Proposed Fair Labor Standards Act (FLSA) Changes

The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting all United States employees in the private sector and in Federal, State, and local governments, including Higher Education.  Employees are either “exempt from overtime” or “non-exempt from overtime” pay based on FLSA regulations.  The U.S. Department of Labor (DOL) administers the FLSA regulations.

Under the current 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 $844 per week or $43,888 annually (the minimum salary requirement or salary threshold); and
3. The position’s “primary duties” must be consistent with executive, professional, administrative, and computer related positions as defined by DOL (the primary duties test).

Teaching faculty will not be impacted. Teaching faculty are FLSA exempt, regardless of their annual/weekly salary, if their "primary duty is teaching, tutoring, instructing, or lecturing in the activity of imparting knowledge." Typically coaches also qualify as FLSA exempt under this "teaching exemption" and will not be affected by the changes.

On April 23, the Department of Labor (DOL) issued the final rule to change the criteria that establishes whether employees are eligible for overtime pay. The rule increases the minimum salary threshold to $43,888 (or $844/week) on July 1, 2024, and then to $58,656 (or $1,128/week) on January 1, 2025. The rule also implements automatic updates to the threshold that will occur every three years. The duties test has not been changed.

Based on past lessons learned and in anticipation of lawsuits challenging the final rule, the University is planning a two-step implementation process. 

Step 1: The University changed the minimum salary threshold from $35,568 to $43,888 on July 1, 2024, in compliance with the federal rule. 

Step 2: The University will monitor official announcements from the US Department of Labor and related regulatory bodies to determine if the salary threshold will increase on January 1, 2025. If the federal rule is enacted as scheduled, the University will take timely steps to be in compliance.

Exempt (salaried) employees are excluded from receiving overtime pay. Non-exempt (hourly) employees are required to be paid overtime (at a rate of one and one-half times their regular rate of pay) for any hours worked in excess of forty hours in a seven-day workweek as defined by their employer.

At OHIO, the majority of Administrative and Professional, Executive, and Faculty positions fall under the FLSA exempt category.

At Ohio University, exempt employees are paid semi-monthly and do not report time worked in Workforce, our time keeping system. Non-exempt employees are paid on a biweekly basis and enter hours worked into the Workforce timekeeping system.

If you are currently classified as "salaried" and your earnings fall below the new threshold amount, you may be affected by the proposed changes. The University is working to apply a consistent approach to these changes to ensure fairness within pay ranges. Therefore, even if you currently earn above the new threshold, you might still be impacted to maintain consistency within your pay range. This would be to ensure current, and potentially future employees, in the same position would have a consistent determination. University Human Resources will notify affected employees after the University has assessed the implications and communicated with University departments.

Impacted employees will switch from a semi-monthly to a bi-weekly pay schedule.

Biweekly pay means employees are paid every two weeks, typically resulting in 26 pay periods per year. Semi-monthly pay means employees are paid twice a month, usually on specific dates such as the 15th and the last day of each month, resulting in 24 pay periods per year.

Paying in arrears means you pay an employee for work they completed in the previous pay period. This is in contrast to “current pay,” which is when an employer pays an employee the last day of the workweek. Arrears payments are utilized for hourly employees to ensure all the hours worked are accurately captured and recorded.

Employees whose positions are reclassified to non-exempt will change to the appropriate leave accrual schedule. However, the annual accrual rates will not change.

• Time Reporting: Non-exempt employees record all hours worked in WorkForce on a biweekly schedule. Applicable compensatory or overtime hours are recorded and paid accordingly.
• Overtime for Non-exempt employees: Non-exempt employees must record all hours worked, including overtime hours, and will receive additional pay for overtime. All overtime must be pre-approved by your supervisor.

The hours an employee works over 40 hours in a workweek is called overtime. It is paid at a standard rate of time and a half or 1.5 times the standard hourly rate. 

The change of moving from salaried (exempt) to hourly (non-exempt) is focused on ensuring work hours are reported and paid, not when they are worked. Hourly employees (non-exempt) can still request alternative scheduling arrangements with their managers; however, all time worked must be recorded within the timesheet. All current and future alternative scheduling arrangements will have to be revisited with your management, with an understanding as to when overtime is permissible. 

With the changes to the eligibility criteria, an analysis is being conducted to determine the positions which may be impacted by the updated compliance standards.  Human Resources will work with the University departments with exempt administrative employees to determine next steps on a case-by-case basis. Thereafter, the results will be communicated to the impacted employees. 

While your salary exceeding the new threshold may indicate that you will remain an exempt employee, it's important to note that additional factors may influence your classification. The University is ensuring consistent application of these changes across pay ranges, which may impact your classification despite your salary level. 

No. The FLSA is a federal law. The determination of an employee’s FLSA status is governed by the requirements of the federal law – it is not an employee choice. It is at the discretion of the organization with regard to each individual’s compensation, position responsibilities, position exemption status for positions with same or similar titles, and the new regulation. In order to be exempt from FLSA provisions (not eligible for overtime), employees must pass both the duties test and salary tests. If you do not pass these tests, you must be paid for overtime hours worked under the law. Exempt employees must also be paid on a salary, not hourly, basis. 

