EMPLOYEE INFORMATIONAL SESSION FAIR LABOR STANDARDS ACT (FLSA) CHANGES TO THE LAW

Transcription

1 EMPLOYEE INFORMATIONAL SESSION FAIR LABOR STANDARDS ACT (FLSA) CHANGES TO THE LAW Presented by: Kathy Agnew Dir, Emplyment & Cmp Services 1

2 What Changed and Wh Changed It In May 2016, the U.S. Department f Labr revised a regulatin that increased the salary threshld where emplyees are eligible t receive vertime. This was a majr change t emplyee exemptin criteria under the Fair Labr Standards Act (FLSA). The salary threshld which has been in place since 2004 increased frm $455 per week (the equivalent f $23,660 annually) t $913 per week (the equivalent f $47,476 annually). Autmatic increase f salary threshld has been established t ccur every three years with the first ne scheduled fr 2020 at apprximately $51,168. Faculty, teachers and caches with a primary respnsibility f instructin remain excluded frm the FLSA salary requirement and will remain exempt. The regulatins specify the change in exempt t nnexempt status, based n the new threshld, must be in effect as f December 1, NMSU has established an effective date f December 1, This is a change frm the Nvember 1, 2016 implementatin date, in light f the pending litigatin f the new FLSA rules in federal curts. 2

3 Effrts in Washingtn Effrts in Washingtn; Legislatin ut there t address the FLSA rule change. H.R Prtecting Wrkplace Advancement & Opprtunity. This bill wuld require DOL t cnduct an ecnmic analysis befre making changes. H.R Overtime Refrm and Enhancement Act (OREA) wuld phase-in new salary threshld ver 3 years and eliminate the escalatin clause. H.R Regulatry Relief fr Small Business, Schls, & Nnprfits bill wuld require a six-mnth delay in the effective date f the rule. Labr HHS vertime apprpriatins riders. At this time the White Huse has nt released a Statement f Plicy n the legislatin and there is n change t the federally mandated December 1, 2016 implementatin date. 3

4 What Changed and Wh Changed It Cnt d FLSA established three tests that must be met in rder fr an emplyee t be exempt frm vertime pay eligibility. If yu meet the duties test but nt the salary level test, then yu must be eligible t earn vertime: Duties Test - the emplyee s jb duties must primarily invlve executive, administrative, prfessinal, cmputer r utside sales duties (als knwn as EAP r white cllar duties). Salary Basis Test - the emplyee must be paid a predetermined and fixed salary that is nt subject t reductin because f variatins in the quality r quantity f wrk perfrmed; Salary Level Test - the amunt f salary paid must meet a minimum specified amunt ($913 per week). Exempt vs Nnexempt - these terms refer t the eligibility t earn vertime. Cmpensatin at an hurly rate des nt define the jb rle. Prfessinal staff can be cmpensated at an hurly rate f pay withut a change t jb duties r levels f authrity and respnsibility. Nnexempt emplyees are eligible t earn vertime Exempt emplyees are nt eligible t earn vertime 4

5 NMSU Implementatin Strategy NMSU will cnvert all classificatins in pay grades 08 and belw t nnexempt. Exceptin fr grade 08 classificatins with 0% cst impact, which culd be regraded t a grade 09. Exceptin fr classificatins determined t have a significant/unique need and reclassificatin funding can supprt the change. NMSU s implementatin strategy decisins, under the DOL s new FLSA rules, were difficult and represents ur best effrt t minimize the impact f these changes t all affected emplyees. The key factrs cnsidered were: The lwest impact t NMSU s emplyees, business peratins and budget. Remain cmpliant with all DOL regulatins, NMSU Administrative Rules and Prcedures and the AFSCME Agreement. Ensure bth shrt term and lng term implicatins f final decisins have been evaluated. 5

6 Strategy Research and Data As a result f differences in cmpensatin structures and pay incentives, ther universities may implement in a different manner than NMSU. The mst prevalent cnsideratin fr NMSU is the pay incentives between exempt and nnexempt. HRS cntacted peers t determine hw they are implementing the new rules. At this time, nly fur (4) universities have respnded: Texas Tech (Lubbck) - At TTU we are cnverting based n the salary the majrity f the emplyees in a certain psitin make, but allwing thse that meet the salary minimum t have a new title t remain exempt. We will nt have full time emplyees in the same jb title having mixed nnexempt and exempt status. HRS is pending a respnse t the pay incentive questin. University f New Mexic Cnvert all exempt psitins, grades 8-12, t nnexempt and keep grade 13 psitins exempt. This will result in an increase in the ttal number f nnexempt emplyees t 3614 frm 2639, a difference f psitins wuld remain exempt and 48 psitins wuld require pay increases t raise them abve the new threshld. This will have an immediate ttal cst impact f apprximately $160,000. There will still be a ptential cst impact fr vertime; hwever, we can develp plicies and prcedures t mitigate this ptential cst. University f Arizna via phne cnversatin, they are implementing strictly based n DOL threshld and allwing multiple exemptin statuses. Hwever, U f AZ des nt have different pay incentives fr exempt and nnexempt. University f Wyming - We are ging t allw mixed classificatins. HRS is pending a respnse t the pay incentive questin. 6

