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 Threshold

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 must be at least $684 per week ($35,568 annually), regardless if full-time or part-time appointment.

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?

Employees not subject to the salary threshold test include instructional faculty (including lecturers if teaching is their primary responsibility), physicians and lawyers. In addition, academic advisors are subject to a different salary threshold requirement that is tied to the entrance salary for teachers in the same educational institution (e.g., lecturers) if primary duties are performing administrative duties directly related to academic instruction or training.

FLSA at the University of Michigan

At U-M, FLSA 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.

Exempt and Non-Exempt at U-M
Aspect of Employment Non-Exempt Exempt
Pay Schedule and Deductions Biweekly (Payroll website) Monthly (Payroll website)
Overtime Pay Time-and-one-half for all hours worked above 40 in one workweek Not eligible
Reporting Work Time Report all hours worked in Wolverine Access (see tutorial). If Wolverine Access is not used, contact your supervisor. Do not report hours worked
Reporting Exception Time Report exception time to the nearest tenth of an hour (see Absence from Work) Report exception time to the nearest hour (see Absence from Work and Tutorial)
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 (see Absence from Work) 2 days per month when hired; does not increase (see Absence from Work)
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 (see Absence from Work) 16 hours per month when hired; 20 hours per month after 5 years of service (see Absence from Work)
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 (see Absence from Work) 17.33 hours per month when hired; 21.33 hours per month after 5 years of service (see Absence from Work)
Working on Holiday Paid time-and-one-half (Holidays SPG 201.26) Paid straight time (Holidays SPG 201.26)
Part-time Schedule No change in FLSA status May require reclassification to non-exempt if comp-rate falls below exempt salary threshold

Information for Supervisors and Time Approvers

Determining FLSA Exemption

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

Job Postings

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

Resources for Timekeepers

Frequently Asked Questions

Where can I find out whether my position is exempt or non-exempt under the FLSA?
You can confirm your FLSA exemption by checking your Pay Group on your paycheck. If your Pay Group reflects 'monthly,' you are exempt; if 'biweekly,' you are non-exempt.
Can schedule flexibility continue if employees become non-exempt?

Yes. Special or alternate scheduling is allowed within the same workweek. Examples include the following:

  1. If an employee normally works 8 hours a day and has a personal appointment on Monday that allows them to work 6 hours, the supervisor can agree that the employee will make up the 2 hours later in the same work week.
  2. If a typical schedule is 8 hours a day during the day and the department needs an employee to work a special event for 4 hours during the evening, the schedule may be revised to give the employee 4 hours of time off at another time during the same work week. The university’s shift premium policy may apply if evening hours are involved in a rearranged work schedule (Shift Premium SPG 201.55).
  3. Remote arrangements (Remote Employment) should be evaluated on a case-by-case basis.
What happens if an employee doesn’t turn in a time report on time?
An employee must report hours worked and exception time for each pay period before the payroll cutoff. If an unusual event occurs and they are unable to submit the timesheet before the deadline, base hours will be paid without exception time (i.e., overtime, vacation time, PTO). Exception time will be processed in a future payroll.
Can supervisors require overtime?
Yes, overtime can be required. Supervisors are encouraged to give as much notice as possible.
Can non-exempt employees waive overtime?
No, it is a legal requirement.
What is the process to reclassify an employee from non-exempt to an exempt classification?
Exempt does not mean the classification is valued more internally or externally and should not be used as a promotional opportunity. Not all classifications can be exempt, even if the employee is performing work at a higher level or with complete autonomy. The Position Description Form is the starting point and primary tool for initiating a classification review. Please work with your local HR to initiate the process.
When do part-time employees receive overtime pay?
Non-exempt employees on a part-time appointment (fractional appointment) are paid at their regular hourly rate for each hour worked. Hours beyond 40 per week are eligible for overtime (Overtime SPG 201.38).
What if an employee works on their lunch break?
Please work with your supervisor to understand your work schedule. (Lunch Periods SPG.201.31).
Does time spent answering emails or using a mobile phone for work outside of normal hours count towards overtime for non-exempt employees?
For non-exempt employees who respond to emails or calls outside of normal work hours or while on lunch breaks on a “regular” basis, that time is counted as work time for overtime purposes. If the employee responds to emails or calls “very occasionally,” then court cases have considered that to be “de-minimis” and therefore not counted for overtime purposes. However, supervisors have discretion to establish overtime approval processes. If the employee continues to work overtime without supervisor approval, then the supervisor could begin taking possible disciplinary action with the employee. Creating a Mobile Device Policy
If an employee is called back to work, is that time included as time worked for the purposes of calculating overtime?
If the employee actually works when being called back, yes. (Call Back Pay SPG 201.06)
Will employees be paid overtime if the supervisor did not approve it?
Yes. If non-exempt employees perform work, they must be paid for it. However, supervisors have discretion to establish overtime approval processes. If an employee continues to work overtime without supervisor approval, the supervisor could take disciplinary action.
Can supervisors offer compensatory time (unpaid time off taken in a later workweek) instead of overtime?
No. U-M does not recognize "comp time."
Must overtime be paid if a non-exempt staff travel overnight on business outside of regular working hours?
The rules governing compensation while on overnight business travel for non-exempt employees are complex. Please speak with your HR representative for guidance based on specific circumstances.
What if an employee must work at an event outside of regular working hours (i.e., entertaining donors at an evening social function)?
An employee working outside of regular working hours is still working. The time is considered time worked and counts toward the 40 hours per week requirement for overtime pay.

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