Understanding FLSA Changes Effective Dec. 1, 2016

1. Leading LanderFair Labor Standards Act (FLSA) Effective December 1, 2016Advanced Training November, 2016

2. Background • The Fair Labor Standards Act (FLSA) is the federal law that governs: • Overtime • Minimum Wage • Recordkeeping • Child Labor • In early 2014, President Obama required the Department of Labor to update the FLSA regulations. • New regulations were finalized on May 18, 2016 and are to be effective by December 1, 2016.

3. Current Regulations vs. New Regulations

4. FLSA CHANGES • Salary Threshold Change $455/week or $23,660 per year • Highly compensated employee threshold - $100,000 per year • Duties Test • Future changes - No changes unless passed in legislation • Updated Salary Threshold $913/week or $47,476 per year • Updated highly compensated employee threshold - $134,004 • Duties Test – no change • Implemented automatic threshold changes every 3 years - next change, year 2020

5. Non Exempt VS Exempt • Minimum wage • Overtime pay (State Government can use compensatory time in lieu of pay) • Recordkeeping • Paid for the hours worked • NEW – Comp time not taken MUST be paid out when nonexempt employee leaves • No overtime • Paid “to get the job done and not by the hours” to do the job • Can do flex time week to week – 41/34

6. Lander Implementation Date November 16, 2016

7. Provisions limiting impact in Higher Education • Bonafide teachers – Teachers are not subject to the salary level requirement for the white collar exemptions if the primary duty is teaching, instructing, or lecturing. Teachers include professors (all rank) and adjunct instructors.

8. Provisions limiting impact in Higher Education • Coaches – Athletic coaches and assistant coaches may fall under the exemption only if their primary duty is teaching. (more than 50 % and needs to be specified in the job description). If however, their primary duties (more than 51%) include recruiting athletes or doing manual labor, they do not qualify.

9. Provisions limiting impact in Higher Education • Academic administrative personnel – Administrative personnel whose primary duty consists of administrative functions directly related to academic instruction or training and who interact with students outside the classroom, such as department heads, academic counselors or advisors and intervention specialists, are subject to a special salary threshold that does not apply to white collar employees outside higher education.

10. Provisions limiting impact in Higher Education Non-academic administrative personnel - An employee whose primary duty involves the performance of office or non-manual work directly related to management or general business operations (i.e. Accounting, Human Resources) and includes the exercise of discretion and independent judgement can be considered as an exempt administrative employee. The new salary threshold of $47,476 must be met.

11. Impact on the Workplace • Employees may be excited about the work/life balance and being able to take more compensatory time off since it will be earned at a time and one-half rate. • In addition, nonexempt employees will receive a payout for unused compensatory time in special events. • Newly affected employees may have a difficult time adjusting to the requirement to complete tasks within a normal workday. • Employees who are being required to transition from “exempt” to “nonexempt” may perceive a loss of status and flexibility, and may have a difficult time adjusting to the new requirements.

12. Impact on the Workplace • Employees may feel as though they have been demoted or are not trusted since they are now required to closely monitor their hours, whereas in the past they worked alongside other exempt co-workers for as many hours as it took to get a job done (regularly exceeding 40 hours). • All employees determined to be non-exempt will be required to report their work time to payroll. • All hours worked over 40 in a work week must be compensated (either comp time or paid overtime).

13. Impact on the Workplace • Analyze each situation to determine the best approach. • Allow compensatory time • Limit the hours employees work • Adjust work schedules • Loss of productivity or work shifting • Answering incidental emails or phone calls after hours could result in overtime.

14. Review of Policies and Resources Website – Office of Human Resources Look for Overtime Changes (should be populated today) Revised Policy – Still pending approval Compensatory Time Form and Payroll Form Powerpoints FAQs Travel Policy Other Resources for Assistance

15. Travel Practice Scenarios

16. Scenario 1 Non-Exempt Greg normally works at 320 Stanley Ave in Greenwood, SC but on Thursday he must work in Greenville for a special one day assignment. His normal scheduled work hours are from 8:30 to 5:00. He leaves his house at 6:30 AM and gets home at 5:30 PM. How many hours of travel should be counted as hours worked?

17. Scenario 1: The Answer If Non-Exempt Greg regularly works at a fixed location in one city and has to work a special one day assignment in another city and returns home the same day, the time spent traveling to and from the other city is work time, except the employer may deduct that time the employee would normally spend commuting to the regular work site.

