Department of Labor announces final rule updating federal Fair Labor Standards Act (FLSA)
The U.S. Department of Labor (DOL) announced changes to the Fair Labor Standards Act (FLSA) that will impact the criteria used to determine eligibility for overtime. Effective Dec. 1, 2016, the salary threshold used to determine eligibility for overtime will be increased from $455 per week to $913 per week.
Why does this matter?
This change is expected to expand the number of employees eligible for overtime. In addition, the DOL included a mechanism to increase the salary threshold every three years. Importantly, certain types of positions are exempt from the minimum salary threshold, including most UF academic personnel — including county extension faculty, physicians, veterinarians, residents and lawyers — as well as student classifications such as graduate assistants.
The salary threshold cannot be prorated based on FTE but may be prorated based on the length of an employee’s appointment. For example, the annualized threshold for a 12-month employee is $47,476, whereas the annualized threshold for a 9-month employee is $35,607.
How is UF responding?
The university has been monitoring the national discussion and has been assessing the potential impacts since the changes were recommended last year. In addition, a cross-functional workgroup with representatives from Human Resource Services, Student Affairs, Sponsored Research, Contracts and Grants, Health Affairs, IFAS, the Provost’s Office and the General Counsel’s Office has provided recommendations to the university leadership team that will enable the university to remain compliant with the mandate while limiting the impact to employees and the university.
Based on the university’s early projections, the change could affect more than 1,700 employees, with the largest portion being university staff.
New employee category
After evaluating a number of options, the university has decided to create a new employee category for impacted employees. This new category will effectively decouple overtime eligibility from job title. Under this approach, employees who perform job duties that are eligible to be considered exempt from overtime but earn less than $47,476 will remain in their current job title but will transition into an overtime-eligible employee class called salaried non-exempt (SNE).
This approach will allow the university to pay these employees in a manner similar to salaried employees — time worked will not be entered and approved except when overtime hours are worked or leave is used. The fringe rate of these employees will be the same as the current exempt fringe rate, thereby reducing the financial impact to units across campus.
Based on a detailed analysis and partnership with key stakeholders throughout campus, effective Dec. 1, 2016, the university will provide salary increases to postdoctoral associates in order to meet the new salary threshold of $47,476. In addition, effective July 1, 2016, the minimum salary level for newly hired postdoctoral associates is being increased to $47,476.
Colleges and units are encouraged to evaluate the impact these changes may have on their respective units. Human Resource Services will provide additional guidance in the coming weeks.