Fair Labor Standards Act (FLSA) Education

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Fair Labor Standards Act (FLSA) Education

• May 2005
• Revised February 2006

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Todays Facilitators

• Jami Painter, University Office of Human
  Resources painterj_at_uillinois.edu
• Campus Human Resources Representative
• Joyce Winn, University of Illinois at Chicago,
  Academic Human Resources - jwinn_at_uillinois.edu
• Debi Stone, University of Illinois at
  Urbana-Champaign, Academic Human Resources
  debstone_at_uillinois.edu
• Patti Sims, University of Illinois at
  Springfield, Human Resources sims.patti_at_uis.edu

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Todays Objectives

• To provide education about the Federal FLSA law
  and regulations.
• To provide an overview of the Universitys review
  process.
• To provide a summary of the impact on affected
  employees.
• To provide an overview of the reporting and
  record retention process for employees changing
  from exempt to salaried non-exempt status.

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FLSA Background

• Fair Labor Standards Act (FLSA)
• Established in 1938 by the Department of Labor
  (DOL)
• Purpose
• Establishes standards for
• Minimum Wage
• Overtime Pay
• Child Labor
• DOL first issued exempt status regulations in
  1940
• Last modification in 1954
• Recent regulation revisions effective August 23,
  2004
• Section 541 (29 CFR 541 et al) White Collar
  Exemptions

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FLSA - Background

• FLSA generally requires that employees be paid
• At least federal minimum wage of 5.15 per hour
  (Illinois law is 6.50 per hour)
• Overtime premium pay of time-and-one-half of the
  employees regular rate of pay for all hours
  worked over 40 in a workweek for employees in
  hourly non-exempt status.
• Overtime premium pay of one-half of the
  employees regular rate of pay for all hours
  worked over 40 in a workweek for employees in
  salaried non-exempt status.

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White-Collar Exemptions

• White-collar exemptions allow for exemptions from
  these requirements.
• Salary Test
• Employee must be paid at least a certain
  compensation level
• Employee is paid on a salary ,rather than hourly,
  basis and
• Duties Test
• Employee performs certain exempt duties.

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White Collar Exemption Requirement 1 (Salary
Test)

• Salary level
• Minimum paid must 455 per week or more.
• If paid less than 455 per week, cannot be exempt
  even if he/she meets the duties test.
• If paid 455 per week or more, can be exempt only
  if he/she also satisfies the duties test.
• Salary cannot be prorated based on FTE.

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White Collar Exemption Requirement 2 (Salary
Test)

• Form of payment
• Employee must be paid a flat salary, not by the
  hour (Academic Monthly Salary)
• Employee must regularly receive a predetermined
  amount that cannot be reduced because of
  variations in the quantity or quality of work
  performed

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White Collar Exemption Requirement 3 (Duties
Test)

• FLSA, Section 12(a)(1) provides exemption from
  minimum wage and overtime pay for bona fide
  employees in the following areas
• Executive
• Administrative
• Professional
• Outside Sales
• Highly Compensated
• Section 13(a)(17) also exempts certain computer
  employees.

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University Review

• Two cross-campus committees formed Summer of
  2004.
• Academic
• Civil Service
• Representatives from University Human Resources,
  Campus Human Resources, Legal Counsel, Provosts
  Offices
• Seyfarth Shaw Attorneys, LLP

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Civil Service Review

• Salary Test
• All exempt Civil Service employees satisfied the
  salary test (455/week) based on Banner report
• Duties Test
• All Civil Service classifications were examined
  for duties test compliance.
• In depth review of job descriptions, SUCSS
  classifications, and work performed was conducted
  for several classifications. Some of these
  included

• Space Administrator III
• Graphic Designer II
• Assistant Program Director

• Admissions and Records Officer II
• Events Administrator
• Information Supervisor
• Budget Analyst I

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Civil Service Duties Test

• Selected classification review
• State Universities Civil Service System
  classification review against FLSA regulations
• Job description review against FLSA regulations
• Interviews with supervisors/department heads to
  evaluate work performed against FLSA regulations
• All Civil Service classifications currently
  classified as Exempt met the duties test for FLSA
  exemption.

