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FLSA Regulation Changes Human Resources Overview
November 10, 2016
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© 2016 The Johns Hopkins University. All rights reserved.
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Today’s Topic
We’ll be taking a look at…
Mandatory nationwide changes to the Fair
Labor Standards Act (FLSA).
Slide 3
Today’s Presenters
Jenny Winter, Compensation Manager for Health Sciences HR which
includes the Schools of Medicine, Public Health and Nursing on the East
Baltimore Campus.
Jess Newton, Compensation Analyst for Central HR. In addition to
direct involvement in the FLSA Compensation review, Jess brings
extensive experience in HR Shared Services processes and systems.
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Session Segments
Presentation
We’ll review the changes to the FLSA and discuss details on how
the new regulations affect JHU employees and managers.
During the presentation, your phone will be muted.
Q&A
After the FLSA overview, we’ll hold a Q&A session.
Phone lines will be opened up, and you’ll be able to ask
questions, as time allows.
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Contact Us
If you would like to submit a question during the presentation or if
you’re having technical difficulties, you can email us at:
[email protected]
Slide 6
Survey
Survey
At the end of this FastFacts session, we’ll ask you to complete a
short survey.
Your honest comments will help us to enhance and improve
future FastFacts sessions.
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How To View Full Screen
Slide 8
FLSA Changes for the
JHU Human Resources team
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Agenda
Today we’ll be providing you with the following:
Overview of the federal FLSA regulations
Details on 2016 regulation changes
Clarification on how these changes affect JHU employees and
managers
Directions on process changes for affected employees
Resources for answering additional questions
Slide 10
FLSA Overview
The Fair Labor Standards Act (FLSA) is the Federal law that sets rules
for critical employment issues including:
Minimum wage requirements
Overtime pay
Employer recordkeeping
Child labor restrictions
Wage equity
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Current FLSA Regulations
There are 3 mandatory tests that positions must meet to qualify as
exempt from overtime (OT) pay:
Salary Test - Employees must earn at least $455 per week/
$23,660 per year*
Salary Basis – Pay cannot fluctuate based on hours worked or
quantity of work performed
Duties Test – Job must regularly involve specific duties
Executive: Hire/fire authority, supervise 2+ FTEs, etc.
Administrative: Exercise high levels of independent discretion
Professional: Requires 4 year degree in specific field
*Teachers, outside salespeople, lawyers and physicians (including
residents) have salary threshold exceptions.
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New FLSA Regulations
On May 18, 2016, the U.S. Department of Labor (DOL) announced
major changes to the Fair Labor Standards Act (FLSA).
Changes to the law were designed to intentionally increase the
number of professional and supervisory employees who are eligible
to earn overtime pay.
Effective 12/1/16, the salary threshold for exempt positions will
increase from $23,660 to $47,476.
The salary threshold will also be adjusted every 3 years based on
U.S. Census data.
OLD Threshold
NEW Threshold
$23,660
$47,476
Effective December 1, 2016
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JHU Exemption Changes
To prepare for the FLSA changes, all exempt positions were reviewed
and classification change recommendations were made by HR.
Effective 12/1/16, over 400 positions that were historically
considered exempt, will become non-exempt (overtime eligible).
All employees experiencing an exemption change will receive formal
notifications, along with detailed FAQs
Managers of affected employees will also receive information to
help them understand the required process changes and
compliance challenges
For employees becoming non-exempt, there are no other changes
being made to job title, salary range, hourly rate, benefits, etc.
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JHU Exemption Changes
For employees changing from exempt to non-exempt, it’s very
important to understand:
An employee’s exemption status has no correlation to his/her value,
significance or importance to the University.
Managers need to be very intentional about reinforcing this
detail and avoid differentiating their staff based on exemption
status.
Exemption status changes are being made as part of a mandatory
Federal change that is impacting employers across the country.
Employers beyond Johns Hopkins are making similar changes to
positions that fall near the new FLSA salary threshold ($47,476).
