Key Terms
- Exempt: An exempt employee is paid on a salary basis (a predetermined amount of money for work performed, regardless of the hours actually worked) and is not required to track time worked.
- Non-exempt: A non-exempt employee is paid based on actual hours worked, and is required to track all time worked and be paid overtime for time worked in excess of 40 hours in a workweek.
The U.S. Department of Labor (DOL) has announced changes to the Fair Labor Standards Act (FLSA), raising the salary threshold required to qualify for exemption from overtime to $47,476 per year, an increase from $23,660 per year.
This is a significant change which is expected to impact several University staff members, transitioning them from exempt status to non-exempt status and overtime eligible. The FLSA rule change does not apply to faculty, but it does affect some staff, administrative faculty-equivalent and post-doc positions.
Next Steps
Human Resources is currently working to compile a list of job classifications impacted. If your job classification is affected, you will be notified by the Human Resources Office. Because HR is still working on an implementation schedule, the actual date of this notification has not yet been determined.
Timeline
The federal government has set the effective date of the final rule for December 1, 2016; however, Campbell University’s actual implementation date may be different. Because this is a complex administrative change involving numerous systems changes and communications to those impacted, Campbell University will decide on an implementation date that works best for all involved.
What is the Fair Labor Standards Act (FLSA)?
The Fair Labor Standards Act (FLSA) is the federal wage and hour law administered by the U.S. Department of Labor (DOL). The purpose of the FLSA is to establish minimum wage, overtime pay, recordkeeping, and youth employment standards affecting most full-time and part-time workers.
Employees are either “exempt” or “non-exempt” from the FLSA regulations. This designation indicates eligibility for overtime pay when overtime is worked. The FLSA requires employers to pay their employees overtime (one and one-half times the employee’s regular rate of pay) for all hours worked over 40 in a workweek unless they meet a minimum pay requirement and their job duties meet specific criteria to be “exempt” from overtime.
What is changing?
The DOL has announced that they will revise the Fair Labor Standards Act (FLSA), raising the salary threshold required to qualify for exemption from overtime to $47,476 per year (an increase from the current $23,660 per year). The new regulation also establishes a mechanism for automatically updating the salary and compensation levels every three years, beginning January 1, 2020.
Why is this change occurring?
It important to understand that it was not Campbell University’s decision to make this change; the Department of Labor made the decision to change its regulations. The DOL explains that overtime regulations were revised in order to “help build real, lasting economic security for more hardworking Americans.” A change to the regulations has not been made since 2004.
When is the regulation effective?
The federal government has set the effective date of the final rule for December 1, 2016. Campbell University’s actual implementation date will be decided upon based on a variety of administrative factors. This is a complex administrative change requiring numerous systems changes in HR and payroll, communications to those impacted, and a myriad of other things required to make this a smooth transition for all involved.
What does this change mean for employees who are affected?
Employees moving from exempt to non-exempt:
- Must report all hours worked
- Must be paid for all hours worked and receive overtime for time worked in excess of 40 hours in a workweek.
It is important to note that this change in FLSA status is in no way a downgrade of any position, of a professional status, or of the importance of your work. Campbell University is simply required to abide by federal law and ensure that employees are paid according to the new FLSA regulations. As a non-exempt employee, you are paid for all of the hours you work and are eligible for overtime which is a financial advantage. Campbell University understands that this transition may be difficult for some employees and units, and will offer several resources to help manage the change. More details will be announced as soon as possible.