FLSA FAQ - University of Chicago



Fair Labor Standards Act

Frequently Asked Questions (FAQ)

Q1. What is the Fair Labor Standards Act (FLSA)?

A. The FLSA establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting employees in the private sector and in Federal, State, and local governments. The United States Department of Labor (DOL) administers and enforces FLSA and has adopted regulations to implement FLSA.

Q2. What are the major changes to the regulations?

A. Changes were made to the tests that determine whether a position is exempt or non-exempt from the minimum wage and overtime provisions of the law. One of the most significant changes was to the salary test for exempt status, which was raised from $250 per week to $455 per week, or $23,660 per year. This minimum salary, one of the required criteria for a position to be exempt under the new regulations, had not been increased since 1975.

Q3. When do the new regulations take effect?

A. The new regulations take effect August 23, 2004.

Q4. How will I know Wwhat positions at the University are affected by the changes?

A. University Human Resources Management (UHRM) is responsible for determining the FLSA exempt or non-exempt status of positions. UHRM/ Compensation has initiated a review of positions that may be affected by the changes by contacting d. Departmental Human Resources Administrators may be contacted by UHRM for copies of current position descriptions to facilitate that review. .

Q5. What is meant by the terms “exempt” and “non-exempt”?

A. Exempt refers to a- An employee who is exempt from the FLSA overtime provisions of the Fair Labor Standards Actby because they are meeting the specific criteria for exemption as listed in the Actclassified as an executive, professional, administrative or outside sales employee, and meet the specific criteria for exemption. The criteria include a “salary basis test” where Exempt eemployees generally must be paid at least $455 per week on a salary basis and are not eligible for overtimea “duties test” to classify a job as executive, professional or administrative. At the University, exempt employees are paid monthly.

Non-exempt refers to a- An employee who is not exempt from FLSAthe overtime provisions of the Fair Labor Standards Act and is therefore covered by the provisions of the FLSA. Such an employee is therefore entitled to receive overtime (time and a half) for all hours worked beyond 40 in a workweek and the employer is required to maintain accurate records of hours worked. Non-exempt employees may be paid on a salaried or hourly basis. Employees represented by a union should refer to the appropriate bargaining unit agreement for more information on overtime. At the University, non-exempt employees are paid biweekly.

Q6. What is overtime?

A. FLSA overtime rules require employers to pay non-exempt employees 1 ½ times their regular rate of pay for each hour (or fraction thereof) worked in excess of 40 in a given workweek. Employees represented by a union should refer to the appropriate bargaining unit agreement for more information on overtime.

Q7. Can an employee paid less than $455 per week still be considered exempt?

A. No. UHRM will work with departmental HR Administrators to consider options in these situations.

Q. What must be included as “hours worked” when calculation weekly overtime?

A. FLSA overtime rules require employers to pay non-exempt employees 1 ½ times their regular rate of pay for each hour (or fraction thereof) worked in excess of 40 in a given workweek. "Hours worked" refers to actual hours worked during the workweek, excluding vacation, holiday and sick leave. Below are a few examples of employee activities and how they are regarded under the "hours worked" definition:

Travel time is not considered work time unless one of the following conditions is met:

• Travel from home to a University site in response to an emergency call after the regular workday is work time;

• When an employee who normally works at one location is sent out of town on a single-day trip, time which is spent traveling is work time;

• An employee who travels away from home overnight is not working when they are a passenger on an airplane, train, boat, bus or automobile outside of the employee's regular work hours, however any time which the employee spends traveling as a passenger on a weekend will be counted as work time if the travel cuts across the hours which the employee would normally work during the week.

On-call time is not considered work time if the employee can use the time spend on call primarily for his or her own benefit. If, however, an employee is required to wait at the employer's premises or at a particular location other then the employee's home, all of the waiting time must be counted as work time.

Time not worked, whether or not it is paid time off, does not count toward the 40-hour threshold used to calculate overtime pay.

Q8. Can part-time employees be classified as exempt?

A. Yes, part-time employees can be classified as exempt as long as they meet the “salary basis test” and the “duties test” described above. The exemption requirements for the particular exemption category they fall under, be it administrative, professional, executive or outside sales. In addition, the employee must meet the minimum weekly salary requirement of $455 is an absolute number and is not pro-rated based on a part-time work schedule. The Fair Labor Standards Act (FLSA) does not stipulate that an employee must work a specific number of hours to be considered exempt. .

Q9. What are the FLSA recordtimekekeeping requirements for employers?

A. The FLSA requires employers to maintain accurate records of hours worked. Accurate recordkeeping is imperative. The University requires non-exempt (bi-weekly paid) employees to complete time cards to track the beginning and end of the work shift, uncompensated meal breaks, and uncompensated rest periods (rest periods of longer duration than 20 minutes). Exempt (monthly paid) employees complete the Monthly Absence Report Form to report full day absences and the reason for each absence as it occurs.

Q. I want to pay my exempt staffers more than their salaries for the extra work they do. How do I pay them if tracking their time jeopardizes the exempt status?

A. Exempt employees may sometimes perform work that is clearly outside the normal scope of their responsibilities. In these cases a Department Administrators or Supervisors may recommend an appropriate lump-sum payment to recognize performance of unusual duties. Extra Service Payments should only be granted as described in Personnel Policy Guideline U307: Compensation for Additional Duties. This policy can be found on-line at:



Q10. Can non-exempt employees be given compensatory time in lieu of paying them wages?

A. The FLSA requires that covered, non-exempt employees receive not less than one and one-half times their regular rate of pay for hours worked in excess of the applicable maximum hours standard. It is illegal for private employers such as the University tofrom granting compensatory time to their employees in lieu of overtime compensation.