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JHU Exemption Changes
Exemption changes are being made consistently across JHU, without
variations at the School or Department level.
There are some instances where employees will earn more than
$47,476 and still be considered non-exempt.
This is done in situations where the majority of incumbents in a
role fall below the FLSA salary threshold or in situations where
the duties performed do not qualify for exempt status.
The U.S. Department of Labor considers FLSA exemption status
determinations as a compliance priority. Misclassifying a position’s
exemption status can result in 3 years of overtime back wage
penalties, and additional damages.
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Managing Non-Exempt Employees –
What Changes?
Non-exempt employees are required to record all hours worked and
coordinate with their supervisor to manage their time appropriately.
The following process issues are considered compliance critical:
The e210 system must be used on a weekly basis to record actual
hours worked and benefit time taken.
Managers also need to verify hours within e210 on a weekly basis
for non-exempt employees. Separate e210 training information is
included under Additional Resources.
Employees are advised that Manager approval must be obtained
before working overtime, however, hours must be reported on the
e210 and paid appropriately even if authorization wasn’t given.
Repeatedly working overtime without approval may result in
disciplinary action for an employee.
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Managing Non-Exempt Employees –
What Changes?
If non-exempt employees are unable to take an uninterrupted meal
break, that time should be paid as worked time.
Overtime pay cannot be waived. Non-exempt employees must be
paid for all hours worked.
Work that is done after regularly scheduled hours, including phone
calls and managing emails must be paid as worked time.
It is critical that non-exempt employees understand these rules and
make every effort to work only during regularly scheduled hours.
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Managing Non-Exempt Employees –
What Changes?
Compensatory time off (comp time) is not an approved practice at
JHU and the policy is being changed to reflect that.
Travel time is also calculated differently for non-exempt employees.
Please refer to the FLSA Toolkit posted on the HR website for
further direction on this area of compliance
http://hrnt.jhu.edu/documents/flsa_toolkit.pdf.
Overtime pay is initiated by entering appropriate hours worked into
the CATS system for hourly employees or via Bonus Supplement ISR
for salaried employees. Overtime should be paid within one pay
period of its occurrence.
Failure to pay employees for all hours worked is a violation of
Federal law which creates a significant liability for JHU. Please
ensure that you make every effort to achieve compliance in this
critical area.
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Non-Exempt – What Doesn’t Change?
While some employees will experience exemption status changes
related to FLSA changes, most employment details stay the
same:
No title changes (unless a new position is being created)
No change to the position classification-role/level/salary range
No change to annualized base salary, but compensation will
now be referenced by hourly rate rather than annual salary
No change to benefit eligibility, contributions or time off
calculations
No change to annual merit increase date
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System-related changes
For employees receiving salary increases to remain
exempt:
Departments will need to submit ISRs to initiate changes
ISRs must be through all required approvals by 12/5
Salary increases will be effective 12/1, and will be seen in
employees’ 12/15 paycheck
New Salary Change Reason Code 23-Compliance must be
used on all ISRs related to FLSA mandated changes
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System-related changes
For classified titles where all employees are
changing to non-exempt:
Individual ISRs will not be required
HR Shared Services will be processing all changes that
do not involve salary increases
Changes will become effective 12/1
Any FLSA changes made after 11/15 will need to be
handled through the standard ISR process, using
Position Maintain/EAC Code 11-Compliance
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FLSA Override Functionality
An FLSA override is needed in SAP when the employee is:
Classified in an Exempt job AND
Works less than 100% FTE with an annual salary of less than
$47,476 (this applies to Full-Time, Part-Time, Limited, and
Casual employee groups)
Activating the FLSA override requires:
Updating the Employee Subgroup on the SAP Position AND
Updating Subtype Z001 on the Concurrent Employment
Groupings infotype (infotype 9712)
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Processing an FLSA Override
To update a current employee who is in an exempt job, but working
less than 100% FTE with an annual salary of less than $47,476 (this
applies to Full-Time, Part-Time, Limited, and Casual employee groups):
1. Process a Position Maintain/PAC ISR to update the Employee
Subgroup to the applicable option:
02 – Salaried Non-Exempt
(applies to Full-Time, Part-
Time & Salaried Limited Employees)
25 – S1 Hrly Non-Exmpt
(applies to all casual employees
as well as hourly Limited employees)
2. In the comments section of the Position Maintain/PAC ISR, add a
comment that says, “EMPLOYEE REQUIRES AN FLSA
OVERRIDE.” This will alert HR Shared Services to add the override
to the employee master data after maintaining the position.
