Federal Changes to the Fair Labor Standards Act (FLSA)


On Tuesday, Nov 22, 2016, a U.S. District Court judge from Texas issued a preliminary injunction postponing the effective date of the U.S. Department of Labor (DOL)’s final rule. The judge issued the injunction in response to a legal challenge brought by a coalition of more than 50 business groups and 21 state attorneys general. As you know, the rule was scheduled to go into effect on December 1. ("Texas Judge Preliminarily Enjoins New Overtime Exemption Rules Nationwide: What Steps Should Follow?")


What does this new development mean for UVU? At this point, changes in individual employee classifications that were scheduled to become effective December 1, 2016 are now on hold.


The FLSA Compliance Committee will continue to carefully monitor these developments and gather information from a variety of sources and organizations. UVU affirms its commitment to comply with the Fair Labor Standards Act. We will continue to keep you apprised of developments in this court action and the DOL’s final rule.

What is the FLSA

The Fair Labor Standards Act (FLSA) requires that most workers receive a minimum overtime pay of 1.5 times the employee’s regular pay rate for all hours worked over 40 hours in a seven-day workweek. UVU calls positions that are covered by FLSA overtime regulations “nonexempt” and/or “overtime eligible.” All part-time staff, temporary staff, and student workers are, by definition, overtime eligible. The U.S. Department of Labor (DOL) has announced changes to the FLSA that will impact the criteria used to determine eligibility for overtime. Effective December 1, 2016, the salary threshold used to determine eligibility for overtime will be increased from $23,660 per year ($455 per week) to $47,476 per year ($913 per week) (“Final Rule”). In addition, the DOL included a mechanism to automatically increase this salary threshold every three years.  Only positions that meet certain narrowly defined criteria (including duties test and appropriate salary test) are exempt from the FLSA’s overtime requirements. UVU’s Human Resources Compensation Office, in consultation with UVU’s Office of General Counsel as needed, is responsible for determining the FLSA classification (overtime status) for all UVU paid positions.

Why Does this Matter?

Generally speaking, the intent of the federal government and the changes to the Department of Labor’s rules is to extend overtime protections to more U.S. workers. This change is expected to expand the number of employees eligible for overtime at Utah Valley University.

Exemptions

Under the Final Rule announced in May 2016 to update the FLSA regulations, a position must satisfy three criteria to qualify as exempt from overtime:

  1. The incumbent in the position must be paid on a salaried basis (the “salary basis test”);
  2. The salary level must be at least $913/week, or $47,476 annually (the minimum salary requirement or “salary level test”);
  3. The employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the DOL regulations (the “duties test”).

How is UVU Responding?

The University has been monitoring the national discussion and has been assessing the potential impacts since the March 2014 announcement that changes were being considered by DOL. In addition, the FLSA Compliance Committee was organized to gather information from a variety of sources and organizations, evaluate the impact and risks associated with the new rules, and develop plans to address the impact to UVU. The committee includes representatives from Human Resources, the Office of General Counsel, and the Office of the Senior Vice President for Academic Affairs. The committee has been working closely with President’s Council and the President’s Executive Leadership Council to seek guidance and approval of any needed changes to UVU policies and/or practices to ensure employees are treated fairly in accordance with applicable law.

Throughout its review process, the FLSA Compliance Committee has consulted with various groups to explore options, hear concerns, and take feedback. Once plans are finalized and approved, Human Resources will be directly contacting employees and their supervisors to communicate FLSA classification changes. We expect this to take place in early November 2016. An employee/supervisor training program will also be offered during this same period.

Additionally, HR will continue to work with administration, school/college, and divisional leadership to prepare for any associated changes that will be implemented in anticipation of the December 1, 2016 effective date.

Based on current projections, a classification change is expected to affect over 250 employees at the University.

Keep in Mind

For those whose positions will be changed from exempt to overtime eligible (nonexempt), keep in mind these four things:

  1. All changes relate to the method and manner of pay and recording keeping, not the level or professional nature of the work that is being performed.
  2. Pay will remain on a salary basis and overtime eligible employees will be given compensatory (“comp”) time or paid overtime for each hour worked above 40 in a workweek.
  3. Overtime eligible employees will be responsible for timekeeping in the T.I.M.S tracking system.
  4. All overtime hours must be approved in advance by the supervisor.

Vacation Accrual

Due to nonexempt employees’ ability to accrue comp time, no change will be made to existing policy, which provides exempt employees three more vacation days per year than non-exempt employees during the first 14 years of employment.

As employees whose classification moves from exempt to nonexempt will not have yet accrued comp time, such employees will be awarded 24 hours of additional personal leave January 1, 2017, which must be used during 2017 leave year.

Compensatory Time

While federal law allows public employees to accrue up to 240 hours of comp time, UVU has established a limit of 120 hours of accumulated comp time. Accrued comp time may be used in the same manner as vacation leave.  Any hours in excess of 120 hours will be paid by the employee’s department as overtime. This limit reduces UVU’s liability at employee termination and/or at the conclusion of grants and contracts.

UVU will also continue its practice of paying out accumulated comp time when an employee changes positions within the University.

Additional Resources

Department of Labor Wage and Hour Links

For any additional questions, please contact UVU HR's Compensation Team:

  • Wayne Squire, Compensation Manager ext.6089

  • Heather Goodale, Compensation Analyst ext.8566
  • Judy Martindale, Director Benefits and Compensation ext.8932