Revisions to the Fair Labor Standards Act
As of May 18, 2016, the U.S. Department of Labor revised the Fair Labor Standards Act. The revisions will become effective December 1, 2016. UCF’s Human Resources department is in the process of updating our policies and pay practices to implement the new regulations.
What is the Fair Labor Standards Act?
The Fair Labor Standards Act (FLSA) is a Federal wage and hour law administered by the U.S. Department of Labor since 1938. The law provides employees with wage and hour protections. It impacts employees in the private and public workforce by establishing minimum wage, overtime pay, and other wage and hour regulations.
Under the FLSA, employees are classified as either exempt or non-exempt.
- Non-exempt employees are paid overtime for time worked in excess of 40 hours in any work week
- Exempt employees are not paid overtime
Under the FLSA guidelines, to qualify for an exempt status, the requirements of three tests must be met:
- Salary Basis Test: An employee must receive a predetermined, fixed salary that is not subject to reduction due to variations in quality or quantity of work performed;
- Minimum Salary Test: An employee must be paid a salary minimum as defined by the Department of Labor that is currently $23,660 per year ($455 per week); and
- Duties Test: The primary job duties performed must involve the kind of work associated with exempt executive, administrative, professional, or highly compensated employees as specifically defined by the FLSA. These exemptions are sometimes referred to collectively as the “white collar” exemptions because the work is performed in an office or other administrative setting.
What will change?
The U.S. Department of Labor has issued a final ruling regarding the Minimum Salary Test. The minimum salary for an employee designated as exempt will change from $23,660 per year ($455 per week) to $47,476 per year ($913 per week). An employee who is paid less than $47,476 per year will be entitled to overtime pay.
Also, the rule will raise the compensation exemption level for highly compensated employees from its previous amount of $100,000 to $134,004 annually.
What will not change?
The U.S. Department of Labor did not make changes to the Duties Test (i.e., what qualifies for an exempt executive, administrative, professional, or highly compensated position) nor to the Salary Basis Test (i.e., who qualifies to receive a salary instead of hourly pay).
For more information about what the FLSA changes mean to UCF, please visit https://hr.ucf.edu/2016-flsa/.