Final Rule to Update the

Fair Labor Standards Act (FLSA)

Manager & Supervisor Training
June 28, 2016
Agenda Topics:
 Overview of the Fair Labor Standards Act
 Department of Labor Final Rule
 Specific Guidance for Higher Education
 Next Steps for Managers
• Review Potentially Affected Positions and Employees to
Ensure Compliance with the DOL’s proposed overtime
rules
• Options to Consider
 Tools and Resources
 Questions
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:
1. The incumbent in the position must be paid on a salaried basis
(the salary basis test);
2. The salary must be at least $913/week, or $47,476 annually (the
minimum salary requirement or salary threshold);
3. 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).
Current Primary Duties Exemptions
 Executive:
http://www.dol.gov/whd/overtime/fs17b_executive.htm

 Administrative:
http://www.dol.gov/whd/overtime/fs17c_administrative.htm

 Professional:
http://www.dol.gov/whd/overtime/fs17d_professional.htm

 Ensure duties in the position description meet the

criteria for the designated exemption
◦ The exemption must be supported by a preponderance of the
duties

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Agenda Topics:
 Overview of the Fair Labor Standards Act
 Department of Labor Final Rule
 Specific Guidance for Higher Education
 Next Steps for Managers
• Review Potentially Affected Positions and Employees
to Ensure Compliance with the DOL’s proposed
overtime rules
• Options to Consider
 Tools and Resources
 Questions
 Key Provisions of the Final Rule
The final rule increases the salary
Minimum Salary Threshold will threshold to $913/week; $47,476
Significantly Increase annually.

The proposed rule establishes a

mechanism for automatically
The Threshold will Adjust
Automatically Every 3 Years
updating the salary and
compensation levels every 3 years,
starting January 1, 2020.

Consideration of Making Changes to the No changes were made to the duties

Duties Tests tests.

The effective date of the Final Rule is December 1, 2016.

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Agenda Topics:
 Overview of the Fair Labor Standards Act
 Department of Labor Final Rule
 Specific Guidance for Higher Education
 Next Steps for Managers
• Review Potentially Affected Positions and Employees to
Ensure Compliance with the DOL’s proposed overtime
rules
• Options to Consider
 Tools and Resources
 Questions
Specific Guidance for Higher Education
 Instructors – under the Professional duties exemption
◦ 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.
◦ The salary and salary basis requirements do not apply to bona fide teachers.

 Graduate Teaching Assistants

◦ Graduate 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 Assistants

◦ Generally, 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.

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Specific Guidance for Higher Education

 Athletic 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/Scholars
◦ Postdoctoral fellows often meet the duties test for the “learned
professional” exemption
◦ Must also satisfy the salary basis and salary level tests to qualify
for this exemption.

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Specific Guidance for Higher Education

 Academic 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 positions
◦ Employees 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 annually

 Resident Assistants
◦ Student 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.

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Agenda Topics:
 Overview of the Fair Labor Standards Act
 Department of Labor Final Rule
 Specific Guidance for Higher Education
 Next Steps for Managers
• Review Potentially Affected Positions and Employees to
Ensure Compliance with the DOL’s proposed overtime
rules
• Options to Consider
 Tools and Resources
 Questions
Next Steps for Managers:
Review Potentially Affected Positions and Employees

Options:
 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.
Review Potentially Affected Positions and
Employees

 Review 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.
 Next Steps for Managers
Use 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.

MANAGING PAY WITHIN A GRADE

Review Point- 3rd Quartile
Minimum Midpoint of Range Maximum
Paying for
the Job Intermediate Advanced Skills
Entry Level Skills Expert Skills and
(based on Skills and and Experience
and Experience Experience
external Experience
Market)
 Meets minimum  Performs (or has  Performs (or has  Expert (or has demonstrated
qualifications of job; demonstrated capability to demonstrated capability capability to perform as
however is fairly new to perform based on prior to perform based on expert based on prior
job and field, has little or experience) some/most job prior experience) all experience) in all job criteria
no direct, related prior responsibilities with increasing aspects of job effectively  Has broad and deep
experience effectiveness and independently knowledge of own area as
Paying  Experienced in the job
 On steep learning curve,  Possesses the basic well as related areas
for the building both skills and knowledge and skill and possesses required  Depth and breadth of
Individual knowledge as well as requirements, but may need knowledge and skills experience, specialized skills,
ability to handle job to build experience  Consistently exhibits
(based on responsibilities
perspectives add significant
performance  May still be learning some desired competencies to value to institution
aspects of job or developing perform job successfully  Serves as expert resource
and skill) expertise to handle them  Seasoned and proficient and/or mentor to others
more independently and professional
effectively  Placement in this quartile
requires approval by OHR
 Consistently exhibits many or Classification and
most desired competencies to Compensation
perform job successfully

Factors for progression within the salary range may be based on external market, individual performance and skill.
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Agenda Topics:
 Overview of the Fair Labor Standards Act
 Department of Labor Proposed Changes
 Next Steps for Managers
• Review Potentially Affected Positions and Employees to
Ensure Compliance with the DOL’s proposed overtime
rules
• Options to Consider
• Budget Preparation
• Changes to Processes and Procedures
• Managing Culture
 Tools and Resources
 Questions
 Tools and Resources
 Office of Human Resources, Classification and Compensation Team
 Tracey Yee, Classification and Compensation Manager, 737-5426
 Heather 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-labor

 Wage and Hour Division Fact Sheet:

 http://www.dol.gov/whd/overtime/nprm2015/factsheet.htm

 Specific Guidance for Higher Education:

 https://www.dol.gov/sites/default/files/overtime-highereducation.pdf
 https://www.dol.gov/whd/overtime/final2016/highered-guidance.pdf
 OSU Leave Administration Policies, Procedures and Guidelines:
 http://hr.oregonstate.edu/sites/hr.oregonstate.edu/files/documents/general/leave_admin_pol.pdf

 Your Business Center Human Resource Team:

 http://fa.oregonstate.edu/osu-shared-services
 U.S. Department of Labor – FLSA Overtime Security Advisor:
 http://webapps.dol.gov/elaws/whd/flsa/overtime/menu.htm
Question and Answer