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Academic Review

• Salary Test
• Banner report identifying all Academic employees
  compensated below the 455/week minimum
• Total number of Academic employees University
  wide not meeting salary test 152
• UIC 90
• UIS 17
• UIUC 45

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Academic Duties Test

• Duties Test
• Banner report identifying all Academic employees
  (job titles and positions)
• Review conducted of all Academic positions.
• In depth review (job descriptions reviewed and
  interviews with supervisors/department heads)
  based on legal counsel recommendations and peer
  institution reviews, for the following positions
• Assistant Coaches
• Resident Directors
• Graduate Assistants

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Academic Duties Test Results

• The following positions met the duties test for
  FLSA exemption
• Assistant Coaches
• Resident Directors
• Some individuals in these positions may not have
  met the salaries test, and therefore, cannot be
  classified as FLSA exempt.

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Graduate Assistants Duties Test Results

• The following assistantship positions met the
  duties test for FLSA exemption
• Teaching Assistants (TA)
• Research Assistants (RA)
• Para-Professional Assistants (PGA)
• TA, RA, and PGA positions primary role is that
  of student, not employee, so the salary test is
  not required.

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Graduate Assistants Duties Test Results

• Graduate Assistants (GA) did not meet the duties
  test and must be classified as salaried
  non-exempt
• Re-classification as salaried non-exempt
  employees will be effective 8/16/05
• Approximate number of GAs University wide not
  meeting duties test for 2004-2005 Academic year
  756
• UIC 173
• UIS 160
• UIUC 423
• 2005-2006 Academic year totals for GAs may vary

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Final Review - Counts

• Civil Service Zero employees will be changed
  from exempt to salaried non-exempt based on the
  salary and duties test.
• Academic Professionals (AP)
• 152 employees will be changed from exempt to
  salaried non-exempt status based on the salary
  test.
• Zero employees will be changed from exempt to
  salaried non-exempt based on the duties test.
• Graduate Assistants (GA) 756 employees for the
  2004-2005 Academic year would have been changed
  from exempt to salaried non-exempt status based
  on the duties test.

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Salaried Non-Exempt Employees

• What will change?
• Eligibility for overtime compensation
• Tracking hours worked
• When will the change be effective?
• On August 16, 2005, the following will occur
• Exempt Indicator on NBAPOSN in Banner changed by
  Campus HR for individuals identified from the
  review who are going from exempt to salaried
  non-exempt status
• Academic Professionals not meeting salary
  requirement begin tracking hours
• Graduate Assistants (GAs) begin tracking hours

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Eligibility for Overtime

• Compensation
• Paid predetermined salary on a monthly basis
  (Academic Monthly Payroll)
• Eligible for overtime pay at one-half the hourly
  rate for all hours worked over 40 for each
  workweek
• Compensatory Time
• Monetary Compensation

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Compensation

• Compensatory Time
• Employees discretion
• Used at one-half time the number of hours worked
  over 40
• At time of termination/separation, paid out all
  unused compensatory time at one-half the regular
  hourly rate at the time of termination/separation
• Balances and usage maintained within the unit
• Maximum compensatory time accumulation allowed
  240 hours

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Compensation

• Monetary Compensation
• Paid at one-half the regular hourly rate
  (full-rate may be found on NBAJOBS, Job Detail
  Screen, Rate field)
• Paid in the form of an adjustment on the job that
  the overtime was worked, following the end of the
  pay period in which the overtime was worked
• Overtime paid in increments of 15 minutes for
  hours worked over 40 in a work week
• 0-7 minutes 0
• 8-22 minutes 15 (.25)
• 23-37 minutes 30 (.5)
• 38-59 minutes 45 (.75)

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Overtime Payment

• Overtime compensation in the form of pay
• Process as an adjustment
• Earning code ADD
• Include dollar amount on monthly job
• Comment field FLSA OT
• Adjustment must be processed and paid within 13
  days of the end of the pay period
• Job Aid to assist with performing an adjustment
  can be found at http//www.obfs.uillinois.edu/joba
  ids/DTE_PayrollAdjustments.doc

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Tracking Hours

• Academic Salaried Non-Exempt employees will track
  hours on the FLSA Salaried Non-Exempt Academic
  Timesheet (Excel spreadsheet)
• Form is available in NESSIE, HR Forms section, at
  https//nessie.uihr.uillinois.edu/cf/index.cfm?ite
  m_id161
• Form may be downloaded and saved to personal
  desktop/folder for each employee.

