Fair Labor Standards Act Revisions

1. Fair Labor Standards ActRevisions

2. 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. The University of Arizona – Human Resources and FSO-Operations

3. 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. The University of Arizona – Human Resources and FSO-Operations

4. 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.” The University of Arizona – Human Resources and FSO-Operations

5. 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. The University of Arizona – Human Resources and FSO-Operations

6. 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. The University of Arizona – Human Resources and FSO-Operations

7. 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. The University of Arizona – Human Resources and FSO-Operations

8. 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. The University of Arizona – Human Resources and FSO-Operations

9. Duties Test for Exemption • Learned Professional Exemption • Creative Professional Exemption • Computer Professional Exemption • Highly Compensated Exemption • Executive Exemption • Administrative Exemption The University of Arizona – Human Resources and FSO-Operations

10. 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. The University of Arizona – Human Resources and FSO-Operations

11. 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. The University of Arizona – Human Resources and FSO-Operations

12. 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. The University of Arizona – Human Resources and FSO-Operations

13. 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. The University of Arizona – Human Resources and FSO-Operations

14. 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. The University of Arizona – Human Resources and FSO-Operations

15. 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. The University of Arizona – Human Resources and FSO-Operations

16. 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. The University of Arizona – Human Resources and FSO-Operations

17. Compliance Steps • Analysis • Communications and Training • Administrative Process • Systems Enhancements The University of Arizona – Human Resources and FSO-Operations

18. 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. The University of Arizona – Human Resources and FSO-Operations

19. 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. The University of Arizona – Human Resources and FSO-Operations

20. 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. The University of Arizona – Human Resources and FSO-Operations

21. 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-Operations The University of Arizona – Human Resources and FSO August 2, 2004 21

22. 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 The University of Arizona – Human Resources and FSO-Operations

23. 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. The University of Arizona – Human Resources and FSO-Operations

24. 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. The University of Arizona – Human Resources and FSO-Operations

25. 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. The University of Arizona – Human Resources and FSO-Operations

26. 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 The University of Arizona – Human Resources and FSO-Operations

27. PSOS Screen 08 Y N M X The University of Arizona – Human Resources and FSO-Operations

28. Employee’s FLSA status Wildcat, Wilbur 1234 PSOS Screen 02 The University of Arizona – Human Resources and FSO-Operations

29. 1234 1234 Wildcat, Wilbur Wildcat, Wilma Wednesday of non-pay week (FLSA Exemption Status Conflict) PSPM03 Time Roster Worksheet The University of Arizona – Human Resources and FSO-Operations

30. Wildcat, Wilbur 1234 1234 Wildcat, Wilma (FLSA Exemption Status Conflict) Wednesday of pay week TRPR31A - Final Departmental Online Time Roster The University of Arizona – Human Resources and FSO-Operations

31. PAF Form to Change Employee Exemption Status Emp FLSA Stat FLSA Title The University of Arizona – Human Resources and FSO-Operations

32. 8 V 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 The University of Arizona – Human Resources and FSO-Operations

33. Paying OT for a Prior Pay Period The University of Arizona – Human Resources and FSO-Operations

34. Adding Comp Time not Previously Reported The University of Arizona – Human Resources and FSO-Operations

35. 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.edu/ FSO – Operations http://www.fso.arizona.edu/fso/operations.asp The University of Arizona – Human Resources and FSO-Operations