Fair Labor Standards Act (FLSA) Education

May 2005Revised February 2006

Today’s Facilitators Jami Painter, University Office of Human

Resources – painterj@uillinois.edu

Campus Human Resources Representative Joyce Winn, University of Illinois at Chicago,

Academic Human Resources - jwinn@uillinois.edu

Debi Stone, University of Illinois at Urbana-Champaign, Academic Human Resources – debstone@uillinois.edu

Patti Sims, University of Illinois at Springfield, Human Resources – sims.patti@uis.edu

Today’s Objectives To provide education about the Federal

FLSA law and regulations. To provide an overview of the University’s

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.

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

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 employee’s 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 employee’s regular rate of pay for all hours worked over 40 in a workweek for employees in salaried non-exempt status.

White-Collar Exemptions White-collar exemptions allow for

exemptions from these requirements. Salary Test

1. Employee must be paid at least a certain compensation level;

2. Employee is paid on a salary ,rather than hourly, basis; and

Duties Test3. Employee performs certain exempt duties.

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.

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

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.

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

Civil Service ReviewSalary Test All exempt Civil Service employees satisfied the

salary test ($455/week) based on Banner reportDuties 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

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.

Academic ReviewSalary 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

Academic – Duties TestDuties 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

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.

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 position’s primary role is that of student, not employee, so the salary test is not required.

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 GA’s University wide not meeting duties test for 2004-2005 Academic year = 756 UIC – 173 UIS – 160 UIUC – 423

2005-2006 Academic year totals for GA’s may vary

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.

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 (GA’s) begin tracking hours

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

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

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)

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/jobaids/DTE_PayrollAdjustments.doc

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?item_id=161

Form may be downloaded and saved to personal desktop/folder for each employee.

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

FLSA Salaried Non-Exempt Academic Timesheet

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

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

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)

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

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.

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 (GA’s) will be changed from exempt to salaried non-exempt status effective August 16, 2005

Academic Professionals not meeting salary requirement and all GA’s 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)

Online Resources FLSA Information and Resources

https://hrnet.uihr.uillinois.edu/dart-cf/index.cfm?Item_id=2734 FLSA Salaried Non-Exempt Academic Timesheet

(NESSIE HR Forms, Policy/Labor, and Leave sections) https://nessie.uihr.uillinois.edu/cf/index.cfm?item_id=161

Pay Adjustment Job Aid http://www.obfs.uillinois.edu/jobaids/DTE_PayrollAdjustments.doc

2006 Payroll Schedule http://www.obfs.uillinois.edu/earnings/2006payrollschedule.xls

DART Administrative Applications https://eas.admin.uillinois.edu/eas/servlet/EasLogin?redirect=https://hrnet.uihr.uillinois.edu/dart-cf/admin/index.cfm

Fair Labor Standards Act

QUESTIONS?