Let’s begin by defining the Fair Labor Standards Act, which hereafter may be referred to as FLSA.

3. Fair Labor Standards Act
The Fair Labor Standards Act (FLSA) is a federal law which establishes
Minimum wage
Overtime pay
Child labor provisions
Recordkeeping requirements
Equal pay standards
The Fair Labor Standards Act, often referred to as the Wage and Hour Law, is a Federal law which establishes minimum wage, overtime, child labor provisions, record keeping requirements, and equal pay standards for employees who are not exempt or excluded from its provisions.
FLSA violations can impact the University financially as well as damage its reputation. This module addresses overtime pay policies and defines compensable work hours in order to diminish possible violations of the FLSA.

4. Non-Exempt vs. Exempt Employees
Paid on a hourly basis
Paid bi-weekly
Paid for overtime based on weekly hours worked
time and a half for hours in excess of 40 per week
Record time
Must record all hours worked
Must record unpaid break periods such as lunch
Exempt
Paid on a salaried basis
At a rate of not less than $455 per week
Excluded from overtime pay
Daily hours are not recorded
Record time on an “exception” basis
Only record paid time off
Here we’ll define the two types of employees under FLSA and clarify their time keeping requirements.
The two classifications we’re interested in are Non-Exempt and Exempt employees. Non-exempt employees are not exempt from the overtime provisions of FLSA and are paid on an hourly basis; no lump sum payments are allowed. They are paid bi-weekly. In addition, they’re paid for overtime based on weekly hours worked. Under University policy, this is time and a half for hours worked in excess of 40 hours per week. Non-exempt individuals must record all hours worked as well as any unpaid break period such as lunch. We will define hours worked later in the module.
Exempt employees are exempt from, or not subject to, the overtime provisions of FLSA and are paid on a salaried basis or lump sum basis, not for the hours they worked, at a rate of not less than $455 per week or $23,660 per year. This is the minimum compensation and is not pro-rated by full-time equivalency. An exempt employee’s hours may vary from work week to work week depending on what is required to accomplish their work. They are exempt or excluded from receiving overtime pay. In addition, they do not record daily hours. Generally, exempt employees only record paid time off. Occasionally, exempt employees will be required to record extended unpaid time away from work.

5. Criteria for Exempt Work
Exercise of discretion and judgment
Have authority to
formulate and/or interpret University policies
waive or deviate from established policies and procedures
commit the University in matters which have significant financial impact
negotiate and bind the University on significant matters
hire or fire other employees
Involved in planning long- or short-term business objectives
Classifying an employee as “exempt” has little to do with the amount of time or work an individual is performing. Rather, the criteria used for classifying work as exempt examines the primary duty of a position or the most important duty of a position. Exempt work includes work requiring the exercise of discretion and judgment related to matters of significance to the University. Exempt work also includes the authority to formulate and/or interpret University policies and waive or deviate from established policies and procedures without prior approval. Also, exempt work may include the authority to commit the University in matters which have significant financial impact and negotiate and bind the University on significant matters. The authority to hire or fire other employees or provide suggestions and recommendations which are given a particular weight as to the hiring, firing, advancement of other employees is another criterion for exempt work. Exempt work may also involve planning long- or short-term business objectives.
Let’s further define what is meant by the exercise of discretion and judgment.

6. Discretion and Independent Judgment
11/1/2017
Discretion and Independent Judgment
Discretion and independent judgment does not include:
Applying well-established techniques, procedures or specific standards described in manuals or other sources
Clerical or secretarial work
Recording or tabulating data
Performing mechanical, repetitive, recurrent or routine work
The exercise of discretion and independent judgment must be more than the use of skill in applying well-established techniques, procedures or specific standards described in manuals or other sources. The exercise of discretion and independent judgment also does not include clerical or secretarial work, recording or tabulating data, or performing other mechanical, repetitive, recurrent or routine work. For example, an employee who simply tabulates data is not exempt as an administrative employee, even if they are called a “statistician.”
The Office of the Vice President for Human Resources has the responsibility to determine exemption status and therefore to determine the appropriate classification of positions.
U.S. Department of Labor, Wage and Hour Division

