There has been an important federal compensation revision that Human Resources would like to bring to your attention. The Department of Labor (DOL) has made changes to the Fair Labor Standards Act (FLSA), which controls the federal rules and regulations for compensation of hourly (non-exempt from overtime) and salaried (exempt from overtime) employees.
On May 18, 2016, the DOL released that the salary threshold currently set at $23,660 annually ($455 per week) will change to $47,476 annually ($913 per week) effective December 1, 2016. This salary threshold is one of the tests used to determine if an employee is non-exempt, and therefore overtime eligible. Although there are some exceptions such as teaching, for the most part employees earning less than $47,476 annually will need to be classified as hourly, and thus overtime eligible. In addition, the DOL added an automatic update to this salary threshold, to occur every three years, beginning on January 1, 2020.
This federal change in the FLSA will impact an estimated 4.2 million employees who are currently salaried in the United States and approximately 300 are WSU employees.
The WSU leadership has been closely monitoring this potential change to the FLSA for several months, and will be ready to implement the change. The guidance provided indicates we have a few options to consider which are being discussed with our leaders:
- Identify employees who are exempt from this salary threshold in accordance with new law, e.g. teaching, coaching.
- For employees whose salaries are close to the threshold, potentially raise the salary based on the job requirement.
- Transition employees to hourly status thus becoming overtime eligible (non-exempt).
- Evaluate staffing and/or realign employee workload to minimize overtime.
What does this mean?
If you are currently a salaried employee, earning less than $47,476, you could potentially move from Unclassified Salary to Unclassified Hourly status at which time the following will occur:
- You will be moved to a bi-weekly pay process.
- You will need to complete a timesheet instead of the current leave report.
- You will become overtime eligible and your manager/supervisor will be discussing in further detail any changes to your work schedule.
- Your classification remains “unclassified” and as such, there is no change to your benefit levels. However, instead of monthly benefit deductions, you will have your benefit deductions taken from your first two biweekly paychecks each month.
- There is nothing for you to do at this time. HR will be in touch with those impacted as full evaluations of the new federal legislation are determined and decisions are made.
For further information on this important change in regulation, please refer to the Frequently Asked Questions (FAQ) and various external web links available on the HR Compensation website: http://www.wright.edu/human-resources/compensation. And as always, you may contact a member of the HR Compensation team:
Sylvia Brockman Director, Total Rewards 775-2567
Kevin Evans Compensation Analyst 775-2723
Tina George Compensation Analyst 775-2124