The Fair Labor Standards Act (FLSA) is nothing new. President Franklin D. Roosevelt signed the FLSA into law in 1938, creating a national minimum wage and the 40-hour workweek, prohibiting child labor and guaranteeing overtime pay for certain jobs.
Today, the overtime component of the FLSA is receiving lots of attention because the U.S. Department of Labor (DOL) is implementing a key change to the provisions for determining which employees are covered by the FLSA minimum wage and overtime requirements. The change, which sets a new salary level threshold for exempt employees, impacts all U.S. businesses and universities, both public and private. The federal government is mandating that all employers implement the new salary level threshold on Dec. 1.
What is the new salary level threshold?
The new regulation requires that an employee be paid a salary of at least $47,476 ($913 per week) on an annual full-time basis to qualify for exempt status. Those under that salary level are nonexempt and their pay must meet the minimum wage and overtime provisions of the FLSA. This means they may be eligible for overtime pay if they work more than 40 hours per week.
This change significantly increases the salary level threshold, currently $23,660 annually. Certain professions are considered to be exempt from overtime and thus the new salary threshold of $47,476 does not apply. For institutions of higher education, these professions include most teachers and academic administrators as well as some others.
Implementation of the new regulations at ISU
"Our key focus right now is meeting the Dec. 1 deadline when the new regulations become effective," said Kristi Darr, interim vice president for university human resources. "We very much value our employees and our focus right now is how we will pay people appropriately in accordance with the Department of Labor's mandates.
"Through Dec. 1 and after, we will continue to work with departments and managers to develop training opportunities and timekeeping methods to fully implement the new regulations at Iowa State."
The process for how employees will record and report overtime still is under review. UHR is working closely with members of the campus community to determine the best approach for Iowa State and will communicate those details when they are available.
How the regulations might affect you
- Some employees who previously were exempt will become nonexempt. This means they now will be covered by the FLSA’s minimum wage and overtime provisions. These employees will be eligible for overtime pay where applicable under the FLSA rules and regulations.
- Some employees who currently are exempt but make less than $47,476 may receive a pay increase to bring their salaries above the threshold necessary for exempt status. This generally will occur when an employee’s current salary is close to the threshold, the employee’s job duties otherwise meet the requirements for exempt status, and it is anticipated that the employee’s overtime pay would be greater than the difference between the current salary and the new salary threshold for exempt status.
- Some employees hold positions for which the salary basis threshold for exempt status does not apply. This includes employees whose primary duties include teaching and some other jobs, such as certain academic administrators, lawyers and physicians. Generally, these employees will not be affected by the new regulations.
- Employees who are nonexempt under the FLSA will be required to track their time more closely, including any time spent on work activities outside the office. UHR is working to develop the tools, guidance and training to facilitate this change for employees and their supervisors.
Part of a larger review
“Compliance with the Dec. 1 changes is our near-term objective," Darr said. "UHR is excited for the long-term enhancements to the professional and scientific classification and compensation structure that are in the future."
University administration funded a review of the structure that will take place over the next few years. The structure review is an opportunity to define:
- Job categories and job families for P&S jobs and establish alignment with new FLSA regulations
- Pathways for P&S career development
- P&S pay structure that balances market, equity and performance
- Pay administration practices and policies to maintain the pay program
A review of potential consultants for the project is underway.
There's more to be said about the FLSA and its new regulations. Look for additional information in upcoming editions of Inside Iowa State and from departmental leaders. In the meantime, go to the university human resources website for more information, or contact FLSA@iastate.edu with questions.