1. FLSA Regulation Changes - Human Resources Overview
November 10, 2016
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© 2016 The Johns Hopkins University. All rights reserved. 1

2. Today’s Topic Mandatory nationwide changes to the Fair
We’ll be taking a look at…
Mandatory nationwide changes to the Fair
Labor Standards Act (FLSA). 2

3. Today’s Presenters
Jenny Winter, Compensation Manager for Health Sciences HR which includes the Schools of Medicine, Public Health and Nursing on the East Baltimore Campus. Jess Newton, Compensation Analyst for Central HR. In addition to direct involvement in the FLSA Compensation review, Jess brings extensive experience in HR Shared Services processes and systems.

4. Session Segments Presentation
We’ll review the changes to the FLSA and discuss details on how the new regulations affect JHU employees and managers.
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Q&A
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8. JHU Human Resources team
FLSA Changes for the
JHU Human Resources team

9. Agenda Today we’ll be providing you with the following:
Overview of the federal FLSA regulations
Details on 2016 regulation changes
Clarification on how these changes affect JHU employees and managers
Directions on process changes for affected employees
Resources for answering additional questions

10. FLSA Overview
The Fair Labor Standards Act (FLSA) is the Federal law that sets rules for critical employment issues including:
Minimum wage requirements
Overtime pay
Employer recordkeeping
Child labor restrictions
Wage equity
The Fair Labor Standards Act (FLSA) requires that employees in the United States:
Be paid at least the federal minimum wage for all hours worked
Be consistently treated as either exempt (salaried) or non-exempt (overtime eligible) based on specific criteria
Be paid additional overtime earnings equal to 1½ times their regular rate of pay, if working in a non-exempt position and working more than 40 hours in a workweek

11. Current FLSA Regulations
There are 3 mandatory tests that positions must meet to qualify as exempt from overtime (OT) pay:
Salary Test - Employees must earn at least $455 per week/ $23,660 per year*
Salary Basis – Pay cannot fluctuate based on hours worked or quantity of work performed
Duties Test – Job must regularly involve specific duties
Executive: Hire/fire authority, supervise 2+ FTEs, etc.
Administrative: Exercise high levels of independent discretion
Professional: Requires 4 year degree in specific field
*Teachers, outside salespeople, lawyers and physicians (including residents) have salary threshold exceptions.

12. $23,660 $47,476 New FLSA Regulations OLD Threshold NEW Threshold
On May 18, 2016, the U.S. Department of Labor (DOL) announced major changes to the Fair Labor Standards Act (FLSA).
Changes to the law were designed to intentionally increase the number of professional and supervisory employees who are eligible to earn overtime pay.
Effective 12/1/16, the salary threshold for exempt positions will increase from $23,660 to $47,476.
The salary threshold will also be adjusted every 3 years based on U.S. Census data.
OLD Threshold
NEW Threshold
$23,660
$47,476
Effective December 1, 2016

13. 400+ Positions Exempt Non-Exempt
JHU Exemption Changes
To prepare for the FLSA changes, all exempt positions were reviewed and classification change recommendations were made by HR.
Effective 12/1/16, over 400 positions that were historically considered exempt, will become non-exempt (overtime eligible).
All employees experiencing an exemption change will receive formal notifications, along with detailed FAQs
Managers of affected employees will also receive information to help them understand the required process changes and compliance challenges
For employees becoming non-exempt, there are no other changes being made to job title, salary range, hourly rate, benefits, etc.
400+ Positions
Exempt Non-Exempt

14. JHU Exemption Changes
For employees changing from exempt to non-exempt, it’s very important to understand:
An employee’s exemption status has no correlation to his/her value, significance or importance to the University.
Managers need to be very intentional about reinforcing this detail and avoid differentiating their staff based on exemption status.
Exemption status changes are being made as part of a mandatory Federal change that is impacting employers across the country.
Employers beyond Johns Hopkins are making similar changes to positions that fall near the new FLSA salary threshold ($47,476).

15. JHU Exemption Changes
Exemption changes are being made consistently across JHU, without variations at the School or Department level.
There are some instances where employees will earn more than $47,476 and still be considered non-exempt.
This is done in situations where the majority of incumbents in a role fall below the FLSA salary threshold or in situations where the duties performed do not qualify for exempt status.
The U.S. Department of Labor considers FLSA exemption status determinations as a compliance priority. Misclassifying a position’s exemption status can result in 3 years of overtime back wage penalties, and additional damages.

16. Managing Non-Exempt Employees – What Changes?
Non-exempt employees are required to record all hours worked and coordinate with their supervisor to manage their time appropriately. The following process issues are considered compliance critical:
The e210 system must be used on a weekly basis to record actual hours worked and benefit time taken.
Managers also need to verify hours within e210 on a weekly basis for non-exempt employees. Separate e210 training information is included under Additional Resources.
Employees are advised that Manager approval must be obtained before working overtime, however, hours must be reported on the e210 and paid appropriately even if authorization wasn’t given.
Repeatedly working overtime without approval may result in disciplinary action for an employee.

17. Managing Non-Exempt Employees – What Changes?
If non-exempt employees are unable to take an uninterrupted meal break, that time should be paid as worked time.
Overtime pay cannot be waived. Non-exempt employees must be paid for all hours worked.
Work that is done after regularly scheduled hours, including phone calls and managing s must be paid as worked time.
It is critical that non-exempt employees understand these rules and make every effort to work only during regularly scheduled hours.

