FAIR LABOR STANDARDS ACT IMPLEMENTATION WHAT YOU NEED TO KNOW E M P L O Y E E T R A N S I T I O N G U I D E L I N E S

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1 FAIR LABOR STANDARDS ACT IMPLEMENTATION WHAT YOU NEED TO KNOW E M P L O Y E E T R A N S I T I O N G U I D E L I N E S 1

2 TABLE OF CONTENTS 1. The Fair Labor Standards Act 2. Georgia Tech s Approach to Implementation 3. Pay Rate and Accruals 4. Deductions 5. Next Steps 2

3 3 The Fair Labor Standards Act

4 WHAT IS FLSA AND WHAT HAPPENED? The Fair Labor Standards Act establishes guidelines for: Minimum Wages Overtime Pay Record-keeping Child Labor Laws A new rule set was announced on May 18, 2016: It includes an increase in the minimum salary threshold, from $23,660 annually to $47,476 annually Federal compliance deadline: December 1,

5 HOW FLSA WORKS Certain criteria must be satisfied to qualify an employee as an employee exempt from federal overtime pay requirements. SALARY TEST DUTIES TEST Employee is paid on salary basis Salary must be more than $913 per week or $47,476 annually Note: Teachers including professors are not required to meet this portion of test Primary duties must be consistent with executive, professional or administrative positions as defined by the Dept. of Labor 5

6 WHAT DOES IT MEAN? Primarily, it means that nearly 5,000,000 workers across the United States will convert from exempt (salaried) to non-exempt (hourly) to comply with Department of Labor regulations. Converting from exempt to non-exempt means three important things: 1. You will be eligible for overtime pay. 2. You will move from being salaried to hourly. This means you will be required to report time worked. Method of time reporting is specific to department (Kronos, Deltek, Tech Time) 3. You will move from being paid monthly to bi-weekly (every two weeks). As a non-exempt employee you will be paid at the same rate of pay for all hours worked in the 26 periods. A change from exempt to non-exempt status will have no impact on pay grade, benefit elections, or your base hourly rate. 6

7 Georgia Tech s Approach to Implementation 7

8 GEORGIA TECH S APPROACH How were decisions made? 1. Federal Law 2. University System of Georgia Guidelines 3. GTHR Recommendations 4. Georgia Tech s executive leadership team retained final decision over all position conversions. Ultimate goal: Positive outcomes for employees providing opportunities for overtime pay and healthy work-life integration. 8

9 WHEN AND WHO IS MOVING? 949 employees across multiple campus units will be converted from exempt to non-exempt employees. October 17, 2016 Converted employees begin reporting time as non-exempt (hourly). October 31, 2016 Last partial monthly check for new FLSA non-exempt population. November 4, 2016 First bi-weekly check for new FLSA non-exempt population. December 1, 2016 Federal Compliance Deadline. 9

10 PAY CYCLES AFTER CONVERSION Pay Cycle Monthly Pay Cycle First to last day of the month. Paychecks Per Year Bi-Weekly Pay Cycle Thursday to Wednesday. Two-week period. Paycheck Date Last day of the month Every other Friday after pay period. Overtime Employees in Pay Cycle N/A- Monthly cycle is reserved for exempt employees Exempt: NOT eligible for overtime. Paid in bi-weekly check when earned. Non-exempt: Eligible for overtime 10

11 11 GEORGIA TECH BI-WEEKLY PAYROLL CALENDAR

12 TRANSITION TO BI-WEEKLY PAY Final Monthly Earnings Your final monthly paycheck on October 31 will include earnings for the period of October 1-14,

13 PAY DURING TRANSITION PERIOD 10 days of October to be paid on 10/31 Start recording bi-weekly time Days of October to be paid on 11/4 First full bi-weekly pay period (paid 11/18) Last Monthly paycheck First bi-weekly paycheck (10/17-10/26) Last Paycheck of year for monthly and bi-weekly 13