7 FAIR LABOR STANDARDS ACT (FLSA) BENEFITS FOR EMPLOYEES 7

8 Benefits fr Emplyees Wrk life balance with the wrk week limited t 40 hurs per week Wrk breaks f 15 minutes fr each 4-hur segment f the wrk perid. Because these breaks are paid, emplyees are required t remain at the jb site. These breaks may nt be added t meal breaks r t adjust start and stp times f the wrk day. Meal breaks, which are nt cmpensated and therefre n yur wn time Cmpensatry time Cmpensatin: nnexempt emplyees are eligible t be paid time-and-a-half fr hurs wrked ver 40 in a wrk week Standby, Unrestricted On Call and Call-Back Pay Eligible fr standard salary increases (prbatin, service, lngevity) Prbatin: perfrmance evaluatin and increase t 5% abve entry f salary range in grade Lngevity: satisfactry cmpletin f 3 regular cnsecutive years, 5% base adjustment Service: 10, 15, 20, 25 and 30 years f regular cnsecutive service, $750, $850, $1,000, $1,300, $1,500 Shift differentials and multi-lingual pay 8

9 Impact t Emplyees N changes in duties, respnsibility r authrity the jb duties and respnsibilities will nt change with a cnversin t nnexempt. The change is t eligibility fr vertime. Pay adjustment frm n-time t lag pay will result in a delayed paycheck after cnversin (e.g. Cnversin December 1, next paycheck December 31 nte: the last check in December is prcessed and paid prir t the winter break) NMSU will ffer emplyees an ptin f receiving a Pay Gap Wage assistance equivalent t the net amunt f ne pay perid rate. Amunt t be repaid frm January-June Timesheet emplyees will need t submit a timesheet each pay perid accunting fr the hurs wrked n a daily basis. Cultural Changes and Mrale Mving t nnexempt may feel like a demtin Impact n emplyee engagement Clarifying rles and respnsibilities 9

10 Travel Planes, Trains and Auts (Fact Sheet #22) Attendance at lectures, meetings, training prgrams and similar activities need nt be cunted as wrking time nly if fur criteria are met, namely: it is utside nrmal hurs, it is vluntary, nt jb related, and n ther wrk is cncurrently perfrmed. Principles which apply in determining whether time spent in travel is cmpensable time depends upn the kind f travel invlved. Hme t Wrk Travel: An emplyee wh travels frm hme befre the regular wrkday and returns t his/her hme at the end f the wrkday is engaged in rdinary hme t wrk travel, which is nt wrk time. 10 Hme t Wrk n a Special One Day Assignment in Anther City: An emplyee wh regularly wrks at a fixed lcatin in ne city is given a special ne day assignment in anther city and returns hme the same day. The time spent in traveling t and returning frm the ther city is wrk time, except that the emplyer may deduct/nt cunt that time the emplyee wuld nrmally spend cmmuting t the regular wrk site. Travel That is All in a Day's Wrk: Time spent by an emplyee in travel as part f their principal activity, such as travel frm jb site t jb site during the wrkday, is wrk time and must be cunted as hurs wrked. Travel Away frm Hme Cmmunity: Travel that keeps an emplyee away frm hme vernight is travel away frm hme. Travel away frm hme is clearly wrk time when it cuts acrss the emplyee's wrkday. The time is nt nly hurs wrked n regular wrking days during nrmal wrking hurs but als during crrespnding hurs n nnwrking days. As an enfrcement plicy the Divisin will nt cnsider as wrk time that time spent in travel away frm hme utside f regular wrking hurs as a passenger n an airplane, train, bat, bus, r autmbile.

11 FAIR LABOR STANDARDS ACT (FLSA) NEXT STEPS 11

12 Cnversin Plan Details What are the Next Steps? Cnversin Date Nvember 1, 2016 December 1, 2016 Develp Pay Gap Assistance Prgram Cnvert Grade 08 and belw exempt t nnexempt with exceptins Implementatin Plan Meet with senir administratrs Ntificatin t affected emplyees Ntificatin t supervisrs Cmmunicate and Train Infrmatinal sessins Nnexempt emplyee training (timesheets, lag pay, etc.) Supervisr training (timesheets, nnexempt rules, etc.) 12

13 Department f Labr Links DOL Website Final Rule Guidance fr Higher Educatin Institutins Fact Sheet #17A (nte: nt updated by DOL yet) Fact Sheet #17G (nte: nt updated by DOL yet) Fact Sheet #22 Questins and Answers frm the General Infrmatin Overtime Webinars Natinal Assciatin fr Cllege Admissin Cunseling H.R Prtecting Wrkplace Advancement & Opprtunity H.R Overtime Refrm and Enhancement Act (OREA) H.R Regulatry Relief fr Small Business, Schls, & Nnprfits 13

14 14 QUESTIONS?