18. Managing Non-Exempt Employees – What Changes?
Compensatory time off (comp time) is not an approved practice at JHU and the policy is being changed to reflect that.
Travel time is also calculated differently for non-exempt employees. Please refer to the FLSA Toolkit posted on the HR website for further direction on this area of compliance
Overtime pay is initiated by entering appropriate hours worked into the CATS system for hourly employees or via Bonus Supplement ISR for salaried employees. Overtime should be paid within one pay period of its occurrence.
Failure to pay employees for all hours worked is a violation of Federal law which creates a significant liability for JHU. Please ensure that you make every effort to achieve compliance in this critical area.

19. Non-Exempt – What Doesn’t Change?
While some employees will experience exemption status changes related to FLSA changes, most employment details stay the same:
No title changes (unless a new position is being created)
No change to the position classification-role/level/salary range
No change to annualized base salary, but compensation will now be referenced by hourly rate rather than annual salary
No change to benefit eligibility, contributions or time off calculations
No change to annual merit increase date

20. System-related changes
For employees receiving salary increases to remain exempt:
Departments will need to submit ISRs to initiate changes
ISRs must be through all required approvals by 12/5
Salary increases will be effective 12/1, and will be seen in employees’ 12/15 paycheck
New Salary Change Reason Code 23-Compliance must be used on all ISRs related to FLSA mandated changes

21. System-related changes
For classified titles where all employees are changing to non-exempt:
Individual ISRs will not be required
HR Shared Services will be processing all changes that do not involve salary increases
Changes will become effective 12/1
Any FLSA changes made after 11/15 will need to be handled through the standard ISR process, using Position Maintain/EAC Code 11-Compliance

22. FLSA Override Functionality
An FLSA override is needed in SAP when the employee is:
Classified in an Exempt job AND
Works less than 100% FTE with an annual salary of less than $47,476 (this applies to Full-Time, Part-Time, Limited, and Casual employee groups)
Activating the FLSA override requires:
Updating the Employee Subgroup on the SAP Position AND
Updating Subtype Z001 on the Concurrent Employment Groupings infotype (infotype 9712)

23. Processing an FLSA Override
To update a current employee who is in an exempt job, but working less than 100% FTE with an annual salary of less than $47,476 (this applies to Full-Time, Part-Time, Limited, and Casual employee groups):
Process a Position Maintain/PAC ISR to update the Employee Subgroup to the applicable option:
02 – Salaried Non-Exempt (applies to Full-Time, Part-Time & Salaried Limited Employees)
25 – S1 Hrly Non-Exmpt (applies to all casual employees as well as hourly Limited employees)
In the comments section of the Position Maintain/PAC ISR, add a comment that says, “EMPLOYEE REQUIRES AN FLSA OVERRIDE.” This will alert HR Shared Services to add the override to the employee master data after maintaining the position.

24. Processing an FLSA Override
To update a vacant position for a future incumbent who will be classified as exempt, but work less than 100% FTE with an annual salary of less than $47,476 (this applies to Full-Time, Part-Time, Limited, and Casual employee groups):
Process a Position Maintain ISR to update the Employee Subgroup to the applicable option:
02 – Salaried Non-Exempt (applies to Full-Time, Part-Time & Salaried Limited Employees)
25 – S1 Hrly Non-Exmpt (applies to all casual employees as well as hourly Limited employees)
On the Hire (Rehire, Reinstatement) or Reassignment ISR, select the FLSA Override checkbox in the Work Hours section. This will alert HR Shared Services to add the override to employee master data.

25. Processing an FLSA Override
To create a new position for a future incumbent who will be classified as exempt, but work less than 100% FTE with an annual salary of less than $47,476 (this applies to Full-Time, Part-Time, Limited, and Casual employee groups):
Process a Position Create/Copy ISR. The Employee Subgroup should be one of the following:
02 – Salaried Non-Exempt (applies to Full-Time, Part-Time & Salaried Limited Employees)
25 – S1 Hrly Non-Exmpt (applies to all casual employees as well as hourly Limited employees)
On the Hire (Rehire, Reinstatement) or Reassignment ISR, select the FLSA Override checkbox in the Work Hours section. This will alert HR Shared Services to add the override to employee master data.

26. Verifying an FLSA Override in SAP
To view the FLSA Override in Display HR Master Data (PA20) go to:
Time Tab
Select Concurrent Employment Groupings (infotype 9712)
Select ‘All’ in the Period section on the right side of the screen
Select Display (eyeglasses icon)

27. Verifying an FLSA Override in SAP
Concurrent Employment Groupings
Note the Subtype for the FLSA Override is Z001- FLSA exempt/non-exempt override
Personnel Assignments
Lists the employees Pernr(s), Position number(s), Position title, the override selection (N – Non-Exempt overrides exempt status) and FLSA OT (this is the FLSA indicator associated with the employees’ job code.)

28. Additional Resources
FLSA changes will have a major impact on employers and employees across the country. It’s very important for HR Contacts and/or managers to meet with any employees who are experiencing exemption changes as soon as possible, to be certain that they have a clear understanding of how the FLSA process changes affect them.
Additional information available:
FLSA Compliance Training for JHU Non-Exempt Staff is a detailed e210 training prepared by JHU HR Shared Services. The training is available in the DOCS section on the HR website, available at
FAQs related to FLSA changes are available from the Comp team 28

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