Jointly presented by Human Resources and FSO-Operations

Fair Labor Standards ActRevisions

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 2

FLSA Definitions

Exempt Employee: paid on a salary basis – non fluctuating, pre-determined amount; not covered by the overtime provisions.

Nonexempt Employee: paid on an hourly basis for all hours worked in a work week; covered by the overtime provisions.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 3

FLSA Overtime Provisions

Nonexempt employees who work over 40 hours in a work week receive overtime pay (or compensatory time off) at one and one half times their regular rate of pay.

Employers must keep accurate records of nonexempt employees’ hours worked.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 4

Requirements for Exemption from Overtime

Employee paid no less than $455 a week – “salary level test;” and

Employee paid a non-fluctuating salary – “salary basis test;” and

Employee performs exempt duties – “duties test.”

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 5

Salary Level Test

Minimum weekly salary raised to $455 from either $250 or $155 depending on test used.

Consequences: More full- or part-time employees in otherwise exempt jobs are now nonexempt.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 6

Salary Basis Test

Employees receive a predetermined amount regardless of quality or quantity of work.

Consequences: Exempt employees must continue to be paid a salary as defined by the FLSA.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 7

Exceptions to Salary Level and Salary Basis Tests

Salary requirements do not apply to teachers, outside sales employees and those practicing law or medicine.

Consequences: Adjunct Faculty making less than $455 a week remain exempt.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 8

Other Exceptions

Graduate student assistants & associates likely are not employees for purpose of FLSA.

Consequences: Graduate student assistants and associates would no longer have to complete time records.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 9

Duties Test for Exemption

Learned Professional ExemptionCreative Professional ExemptionComputer Professional

ExemptionHighly Compensated ExemptionExecutive ExemptionAdministrative Exemption

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 10

Duties Test – Professional Exemption - Learned Professional

Primary duty is performance of work requiring advanced knowledge, intellectual in character and exercising judgment and discretion.

Advanced knowledge involves a field of science or learning and must customarily involve a prolonged course of specialized intellectual study.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 11

Duties Test - Professional Exemption - Creative Professional

Primary duty is the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 12

Duties Test - Computer Professional

Primary duty involves systems analysis procedures, including consulting with users to determine hardware, software & systems specifications;

The design, development, analysis, testing or modification of programs and systems; or

Similar work related to machine operating systems.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 13

Highly Compensated Employee Test

Primary duty is office or non-manual work; and

Regularly performs either executive, administrative or professional exempt work; and

Earns $100,000 or more, including a salary of at least $455 a week.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 14

Duties Test – Executive Exemption

Primary duty is managing a recognized department or subdivision. Note: employee can still perform non-management tasks if primary duty is managing.

Regularly directs the work of at least two or more full-time employees or their FTE equivalent.

Has authority to take actions such as hiring or firing or the ability to recommend and meaningfully influence such actions.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 15

Duties Test - Administrative Exemption

Primary duty is office or non-manual work directly related to the general business operations of the employer.

Primary duties include the exercise of discretion and independent judgment with respect to matters of significance.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 16

Examples of Discretion & Independent Judgment

May deviate from established policies and procedures without prior approval.

Negotiates and has authority to bind the employer on significant matters with or without financial impact.

Handles complaints, disputes and grievances.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 17

Compliance Steps

1. Analysis2. Communications and

Training3. Administrative Process4. Systems Enhancements

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 18

Steps for Compliance - Analysis

Identify employees in exempt jobs who fail to meet new salary level test.

Review Classified Staff generic job descriptions and identify any questionable exemptions.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 19

Steps for Compliance – Communications and Training

HR notifies departments with employees changed from exempt to nonexempt because of salary level test.

HR and FSO present training sessions to the campus community.

Establish comprehensive FLSA page on HR website.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 20

Steps for Compliance –Administrative

Ensure recordkeeping requirements are communicated to departments.

Introduce revisions to PAF and the Hiring Form to capture the employee exemption status.

Introduce new codes for the exemption status of the job and of the employee.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 21

EmployeeIs Nonexempt

Yes

No

EmployeeIs Exempt

Yes

No EmployeeIs ExemptYes

EmployeeIs Nonexempt

No

Determining Employee Exemption Status

single job OR multiple jobsIs the employee a doctor, lawyer

or teacher?

Is the employee assigned to a Classified

Staff job that HR has designated as nonexempt?

Is the employee regularly paid a salary

of at least $455 a week?

The University of Arizona – Human Resources and FSO August 2, 2004 21

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 22

FLSA Exemption Codes

For the Employee

E – Exempt

N – Nonexempt

For the Job

Y – Yes, the job is always exempt

N – No, the job is never exempt

M – Maybe the job is exempt

X – Exclude this job

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 23

Steps for Compliance – Systems Enhancements

Develop capability to have nonexempt and exempt employees in the same classification.

Set up system to track salary level changes that result in exemption status change.

Capture exemption status changes in the Payroll/HR system.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 24

Impact on Employees

May be eligible for overtime pay.

Maintain accurate time record of every hour worked.

Communicate with departments if holding more than one job.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 25

Impact on Hiring Departments

Monitor budgets to pay overtime to newly eligible employees.

Train employees on accurate time keeping procedures.

Be aware of changes in employees exemption status, and manage accordingly.

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 26

FLSA Compliance Tools

•PSOS Screens• 2 screens with exemption codes

• ISW reports • 2 Different reports• Notices of Exemption code conflicts

• Corrections• PAF • Time Sheets• POPRs or Vac/Sick Adjustments

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 27

PSOS Screen 08

YNMX

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 28

PSOS Screen 02

Employee’s FLSA status

Wildcat, Wilbur 1234

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 29

PSPM03 Time Roster Worksheet

(FLSA Exemption Status Conflict) Wednesday of non-pay week

Wildcat, Wilbur

Wildcat, Wilma

1234

1234

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 30

TRPR31A - Final Departmental Online Time Roster

Wildcat, Wilbur

Wildcat, Wilma

(FLSA Exemption Status Conflict)Wednesday of pay week

1234

1234

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 31

PAF Form to Change Employee Exemption Status

Emp FLSA Stat

FLSA Title

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 32

Timesheets for Recordkeeping

M T W T F S S M T W T F S S Vac Sick Cmp InitCD HRS CD HRS CD HRS

Week 1 totals

Week 2 totals

Pay Period

8V

M T W T F S S M T W T F S S Vac Sick Cmp InitCD HRS CD HRS CD HRS

Week 1 totals

Week 2 totals

Pay Period

4 4 4 4 4 R R V R R

4 4 4 4 4 4R R R R R U

.50 FTE Non-Exempt Employee (retro time sheet to correct)

Exempt Employee – Exception Time reporting

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 33

Paying OT for a Prior Pay Period

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 34

Adding Comp Time not Previously Reported

The University of Arizona – Human Resources and FSO-Operations August 2, 2004 35

Contacts and Questions

For questions regarding: Contact: PAFs Systems Control 621-3664

Time Rosters, Timesheets FSO-Operations 621-9097OT reporting

Employee Inquiries Human Resources 621-3662

Departmental Inquiries HR Organizational Consultant

Or visit our websites:Human Resources http://www.hr.arizona.edu/FSO – Operations http://www.fso.arizona.edu/fso/operations.asp