18. Scenario 2 Non-Exempt Jean has a work related conference held in Columbia, typically a 2 hour commute. The conference starts at 11am on Monday and concludes at 1pm on Tuesday. Jean’s normal hours are 8:00 – 4:30 Monday through Friday. What is considered work time?

19. Scenario 2: The Answer Non-Exempt Jean should report to the office at her normal start time, leave to attend the meeting at 9am and return to the office at 3pm the next day. Since an overnight stay is included, all travel time counts as work time. However, if Non-Exempt Jean does not report to work before or after the conference, then leave time would need to be reported. Travel time is counted as work time as well as time in attendance at the conference/meeting and working lunches (excluding mingling and optional entertainment provided that occurs outside of normal work hours).

20. Scenario 3 Non-Exempt Rich has to take an overnight trip out of town for a meeting on Monday. It is necessary for him to fly out on Sunday. He leaves his home for the airport at 1:30 to catch a 4:00 PM flight. His plane arrives at his destination at 6:00 PM. His normal work schedule is 8:30 – 5:00. What hours are considered work time?

21. Scenario 3: The Answer When Non-Exempt Rich is driving to the airport for an overnight trip in another city, all his travel time will count as work hours, as well as other hours that are within his regularly scheduled work hours. However, unless he is performing a work related activity such as preparing for the meeting by reviewing meeting material or making notes, he should not count time after his regular work hours spent as a passenger on the airplane. In this case, he would not count the time from 5:00 to 6:00 unless he is performing work-related duties.

22. Scenario 4 Non-Exempt Rich decides he is going to drive on Friday to go to his conference. His supervisor told him he would have to leave at the end of the business day (5pm). Would hours count as travel time?

23. Scenario 4: The Answer Since Rich is driving himself to the conference after work on Friday, this is considered work time.

24. Scenario 5 While Non-Exempt Rich left on Friday to go out of town on business, nonexempt Ned had to leave on Sunday. Nonexempt Ned normally works Monday thru Friday from 8am until 5pm. What is compensated?

25. Scenario 5: The Answer Any travel time involving an overnight stay is counted as hours worked for the vehicle driver, even if the travel occurs on a non-work day. If a co-worker rides with Ned as a passenger in the vehicle, he/she should count only the hours that are during his/her regularly scheduled work hours, regardless of the day of the week. Any time outside normal work hours would not be considered as hours worked unless he/she is performing work of some kind.

26. Scenario 5: The Answer (cont.) If Non-Exempt Ned chooses to fly instead, and flies from 10am to 4pm, all this time is compensable as it corresponds to his normal scheduled work time. However, if the flight is delayed and does not leave until after 5pm, the travel time on the plane is not considered compensable unless he is reviewing notes, checking email, or preparing for the meeting while traveling.

27. Scenario 6 Non-Exempt Adam resides on our premises. Do we have to compensate him while he sleeps?

28. Scenario 6: The Answer No, you do not have to count the time Non-Exempt Adam sleeps as work time as long as the following conditions are met: • There is an express agreement that excludes sleeping time. • Adequate sleeping facilities for an uninterrupted night’s sleep are provided. • At least five hours of sleep are possible during the scheduled sleeping periods. • Interruptions to perform duties are considered time worked.

29. Scenario 7 What about the other times Non-Exempt Adam is living on the premises but is not considered working? Do we have to pay for that as time worked?

30. Scenario 7: The Answer If Non-Exempt Adam is on his off duty time (complete freedom from all duties) and free to eat, watch television, exercise, play or engage in other personal endeavors, then that time is not considered work time.

31. Checklist Supervisors • Attend training • Review all resources and policies • Communicate this week by Friday, November 11, 2016 if possible, to affected exempt to nonexempt employees new expectations • Communicated to affected current nonexempt employee changes by end of week, November 11, 2016 • Communicate timelines for 1st changes due dates. Begins November 16, 2016 – due to payroll November 21, 2016 • For current nonexempt employees – need comp time balance as of November 15, 2016 by this Monday.

32. Checklist Human Resources • Sending out supervisor affected list by Tuesday • Sending out Employee Follow up Notification Letters by Monday, November 13, 2016. • Current nonexempt will get an email notification from HR. • Enter all current nonexempt comp time balance. • Maintain all comp time records. • Beginning end of each month after payroll is processed, HR will provide a monthly report to each supervisor/VP and the budget office a copy of comp time for their area.

33. THANK YOU! Questions?