No. In order to be exempt (salaried) from FLSA provisions (not eligible for overtime), employees must pass both the duties test and salary tests. If you do not pass these tests, you will be paid hourly for time worked. 

Complete information on the new rule is available from the Department of Labor’s Wage and Hour Division(opens in a new window). Please contact Human Resources at 740-593-1636 or by email at UHR@ohio.edu. FAQs will continue to be updated as we learn more. 

Part-time workers are required to meet all three tests (the duties test, salary basis test and salary level test) to be exempt from overtime pay requirements. Regardless of full- or part-time status, employees must be paid at least the minimum salary threshold on a weekly basis in order to be exempt from overtime pay requirements. That means that, beginning July 1, 2024, full- and part-time employees must be paid at least $833 per week in order to maintain exempt status, so long as the salary basis and duties tests are also met. The same will be true beginning January 1, 2025, when full- and part-time employees must be paid $1,128 per week per week to maintain their exempt status. It is important to note that the minimum salary threshold cannot be prorated for part-time employees.

According to the Wage and Hour Division (WHD) Field Operations Handbook, institutions “may prorate the salary of an otherwise-exempt employee who has a duty period of less than a full year.” For example, an employee who works a nine-month schedule but receives paychecks over a 12-month period may have their checks prorated over the actual period of work (nine months) to determine whether the employee is paid at least the salary threshold.

Example: An employee who works for nine months (39 weeks) of a year but is paid over a 12-month period receives a salary of $40,000 ($769.23 per week), which would fall below the new July 1 salary threshold of $43,888 per year ($844 per week). Without prorating the salary, it would appear that the employee would need to be classified as nonexempt for failing to meet the minimum salary threshold. However, because DOL allows for employers to prorate the salary of the partial-year employee, the nine-month employee would actually meet the salary level requirement because the prorated weekly salary is $1,025.64 ($40,000/39 weeks), which is well over the July 1 level of $844 per week. As such, the nine-month employee could be classified as exempt, so long as they also meet the salary basis and duties tests. It is important to note, however, that the nine-month employee cannot perform any work outside of the nine-month period if employers choose to prorate their salary to meet the minimum salary threshold.
 

Yes. Temporary hourly, non-exempt employees are not eligible to receive compensatory time off in lieu of overtime pay. Other hourly, non-exempt employees may elect to receive compensatory time off in lieu of overtime pay. Such compensatory time is also awarded at the premium rate of one and one-half hours of time off for each hour of overtime. A maximum accrual of four hundred eighty hours is permitted for intermittent employees; a maximum accrual of two hundred forty hours of compensatory time is permitted for other employees. When the maximum hours of compensatory time accrual is reached, compensation for overtime shall be made in cash.

For more information regarding compensatory time please visit 40.049: Overtime for Non-Exempt Employees.

You will code the time in WorkForce as hours worked and you will take a day off in the future. This day should be taken as soon as possible, but no later than June 30. When you do take the day off, you will use the pay code of “Other” in WorkForce to record your time and indicate "WBC" in the comments.

Overtime is considered any time worked over 40 hours per work week, not the two-week (80 hour) pay period. A work week is considered Sunday through Saturday. EX: If you work 44 hours in week one of a pay period, you will be paid 4 hours of overtime, even if you only have 36 hours worked in week two.

No, because overtime is calculated based on the 40-hour work week. You cannot flex your time from week to week, it can only be flexed in one work week. EX:  If an employee works 44 hours in week one of the pay period they cannot flex the following week by working 36 hours.

Starting January 1, 2025, due to the increase in the FLSA salary threshold, some salaried employees will transition to hourly compensation to remain compliant with federal regulations. This transition may lead to questions about how pay is reflected on your paystub.
1.    Why is there an hourly rate on my paystub?
Even for salaried employees, our payroll system calculates and displays an hourly rate based on the number of days in the pay period. This rate may fluctuate slightly between pay periods depending on the length of the pay period (e.g., if one pay period is longer or shorter than another). Please note that this variation does not reflect any actual change in your salary. The total amount you are paid for the pay period is accurate, but the hourly rate displayed is for informational purposes and can shift due to payroll system settings.

2.    If I’m transitioning to hourly, how can I check my correct hourly wage?
If you are a full-time (1.0 FTE), 12-month employee, you can generally estimate your hourly rate by dividing your annual salary by 2,080 hours (the number of working hours in a year for a full-time employee). However, please note this calculation applies to full-time, 12-month employees. Part-time employees or those with different contract lengths or schedules may have different calculations. For your official hourly rate, please refer to your job offer letter, or contact your HR liaison if you have questions about your rate.

Yes, this alignment will ensure a fair and consistent implementation of FLSA changes, if the FLSA
mandate becomes effective on January 1, 2025.

