06:25:01 Fair Labor Standards Act

Purpose

The purpose of this policy is to convey a basic understanding of the provisions of the Fair Labor Standards Act.

Policy

I. Covered Employees

The Fair Labor Standards Act [FLSA] defines covered employees in terms of the enterprises for which they work. Institutions of higher education, whether or not they are public or private are expressly included. The FLSA also provides for exemptions of various employees based upon the duties and responsibilities of the position, not the position classification. Employees in these positions are excluded from minimum wage and overtime provisions and are classified as “exempt”. Those covered by the minimum wage and overtime provisions are classified as “non-exempt”. Within the TBR, employees included in the TBR Classification/Compensation Plan in the account code range of 613XX are classified non-exempt. The provisions of FLSA apply to all regular and temporary, full and part-time non-exempt employees. Employees who are faculty or administrators in the object code range of 611XX, 612XX, or 616XX are classified as exempt as further defined below.
 

1. Executive Employees - Generally, in order to qualify as an “executive” employee, an employee must:
    
   1. earn a minimum weekly salary of $455;
       
   2. have as a primary duty the management of a recognized department of an agency;
       
   3. customarily and regularly supervise two or more employees;
       
   4. customarily and regularly exercise discretionary powers;
       
   5. have the authority to hire or fire other employees or make recommendations as to the hiring and firing of employees; and makes recommendations with regard to changes in employee status that are given weight. (29 C.F.R. 541.1-541.106)
       
2. Administrative Employees - Generally, in order to qualify as an “administrative” employee, an employee must:
    
   1. earn a minimum weekly salary of $455;
       
   2. have as a primary duty the performance of non-manual or office work directly related to management policies or business operations or the performance of functions in the administration of a school (includes teaching);
       
   3. customarily and regularly exercise discretion and independent judgment; (29 C.F.R. 541.200-541.204)
       
3. Professional Employees - In order to qualify for an exemption as a “professional” employee, an employee must:
    
   1. earn a minimum weekly salary of $455;
       
   2. have as a primary duty the performance of
       
      1. work requiring advanced knowledge of the type acquired by specialized study (e.q. law, medicine); or
          
      2. work that is original and creative in an “artistic” field; or
          
      3. teaching;
   3. consistently exercises discretion and judgment in the work; (29 C.F.R. 541.300-541.301)
       
4. Computer Professional Exemption - In order to qualify for an exemption as a “computer professional” employee, an employee must:
    
   1. earn a minimum weekly salary of $455
       
   2. have as a primary duty the performance of
       
      1. application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software of system functional applications or
          
      2. design, development, documentation analysis, creation, testing, or modification of computer systems or programs, including prototypes, based on and related to user of system design specifications; or
          
      3. design, documentation, testing, creation or modification of computer programs related to machine operating systems; or
          
      4. a combination of duties described in (A), (B) and (C), the performance of which requires the same level of skills.
          
      5. Be employed as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer software field. (29 C.F.R. 541.400-541.402)

II. Basic Wage Standards

1. Minimum Wage
   Section 6(a) of the FLSA requires that all covered workers receive an hourly wage not less than $7.25 beginning July 24, 2009. This rate is subject to revision by the federal government. Any changes will be posted on labor law posters in the hallway outside the human resources office. It does not require that the employee be paid on an hourly basis. Fixed monthly or semimonthly salaries must be converted to weekly wage equivalents to determine compliance. The conversion is achieved by multiplying the monthly salary by 12 months (semimonthly by 24) and then dividing by 52 weeks. This will produce the wages earned on a weekly basis. Dividing the weekly earnings by the number of hours worked determines the hourly wage.
   
   Deductions made from wages for such items as cash shortages are not legal to the extent that they reduce the employee’s earnings to below minimum wage or reduce the amount of overtime due.
   
   The reasonable cost of board, lodging, and other facilities customarily furnished by the employer may be considered part of wages.
   
   Non-exempt employees may be contracted with to perform additional duties beyond the normal workweek; however, such work shall be compensated on the basis of their regular hourly wage subject to overtime provisions of FLSA. This work may not be contracted on a job-based wage scale: i.e. payment of a flat fee for typing a paper to be presented to a professional society. Non-exempt employees who are working full-time and are also working part-time in a capacity different from their full-time employment must be paid at a minimum overtime rate computed by using a weighted average for the week. The assistant vice president for human resources should be contacted for assistance in determining this rate. Note, the overtime rate does not apply where the part-time work is occasional or sporadic. For example, a secretary or maintenance worker who occasionally takes tickets at concerts or officiates at sporting events may be paid in accordance with the regular pay rate for these jobs, rather than an overtime rate.
    
2. Overtime
   The FLSA requires that employers pay non-exempt employees one-and-one-half times their regular rate of pay for any hours worked in excess of a state maximum during a given workweek. The stated maximum is 40 hours. Therefore, hours worked in excess of 37.5 and equal to or less than 40 in a workweek would be compensated at straight time and those in excess of 40 at time-and-a-half. The employer has the authority to require employees to work additional hours; and therefore, employees do not have the right to waive or decline overtime work. Within the Tennessee Board of Regents, only clerical and support employees (non-exempt) are eligible for overtime payments.
    