7. Purdue’s Overtime Policy
Overtime pay is calculated at 1.5 times the regular rate for every hour worked in excess of 40 during the work week
Payment of overtime cannot be waived by employee or employer
Hours cannot be averaged over two workweeks
University holidays and personal holidays are included in determining overtime hours
As mentioned previously, FLSA regulations require employers to pay overtime compensation to all non-exempt employees at a rate of one and a half times the regular rate for every hour worked in excess of 40 during the work week. one and a half times the regular rate is the minimum standard set by FLSA. Higher overtime rates such as double-time, triple-time and other forms of premium pay, can be the subject of contract or policy but are not required by FLSA. Purdue’s policy sets the overtime rate at one and a half times the regular rate. Payment of overtime is mandatory; it cannot be waived by the employee or employer. Hours cannot be averaged over two workweeks to avoid payment of overtime. University holidays and personal holidays are included in determining overtime hours.

8. Purdue’s Overtime Policy – Maximum Overtime
Scheduled in a 24-hour period = 8 hours
Worked in any work week = 20 hours
NOTE: Overtime worked by the employee, whether it is authorized or unauthorized by the supervisor, must be counted and compensated as “worked overtime”
Purdue’s overtime policy indicates that the maximum overtime hours that can be scheduled in a 24-hour period is 8 hours. It’s important to note that the maximum number of hours an employee may work in a 24-hour period is 16 hours including both regular and overtime. The maximum overtime hours that can be worked in any work week is 20 hours. This includes overtime that is not scheduled but worked by the employee without supervisory approval. Employees must have permission from their supervisors to work overtime. Failure to request supervisor permission to work overtime may result in disciplinary action. Whether overtime worked is with or without permission of the supervisor does not matter in terms of compensation, the time must be counted as “worked overtime.”
Working unauthorized overtime is a disciplinary issue not a compensation one. While an employee is showing initiative in working overtime, it is important for the employee to understand that overtime must be approved by his or her supervisor. An employee who works unauthorized overtime is subject to disciplinary action. Any questions regarding discipline should be directed to Human Resources Employee Relations.

9. Hours of Work Workweek Monday through Sunday Work Schedule
Can be changed to support a business need
Flexible Work Schedule
Request to flex should come from the employee
Should be mutually agreeable
Compensatory Time
Purdue policy does not allow the use of compensatory time
Hours cannot be carried to another week
*Exceptions to the University pay policies
must have Human Resources approval
FLSA mandates that an employer define the beginning and ending of a work week to include seven consecutive 24-hour periods. the university has designated multiple workweeks to accommodate different needs; however, the most common workweek used is Monday through Sunday. Work schedules can be changed to support a business need. For example, if an employee has worked extra hours in the early part of the week, the supervisor can tell the employee to work less hours on another day later in the week so the employee does not go over 40 hours. However, a flexible work schedule should be requested by the employee in advance. The schedule should be mutually agreed upon by the employee and the supervisor. Flexible schedules may not include compensatory time. Purdue’s policy does not allow for the use of compensatory time. Compensatory time is providing time off at a later date for overtime worked in a specific work week. The policy indicates that hours cannot be carried to another week. Any exceptions to the University pay policies must have approval from Human Resources.
Further information on flexible work schedules may be found in the additional resources portion of the Risk Management Initiative website.

