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Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act (FLSA), governs the process that Compensation Analysts use to determine whether a position is either eligible for over-time pay for hours worked in excess of 40 per week (non-exempt) or is paid a flat sum for hours worked, even if they exceed 40 hours within a workweek (exempt).

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FLSA History

The Fair Labor Standards Act, (FLSA), is a federal law dating back over half a century which establishes certain minimum requirements for employees' hours of work, wages, premium overtime and payroll records.

The FLSA, identifies two types of employees: non-exempt employees and exempt employees:

  • Non-exempt employees are employees who, based on the duties performed and the manner of compensation, are required to account for time worked and sick leave, vacation, and other leave on an hourly and fractional hourly basis. The FLSA requires that these employees be paid overtime at the premium (time-and-one-half) for actual time worked in excess of 40 hours per week.
  • Exempt employees are employees who, based on the duties performed and the manner of compensation, are exempt from the FLSA minimum wage and overtime provisions. Exempt employees are paid an established monthly or annual salary and are expected to fulfill the duties of their positions regardless of the hours worked. They do not receive premium overtime, straight overtime or compensatory time for working more than 40 hours in a work week.
  • Salary Basis Test: requirement that employees be paid at least $913 per week or $47,476 per year "on a salary basis", which means that the employee must receive his full predetermined salary for any week in which he performs any work, without regard to the number of days or hours worked or the quality or quantity of work performed.
  • Duties Test: defines three categories of jobs which may be exempt from the overtime entitlement: executive, administrative and professional. Computer professionals may qualify as exempt under the professional exemption if they meet special duties criteria and are paid either on a salary basis or an hourly amount which is at least $45.84 per hour. In addition, certain seasonal, recreational employees can be considered exempt from certain provisions.

The FLSA did not apply to the University until 1966; coverage lasted only a short time before a Supreme Court decision voided coverage. Another Supreme Court decision in 1985 paved the way for FLSA coverage of virtually all public employees. Congress implemented this decision, which applied to the University, in 1986.

Salary Basis Test

First "Hurdle" to pass when determining if job is EXEMPT.  Employees compensated on a "Salary Basis"

  • Must be paid at least $913 per week or $47,476 per year on a "Salary Basis"
  • Must receive full predetermined salary for any week in which the employee performs any work without regard to number of days or hours worked or the quality or quantity of work performed
  • Are not paid overtime - expected to work until the job is completed without additional compensation

Employees are not allowed to have the following deductions from salary:

  • absences occasioned by the employer or by the operating requirements of the business
  • absences for jury duty, witness duty, or temporary military leave during any week in which the employee performs some work
  • absences for disciplinary suspensions of less than one full workweek, except in the case of suspension for infractions of safety rules of major significance, (which would allow suspension without pay for less than one day)

Deductions from salary are permitted for:

  • absences from work for a day or more for personal reasons
  • absences from work for a day or more for sickness or a disability
  • absences from work for a day or more required by the employer for infractions of safety rules relating to the prevention of serious danger to the employer's premises or other employees.
  • absences from work of one full workweek in which the employee performs no work.

Duties Test

  • The Duties Test is the second criteria that jobs and employees must pass through to be considered exempt from the FLSA requirements. There are three major categories of jobs which may be considered exempt and one Specialized professional group:
  • Executive: Supervisory or Management jobs.
  • Professional: Learned or Professionals which requires performance requiring knowledge of an advanced type, which normally means more than a high school education, in a field or science and/or learning and Artistic Professionals which requires performance of original and creative work requiring invention, imagination or talent in a recognized field of artistic endeavor.
  • Administrative: Employees who perform non-manual work directly related to management policies, such as executive assistants or advisory specialists to management and generally do not perform "production work" and have the authority and power to make independent judgments and exhibit discretion
  • Computer Professional: Computer professionals may qualify as exempt under the professional exemption if they meet Special duties criteria and are paid either on a salary basis or an hourly amount which is at least $45.84 per hour. In addition, certain seasonal, recreational employees can be considered exempt from certain provisions.