3. Computation of Overtime
   Overtime must be paid at a rate of at least one-and-one-half times the regular hourly rate for hours worked in excess of 40 in a single workweek. The regular hourly rate is calculated by dividing the gross annual salary by 1950 hours.
   
   Example: An employee paid $5.15 an hour works 44 hours in one week. This employee would be paid $206.00 (straight time) for the first 40 hours worked and $30.90 (time-and-a-half) for the 4 hours worked above 40:
    

   $206.00	40 hrs. x
   x 30.90	4 hrs. X
   $236.90	total weekly
   	40 hrs. x
   x 30.90	4 hrs. X
   $236.90	total weekly

4. Compensatory Time Off
   Compensatory time off may be granted in lieu of hourly wage payments for any hours worked in excess of 37.5 per week. All hours worked in excess of 37.5 up to 40 in a given workweek may be taken as comp time at a straight-time rate at any time during the pay period in which they were earned.
   
   All hours worked in excess of 40 in a given workweek may be taken as compensatory time off at time-and-a-half during any subsequent workweek in the pay period in which they were earned.

III. Workweek

A workweek is defined as 168 hours during seven consecutive 24-hour periods. The workweek may begin on any day of the week and any hour of the day as defined by the employer. A single employer may define more than one workweek each for a different employee group. For purposes of calculating hourly wage rates and overtime payments, every workweek stands alone: there can be no averaging of two or more workweeks.

The Tennessee Board of Regents and the college subscribe to a 37.5-hour workweek as described in TBR Guideline No. P-020. While most TBR employees adhere to this schedule, it is recognized that in some instances the nature of the work requires that a 40-hour workweek be followed. Examples are security and boiler operator positions where round-the-clock duty requirements necessitate three eight-hour shifts. Where these exceptions must occur, the institution must obtain approval from the chancellor. Furthermore, any employee working a 40-hour workweek must accrue eight hours of sick leave each month, an appropriate amount of annual leave based upon an eight-hour day and length of service and eight hours of pay for holidays.

IV. Hours Worked

This includes all hours for which an employee must be on duty, or on the employer’s premises or at any other designated place of work. Also included is any additional time the employee is permitted or tolerated to work. Compensated time for annual leave and sick leave does not count toward time worked for overtime purposes.

V. Effect of Longevity Pay on Overtime Rates

The value of longevity pay is not included in the week-to-week calculation of regular hourly rate for overtime payment purposes. But, when longevity pay is given, 1/2 the hourly equivalent rate of the longevity payment is due for all premium overtime hours earned during the prior year of service for which the longevity payment is made. For example, a non-exempt employee worked 2150 hours during the year including 100 hours of premium overtime and received a $750 longevity payment. The overtime due on the payment would be $750 divided by 2150 hours = $.348 hourly equivalent times 1/2 = $1.74 per hour times 100 premium hours = $17.40 additional overtime payment.

NOTE: This method of paying, overtime on longevity became effective with the coverage of nonexempt State employees by the FLSA (workweek of April 15, 1985) and applies only to that portion of the employee’s longevity work year after that date. This longevity provision does not apply to exempt employees.

VI. Record Keeping

With respect to an employee subject to both minimum wage and overtime pay provisions, the following records must be kept:
 

1. personal information, including employee’s name, home address, occupation, sex, and birth date (if under 19 years of age);
2. hour and day when workweek begins;
3. total hours worked each workday and each workweek;
4. total daily or weekly straight-time earnings;
5. regular hourly pay rate for any week when overtime is worked;
6. total overtime pay for the workweek;
7. deductions from or additions to wages;
8. total wages paid each pay period; and
9. date of payment and pay period covered.
    

This information may be maintained in a variety of files, personnel and payroll documents and does not have to be collected in a single document.

Under the regulations, deductions for full day disciplinary suspensions for violation of workplace conduct rules will not jeopardize the salary basis if (a) the employee does no work for a full day, (b) the deductions are in full day increments, (c) the deductions are carried out pursuant to a written policy that is applied uniformly to all workers, and (d) the suspension was imposed in good faith.

The regulation specifically cites policies against sexual harassment and workplace violence as the type of “conduct rules” referred to above.
Starting and ending weeks. The employee’s starting and ending weeks are another exception to the rule that to be exempt an employee must be paid the same salary each week. An employer may prorate the salary for those weeks to reflect the number of hours or days actually worked. 29 C.F.R. 541.602(b)(6).

VII. Enforcement

The Wage and Hour Division of the Department of Labor (DOL) administers and enforces the law as it applies to state governments. Enforcement is carried out by compliance officers stationed across the United States. The D.O.L. has the right to enter and inspect places of employment to determine if FLSA has been violated. There is a two-year statute of limitations for suits to enforce the provisions of the Act; for willful violations this period is three years.

Employees may enforce the FLSA against their employer by instituting a court action or by filing a complaint with the D.O.L. It is a violation of FLSA to fire or in any way discriminate against an employee for filing a complaint or participating in a legal action under the law.

Federal Register (29 C.F.R. Part 541) must be reviewed as a supplement to WSCC Guidelines for FLSA 8-23-04. 8/04; 3/06; 10/13; 05/16