Fair Labor Standards Act

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FLSA Overview

The Fair Labor Standards Act (FLSA) determines whether a position is eligible for overtime pay. An “exempt” position is not eligible for overtime pay. A “non-exempt” position is eligible and must receive overtime pay at time-and-one-half for any hours worked above 40 hours in one workweek. (Note: Staff represented by a collective bargaining unit should consult their agreements concerning overtime.)

Three Tests: Salary Basis, Duties and Salary Level

A position may be considered exempt under the FLSA if it meets three tests. 

  1. Employee must be paid on a salary basis, not an hourly basis
  2. Duties must meet criteria for executive, professional, administrative, computer or outside sales activities
  3. Compensation rate (pro-rated full-time rate if part-time) must be at least $23,660 annually 

If any one of the three tests is not met, the employee must be classified as non-exempt and eligible for overtime pay. Please note that exempt classification is an option, not a requirement under the law. A position that meets all three tests may still be classified as non-exempt.

Are There Exceptions?

Salaried employees not subject to the salary threshold test include instructional faculty (including lecturers), physicians and lawyers. In addition, academic advisors are subject to a different salary threshold requirement.  

FLSA Status at the University of Michigan

At U-M, FLSA status determines your eligibility for overtime pay, how you report time, whether you are paid biweekly or monthly, and your starting accrual rate for vacation time or Paid Time Off (PTO). Most other benefits are the same for non-exempt and exempt employees.

Comparing Exempt and Non-Exempt Status at U-M
Aspect of Employment Non-Exempt Exempt
Pay schedule Biweekly Monthly
Overtime pay Time-and-one-half for all hours worked above 40 in one workweek Not eligible
Reporting work time Report all hours worked Do not report hours worked
Reporting exception time Report exception time to the nearest tenth of an hour Report exception time
Vacation accrual rate 1 day per month when hired; 1.5 days per month after 5 years of service; 2 days per month after 8 years of service 2 days per month when hired; does not increase
PTO accrual rate (Michigan Medicine staff hired after 07/01/15 only, excluding Medical School) 12.67 hours per month when hired; 16.67 hours per month after 5 years of service; 20 hours per month after 10 years of service 16 hours per month when hired; 20 hours per month after 5 years of service
PTO accrual rate (Michigan Medicine staff hired before 07/01/15 only, excluding Medical School) 13.33 hours per month when hired; 17.33 hours per month after 5 years of service; 21.33 hours per month after 10 years of service 17.33 hours per month when hired; 21.33 hours per month after 5 years of service
If employee works on a holiday Paid time-and-one-half Paid straight time
If employee reduces hours to part-time No change in FLSA status May require reclassification to non-exempt if comp-rate falls below exempt salary threshold

Information for Non-Exempt Employees

Biweekly Pay Schedule

Non-exempt employees are paid biweekly. The pay calendar can be viewed on the Payroll website. There are 26 biweekly pay dates per year, including two months that have three paychecks. 

Biweekly Time Reporting

Non-exempt staff must report all hours worked as well as exception time (such as overtime, sick time, and vacation or PTO).  Exception time must be reported to the nearest one-tenth of an hour. 

Most non-exempt employees report time using Employee Self-Service in Wolverine Access. View a tutorial on self-service biweekly time reporting. If you do not report time in Wolverine Access, contact your supervisor or department timekeeper for assistance.

Learn more about overtime pay or browse frequently asked questions.

Payroll Deductions for Non-Exempt Employees

Biweekly Pay Schedule and Payroll Deductions
Deductions taken from every paycheck (26 per year) Deductions taken from first two paychecks per month (24 per year) Deductions taken from second paycheck of the month unless otherwise indicated
Basic Retirement Plan contribution, 403(b) Supplemental Retirement account contribution, 457(b) Deferred Compensation Plan contribution, gifts to the university, garnishments, tax levies, Friend of the Court deductions, other miscellaneous deductions for non-benefit items Health plan, dental plan, vision plan, life insurance, long-term disability, long-term care insurance, flexible spending accounts Gifts to United Way, parking, athletic tickets

Vacation or PTO Accrual Rate for Non-Exempt Employees

Non-exempt, non-bargained-for employees who are not on the PTO program begin accruing vacation at the rate of 1 day per month when hired. The accrual rate increases to 1.5 days per month after completing 5 years of service and increases again to 2 days per month after completing 8 years of service.

