Final Rule to Update the - PowerPoint Presentation

1. Final Rule to Update the Fair Labor Standards Act (FLSA)Manager & Supervisor TrainingJune 28, 2016

2. Agenda Topics: Overview of the Fair Labor Standards Act Department of Labor Final RuleSpecific Guidance for Higher Education Next Steps for Managers Review Potentially Affected Positions and Employees to Ensure Compliance with the DOL’s proposed overtime rulesOptions to ConsiderTools and ResourcesQuestions

3. Overview of the Fair Labor Standards Act (FLSA)The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments. Under the final rule to update the FLSA regulations, a position must satisfy three criteria to qualify as exempt from overtime:The incumbent in the position must be paid on a salaried basis (the salary basis test);The salary must be at least $913/week, or $47,476 annually (the minimum salary requirement or salary threshold);The position’s primary duties must be consistent with executive, professional, or administrative positions as defined by Department of Labor (DOL). (the primary duties test).

4. Current Primary Duties ExemptionsExecutive: http://www.dol.gov/whd/overtime/fs17b_executive.htmAdministrative: http://www.dol.gov/whd/overtime/fs17c_administrative.htmProfessional: http://www.dol.gov/whd/overtime/fs17d_professional.htmEnsure duties in the position description meet the criteria for the designated exemptionThe exemption must be supported by a preponderance of the duties3

5. Agenda Topics: Overview of the Fair Labor Standards Act Department of Labor Final RuleSpecific Guidance for Higher Education Next Steps for Managers Review Potentially Affected Positions and Employees to Ensure Compliance with the DOL’s proposed overtime rulesOptions to ConsiderTools and ResourcesQuestions

6. Key Provisions of the Final Rule5The proposed rule establishes a mechanism for automatically updating the salary and compensation levels every 3 years, starting January 1, 2020.No changes were made to the duties tests.The Threshold will Adjust Automatically Every 3 YearsConsideration of Making Changes to the Duties Tests The final rule increases the salary threshold to $913/week; $47,476 annually.Minimum Salary Threshold will Significantly IncreaseThe effective date of the Final Rule is December 1, 2016.

7. Agenda Topics: Overview of the Fair Labor Standards Act Department of Labor Final RuleSpecific Guidance for Higher Education Next Steps for Managers Review Potentially Affected Positions and Employees to Ensure Compliance with the DOL’s proposed overtime rulesOptions to ConsiderTools and ResourcesQuestions

8. Specific Guidance for Higher EducationInstructors – under the Professional duties exemptionTeachers 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.The salary and salary basis requirements do not apply to bona fide teachers. Graduate Teaching AssistantsGraduate teaching assistants who have teaching as their primary duty are covered under the teaching exemption and are not subject to the salary tests, remaining exempt under the Final Rule.Graduate Research AssistantsGenerally, the DOL views graduate students who are engaged in research under a faculty member’s supervision in the course of obtaining a degree as being in an educational relationship with the school. Therefore, the DOL would not assert an employment relationship with either the school or any grantor funding the research. Thus, in these situations, the DOL will not assert that such workers are entitled to overtime.7

9. Specific Guidance for Higher EducationAthletic Coaches:Athletic coaches employed by higher education institutions may qualify for the teaching exemption.Athletic instructors who spend more than half of their time instructing student-athletes about physical health, teamwork, and safety likely qualify as exempt teachers. Assistant coaches, for example, who spend most of their time in unrelated activities, such as recruiting or administrative work, are unlikely to have a primary duty of teaching. Postdoctoral Fellows/ScholarsPostdoctoral fellows often meet the duties test for the “learned professional” exemptionMust also satisfy the salary basis and salary level tests to qualify for this exemption.8

10. Specific Guidance for Higher EducationAcademic Administrative Positions:Positions whose primary duty is performing administrative functions directly related to academic instruction or training in an educational establishment. Examples: Academic advisors or counselors, intervention specialists, or similar positionsEmployees must either be paid on a salary or fee basis of not less than the salary level, or be paid on a salary basis at least equal to the entrance salary for teachers in the same educational establishment.OSU Instructor Minimum: $898/week; $46,692 annuallyResident AssistantsStudent residential assistants enrolled in bona fide educational programs who receive reduced room or board charges or tuition credits from the university are not generally considered employees under the FLSA, and therefore are not subject to the FLSA’s wage and hour requirements.9

