Human Resources

The FLSA regulates whether an employee is overtime-eligible ("non-exempt") or overtime-exempt ("exempt"). One of the requirements of the FLSA is for an employer to determine the exemption status of each employee. Beginning December 1, 2016, to qualify for FLSA exempt status, the FLSA rule requires that an employee earn no less than $913 per week, or $47,476 per year.

Resources When Changing FLSA Status

Because hourly non-exempt staff are paid on bi-weekly basis, and salary exempt staff are paid on a monthly basis, a change of FLSA status means a change in pay cycles. The following resources have been prepared to assist employees during this transition. A one-week gap in income is not uncommon due to the payroll processing times for the different pay cycles.

• Employee Letter templates
• Notice Regarding Overtime Compensation (compensatory time election )
• Frequently Asked Questions - Changing FLSA Exemption
• FSLA Guidance for HR Business Partners

Exempt Employees

Exempt employees are not covered by (or are “exempt” from) the FLSA’s regulations pertaining to overtime. Four major exemption categories have been established and defined by the Act. They are "executive," "administrative," "professional" and “outside sales.” To be determined exempt under one of these categories, the employee’s position must meet certain criteria relating to their job responsibilities.

Exempt employees are:

• Paid an established monthly (or annual) salary.
• Paid for carrying out the duties of their position – regardless of how many hours worked.
• Exempt employees may work more or less than 40 hours per week and their pay does not change.
• They do not receive overtime nor compensatory time off.

Compensation Provisions for Exempt Employees

Due to the “salary” nature of the position, consult your HR expert before you consider reducing the pay of an exempt employee.

• Vacation and sick time must be charged in full-day increments (not hours or portions of a day).
• When a full-time employee has exhausted all available accrued vacation and sick leave and previously accrued compensatory time off, salary will not be reduced ("docked") for absences of less than a full day.
• Salary may not be reduced for absences of less than a full day.
• In cases of corrective action, suspensions without pay will not be permitted for less than one full workweek, except in the case of suspension for infractions of safety rules of major significance.
• Note:  Leave bank deductions shall be made for any hours or partial hours taken by an exempt employee who elects or is required to substitute paid leave for unpaid family and medical leave taken on an intermittent basis or reduced schedule.  (Refer to PPSM-2.210: Absence from Work)