Archdiocese of Denver Management Corp. Compliance with New Fair - - PDF document

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Compliance with New Fair Labor Standards Act (FLSA) Regulations and Overtime Rules

October (4, 6, 20) 2016 Presented by: the Offices of Human Resources and Parish Finance

Archdiocese of Denver Management Corp.

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New FLSA Regulations

FLSA is a federal law that dictates who is entitled to minimum wage and overtime pay. An employee is classified as either Non-Exempt or Exempt under FLSA Non-Exempt: FLSA classification that requires employees:

• Be paid at least the federal minimum wage for all hours worked;
• Be paid overtime at 1.5 times the regular rate of pay for all hours worked
• ver 40 in a workweek or 12 hours in a single day.

ALL JOBS ARE NON-EXEMPT UNLESS YOU PROVE OTHERWISE

New FLSA Regulations

Exempt: To qualify for exemption:

• Employees generally must meet certain tests regarding

job duties;

• Be paid on a salary basis at not less than $913 per week

as of December 1, 2016.

• Job titles do not determine exempt status.

– In order for an exemption to apply, an employee’s specific job duties and – Salary must meet all the requirements of the Department of Labor’s regulations.

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New FLSA Regulations

• The new salary threshold takes effect on December 1, 2016
• The minimum salary required to classify/pay an employee on an

exempt salary basis (meaning the same pay each week, with no additional

pay for hours worked over 40 in a week) increases to $913 a week (for a

full-year, this annualizes to $47,476 per year).

– The salary threshold level will be evaluated/increased every 3 years beginning on January 1, 2020.

The “duties test” remains unchanged

New FLSA Regulations

• The new regulations apply to all workers, with the

following exceptions applicable to our workplaces:

– Ordained Clergy – Religious Order Brothers/Sisters, – Bona Fide Teachers

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FLSA Comparison

Current: – ‘Duties’ Test (as defined specifically for executive, administrative, professional

• r teacher)

and – Employee must be paid “on a salary basis” and – The salary must be at least $455/week

New (December 1, 2016):

– ‘Duties’ Test (as defined specifically for executive, administrative, professional

• r teacher)

and – Employee must be paid “on a salary basis” and – The salary must be at least $913/week To be classified Exempt and be paid a salary, the employee must meet ALL of the following:

Exempt ‘Duties Test’

When salary threshold ($913 per week) met: FLSA provides exemption for bona fide executive, administrative, professional and certain computer employees.

• Executive:

– Manages an enterprise/department and directs the work of 2 or more full-time equivalent employees – Authority to hire/fire..

• Learned Professional:

– Work requiring advanced knowledge in field of science or learning – Acquired by prolonged course of specialized intellectual instruction – Requires consistent exercise of discretion and judgment..

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Exempt ‘Duties Test’ (continued)

• Administrative:

– Office or non-manual work directly related to management or general business operations of the employer or its customers – Employee exercises discretion and independent judgment with respect to matters of significance..

Bona Fide Teacher

Bona Fide Teacher as defined by FLSA:

• 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.

• Exempt teachers include, but are not limited to:

– Regular academic teachers; – Kindergarten or nursery school teachers; – Teachers of gifted or disabled children; – Teachers of skilled and semi-skilled trades and occupations; – Home economics teachers; and vocal or instrument music teachers.

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Compliance With New FLSA Regulations

• Option 1: For positions that meet the duties test and are close to

the new salary threshold but do not meet or exceed it: – Increase base wages to the minimum salary threshold – Maintain exempt status paid on a salary basis.

• Option 2: For positions that meet the duties test but are not close

to the minimum salary threshold: – Change employees to non-exempt status – Pay an equitable hourly rate – Require employee to complete time record

Increase Base Wages & Retain Exempt Status

• If all apply:

– You have a bona-fide exempt position that is paid close to the salary threshold – You have the budget to allow for it – You will not create an internal pay equity issue

• Increase compensation to at least $913/week ($1826 Bi-Weekly)
• Continue to classify as Exempt and pay on a Salary Basis

7 Convert to Hourly Rate & Change to Non-Exempt Status

Employees who work a fixed schedule and are unlikely to work over 40 hours per week regularly:

• Straight Conversion of existing salary to hourly rate
• Weekly Rate / Standard Weekly Hours = Hourly Rate

Example: $600 (weekly rate)/ 35 (weekly standard hours) = $17.14 per hour

• Must meet minimum wage requirements
• Must track all hours via time-sheets
• Must pay OT (1.5 times) for all hours actually worked over 40 in a

week or 12 in a day

– Hours worked do not include time-off such as vacation, holiday, sick and personal days

What NOT To Do

The following ‘creative’ methods of mitigating costs are not acceptable and are not legal.

• Converting employees to Independent Contractor status when the

employee does not meet the definition of an Independent Contractor.

• Paying non-exempt employees ‘stipends’ for projects in lieu of
• vertime payments.
• Allowing non-exempt employees to ‘volunteer’ to work overtime at no

pay for duties which they are typically paid.

• Allowing employees to falsify timecards indicating no overtime has

been worked when it has been.

Please Note: This list is not meant to be comprehensive, if you are considering any other

methods of compliance not covered here please contact HR for advice.

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Next Steps:

• Identify employees currently paid on a salary basis who

earn less than $913 per week (full-time and part time).

• Determine what is most appropriate for each employee

impacted.

• Create a list of recommended changes and their

budgetary impact for review and approval by the Pastor.

– Recommendations to the Pastor on compensation and structure changes, when appropriate, should be made with consultation to the supervisor of the employee who is impacted.

Next Steps:

• NOT recommending that you make immediate changes to

existing staff.

• Recommending review of all staff classifications make

changes by pay period prior to December 1, 2016.

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Questions?