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2016 Fair Labor Standards Act (FLSA) Ruling Update

FLSA Update: December 1, 2016

On November 22, 2016, a federal judge in Texas temporarily blocked implementation of the new Fair Labor Standards Act (FLSA) regulation scheduled to go into effect on December 1, 2016. The University is not delaying implementation and all changes will go into effect as previously communicated to impacted employees and their supervisors.

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On May 18, 2016, the Department of Labor announced changes to the FLSA including raising the salary threshold required for employees to be considered exempt from overtime from $23,660 to $47,476 annually. These changes become law on December 1, 2016.

What does it mean to be exempt or nonexempt?

Exempt employees are excluded from the overtime requirements. Non-exempt employees are paid overtime for time worked in excess of 40 hours in any workweek. For an employee to be classified as exempt, he/she must meet the following three tests:

  • Minimum Salary Test: An employee must be paid a salary minimum that is currently $23,660 per year ($455 per week);
  • Salary Basis Test: An employee must receive a predetermined, fixed salary that is not subject to reduction due to variations in quality or quantity of work performed; and
  • Duties Test: An employee must qualify as an executive, administrative, professional, or computer professional (as specifically defined by the FLSA)
What is changing?

The Department of Labor (DOL) has raised the minimum salary for an employee to be designated as exempt from $23,660 per year ($455 per week) to $47,476 per year ($913 per week). 

Why are the regulations changing?

The existing thresholds were set by the federal government in 2004. In 2015-16, the DOL reevaluated the thresholds and determined that they should be increased.

When will these changes become effective?

The new thresholds take effect December 1, 2016.

Who will be impacted by the change?

Impacted employees include all exempt employees whose base pay is below $47,476.

How will these employees be impacted?

Human Resources has reviewed each impacted position with division and department leaders to determine the best steps to implement the new regulations.

As a result, some salaries were increased to the minimum threshold in order to keep the position exempt. Other salaries will remain the same and the position will become nonexempt.

Are there positions at the University that are not required to meet the minimum salary threshold in order to remain exempt?

Yes. If the primary duty of the position is teaching, tutoring, instructing, or lecturing, the role falls under the FLSA's professional teacher exemption and the minimum salary requirement does not apply. Therefore, the position will remain exempt and pay will stay the same.

When will impacted employees be notified of how the impending regulations will affect their position?

Human Resources has worked with division and department leaders to review every impacted position. Impacted employees will be individually notified in early November of how the impending regulations will affect their position.

If my position has been moved to nonexempt, how do I record my time?

Please use these step-by-step instructions for assistance entering your time.

Can an exempt employee opt out of this change?

No. The exemption criteria are federal law. An employee and employer cannot agree to waive any of the law’s requirements.

Will switching from exempt to nonexempt impact an employee's leave accrual or retirement benefits?

No. This regulatory change will not change an employee’s leave accrual or retirement plan participation.

Is a nonexempt employee eligible for comp time?

Compensatory (comp) time is when an employee is allowed to adjust his/her schedule to compensate for extra hours worked. As a private employer, comp time is not allowed at the University of Richmond. A supervisor may allow an employee to adjust time in lieu of overtime only when this time is taken within the same work week in which the extra hours were worked.

Can a nonexempt employee still work early or late? Can they check e-mails from home?

Nonexempt employees can make arrangements and obtain approval from their supervisor to work from home, or to change their daily schedules to different hours. However, all time worked must be accounted for and recorded as time worked. All overtime and any alternative work arrangements must be approved in advance by the employee’s direct supervisor.

Does the term nonexempt mean non-professional?

No. The term “nonexempt” simply means that the individual holding the position is eligible for overtime. There are many nonexempt jobs that have professional responsibilities at UR.

How does the ruling affect staff members who work less than full time?

The Department of Labor's minimum salary requirement is based on a weekly salary of $913. As long as the weekly salary is below $913, the employee must be nonexempt and paid hourly.

Can nonexempt employees still attend professional conferences?

Yes. Nonexempt employees must account for the travel time and for the hours of conference attendance, but there is no prohibition on traveling or professional development.

I wasn't directly impacted by this change, but feel that these changes have caused salary compression. Will the University consider increasing salaries for other positions?

The University understands that becoming compliant may cause salary compression in certain areas. Salary compression occurs when there is only a small difference in pay between employees regardless of their skills, knowledge, experience, performance, grade level, or seniority. 

Human Resources will continue to monitor University positions to ensure they are internally equitable and competitive within the market.

Where can I find more information?

For more detailed information about the FLSA, visit the HR FLSA webpage. For more information about this change, visit the Department of Labor (DOL) website.