Q. Can an employee paid less than $455 per week still be considered exempt? What happens if I have temporary or part-time staff employees paid below this salary threshold?

A. Currently exempt part-time or temporary employee who make less then $455 per week will become non-exempt and switched to the bi-weekly payroll. This means they will need to complete time cards instead of the Monthly Absence Report Form for time and attendance. The specific salary requirements for executive, administrative, and professional employees may not be reduced based on part-time or temporary employment.

Q11. Are employers required by law to give their employees lunch and rest periods? If so, must employers pay their employees for such breaks?

A. According to Illinois State Law, a Anon-exempt employee who works 7 ½ continuous hours or more must be provided an unpaid meal period of at least 20 minutes. The meal period must be given to an employee no later than five5 hours after beginning work. In addition, employees must receive a minimum of twenty four hours of rest in each calendar week. A rRest periods of short duration, running from five to about twenty minutes, must be counted as "hours worked" under the FLSA and thus is compensable time.

Q. Can employers dock exempt employees’ wages for being late or absent?

A. In order for executive, administrative, or professional employees to be considered exempt under the FLSA, such employees must be paid on a salary basis. Employees are considered to be paid on a salary basis within the meaning of the Act if they regularly receive in each pay period a predetermined amount which is not subject to reduction because of variations in the quality or quantity of the work they perform. The only exceptions under which an employer may make deductions from an employee's salary without disturbing that employee's "salaried" status are when: (1) the employee is absent for a day or more for personal reasons, other than sickness or accident; (2) the employee is absent for a day or more due to sickness or disability if the deduction is in accordance with a plan for compensating such losses; or (3) the employee is penalized for major safety violations. Exempt employees report full day absences and the reason for each absence as it occurs on the Monthly Absence Report. Absences of less than one full day, however, are not to be charged to accumulated time, nor are they to be deducted from pay. However, if the employee's pay is to be reduced, then the department must submit a copy of the Monthly Absence Report Payroll in accordance with University published guidelines.

Q12. Can employees waive their right to be non-exempt?

A. No. Employees and employers must meet the FLSA criteria to classify a job as exempt.n-exemption may not be waived; the FLSA does not allow it. Employees’ default status is non-exempt unless duties and responsibilities allow for exemption from the provisions of the FLSA and the employee is paid a minimum of $455 per week.

Q13. Who determines whether employees are exempt or non-exempt?

A. Position classifications are determined by UHRM/Compensation in conjunction with Department Administrators and Supervisors determine position classifications by reviewing each position’s job duties and comparing those duties to FLSA regulationsestablished criteria that a job must pass in order to be exempt from overtime regulations. The decisionse criteria ar ise based on what a employee does, not just on on the jobir title or just what is described in the job description. There are four exemption tests contained in the FLSA: executive, administrative, professional and outside sales and the job must meet all the criteria to qualify under the test. The primary duties of the job must consist of 50% or more of the test criteria. UHRM Compensation staff contact information can be found on-line at:



Q14. Are benefits affected by whether employees are exempt or non-exempt?

A. No. . Benefits are not affected by whether employees are exempt or non-exempt. . However, exempt employees have benefit deductions taken from each paycheck whereas non-exempt employees have benefit deductions taken from every other paycheck.

Q. What job titles are affected by the amended FLSA regulations?

A. Exemption status is determined by actual job duties and responsibilities performed, not by job title. To ensure we will be in compliance with the new legislation, UHRM will be contacting Department Administrators in the next week or so to confirm the individuals who are affected and to review changes in the payroll process for these individuals.

Q. How does a change in exemption category impact employee’s pay?

A. An employee’s current annual rate of pay will be converted to an hourly rate to where the employee will realize the same annual amount.

Q. What happens if an employee changes his or her hours?

A. If an exempt employee changes hours such that his or her salary would be pro-rated to less than $455 per week, the employee will need to become non-exempt and switched to the bi-weekly payroll. He or she would then need to complete time cards instead of the Monthly Absence Report form for time and attendance.

If a non-exempt employee changes hours such that his or her salary would be more than $455 per week, the employee may be eligible for exemption if his or her duties and responsibilities meet the criteria for the executive, administrative, or professional exemption. In that case, this employee may then become exempt and switched to the monthly payroll.

Q15. What are the implications if employees have multiple jobs?

A. The University must consider the entire effort the employee works in order to determine exempt or non-exempt status of the job. In these cases, departments should contact UHRM for assistance. Employees must be compensated at the overtime rate of time and a half for all hours worked over 40 in a week. Therefore, if an employee has a concurrent job, the hours worked in all jobs must be combined to determine if overtime is owed.

Q. Do employees vacation, sick day or personal holiday accrual rate change depending on whether they are exempt or non-exempt?

A. No. Vacation, sick day and personal holiday accruals are based on the number of hours a benefits-eligible employee is regularly schedule to work. They are not based on whether an employee is exempt or non-exempt.

Q. What is the pay cycle for exempt and non-exempt employees?

A. Non-exempt employees are paid on a biweekly pay cycle. Exempt employees are paid on monthly pay cycle.

Q16. What is the minimum wage?

A. The minimum wage for non-exempt employees in Illinois is $5.50 per hour. . It will become raise to $6.50 on January 1st, 2005.

Q17. Where can I find more information about the Fair Labor Standards Act?

A. For more information about the Fair Labor Standards Act, the Department of Labor, Employment Standards Administration has a "Handy Reference Guide to the FLSA" on the internet at this address:



In addition, UHRM/Compensation offers training on this topic as requested. Please contact Norah Blackaller, in Training and Development to request the class (834-8718;

blackall@uchicago.edu).

Prepared by: UHRM/Compensation, 08-23-04

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