Fair Labor Standards Act (FLSA) Education

1. Fair Labor Standards Act (FLSA) Education May 2005 Revised February 2006

2. 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

3. 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.

4. 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

5. 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.

6. 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.

7. 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.

8. 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

9. 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.

10. 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

11. 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: • Admissions and Records Officer II • Events Administrator • Information Supervisor • Budget Analyst I • Space Administrator III • Graphic Designer II • Assistant Program Director

12. 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.

13. 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

14. 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

15. 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.

16. 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.

17. 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

18. 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.

19. 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

20. 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

21. 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

22. 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)

23. 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

24. 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.

25. 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

26. FLSA Salaried Non-Exempt Academic Timesheet

27. 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

28. 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

29. 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)

30. 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

31. 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.

32. 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)

33. 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

34. Fair Labor Standards Act QUESTIONS?