14 14 Pay Rate and Accruals

15 PAY RATE AND ACCRUALS Hourly pay rate is converted in the following calculation: Take annual rate divided by 2,080 to determine hourly rate. $43,041.00/2,080*=$20.69 *2,088 = 174 workable hours per month x 12 months Accrual rates for non-exempt employees: Vacation: Sick Leave: Annualized accruals will not change. Monthly accruals will vary, depending on the number of working hours per month. 15

16 ANALYZING CASH FLOW There are 26 bi-weekly paychecks in a year (as opposed to 12 monthly paychecks in a year) 10 months/year consist of two (2) paychecks per month, two months/year consist of three (3) paychecks per month 2 (or 3) bi-weekly paychecks per month are not the same as one monthly paycheck Your monthly salary divided by two weeks DOES NOT equal bi-weekly pay Over the course of the year, employees will be paid the same gross. 16

17 HOW TO CALCULATE YOUR BI-WEEKLY PAYCHECK To calculate your gross, bi-weekly paycheck using example annual pay of $43,041: 1. Calculate hours worked per year: 40 (work week hours) x 52 (weeks in year) = 2080 work hours per year 2. Divide yearly salary by number of work hours per year: $43,041 (yearly salary)/2080 (work hours per year) = $ Multiply hourly rate by the hours in a pay period: 40 (hours per week) x 2 weeks = 80 hours per pay period $20.69 (hourly rate) x 80 (hours per pay period) = $1, gross per check Checking our math: 26 (paydays in a year) x $1, per check = $43,041* per year (*rounded up) 17

18 SNAPSHOT OF A YEAR S PAY Employee Name: George P. Burdell Annual rate = $43, Hourly rate = $20.69 Bi-weekly Estimate reflects pay for 80 hours* (80 x 20.69= $1,655.42) Pay Date Monthly Gross 9/30/2016 $3, /31/2016 $3, /30/2016 $3, /31/2016 $3, /31/2017 $3, /28/2017 $3, /31/2017 $3, /30/2017 $3, /31/2017 $3, /30/2017 $3, /31/2017 $3, /31/2017 $3, Total $43, NOTE: Over the course of the year, you will be paid the same gross Adjusted to Bi-weekly Pay Period Pay Date Gross Check Type 9/1/2016 9/30/2016 9/30/2016 $3, Full Monthly 10/1/ /14/ /31/2016 $1, Partial Monthly 10/17/ /26/ /4/2016 $1, Partial Biweekly 10/27/ /9/ /18/2016 $1, Full Biweekly 11/10/ /23/ /2/2016 $1, Full Biweekly 11/24/ /7/ /16/2016 $1, Full Biweekly 12/8/ /21/ /23/2016 $1, Full Biweekly 12/22/2016 1/4/2017 1/13/2017 $1, Full Biweekly 1/5/2017 1/18/2017 1/27/2017 $1, Full Biweekly 1/19/2017 2/1/2017 2/10/2017 $1, Full Biweekly 2/2/2017 2/15/2017 2/24/2017 $1, Full Biweekly 2/16/2017 3/1/2017 3/10/2017 $1, Full Biweekly 3/2/2017 3/15/2017 3/24/2017 $1, Full Biweekly 3/16/2017 3/29/2017 4/7/2017 $1, Full Biweekly 3/30/2017 4/12/2017 4/21/2017 $1, Full Biweekly 4/13/2017 4/26/2017 5/5/2017 $1, Full Biweekly 4/27/2017 5/10/2017 5/19/2017 $1, Full Biweekly 5/11/2017 5/24/2017 6/2/2017 $1, Full Biweekly 5/25/2017 6/7/2017 6/16/2017 $1, Full Biweekly 6/8/2017 6/21/2017 6/30/2017 $1, Full Biweekly 6/22/2017 7/5/2017 7/14/2017 $1, Full Biweekly 7/6/2017 7/19/2017 7/28/2017 $1, Full Biweekly 7/20/2017 8/2/2017 8/11/2017 $1, Full Biweekly 8/3/2017 8/16/2017 8/25/2017 $1, Full Biweekly 8/17/2017 8/30/2017 9/8/2017 $1, Full Biweekly Total $43,