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Processing an FLSA Override
To update a vacant position for a future incumbent who will be
classified as exempt, but work less than 100% FTE with an annual salary
of less than $47,476 (this applies to Full-Time, Part-Time, Limited, and
Casual employee groups):
1. Process a Position Maintain ISR to update the Employee Subgroup to
the applicable option:
02 – Salaried Non-Exempt
(applies to Full-Time, Part-
Time & Salaried Limited Employees)
25 – S1 Hrly Non-Exmpt
(applies to all casual employees
as well as hourly Limited employees)
2. On the Hire (Rehire, Reinstatement) or Reassignment ISR, select the
FLSA Override checkbox in the Work Hours section. This will alert
HR Shared Services to add the override to employee master data.
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Processing an FLSA Override
To create a new position for a future incumbent who will be classified
as exempt, but work less than 100% FTE with an annual salary of less
than $47,476 (this applies to Full-Time, Part-Time, Limited, and Casual
employee groups):
1. Process a Position Create/Copy ISR. The Employee Subgroup should
be one of the following:
02 – Salaried Non-Exempt
(applies to Full-Time, Part-
Time & Salaried Limited Employees)
25 – S1 Hrly Non-Exmpt
(applies to all casual employees
as well as hourly Limited employees)
2. On the Hire (Rehire, Reinstatement) or Reassignment ISR, select the
FLSA Override checkbox in the Work Hours section. This will alert
HR Shared Services to add the override to employee master data.
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Verifying an FLSA Override in SAP
To view the FLSA Override in Display HR Master Data (PA20) go to:
Time Tab
Select Concurrent Employment Groupings (infotype 9712)
Select ‘All’ in the Period section on the right side of the screen
Select Display (eyeglasses icon)
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Verifying an FLSA Override in SAP
Concurrent Employment
Groupings
Note the Subtype for the FLSA
Override is Z001- FLSA
exempt/non-exempt override
Personnel Assignments
Lists the employees Pernr(s),
Position number(s), Position
title, the override selection
(N – Non-Exempt overrides
exempt status) and FLSA OT
(this is the FLSA indicator
associated with the employees’
job code.)
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Additional Resources
FLSA changes will have a major impact on employers and employees
across the country. It’s very important for HR Contacts and/or
managers to meet with any employees who are experiencing
exemption changes as soon as possible, to be certain that they have a
clear understanding of how the FLSA process changes affect them.
Additional information available:
 FLSA Compliance Training for JHU Non-Exempt Staff is a detailed
e210 training prepared by JHU HR Shared Services. The training is
available in the DOCS section on the HR website, available at
http://hrnt.jhu.edu/index.cfm
 FAQs related to FLSA changes are available from the Comp team
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Q&A
We’re going to open the phone lines now!
There will be a slight pause, and then a recorded voice will provide
instructions on how to ask questions over this conference call line.
We’ll be answering questions in the order that we receive them.
We’ll also be answering the questions that were emailed to us
during the presentation.
If there’s a question that we can’t answer, we’ll do some research
after this session, and then email the answer to all participants.
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Thank You!
Thank you for participating!
We would love to hear from you.
Are there certain topics that you would like us to cover in future
FastFacts sessions?
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Please email us at: [email protected]
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Survey
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