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FLSA Salaried Non-Exempt Academic Timesheet

• Report total hours worked per day
• Automatic Calculations
• Hours worked over 40 in each workweek
• Number of hours due to employee in the form of
  comp time or overtime payment for each monthly
  pay period
• Employee and Supervisor signature required on all
  timesheets in which overtime hours were accrued
• Units may choose to collect employee timesheets
  and signatures for all months for documentation
  and retention purposes
• Spreadsheet/paper form retained in the unit

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FLSA Salaried Non-Exempt Academic Timesheet
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Hiring Salaried Non-Exempt Academic Staff

• DART calculator will be available to determine if
  employee meets the minimum salary test
• Administrative Applications section in DART
• FLSA exemption status should be determined BEFORE
  a verbal or written offer is made
• Unit enters annual salary and number of months of
  service calculator displays weekly salary
• Until calculator is available, units may manually
  determine the weekly salary by using this
  formula Annual Salary / Mo Paid / 4.333
  Weekly Salary

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Hiring Salaried Non-Exempt Academic Staff

• Banner Position Creation and Maintenance
• Exempt Indicator defaults from the p-class
• Confirm Exempt Indicator box in NBAPOSN is not
  checked
• If checked, uncheck the field
• Employees utilizing same p-class may have
  different FLSA exemption statuses because of
  weekly salary

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Banner FLSA Indicator

• Campus Human Resources will fix FLSA Indicator
  for Academic employees identified during the
  review
• Beginning August 16, 2005, units will be
  responsible for ensuring FLSA status is correct
  (UIC and UIUC only)

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Academic Exempt Reporting

• Applies to the following employee groups
• Academic Professionals (AP) who meet the 455
  salary requirement
• Faculty
• Teaching Assistants (TA)
• Research Assistants (RA)
• Para-Professional Assistants (PGA)
• Post-Doc Research Associates/Interns

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Academic Exempt Reporting

• Report absences in four (4) and eight (8) hour
  increments only.
• Part-time Academic employees report in half- and
  full-day increments based on their work schedule.
• Example an employee who works six hours per day
  would report in three and six hour increments.
• Employees may not accumulate time over multiple
  days to reach the 4 and 8 hour increments.
• Example an employee who is absent two hours on
  Monday and two hours on Tuesday does not report
  four hours of absence.
• Absences of less than 4 or 8 hours per day are
  not reported against vacation or sick leave
  usage.
• Exempt employees are still expected to be
  available for customers/clients and perform their
  work responsibilities above and beyond the normal
  University workweek, in order to fulfill their
  professional responsibilities.

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Summary

• No Civil Service employees will be changed from
  exempt to non-exempt
• All Academic Professional employees not meeting
  the minimum salary requirement (455/wk) and all
  Graduate Assistants (GAs) will be changed from
  exempt to salaried non-exempt status effective
  August 16, 2005
• Academic Professionals not meeting salary
  requirement and all GAs will begin tracking
  hours on FLSA Salaried Non-Exempt Academic
  Timesheet August 16, 2005
• Units responsible for determining FLSA exemption
  status and verifying FLSA Indicator in Banner
  August 16, 2005 (UIC and UIUC only)
• Exempt Academic employees report absences in 4
  and 8 hour increments only (full- and half-day
  for part-time employees)

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Online Resources

• FLSA Information and Resources https//hrnet.uihr.
  uillinois.edu/dart-cf/index.cfm?Item_id2734
• FLSA Salaried Non-Exempt Academic Timesheet
  (NESSIE HR Forms, Policy/Labor, and Leave
  sections) https//nessie.uihr.uillinois.edu/cf/ind
  ex.cfm?item_id161
• Pay Adjustment Job Aid http//www.obfs.uillinois.e
  du/jobaids/DTE_PayrollAdjustments.doc
• 2006 Payroll Schedule http//www.obfs.uillinois.e
  du/earnings/2006payrollschedule.xls
• DART Administrative Applications
  https//eas.admin.uillinois.edu/eas/servlet/EasLog
  in?redirecthttps//hrnet.uihr.uillinois.edu/dart-
  cf/admin/index.cfm

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Fair Labor Standards Act

• QUESTIONS?