Fair Labor Standards Act 2024 Updates - FAQ
1. What is the FLSA?
The Fair Labor Standards Act (FLSA) is the Federal wage and hour law administered by the U.S. Department of Labor (DOL). The purpose of the FLSA is to establish minimum wage, overtime pay, recordkeeping, and youth employment standards affecting most full‐time and part‐time workers. Employees are either “exempt” or “non‐exempt” from the FLSA regulations. This designation indicates eligibility for overtime pay when overtime is worked. The FLSA requires employers to pay their employees overtime (one and one‐half times the employee’s regular rate of pay) for all hours worked over 40 in a workweek unless they meet a minimum pay requirement and their job duties meet specific criteria to be “exempt” from overtime.
2. What is the difference between an “exempt” employee and a “non-exempt” employee?
An “exempt” employee is paid on a salary basis (a predetermined amount of money for work performed, regardless of the hours actually worked) and is not required to track time worked. At EKU, these employees are paid semi‐monthly. A “non‐exempt” employee is paid based on actual hours worked and is required to track all time worked and be paid overtime for time worked in excess of 40 hours in a workweek. At EKU, these employees are paid bi‐weekly.
3. How is “exempt” status determined?
To qualify for exempt status, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than the minimum threshold amount annually (please see question 4 for updates to this amount). Job titles do not determine exempt status. In order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the Department of Labor’s (DOL) regulations. Human Resources performs the analysis of exempt vs. non-exempt status in consultation with the hiring manager for all positions. Most jobs can be classified as non-exempt, but only some jobs can be classified as exempt.
4. What is changing?
The DOL has announced that they will revise the FLSA, increasing the salary threshold required to qualify for exempt status from $35,568.00 annually to $43,888.00 annually for a full-time worker, effective July 1, 2024. A small number of employees are subject to a slightly lower threshold due to the nature of their duties at the University. As a result of these updates, Human Resources has been working with area VPs and managers to review positions impacted by these updates and make decisions about exempt vs. non-exempt status accordingly.
5. What does this mean for employees who will experience a change?
Employees maintaining their exempt status may see a slight pay increase to satisfy the threshold applicable to their position/duties. Otherwise, they will not experience any changes.
Employees moving from exempt to non‐exempt:
- Must now report all hours worked;
- Must be paid for all hours worked and receive overtime for time worked in excess of 40 hours in a workweek;
- Will be paid bi‐weekly rather than semi‐monthly. Also, bi-weekly payroll is paid on a two-week delay, unlike semi-monthly payroll which is paid at the time work is completed.
- Will no longer be eligible for additional assignments in most circumstances, including teaching assignments that are not included in the employee’s primary job responsibilities. This is a long-time University practice to ensure compliance with FLSA mandates. Regarding teaching assignments specifically, only exempt staff may be approved to teach up to three credit hours per term.
It is important to note that this change in FLSA status from exempt to non-exempt is in no way a downgrade of any position, of a professional status, or of the importance of an employee’s work. EKU is required to abide by Federal law and ensure that employees are paid according to the new FLSA regulations. This change aims to providing regulations that ensures that employees are being paid fairly and paid for all hours worked. However, EKU understands that this will be a change for some employees and departments and will offer several resources to help manage the change.
6. What impact will these changes have on an employee’s retirement system?
These changes will not impact an employee’s retirement system.
7. What impact will these changes have on an employee’s benefits?
An employee’s benefits will not change, but there may be some fluctuation in deduction amounts for those transitioning to the bi-weekly payroll, as there are 26 instead of 24.
8. Is an employee who moves from exempt to non-exempt being demoted?
No. Exempt status has nothing to do with an individual employee’s standing with the University. Employees who move from exempt to non-exempt will now have the ability to earn overtime if they work more than 40 hours in a work week.
9. Will impacted employees still be subject to any across-the-board increases?
Yes! Assuming an impacted employee meets all usual criteria for an across-the-board increase.
10. Will these updates require a pay increase to impacted employees?
Impacted employees who remain exempt will require a pay increase to meet the new FLSA threshold. Remember: most employees can be classified non-exempt, whereas only some employees can be classified as exempt.
11. Will employees moved from exempt to non-exempt status have an annual salary change?
Aside from any across-the-board increases, no. Employees who transition to non-exempt will retain the same annual salary that they were earning as an exempt employee.
12. For employees who move from exempt to non-exempt status, will their checks be paid out on the same schedule?
No. Exempt employees are paid on a semi-monthly schedule and non-exempt employees are paid on a bi-weekly schedule. This means that employees on the bi-weekly schedule are paid over 26 pay periods instead of 24.
13. For employees who move from exempt to non-exempt status, will their checks be the same amount as when they were exempt?
No. The total amount each check will be slightly lower because there are more pay periods in the year for non-exempt employees. Since there are 26 bi-weekly pay periods instead of 24 semi-monthly pay periods, non-exempt employees receive an additional check in two months of the year.
14. For employees who move from exempt to non-exempt status, when will they receive their last exempt (salaried) check?
The last exempt (salaried) semi-monthly paycheck for positions switching to non-exempt will deposit on June 27, 2024, for the pay period of June 16 – June 30.
15. For employees who move from exempt to non-exempt status, when will they receive their first non-exempt (hourly) check?
The first non-exempt (hourly) biweekly paycheck will deposit on July 18, 2024, for the pay period of July 1 – July 6. The next biweekly paycheck will deposit on August 1, 2024, for the period of July 7 – July 20. The biweekly pay schedule can be found at https://hr.eku.edu/hr-forms or by clicking here.
16. What is bridge pay?
Bridge pay is a one-time partial pay advance to employees who are transitioning from exempt to non-exempt status. Bridge pay is optional, but all employees subject to the pay will be automatically enrolled and must contact HR by July 2, 2024, if they do not wish to participate. The purpose of bridge pay is to offset the full pay-period delay in July that the transitioning employees will experience by depositing a set amount on or about July 12, 2024. The pay advance is an amount that will need to be paid back by the employee over the course of ten payrolls or less.
17. Does this apply to different industries?
Yes. The FLSA updates apply across-the-board regardless of geography, organization size, or the industry.
