Fair Labor Standards Act Revisions

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Fair Labor Standards ActRevisions
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FLSA Definitions

• Exempt Employee paid on a salary basis non
  fluctuating, pre-determined amount not covered
  by the overtime provisions.
• Nonexempt Employee paid on an hourly basis for
  all hours worked in a work week covered by the
  overtime provisions.

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FLSA Overtime Provisions

• Nonexempt employees who work over 40 hours in a
  work week receive overtime pay (or compensatory
  time off) at one and one half times their regular
  rate of pay.
• Employers must keep accurate records of nonexempt
  employees hours worked.

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Requirements for Exemption from Overtime

• Employee paid no less than 455 a week salary
  level test and
• Employee paid a non-fluctuating salary salary
  basis test and
• Employee performs exempt duties duties test.

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Salary Level Test

• Minimum weekly salary raised to 455 from either
  250 or 155 depending on test used.
• Consequences More full- or part-time employees
  in otherwise exempt jobs are now nonexempt.

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Salary Basis Test

• Employees receive a predetermined amount
  regardless of quality or quantity of work.
• Consequences Exempt employees must continue to
  be paid a salary as defined by the FLSA.

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Exceptions to Salary Level and Salary Basis Tests

• Salary requirements do not apply to teachers,
  outside sales employees and those practicing law
  or medicine.
• Consequences Adjunct Faculty making less than
  455 a week remain exempt.

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Other Exceptions

• Graduate student assistants associates likely
  are not employees for purpose of FLSA.
• Consequences Graduate student assistants and
  associates would no longer have to complete time
  records.

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Duties Test for Exemption

• Learned Professional Exemption
• Creative Professional Exemption
• Computer Professional Exemption
• Highly Compensated Exemption
• Executive Exemption
• Administrative Exemption

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Duties Test Professional Exemption - Learned
Professional

• Primary duty is performance of work requiring
  advanced knowledge, intellectual in character and
  exercising judgment and discretion.
• Advanced knowledge involves a field of science or
  learning and must customarily involve a prolonged
  course of specialized intellectual study.

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Duties Test - Professional Exemption - Creative
Professional

• Primary duty is the performance of work requiring
  invention, imagination, originality or talent in
  a recognized field of artistic or creative
  endeavor.

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Duties Test - Computer Professional

• Primary duty involves systems analysis
  procedures, including consulting with users to
  determine hardware, software systems
  specifications
• The design, development, analysis, testing or
  modification of programs and systems or
• Similar work related to machine operating systems.

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Highly Compensated Employee Test

• Primary duty is office or non-manual work and
• Regularly performs either executive,
  administrative or professional exempt work and
• Earns 100,000 or more, including a salary of at
  least 455 a week.

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Duties Test Executive Exemption

• Primary duty is managing a recognized department
  or subdivision. Note employee can still perform
  non-management tasks if primary duty is managing.
• Regularly directs the work of at least two or
  more full-time employees or their FTE equivalent.
• Has authority to take actions such as hiring or
  firing or the ability to recommend and
  meaningfully influence such actions.

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Duties Test - Administrative Exemption

• Primary duty is office or non-manual work
  directly related to the general business
  operations of the employer.
• Primary duties include the exercise of discretion
  and independent judgment with respect to matters
  of significance.

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Examples of Discretion Independent Judgment

• May deviate from established policies and
  procedures without prior approval.
• Negotiates and has authority to bind the employer
  on significant matters with or without financial
  impact.
• Handles complaints, disputes and grievances.

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Compliance Steps

• Analysis
• Communications and Training
• Administrative Process
• Systems Enhancements

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Steps for Compliance - Analysis

• Identify employees in exempt jobs who fail to
  meet new salary level test.
• Review Classified Staff generic job descriptions
  and identify any questionable exemptions.

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Steps for Compliance Communications and Training

• HR notifies departments with employees changed
  from exempt to nonexempt because of salary level
  test.
• HR and FSO present training sessions to the
  campus community.
• Establish comprehensive FLSA page on HR website.

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Steps for Compliance Administrative

• Ensure recordkeeping requirements are
  communicated to departments.
• Introduce revisions to PAF and the Hiring Form to
  capture the employee exemption status.
• Introduce new codes for the exemption status of
  the job and of the employee.

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Determining Employee Exemption Status single job
OR multiple jobs
Is the employee a doctor, lawyer or teacher?
Employee Is Exempt
Yes
No
Is the employee assigned to a Classified Staff
job that HR has designated as nonexempt?
Employee Is Nonexempt
Yes
Employee Is Exempt
No
Yes
Is the employee regularly paid a salary of at
least 455 a week?
No
Employee Is Nonexempt
The University of Arizona Human Resources and
FSO
August 2, 2004
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FLSA Exemption Codes
For the Employee E Exempt N Nonexempt For
the Job Y Yes, the job is always exempt N
No, the job is never exempt M Maybe the job is
exempt X Exclude this job
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Steps for Compliance Systems Enhancements

• Develop capability to have nonexempt and exempt
  employees in the same classification.
• Set up system to track salary level changes that
  result in exemption status change.
• Capture exemption status changes in the
  Payroll/HR system.

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Impact on Employees

• May be eligible for overtime pay.
• Maintain accurate time record of every hour
  worked.
• Communicate with departments if holding more than
  one job.

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Impact on Hiring Departments

• Monitor budgets to pay overtime to newly eligible
  employees.
• Train employees on accurate time keeping
  procedures.
• Be aware of changes in employees exemption
  status, and manage accordingly.

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FLSA Compliance Tools

• PSOS Screens
• 2 screens with exemption codes
• ISW reports
• 2 Different reports
• Notices of Exemption code conflicts
• Corrections
• PAF
• Time Sheets
• POPRs or Vac/Sick Adjustments

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PSOS Screen 08
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PSOS Screen 02
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PSPM03 Time Roster Worksheet
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TRPR31A - Final Departmental Online Time Roster
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PAF Form to Change Employee Exemption Status
Emp FLSA Stat
FLSA Title
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Timesheets for Recordkeeping
Exempt Employee Exception Time reporting
.50 FTE Non-Exempt Employee (retro time sheet to
correct)
4 4 4 4 4 R R V R R
4 4 4 4 4 4 R R R R R U
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Paying OT for a Prior Pay Period
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Adding Comp Time not Previously Reported
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Contacts and Questions
For questions regarding Contact PAFs Systems
Control 621-3664 Time Rosters,
Timesheets FSO-Operations 621-9097 OT reporting
Employee Inquiries Human Resources
621-3662 Departmental Inquiries HR
Organizational Consultant Or visit our
websites Human Resources http//www.hr.arizona.e
du/ FSO Operations http//www.fso.arizona.edu/fs
o/operations.asp