Fair Labor Standards Act

New Fair Labor Standards Act Regulations

Background

The Fair Labor Standards Act (FLSA) is a federal act, passed in 1938, that ensures eligible, non-exempt employees receive the statutory minimum wage and time-and-one-half overtime pay for hours worked in excess of 40 in any defined work week. The Department of Labor (DOL) issues and enforces FLSA regulations. The DOL, on May 18, 2016, issued final regulations that modified the current regulations. More employees are now eligible for overtime pay under the modified regulations.

Under long-standing (and unchanged) FLSA regulations, an employee is classified as exempt under what are referred to as the white collar exemptions, only if the employee meets both of the following tests: (1) salary level test – the employee makes above a certain salary level, currently $23,660 annually, and (2) duties test – their duties consist of certain executive, administrative or professional functions. Exceptions to the salary level test are provided for employees who fall into specific categories – primarily teachers, doctors, lawyers, academic administrative personnel and outside sales. Those categories of employees do not need to meet the salary level test.

New Regulations

The new regulations that go into effect December 1, 2016, significantly increase the salary level to $47,476. What this means is that employees currently making between $23,660 and $47,476 and classified as exempt will lose their exemption unless they fall into the doctor, teacher, lawyer, academic administrative personnel and outside sales exceptions. These impacted employees will need to be paid overtime according to federal requirements at a time and a half rate.

Next Steps

The Human Resources Department has reviewed who will be impacted and did a thorough review of job duties and classifications over the last several months. There will be direct communication with all impacted employees in the coming weeks in the form of emails, meetings, and trainings.

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