Supervisors will provide guidance to employees who are non-exempt (hourly) before they travel. A travel
guide is linked below for your reference. If there are questions or specific circumstances which need
further clarification, please contact your respective HR Liaison or the compensation team at compensation@ohio.edu.

Fact Sheet #22: Hours Worked Under the Fair Labor Standards Act (FLSA) | U.S. Department of Labor

The university is providing a one-time “transition” payment equal to one weeks’ pay, to be paid on
January 15. Impacted employee also have the option to “cash in” up to 40 hours of vacation time, if
available. This is a one-time only option and will be paid on January 15.

Under the Fair Labor Standards Act (FLSA), supervisors can adjust or “flex” an employee’s schedule
within a workweek to meet business needs. This flexibility can help manage workloads and ensure
coverage. Whenever possible, provide employees with advance notice of schedule changes and explain
the reason for the change.

When employees work overtime, they have the option to either receive payment for the extra hours
worked or choose compensatory time off, which they can use at a later date.

This potential change does not prevent an hourly employee from teaching courses. However, there are
pay complexities that must be addressed to ensure compliance with the Fair Labor Standards Act (FLSA).
Please contact the compensation team at compensation@ohio.edu before assigning a course to an
hourly employee.

It’s important to remember that while the minimum salary for pay grade 17 is increasing, the mid-point
differential between pay grades 17 and 18 is not changing because of this adjustment. In our banded pay
structure, it’s possible for employees in a lower band with more experience to earn more than those in a
higher band with less experience. This flexibility allows us to reward employees for their skills and
experience, even if they’re in a lower band. We’ll continue to monitor pay compression as part of our
ongoing compensation strategy, but for now, the differentiation between pay grades will still hold,
especially when you consider the mid-points and upper ranges of each band.

In addition to the steps we’re taking to ensure compliance with the new FLSA threshold, the university
does have tools in place to help manage compression. For example, we have compression reviews that
can be triggered when a new hire is made, which helps evaluate pay equity within teams. There are also
in-range adjustments available as part of a classification review, which can be used to address
situations where compression is an issue. Lastly, we have additional bonus options available for
recognizing performance or other contributions, which can be a useful tool in addressing these kinds of
gaps. So while there isn’t an automatic adjustment planned for supervisors in this situation, there are
existing mechanisms in our administrative guidelines that can be applied to help manage compression
on a case-by-case basis. If you feel there’s a significant concern about compression within your team,
we encourage you to reach out to HR to explore these options further

While the formal announcement is scheduled for Monday, there’s some flexibility here based on what
you feel is best for your team. If you'd like to use this time to prepare, you can wait until the official
announcement on Monday before discussing it with your team. That way, you can use the formal
communication as a starting point and have all the official information in hand before engaging in
discussions. For those who feel comfortable, starting a conversation with affected employees before the
official communication could also open the door for questions in a more informal way. The main thing is
what feels most effective for you and your team.

Employees who transition to hourly because of the FLSA salary threshold change would typically only
return to salaried status if they move into a position with a higher pay grade. However, there are other
possibilities to consider. Future changes to the FLSA itself could adjust the salary threshold again, which
might impact an employee's status. Additionally, if an employee’s duties significantly change over time,
leading to a reclassification of their position, that could also bring them back into a salaried role.

Employees who are transitioned to hourly status will remain hourly even if their earnings meet or exceed
the new salary threshold of $58,656. This approach ensures fair and consistent treatment of all
employees and maintains uniformity in pay grades.

We understand the concern and have thoughtfully considered the impact this decision will have on
future employees, with the understanding there could still be changes prior to January 1, 2025.
Therefore, December 1, 2024 is the date we have tentatively chosen to address this concern.

While we understand the unique demands of certain offices and the need for evening work, the
University typically maintains standard hours of operation from 8 AM to 5 PM to ensure accessibility for
students, faculty, and staff. However, if you believe an exception may be appropriate based on your
office’s specific needs, we recommend discussing this with your leadership team to determine if an
alternate schedule can be accommodated.

Yes, if employees transition from salary to hourly their benefits, including education benefits, will remain
the same.

No, if employees transition from salary to hourly their titles will not change.

No. They will be administrative hourly.

Managers must approve timesheets in WorkForce. These timesheets must be submitted by
designated deadlines to ensure timely processing of payroll. Employees only need to log their start
and end times for each workday in WorkForce.

Employees who work remotely will also use Workforce to enter their time worked. If you have
specific concerns outside of the tracking mechanism, please reach out to your UHR Liaison to
discuss.

The UHR Compensation team will assist with this assessment.

We have options for flexible scheduling in our policies to help with challenging situations, and as
mentioned in our meeting, we’ll keep reviewing our policies for any needed clarifications. For
emergencies, please reach out to HR so we can support you in addressing those needs.

If a supervisor assigns an hourly-pay employee to work on a day observed as a holiday, the employee
will receive holiday pay plus pay for time worked, as described in policy 40.050.