Fair Labor Standards Act (FLSA)
FLSA Regulations Update
The U.S. Department of Labor (DOL) has announced changes to the Fair Labor Standards Act (FLSA), raising the salary threshold required to qualify for exemption from overtime to $47,476 per year, increase from $23,660 per year effective December 1, 2016.
This is a significant change. A significant number of UHV staff members are expected to transition from exempt status (i.e. monthly paid) to non-exempt status (i.e. biweekly paid and overtime eligible). The FLSA rule change does not apply to faculty.
This change in FLSA exemption status is not an indicator of professional status change or decrease of the importance of your work. UHV is simply required to be in compliance by federal law. The Human Resources department is working closely with managers/supervisors in each department to review all positions affected and ensure full compliance of the new changes.
All jobs are categorized by an employment classification determined by the FLSA. The Human Resources department works with a Compensation Consultant to evaluate the employment classifications of all staff positions. Position evaluation takes place during the creation or re-classification of positions.
These classifications are based on several factors such as the actual job duties outlined in the job analysis questionnaire (JAQ), as well the salary, among other things. Below are the two types of employment classifications:
Not eligible for overtime or compensatory time
Must record exceptions to work (sick, vacation, jury duty, bereavement, etc.)
Eligible for overtime or compensatory time
- Must record all hours worked in addition to absences
Calculation of bi-weekly paycheck
Due to revisions in the Fair Labor Standards Act (FLSA), employees who are moving from exempt to non-exempt from the overtime provisions of FLSA will change from receiving monthly paychecks to bi-weekly paychecks. The following calculation will be used to convert a full-time employee’s compensation rate from monthly to hourly:
Monthly Compensation Rate * 12 months = Annual Salary
Annual Salary / 2080 hours (40 hours * 52 weeks/year) = Hourly Rate
$3,000/month * 12 months = $36,000/year
$36,000 / 2080 hours = $17.31/hour
There are 26 pay periods in a year for bi-weekly employees, 52 weeks in a year divided by 2. Twice a year bi-weekly employees receive 3 paychecks in a month. For this reason, bi-weekly paychecks for employees who are currently receiving monthly paychecks will be somewhat less than half their current monthly paycheck since there are 26, not 24 paychecks in a year.
Using the example above, below is the bi-weekly pay for an employee with an annual salary of $36,000:
$17.31/hour * 80 hours (40 hours/week * 2 weeks) = $1,384.80 (Bi-weekly Pay)
$1,384.80 * 26 pay periods = $36,004.80