Archdiocese of Denver Management Corp. Compliance with New Fair Labor Standards Act (FLSA) Regulations and Overtime Rules October (4, 6, 20) 2016 Presented by: the Offices of Human Resources and Parish Finance Please mute your phone (Otherwise we all can hear your phone ring or office conversations) Submit questions via the Chat Box (We will stop and answer your questions) Once we conclude the presentation we will solicit questions via Raise Hand Problems viewing the presentation? Email pat.kaus@archden.org Call Steve Bush at 303-715-3248 1
New FLSA Regulations FLSA is a federal law that dictates who is entitled to minimum wage and overtime pay. An employee is classified as either Non-Exempt or Exempt under FLSA Non-Exempt: FLSA classification that requires employees: Be paid at least the federal minimum wage for all hours worked; Be paid overtime at 1.5 times the regular rate of pay for all hours worked over 40 in a workweek or 12 hours in a single day. ALL JOBS ARE NON-EXEMPT UNLESS YOU PROVE OTHERWISE New FLSA Regulations Exempt: To qualify for exemption: Employees generally must meet certain tests regarding job duties; Be paid on a salary basis at not less than $913 per week as of December 1, 2016. Job titles do not determine exempt status. In order for an exemption to apply, an employee s specific job duties and Salary must meet all the requirements of the Department of Labor s regulations. 2
New FLSA Regulations The new salary threshold takes effect on December 1, 2016 The minimum salary required to classify/pay an employee on an exempt salary basis (meaning the same pay each week, with no additional pay for hours worked over 40 in a week) increases to $913 a week (for a full-year, this annualizes to $47,476 per year). The salary threshold level will be evaluated/increased every 3 years beginning on January 1, 2020. The duties test remains unchanged New FLSA Regulations The new regulations apply to all workers, with the following exceptions applicable to our workplaces: Ordained Clergy Religious Order Brothers/Sisters, Bona Fide Teachers 3
FLSA Comparison To be classified Exempt and be paid a salary, the employee must meet ALL of the following: Current: Duties Test (as defined specifically for executive, administrative, professional or teacher) and Employee must be paid on a salary basis and The salary must be at least $455/week New (December 1, 2016): Duties Test (as defined specifically for executive, administrative, professional or teacher) and Employee must be paid on a salary basis and The salary must be at least $913/week Exempt Duties Test When salary threshold ($913 per week) met: FLSA provides exemption for bona fide executive, administrative, professional and certain computer employees. Executive: Manages an enterprise/department and directs the work of 2 or more full-time equivalent employees Authority to hire/fire.. Learned Professional: Work requiring advanced knowledge in field of science or learning Acquired by prolonged course of specialized intellectual instruction Requires consistent exercise of discretion and judgment.. 4
Exempt Duties Test (continued) Administrative: Office or non-manual work directly related to management or general business operations of the employer or its customers Employee exercises discretion and independent judgment with respect to matters of significance.. Bona Fide Teacher Bona Fide Teacher as defined by FLSA: Teachers are exempt if their primary duty is teaching, tutoring, instructing or lecturing in the activity of imparting knowledge, And if they are employed and engaged in this activity as a teacher in an educational establishment. Exempt teachers include, but are not limited to: Regular academic teachers; Kindergarten or nursery school teachers; Teachers of gifted or disabled children; Teachers of skilled and semi-skilled trades and occupations; Home economics teachers; and vocal or instrument music teachers. 5
Compliance With New FLSA Regulations Option 1: For positions that meet the duties test and are close to the new salary threshold but do not meet or exceed it: Increase base wages to the minimum salary threshold Maintain exempt status paid on a salary basis. Option 2: For positions that meet the duties test but are not close to the minimum salary threshold: Change employees to non-exempt status Pay an equitable hourly rate Require employee to complete time record If all apply: Increase Base Wages & Retain Exempt Status You have a bona-fide exempt position that is paid close to the salary threshold You have the budget to allow for it You will not create an internal pay equity issue Increase compensation to at least $913/week ($1826 Bi-Weekly) Continue to classify as Exempt and pay on a Salary Basis 6
Convert to Hourly Rate & Change to Non-Exempt Status Employees who work a fixed schedule and are unlikely to work over 40 hours per week regularly: Straight Conversion of existing salary to hourly rate Weekly Rate / Standard Weekly Hours = Hourly Rate Example: $600 (weekly rate)/ 35 (weekly standard hours) = $17.14 per hour Must meet minimum wage requirements Must track all hours via time-sheets Must pay OT (1.5 times) for all hours actually worked over 40 in a week or 12 in a day Hours worked do not include time-off such as vacation, holiday, sick and personal days What NOT To Do The following creative methods of mitigating costs are not acceptable and are not legal. Converting employees to Independent Contractor status when the employee does not meet the definition of an Independent Contractor. Paying non-exempt employees stipends for projects in lieu of overtime payments. Allowing non-exempt employees to volunteer to work overtime at no pay for duties which they are typically paid. Allowing employees to falsify timecards indicating no overtime has been worked when it has been. Please Note: This list is not meant to be comprehensive, if you are considering any other methods of compliance not covered here please contact HR for advice. 7
Next Steps: Identify employees currently paid on a salary basis who earn less than $913 per week (full-time and part time). Determine what is most appropriate for each employee impacted. Create a list of recommended changes and their budgetary impact for review and approval by the Pastor. Recommendations to the Pastor on compensation and structure changes, when appropriate, should be made with consultation to the supervisor of the employee who is impacted. Next Steps: NOT recommending that you make immediate changes to existing staff. Recommending review of all staff classifications make changes by pay period prior to December 1, 2016. 8
Questions? 9