10. Hours Worked – On Call Pay
Restricted use of time while “on call” requires compensation
Unrestricted time while “on call” means employees are not considered in pay status
Unrestricted means the employee is free to do normal daily activities
When not in “on call” status, but responding to a phone call or , employees will be paid for the length of the phone call or at the overtime rate
Let’s discuss a few specific examples of hours worked. When an employee is “on call” and their activities are restricted they must be compensated for all “on call” hours. An example could be a grounds maintenance worker who is burdened by numerous calls while on-call such that the calls prevented free use of time. When an employee is “on call” and their time is unrestricted, they are not required to be compensated for their “on call” time. Unrestricted time means that the employee is free to do things such as run errands, watch TV, go to church, etc. When not in “on call” status, but responding to a phone call or , employees will be paid for the length of the phone call or at the overtime rate. In general, non-exempt staff should be discouraged from reading and responding to work-related outside of normal working hours unless absolutely necessary.

11. Hours Worked – Callback Pay
Callback is when an employee is required to return to the workplace outside of their normal work schedule
Not provided when:
extra work is scheduled in advance
employees are asked to extend their regular work shifts
Employees must receive a premium equivalent to two hours of regular pay and be compensated for all hours worked
All time worked is included to determine overtime eligibility
Nonexempt, benefits-eligible employees receive callback pay when they are required to return to the workplace, after leaving a scheduled work shift, outside of their normal work schedule. Callback pay is not provided when the extra work is scheduled in advance or when an employee is asked to extend his or her regular work shifts, in other words to stay past the end of the shift or to report to work early. Callback pay provides employees a premium equivalent to two hours of regular pay in addition to compensation for all hours worked. All time worked in callback status is included to determine overtime eligibility. Callback premium payment is not included when calculating overtime eligibility.

12. Hours Worked – Training, Lectures & Meetings
Employees are not paid if all of the following criteria are met:
Attendance is
outside of regular work hours
voluntary
Information is not directly job related
Employee does not do any productive work during the session
Employees are not compensated for attending training, lectures or meetings when all of the following criteria are met: attendance is outside of regular work hours and is voluntary, the information presented is not directly job related and the employee does not do any productive work during the training, lecture or meeting.
Next we’ll discuss nonexempt employee travel time.

13. Nonexempt Employee Travel
General Rules
An employee’s commute is not compensable
Work related travel during the employee’s normal working time is paid time
Travel outside those normal working hours is not paid
Work performed while driving will be paid if not de minimis
In general, an employee’s commute time to and from their ordinary workplace is not compensable, even if the employer provides the vehicle. Work related travel during the employee’s normal working time is paid. For example, the time a maintenance worker spends driving between buildings on campus for repairs during normal working hours would be compensable. However, travel outside of those normal work hours is not paid. Work performed while driving will be paid unless it is considered de minimis. De minimis means too trivial or minor to merit consideration. Let’s review some examples to demonstrate the concept of de minimis work.

14. Nonexempt Employee Travel Examples
Carrying a heavy briefcase of files on a weekly basis during the commute is de minimis, given that the employee is still free to do other things during the commute . However, when transporting specialized or heavy equipment is a principal activity and a regular part of the employee’s daily travel, such time may be compensable.
Talking occasionally on a cell phone on work-related matters during the commute may be de minimis, but an extended period of time (i.e. 10 minutes or more) may be paid time.
For example, carrying a heavy briefcase of files on a weekly basis during a commute is de minimis, given that the employee is still free to do other things during the commute (i.e. eat, listen to music, talk, read). The employer is not the primary beneficiary of that time, so the employee would not be compensated. On the other hand, when transporting specialized or heavy equipment is a principal activity and a regular part of the employee’s daily travel, such time may be compensable.
Similarly, talking occasionally on a cell phone on work-related matters during the commute may be de minimis. However, talking on a cell phone for an extended period of time (i.e. 10 minutes or more) on work-related matters may be paid time. Let’s discuss nonexempt employee travel further.

