The Fair Labor Standards Act (FLSA), administered by the U.S. Department of Labor since 1938, establishes federal minimum wage, overtime pay, and recordkeeping requirements for all employees in the private sector and in Federal, State, and local governments, including Higher Education. On April 23, 2024, the U.S. Department of Labor published changes to update the minimum salary levels needed for jobs to be exempt from overtime pay under the FLSA.
According to the Department of Labor, the changes are intended to keep the earnings thresholds up to date for the benefit of both workers and employers and to address wage growth since the last update in 2019. The changes are also intended to more effectively identify who is employed in a bona fide executive, administrative, or professional capacity and ensure that the FLSA’s overtime protections are fully implemented.
These changes, which became effective July 1, 2024, increased the minimum salary level for exempt employees from $684 on a weekly basis ($35,568 annually) to $844 weekly ($43,888 annually). Additional revisions made to the law will again increase the salary threshold to $58,656 beginning on January 1, 2025. The Department of Labor’s Final Rule on FLSA also implements automatic updates to the threshold that will occur every three years. UCF is continuing to monitor the January 1 update, as it is expected that this portion of the update will be met with legal challenges.
Exempt vs Non-exempt Employment Status
Non-Exempt Employees: Non-exempt (referred to as “Overtime Eligible” here at UCF) jobs at UCF are subject to the overtime rule, and employees must typically be paid at least one and one-half times their regular rate of pay for any hours worked beyond 40 in a workweek. Overtime Eligible employees must report their time for each pay period, to reflect any hours worked beyond 40 in a workweek that would be eligible for overtime.
Exempt Employees: The FLSA provides an exemption from its overtime pay requirements for certain jobs and duties. UCF employees whose duties meet the tests for exemption are commonly referred to as “exempt” employees. This means that the overtime provisions of the FLSA does not apply to those jobs, and employees classified in these jobs are not eligible for overtime. It is important to note that exempt status must be determined based on the duties for a job. Titles alone are not sufficient to determine the status of a position under the FLSA.
To qualify for exempt status, positions must meet all three of the following tests:
- Salary Level Test: The minimum weekly pay rate for exempt employees must be above the FLSA minimum salary threshold for overtime compensation.
- Salary Basis Test: Generally, exempt employees must be paid full salary for any week in which any work is performed. Variations in the work product or the actual hours worked typically does not impact compensation.
- Duties Test: The specific job’s duties must qualify under the duties test provided by the Act for the particular exemption. The Compensation & Classification team utilizes the duties tests to make determinations when reviewing job descriptions. For more information on the duties tests, refer to the fact sheets available on the Department of Labor’s website.
Employees who experience a change from an Exempt to Non-Exempt (overtime eligible) status as a result of the 2024 Final Rule will not experience a change in the following areas:
- Employee Classification – This DOES NOT change an employee’s current employee type. USPS employees and A&P employees remain at the same classification held prior to the change in the law.
- Annual Leave Accrual – The changes in law DO NOT change to the leave accrual rate.
- Base Pay – There is NO change in base pay for affected employees.
- Benefits – Employee health and wellness benefits remain the same.
- Retirement – There will be NO change in the affected employee’s retirement plans which they are enrolled in or available to enroll in.
UCF employees affected by the July 1, 2024, increase, and their supervisors, were notified of this change and were asked to begin tracking their time in Workday beginning with the June 21, 2024, pay period. Supervisors were also provided with resources to assist with this transition including, the options that are available, such as flexing time, when an employee may need to work more than 40 hours in a given pay week. Supervisors are encouraged to contact UCF Human Resources with any questions or concerns they may have related to these changes.
For more information on the FLSA revisions please read the FAQs in this edition of the IntegrityStar or visit the UCF Human Resources Compensation and Classification FLSA website. If you have additional questions related to these updates, please email the Compensation and Classification Team at comp@ucf.edu.