The PTO program currently covers almost all Michigan Medicine employees, excluding the Medical School, with the exception of a few bargained-for staff. Learn more about accrual rates in the PTO program.

Vacation and PTO are available for use at the beginning of each pay period that includes the first of the month in which they are accrued.

For additional information about vacation or PTO accrual, please contact your department HR representative or your department timekeeper. 

Information for Exempt Employees 

Monthly Pay Schedule

Exempt employees are paid monthly. The pay calendar can be viewed on the Payroll website. There are 12 monthly pay dates per year.

Monthly Time Reporting

Exempt employees report time monthly, with exceptions (such as sick time and vacation or PTO) reported. Most exempt employees report time using Employee Self-Service in Wolverine Access. View a Wolverine Access tutorial on self-service monthly time reporting. If you do not report time in Wolverine Access, contact your supervisor or timekeeper for assistance.

Payroll Deductions for Exempt Employees

All payroll deductions are taken from every paycheck for exempt employees.

Vacation or PTO Accrual Rate for Exempt Employees

Exempt employees who are not on the PTO program accrue vacation at the rate of 2 days per month when hired. The rate does not increase.

The PTO program currently covers almost all Michigan Medicine employees, excluding the Medical School, with the exception of a few bargained-for staff. Learn more about accrual rates in the PTO program.

Vacation and PTO are available for use at the beginning of each pay period that includes the first of the month in which they are accrued.

For additional information about vacation or PTO accrual, please contact your department HR representative or your department timekeeper.

Information for Supervisors and Time Approvers

Determining FLSA Status

For assistance determining FLSA status, review resources for employment and classification procedures or contact your department HR representative.

Training Resources for Time Approvers

Most employees and time approvers use Wolverine Access to report and approve time.

If your employees do not report time in Wolverine Access, please contact your departmental timekeeper for assistance.

Job Postings

In cases where the salary will ultimately determine the FLSA exemption status of an open position, position descriptions and job postings should state that the position is subject to FLSA review and the classification and exemption status could change as a result..

Administering Overtime

Learn more about administering overtime for non-exempt employees.

Resources for Timekeepers

Frequently Asked Questions About the FLSA

You may also wish to browse frequently asked questions about overtime pay.

Where can I find out whether my position is exempt or non-exempt under the FLSA?
At U-M, exempt employees are paid monthly and non-exempt employees are paid biweekly. You can confirm your FLSA status by checking your Pay Group under Timesheet or View Leave Balances in Employee Self-Service in Wolverine Access. If your Pay Group starts with M, you are an exempt employee who is paid monthly. If your Pay Group starts with B, you are a non-exempt employee who is paid biweekly.
Can non-exempt employees have flexibility in their work hours?
Yes. Special or alternate scheduling is allowed within the same workweek. For example, if you normally work 8 hours a day, and have a personal appointment on Monday that only allows you to work 6 hours, you and your supervisor can agree that you will make up the time later in the same workweek. Another example would be if your typical schedule is 8 hours a day during the day, and your department needs you to work a special event for 4 hours during the evening. Your schedule may be changed to give you 4 hours of time off at another time during the same workweek. Note: Special or alternate schedules must be within a single workweek.
What happens if an employee doesn’t turn in a time report on time?
You must report hours worked and exception time for each pay period before the cutoff. If an unusual event occurs and you are unable to submit your time report before the deadline, you will be paid for your base hours. However, the Payroll Office will not be able to process exception time (i.e., overtime, vacation time, PTO) without your time report. Any exception time will be processed in a future payroll. Therefore, you need to submit time reports prior to the cutoffs to avoid a delay in pay for all hours worked within the pay period and to ensure your leave balances are up-to-date.
Does time spent answering emails or using a mobile phone for work outside of normal hours count towards overtime for non-exempt staff?
Please review the Mobile Devices Guidelines Regarding Classification.

For More Information