15. Nonexempt Employee Travel - continued
Travel between worksites during the same work day is compensable
Out-of-town travel, when an employee returns home the same day, is compensable
Out-of town travel overnight:
Compensable for the driver and passenger during regular work hours
Compensable for the driver outside of regular work hours
Not compensable for the passenger outside of regular work hours unless the employee performs work while riding
If an employee is traveling from site to site during the same work day they must be compensated for that time if it’s related to the employer’s primary activity. This includes if the employee is driving during regular working hours, outside of regular working hours, when the employee is a passenger during regular hours and when they are a passenger outside of regular working hours. The same goes for an employee who is traveling out of town and returning home on the same day, it is compensable in all scenarios whether the employee is driving or is the passenger and whether it is during or outside regular working hours.
When traveling out of town overnight the situation impacts whether or not the time is compensable. If an employee drives during regular working hours it is compensable, but only for “regular hours” on weekends and weekdays. In other words, if the employee normally works 8am to 5pm, they will be in pay status from 8am to 5pm on Saturday, Sunday, and the weekdays. The same would apply if the employee is a passenger during regular working hours. If an employee drives outside regular working hours, the time is compensable. If an employee is a passenger outside of regular working hours the time is not compensable unless the employee performs work while riding.

16. Miscellaneous Pay Practices
Shift Differential
If an employee works more than 4 hours between 4pm and 8am they are paid an additional .45 cents/hour
Holiday Pay
If an employee is required to work a holiday they are paid a premium rate of 1 ½ times their regular rate of pay
Let’s move on to discuss Purdue’s more commonly occurring Miscellaneous Pay Practices. Non-exempt staff receive a .45 cent premium per hour for evening and night shift if they work more than four hours between 4pm and 8am. In addition non-exempt staff receive holiday pay if they are required to work a holiday. They are compensated at a premium rate of one and a half times their regular rate of pay for each hour they work on a holiday.

17. Summary
FLSA is a Federal Law that establishes minimum wage, overtime, child labor provisions, record keeping requirements, and equal pay standards
The law discusses two classifications of employees
Exempt employees are exempt from the overtime provisions of FLSA
Non-exempt employees are subject to the overtime provisions of FLSA
Purdue’s overtime policy corresponds to FLSA with an overtime rate of 1.5 times the normal rate for all hours worked in excess of 40 in a workweek
Defines a workweek beginning on Monday and ending on Sunday
For overtime purposes, it’s important to detail time worked
Flexible schedules, on-call status, call back status, training, meetings or lectures and travel time can impact time worked
Some of the more commonly occurring premium pay situations include:
Shift differential of .45 cents per hour for non-exempt employees who work more than 4 hours between 4pm and 8am
Holiday pay at a rate of 1.5 times their regular rate of pay for each hour they work on a holiday.
In summary, FLSA is a Federal Law that establishes minimum wage, overtime, child labor provisions, record keeping requirements, and equal pay standards for employees who are not exempt or excluded from its provisions. The law discusses two classifications of employees, exempt and non-exempt. Exempt employees are exempt from the overtime provisions of FLSA. Non-exempt employees are subject to the overtime provisions of FLSA which dictates that employees must be compensated at a minimum rate of one and a half times the normal rate for all hours worked in excess of 40 in a work week.
Purdue’s overtime policy corresponds with the FLSA rate of one and a half times the normal rate and defines a workweek beginning on Monday and ending on Sunday. For overtime purposes, it’s important to detail time worked. Flexible schedules, on-call status, call back status, training, meetings or lectures, and travel time can impact time worked.
We also covered some of the miscellaneous pay practices including the shift differential of .45 cents per hour for non-exempt employees who work more than 4 hours between 4pm and 8am and holiday pay where employees working a holiday are paid at a rate of one and a half times their regular rate of pay for each hour they work, which are commonly occurring premium pay situations.

18. Risk Management Employment Claims Initiative
Conclusion
Risk Management Employment Claims Initiative
If you have any questions regarding this training please contact
NOTE: Please be sure to contact to obtain an accessible certification quiz in order to obtain credit for completion.
Thank you!
This concludes the Wage and Hour Issues for Employees and Supervisors Module. As a reminder, there are additional tools and resources on the Risk Management Initiative website. For questions about this training please contact NOTE: Please be sure to contact to obtain an accessible certification quiz in order to obtain credit for completion. Thank you for your time and consideration.