19 BENEFITS DEDUCTION SCHEDULE Employee Name: George P. Burdell Annual rate = $43, Hourly rate = $20.69 Bi-weekly Estimate reflects pay for 80 hours* (80 x 20.69= $1,655.42) Adjusted to Bi-weekly Deduction Schedule Pay Period Pay Date Gross Benefits Deduction Type 9/1/2016 9/30/2016 9/30/2016 $3, Full monthly deduction 10/1/ /14/ /31/2016 $1, Full monthly deduction 10/17/ /26/ /4/2016 $1, Full biweekly deduction 10/27/ /9/ /18/2016 $1, Full biweekly deduction 11/10/ /23/ /2/2016 $1, Full biweekly deduction 11/24/ /7/ /16/2016 $1, Full biweekly deduction 12/8/ /21/ /23/2016 $1, No benefits deduction 19

20 20 Deductions

21 UNDERSTANDING PAYROLL DEDUCTIONS $ or % Payroll deductions for benefits and taxes are taken from paychecks either as: Flat dollar deduction amount or Percentage deduction based on earnings 21

22 CHANGING FROM EXEMPT TO NON-EXEMPT Deductions Benefits (medical, dental, etc.) as well as parking deductions will be split between biweekly checks for non-exempt employees. Non-exempt employees enrolled in Flexible Spending Accounts (accounts designed to save money on taxes for health care or dependent care expenses) will not have to do anything. Deductions will be recalculated automatically to be deducted in the remaining checks for Deductions for retirement savings plans will be recalculated automatically to spread over the remaining pay checks for Wage garnishments and flat additional deductions for taxes and retirement plans that were coming out monthly will need to be adjusted to prevent the same amount from coming out per check as a bi-weekly employee. 22

23 FLAT DOLLAR AMOUNT DEDUCTIONS Flat Amount deducted Twice Per Month (24 paychecks) Insurance Health Insurance Life & Dependent Life Accidental Death & Dismemberment Supplemental Life Insurance Supplemental Disability Health Care/Dependent Care Other Additional flat dollar Garnishments depending on withholding order Transit and Parking, etc. 23

24 PERCENTAGE-BASED DEDUCTIONS Taxes % based on earnings are deducted every paycheck Retirement Federal State OASDI (Social Security) Medicare USG Retirement Plan (TRS or ORP) 403B or 457B if elected % Deduction (for example, 3% of every check) Other Garnishments depending on withholding order 24

25 SPECIAL AFTER-TAX DEDUCTIONS There are certain, after-tax deductions that will not automatically change with your new pay schedule. To account for the different deduction schedule and to be effective for your first bi-weekly paycheck, update your withholdings in the systems indicated below from October 26-October 30, Go into TechWorks to manually update: Flat amount direct deposits Flat amount of additional tax Credit Union deductions (e.g. loans, percentage-based deductions) Payroll deductions to load BuzzCard with BuzzCard Account Funds 529 College Savings Plans Go into Retirement Manager to manually update: 403B or 457B if elected % Deduction (e.g., 3% of every check) Failure to update withholdings may result in a smaller than anticipated paycheck. 25

26 26 Next Steps

27 TRANSITION PLANNING RECOMMENDATIONS 1. Plan ahead for new gross pay. If you have elected additional tax withholdings, check your W-4 on TechWorks 2. Review your budget and adjust for new check amounts and paydays. 3. Make adjustments to automatic withdrawals from your accounts to align with new pay schedule. 4. Update withholdings in TechWorks and Retirement Manager if necessary (Oct , 2016) 5. Contact Lenders, Banks, Landlord, etc. and request to: Move bill due dates to later in the month or Split monthly bill in two payments 27

28 IMPORTANT IMPLEMENTATION DATES October 17, 2016 Converted employee population begins reporting time as nonexempt (hourly). October 31, 2016 Last partial monthly check for new FLSA non-exempt population. November 4, 2016 First bi-weekly check for new FLSA non-exempt population. December 1, 2016 Increases processed for exempt employees moved to new salary threshold. December 1, 2016 Federal Compliance Deadline. December 23, 2016 Last check of calendar year for monthly (salaried) and bi-weekly (hourly) employees. 28

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