UAH - Human Resources

What is the Fair Labor Standards Act?

The Fair Labor Standards (FLSA) is a federal law that establishes the minimum wage, sets guidelines for determining eligibility for overtime pay, and sets standards for recordkeeping for all employees. The rule defines and delimits who is a bona fide executive, administrative and professional employee exempt from the overtime requirements. To qualify for an exemption, an employee must generally satisfy three tests:

Salary basis test – the employee must be paid on a salary, not hourly, basis
Salary level test – the employee must receive a minimum salary rate established by the FLSA
Duties test – the employee’s primary duty must involve work associated with the executive, administrative, or professional exemption

EXCEPTIONS: Employees whose primary duty is teaching, tutoring, instructing, or lecturing qualify for an exemption and do not need to meet the salary level and salary basis test. At UAH, this includes faculty and coaches. Certain employees “whose primary duty is performing administrative functions directly related to academic instruction or training” may also qualify for exemption from overtime. Still, these employees must satisfy the salary level and salary basis tests.

What are the changes to the FLSA?

On April 23, 2024, the U.S. Department of Labor (DOL) Wage and Hour Division finalized a rule amending the Fair Labor Standards Act (FLSA) overtime regulations. This rule changes the criteria for exemption status under the FLSA. Specifically, the change relates to the minimum salary required for an employee to be exempt from overtime provisions. The DOL estimates that this change will result in about 4 million U.S. workers not currently eligible for overtime becoming eligible for overtime.

The minimum salary threshold will increase from $35,568 as follows:

	Effective Date	Standard Salary Level Increase
Phase I	July 1,2024	$844 per week (equivalent to $43,888 per year)
Phase II	January 1, 2025	$1,128 per week (equivalent to $58,656 per year)
	January 1, 2027	Automatic updates every three years beginning July 1, 2027, based upon census data

Labor groups and attorneys general have filed legal challenges to the new FLSA regulations. These challenges may affect the proposed Phase II implementation of the minimum salary threshold of $58,656.

For additional information on FLSA from the Department of Labor, you may refer to the article, “What The New Overtime Rule Means for Workers” and the DOL overview of Wage and the Fair Labor Standards Act.

How do the changes impact UAH?

UAH is committed to a smooth transition and ongoing communication with leaders and staff. Accordingly, the Office of Human Resources will provide training and resources to support the implementation and ensure all impacted supervisors and employees are well-informed and prepared to comply with the new regulations.

Approximately 305 UAH employees fall below the minimum salary thresholds

Employees whose annual base salary falls below the threshold on July 1, 2024, or January 1, 2025, and who do not qualify for an exemption will be reclassified as Professionals Eligible for Overtime
FLSA changes will be implemented in two phases. Phase I will include employees affected by the $43,888 minimum salary threshold effective July 1, 2024. Phase II will include employees affected by the $58,656 threshold effective January 1, 2025.
Phase I employees will receive written notification of their change in status by June 26, 2024.
Human Resources will provide training and other resources for supervisors who manage employees reclassified as Professionals Eligible for Overtime
The Overtime and Compensatory Time Policy provides guidance regarding the University’s policies and procedures for employees who are eligible for overtime. Employees who work over 40 hours in a workweek are eligible for overtime pay or compensatory time earned at 1.5 hours for every hour worked. The maximum accrual for compensatory time is 240 hours.
Employees reclassified as Professionals Eligible for Overtime will not lose any of their current benefits. All benefits will be grandfathered, meaning they will continue to receive a 403(b) match and accrue annual leave at their current rate. This grandfathered status remains in effect while the employee stays in their current position. The grandfathered status will end if the employee transitions to another nonexempt position.