11. Agenda Topics: Overview of the Fair Labor Standards Act Department of Labor Final RuleSpecific Guidance for Higher Education Next Steps for Managers Review Potentially Affected Positions and Employees to Ensure Compliance with the DOL’s proposed overtime rulesOptions to ConsiderTools and ResourcesQuestions

12. Next Steps for Managers:Review Potentially Affected Positions and EmployeesOptions:Supervisors are NOT required to move any employees to the new threshold.  You can leave them at their current rate of pay, and they will become FLSA non-exempt (overtime eligible) because they no longer meet the minimum salary threshold.  If an employee never works above 40 hours/week, this approach will not cost the institution any additional money.  Work that exceeds 40 hours a week, however, would need to be compensated at time-an-a-half, with either overtime pay or compensatory time (comp time). Comp time may be accrued up to 240 hours, after which OT must be paid.It is important for Supervisors to consider the impact on internal salary equity against similarly-situated positions, and against higher-level positions within the unit in order to mitigate salary compression.

13. Review Potentially Affected Positions and EmployeesReview positions that are below the new salary threshold ($47,476) and determine which ones, if any, you might want to adjust to the new threshold, so that those positions would remain exempt.  This exercise would be appropriate for positions that are already fairly close to the new threshold.Before deciding to increase an employee’s rate of pay, Supervisors must review the position profile and salary grade of the employee, and make sure a salary increase would be both inside the assigned range, and within the appropriate quartile of the range for the employee’s performance, skill, and experience.  Please see the “Managing Pay Within a Grade Tool” for further guidance in making this determination.

14. Next Steps for ManagersUse the Managing Pay Within a Grade Tool for further guidance in deciding if increasing an employee’s rate of pay is appropriate for the employee’s performance, skill, and experience.13MinimumMaximumReview Point- 3rd QuartileMeets minimum qualifications of job; however is fairly new to job and field, has little or no direct, related prior experienceOn steep learning curve, building both skills and knowledge as well as ability to handle job responsibilitiesPaying forthe Job(based on external Market)Paying for the Individual (based on performance and skill)Performs (or has demonstrated capability to perform based on prior experience) some/most job responsibilities with increasing effectivenessPossesses the basic knowledge and skill requirements, but may need to build experienceMay still be learning some aspects of job or developing expertise to handle them more independently and effectivelyConsistently exhibits many or most desired competencies to perform job successfullyExpert (or has demonstrated capability to perform as expert based on prior experience) in all job criteriaHas broad and deep knowledge of own area as well as related areasDepth and breadth of experience, specialized skills, perspectives add significant value to institutionServes as expert resource and/or mentor to othersPlacement in this quartile requires approval by OHR Classification and CompensationMANAGING PAY WITHIN A GRADEFactors for progression within the salary range may be based on external market, individual performance and skill.Entry Level Skills and ExperienceIntermediate Skills and ExperienceExpert Skills and ExperiencePerforms (or has demonstrated capability to perform based on prior experience) all aspects of job effectively and independentlyExperienced in the job and possesses required knowledge and skillsConsistently exhibits desired competencies to perform job successfullySeasoned and proficient professionalAdvanced Skills and ExperienceMidpoint of Range

15. Agenda Topics: Overview of the Fair Labor Standards Act Department of Labor Proposed ChangesNext Steps for Managers Review Potentially Affected Positions and Employees to Ensure Compliance with the DOL’s proposed overtime rulesOptions to ConsiderBudget PreparationChanges to Processes and ProceduresManaging CultureTools and ResourcesQuestions

16. Tools and ResourcesOffice of Human Resources, Classification and Compensation TeamTracey Yee, Classification and Compensation Manager, 737-5426Heather Riney, Classification and Compensation Officer, 737-3104 classification.compensation@oregonstate.edu Website: http://hr.oregonstate.edu/policies-procedures/administrators/classification-compensation/final-rule-update-fair-laborWage and Hour Division Fact Sheet: http://www.dol.gov/whd/overtime/nprm2015/factsheet.htmSpecific Guidance for Higher Education:https://www.dol.gov/sites/default/files/overtime-highereducation.pdfhttps://www.dol.gov/whd/overtime/final2016/highered-guidance.pdfOSU Leave Administration Policies, Procedures and Guidelines:http://hr.oregonstate.edu/sites/hr.oregonstate.edu/files/documents/general/leave_admin_pol.pdfYour Business Center Human Resource Team: http://fa.oregonstate.edu/osu-shared-servicesU.S. Department of Labor – FLSA Overtime Security Advisor: http://webapps.dol.gov/elaws/whd/flsa/overtime/menu.htm

17. Question and Answer