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What is the Fair Labor Standards Act? 

The FLSA establishes minimum wage, overtime pay eligibility, recordkeeping, and youth employment standards affecting employees. 

Why is the FLSA changing? 

In 2014, President Obama directed the Department of Labor (DOL) to update and modernize the regulations, especially those for salaried/exempt workers. The intent is to provide more than 4 million U.S. workers making less than $47,476 per year with either additional time away from work or overtime pay for hours worked over 40 in a week. 

How is the FLSA changing? 

The primary change is thsalary threshold for salaried/exempt employees. It will risto $47,476 from $23,660. This means, except in a few specific professionspositions paying less than $47,476 will be eligible for overtime pay. 

Another change is the threshold will be reevaluated every three years with the first potential update occurring Jan. 1, 2020.  

What is the effective date of the changes in the FLSA? 

Dec. 1, 2016 

What factors did the University consider when deciding our approach? 

We tried to balance several priorities when developing our approach. First, we realize changing from a salary to hourly paid position is challenging. Walso know the best decisions often occur at the local level but that we also have to implement these changes equitably across the University. With these priorities in place, HR partnered with University-wide representatives to review positions currently exempt from overtime pay eligibility. 

What decisions have been made on how the University will comply with the changes?

After a review of feedback from college and unit leadership and discussion with senior leaders, University leadership has made the following decisions:  

  1. Employees in positions reclassified from exempt to non-exempt will retain their current vacation accrual rates. These employees will not see any change in their benefits or annual salary (presuming they work a full 40-hour week).  
  2. All positions in the same job title will have the same classification, either exempt or non-exempt. 
  3. Job titles in the pay grades up through grade 43 (grade 8 for UK HealthCare) will generally be reclassified to non-exempt, hourly paid. 
  4. Job titles in the pay grade of 44 (grade 9 for UK HealthCare) or higher may qualify to remain exempt IF: 
    1. Position occupant is a 0.75 FTE or higher and within $5,000 of the new threshold AND 
    2. Requesting department currently has recurring funds available to cover the salary increase AND 
    3. All departments with employees in that job title agree to fund salary increases. 
  5. Position reclassification from exempt to non-exempt status will occur Dec. 1. Employees who transition from a monthly to a biweekly payroll schedule due to these changes will receive a transition payment to ensure their December pay remains whole.  

Note: If following the protocol in numbers 3 and 4 above are not feasible, colleges and units may request additional review through their area's respective senior leader (Provost, EVPFA, EVPHA or President). That senior leader will then reach out to HR to get additional data for consideration, review the case and make a recommendation to HR. HR will complete the additional review, considering the recommendation from the senior leader, and make the final decision.  

What changes might be experienced by an employee in a currently exempt position earning less than $47,476? 

Some exempt positions, including those that meet the teaching exception, do not have to meet the earnings threshold and may not experience classification or pay changes.  

For other positions, there are a couple of possibilities: 

An exempt position may be reclassified to non-exemptIn this case, employees will be paid on an hourly basis, using their current salary to create an hourly rateThese employees will also be eligible for overtime for hours worked beyond 40 in the regular work week, at a rate of one and one half times their normal hourly rate 

Please note: Salary to hourly pay conversion will be made using the employee's current salary to create an equivalent hourly rate based on no more than a 40 hour work week. 

OR 

A position may remain exempt by meeting the new threshold ($47,476)In this case the employee would remain ineligible for overtime and will continue to be paid the same salary regardless of hours worked 

Could employees making more than $47,476 be affected? 

Yes. If an employee in a job title earns more than $47,476, but other positions in the same job title early less than the salary threshold, all positions in that same job title will transition to non-exempt position.

What is the teaching exception? 

Under the FLSA guidelines, positions with teaching, both inside and outside the classroom, as the primary function do not have to meet the threshold. For example, coaches fall under teaching if their primary duty is instructing athletes in how to perform their sport. Other jobs meeting the criteria include county extension agents and most faculty. 

Why don’t we just move all employees up to $47,476? 

Several factors prevent all affected positions from receiving a salary increase.  Aside from the budget implications, increasing the salary for all exempt positions to $47,476 would create pay inequities across the University. 
For example, if the salary for every employee in a given job title rose to $47,476, an employee with 15 years of experience would now earn the same as someone with two years of experience. In addition, new employees hired into that job title would all make the same as more experienced employees. 

If my position is reclassified to non-exempt, what can I expect? 

Some things will not change. You will continue to accrue vacation at your current rate, and your eligibility for benefits will remain the same. 

Effective Dec. 1, your salary will be converted to the equivalent hourly rate and you will be paid based on hours worked. For example, an employee paid $40,000 per year on a salaried basis will be paid a rate of $19.23 per hour. ($40,000 divided by 2080 hours per year.)  

You will be eligible for overtime pay, at 1.5 times your normal hourly rate, if you work more than 40 hours in a week. The employee in the example above would receive an overtime pay rate of $28.85 per hour. You must record your working time and leave requests in myUK 

You will be paid every two weeks, rather than monthly. 

The changes will not affect a department's ability to offer flexible work arrangements. Employees should review their existing arrangements with their supervisors. 

What is overtime and how is it monitored?  

Overtime is any time actually worked over 40 hours in a week. The University's official work week is 12:01 a.m. Sunday through midnight Saturday. If someone takes 8 hours of vacation in a week and works 33 hours, the hour above 40 would still be paid at the normal rate because the employee only worked 33 hours.Employees will be paid for all hours worked. Overtime must be approved by managers in advance. 

If I have more questions, who can I contact?  

Some questions, specifically those about workload planning and overtime pay availability, are best discussed between you and your supervisor. HR is able to assist with many other questions. Please email us at humanresources@email.uky.edu for more information.