Effective Dec. 1, 2016, employers, including UNM, must be in compliance with the revised overtime rule established by the Wage and Hour Division of the U.S. Department of Labor (DOL). It is set forth under the Fair Labor Standards Act (FLSA).
On May 18, 2016, the DOL released the revised rule which redefines the salary threshold that determines if an employee is considered exempt (salaried) or nonexempt (hourly). Since 2004, employees performing certain jobs and earning a weekly amount of $455 or more (calculated using an appointment of 100 percent) have been considered exempt. Moving forward, this salary threshold has been raised from $455 to $913 per week (from $23,660 to $47,476 annually).
The reason stated for this change is to extend overtime pay protections to over four million workers. Its purpose is to ensure workers are paid fairly or allowed compensatory time for hours worked above 40 in a defined workweek.
So what is UNM doing in regard to this change? A team of administrators from the divisions of Human Resources and Financial Services was assembled to review and identify the employees who will be affected. A unified strategy for compliance was determined and routed through University leadership for approval. In general, the approach will be to modify any exempt position at a grade 12 and below to a nonexempt status with no change in annual base salary. Exempt positions in a grade 13 will remain exempt and will be required to meet the new weekly threshold of $913. It is very important to understand this is a general approach; however, there may be unique situations that require additional discussions for an alternative solution due to budgetary or organizational needs. Employees who are already classified as nonexempt will not be affected by this change in the regulation.
The Division of Human Resources will begin meeting with organization leaders next week to discuss the forthcoming changes and the impact to individual employees. Following this, affected employees can expect to be notified in writing, no later than Oct. 1 of any changes to be effective Nov. 12, 2016. After receiving their notice, employees will have the opportunity to speak with their supervisor and HR representatives if they have questions. Training will also be available for employees who are new to the nonexempt classification and for supervisors who may be new to supervising nonexempt employees.
Although these changes must be made due to federal regulations, employees who experience a change from exempt status to nonexempt status are not losing any value in their position or their contributions to UNM.
The Division of Human Resources asks that employees remain patient as departmental meetings are conducted over the next couple of weeks. As individual employee changes are finalized, the affected employees and their supervisors will be notified as previously stated. It is understood that employees may be wondering how their pay will be affected during the transition from exempt to nonexempt. This has been a primary concern of the implementation team; therefore, guidance, training, and tools will be made available in future communications. Employees should refrain from contacting Payroll at this time.
More information can be found on the HR FLSA website. FAQs, registration for the training sessions, related resources, and other important information will be included in this website as it becomes available.
If you have general questions regarding FLSA, you are encouraged to contact your Human Resources Consultant; otherwise, please hold all questions pending receipt of an individual notification.