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Executive, Professional and Administrative Exemption Test

Executive Exemption Test

  • The employee's primary duty (at least 50% of the time) is the management of a recognized department or subdivision and
  • The employee's primary duty is to customarily and regularly direct the work of two (2) or more full-time employees or the equivalent (e.g. four half-time employees) and
  • Possesses the authority to hire and fire employees, or whose suggestions are given substantial weight in such decisions, including promotions and
  • The employee customarily and regularly exercises discretionary power involving the comparison and evaluation of possible courses of conduct in acting or making decisions after the various possibilities have been considered and
  • Does not devote more than 20% of hours not closely related to items listed above.

Professional Exemption Test

  • The employee spends more than 50% of time working as a professional in either a learned or artistic profession
  • For those who work in a learned profession, the exemption requires knowledge of an advanced type in a field of science or learning which is normally acquired by a prolonged course of specialized intellectual instruction as distinguished from general academic education, apprenticeships or routine training.
  • For those who work in an artistic profession, the exemption requires original or creative work depending primarily on invention, imagination, or talent in a field of artistic endeavor. The professional exemption also includes teaching, tutoring, instructing, or lecturing for a school system or educational institution and
  • Performs work requiring the consistent exercise of discretion and judgment and
  • The work product is predominantly intellectual and varied in character and cannot be standardized in relation to a given period of time and
  • Does not devote more than 20% of hours not closely related to activities that are not an essential part of and necessarily incident to the standards.

Administrative Exemption Test

  • Duties consist of non-manual or office work directly related to management policies or general business operations (Recent interpretations of the Administrative Exemption have placed emphasis on this aspect of the test) or the performance of administrative functions in an educational establishment in work related to academic instruction and training and
  • Customarily and regularly exercises discretion and independent judgment and
  • Regularly and directly assists a person employed in an executive and administrative capacity; or performs work under only general supervision requiring special training, experience or knowledge; or executes special assignments and tasks under general supervision and
  • Does not devote more than 20% of work time to activities not directly or closely related to performance of administrative work as defined above

Generally, there are four types of Administratively Exempt Employees:

  • Executive or administrative assistants who generally work for an official or manager who has duties of such scope and which require so much attention that the work of personal scrutiny, correspondence, interviews and the like must be delegated;
  • Employees who act as advisory specialists to management, such as personnel directors, consultants, statisticians, credit managers, purchasing agents and buyers;
  • Individuals engaged in the overall academic administration of an educational institution. Such persons must perform duties which are primarily concerned with the administration of such matters as curriculum, quality and methods of instructing, measuring and testing the learning potential and achievement of students, establishing and maintaining academic and grading standards and other aspects of the teaching program;
  • "Special assignment employees" such as lease buyers, field representatives and promotion employees

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Compensation of Exempt Titles

Employees in exempt titles are compensated as follows:

  • The normal work week for a full-time employee is considered to be a minimum of forty hours, however, greater emphasis is placed on meeting the responsibilities assigned to the position rather than on working a specified number of hours.
  • Use of vacation and sick leave will be recorded in one-day increments; absences of less than a day will not be charged against accrued leave time.
  • Exempt employees will not receive overtime compensation or compensatory time off.
  • The employee's salary may not be reduced for absences of less than a full day even if approved at the employee's request.
  • In cases of corrective action, suspensions without pay are not permitted for less than one full workweek, except in the case of suspension for infractions of safety rules of major significance.
  • Exempt employees may not be required to record their work time for the purposes of receiving their salary.

Compensation of Non-exempt Titles

Non-exempt titles are compensated as follows:

  • For all hours which exceed 40 hours of actual work in a workweek, premium overtime is compensated at the rate of time-and-one-half.
  • Vacation and sick leave and compensatory time use is recorded to the nearest one-quarter hour.
  • When an employee has exhausted all available accrued vacation and sick leave and compensatory time off, salary is reduced ("docked") in hourly or fractional hourly increments.
  • In cases of corrective action, suspension without pay for periods of one day or more is permitted.

Because the FLSA requires payment for all hours worked, there may be circumstances when overtime pay will be due even when the overtime was not authorized in advance. It is up to management to exercise control regarding performance of work. Normally, a supervisor sets performance expectations, including overtime authorization, and assists the employee in attaining and sustaining satisfactory performance by providing regular feedback to the employee through performance evaluations and coaching. If the employee fails to correct deficiencies such as working unauthorized overtime, corrective action may be appropriate. Employee and Labor Relations Consultants are available for consultation, information and advice regarding appropriate courses of action.

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Q: Are the jobs which are nonexempt still considered 'professional' jobs?
A: The exemption status does not diminish the professional nature and significance of any job at the University. It is simply a legal designation for pay purposes. The University considers all employees as "professionals" and emphasizes appropriate job classifications, merit pay, performance incentives and professional development.

Q: Is the FLSA status, (exempt/nonexempt determination), considered final or can determinations be appealed or changed based upon management comment?
A: The FLSA status has been determined for each title. However, individual positions or performance may require analysis by Compensation to ensure that each is assigned to the appropriate classification. As always, positions must meet the series concept definitions in order to be reclassified. Positions will not be reclassified for the purpose of avoiding overtime payments.

Q: Are departments required to pay premium overtime to "non-exempt" employees who work over 40 hours a week, or do departments have the discretion to provide compensatory time off?
A: For Non-Exclusively Represented Staff (PPSM): At the time overtime work is assigned, managers/supervisors need to discuss the method of compensation prior to authorizing the overtime. Management may offer either payment or Compensatory Time Off (CTO). The employee selects the method - payment or CTO.

For Exclusively Represented Employees: Please consult respective contracts for current practice.

Q: Can "exempt" employees work part-time?
A: Yes, but the part-time employee must also be compensated on a salaried basis. For example, if an exempt employee has a 50% appointment, they would be paid at 50% of the established monthly rate. The workload should be adjusted as appropriate.

Q: If a nonexempt employee works overtime without obtaining prior approval from his/her supervisor, is the department obligated to compensate premium overtime?
A: Yes. Overtime must always be authorized in advance by the supervisor. However, it still accrues as a liability when the employee works overtime and the supervisor knows or "should have known" that the work was performed and did nothing to stop it from occurring. Corrective action may be appropriate against the employee for not following department procedure.

Q: Can exempt employees be asked to sign a timesheet or time record?
A: Yes. The exempt employee can be required to record the negative time or exceptional time which was used during the pay period. In other words, the exempt employee is indicating when they used vacation, sick leave or personal unpaid leave in one day increments.

Q: Can detailed records be kept for exempt employees for purposes other than compensation or salary?
A: Yes, detailed records to the quarter hour can be kept for employees who charge a percentage of their salary to various grants or who are working on a number of accounts and the work charged to each account varies, or for other purposes, such as management reports, as long as the recording of time does not relate to pay.

Q: Can exempt employees be compensated for being on-call or for carrying a beeper?
A: No, exempt employees may be required to be on-call or to carry a beeper but no additional compensation may be provided.

Q: Since exempt employees' time is not rigidly controlled, how do I address issues of work time and work absences?
A: You should discuss with the exempt employee the expectations of the position, including the need to be present in order to perform work that is essential to the unit's operations or the need to arrive by a certain time in order to assure that the workplace is properly staffed for business. Discussions should focus on the responsibilities of the exempt employee and how those expectations relate to time spent at work.

You may also discuss your expectation that the exempt employee needs to be present during certain days of the week in order to attend meetings, meet pre-determined deadlines and to consult with his/her colleagues.

Q: What if the exempt employee fails to maintain the schedule discussed above or fails to be present during crucial times of the year?
A: You may then need to formally counsel or warn the employee about his/her failure to meet the performance expectations of the position. Ultimately, an employee could be dismissed for his/her failure to be present since the employee, if not present, cannot perform the job duties of the position in order to meet the University's business needs.

Q: May I require an exempt employee to inform me when he/she intends to be absent from the campus for several hours during a typical work day?
A: You may certainly ask any employee to inform you if they will not be at work during some hours of a typical work day. The information is necessary so that others who need to coordinate with that employee can be informed of the work schedule. It is also common courtesy. If an employee fails to keep you informed, you may discuss the matter with the employee, emphasizing the performance-related aspects of the employee's failure to keep you informed.

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