Background Information:

On August 23, 2004, the U.S. Department of Labor’s (DOL) new rules for “white collar” employees under the FLSA went into effect. These revised regulations modernized the standards used to determine whether an employee is exempt from the FLSA’s overtime provisions as an “executive”, “administrative”, “professional”, “outside sales”, or “computer” employee. These changes represent the first significant modifications of the FLSA rules in over 50 years.

In general, the FLSA requires covered employers, such as BGSU, to pay their employees at least federal minimum wage and overtime pay of one and one half times their regular rate of pay for all hours worked over 40 in a single workweek. There are exemptions, however, from the minimum wage and overtime requirements. For example, the FLSA regulations state that personnel employed in a bona fide executive, administrative, professional capacity (or in the capacity of “outside salesman”), or certain computer employees are exempt from the minimum wage and overtime requirements. These persons are considered “exempt employees” because they are exempt from the requirement for overtime pay. The FLSA regulations provide tests or standards to use in order to determine if a particular job should be classified as “exempt”. In addition, the new regulations also significantly raise the minimum pay threshold for automatic determinations of eligibility for overtime pay. All employees paid less than $455 a week are automatically covered under the FLSA and are eligible for overtime. These employees are called “non-exempt”.

General Rules

The following are selected summaries of certain important provisions contained in the new regulations. These summaries, however, are not intended to be a substitute for consulting with HR if you should have any questions about the application of the standards or the classification of any job as exempt or non-exempt.

Hourly Employees: The new standards for exemptions do not apply to manual laborers or other blue collar workers, such as non-management workers, maintenance, and construction workers paid on an hourly basis. Unless a person meets one of the exemptions mentioned above, that person should be considered eligible for the payment of overtime.

Revised Salary Minimum: Full-time employees earning less than $23,660 annually ($455 a week) will automatically be eligible for overtime pay.

Job Duties Tests: In determining if an employee is an exempt executive, administrative or professional employee a job duties test is applied.

To qualify as an exempt executive employee, the following duties test must be met:
• The employee must be compensated on a salary basis (as defined in the regulations);
• The employee must have a primary duty of managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
• The employee must customarily and regularly direct the work of two or more other full-time employees or their equivalent; and
• The employee must have authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing advancement, promotion, or any other change of status of other employees must be given particular weight.

To qualify as an exempt administrative employee, the following duties test must be met:
• The employee must be compensated on a salary basis (as defined in the regulations);
• The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
• The employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.

To qualify as an exempt learned professional employee, the following duties test must be met:
• The employee must be compensated on a salary basis (as defined in the regulations);
• The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
• The advance knowledge must be in a field of science or learning; and
• The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

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Highly Compensated Professionals: With the new regulations, if an employee’s total annual compensation is $100,000 or more, which includes at least $455 per week paid on a salary basis, and performs one or more of the exempt duties of an exempt executive, administrative, or professional, the employee is considered a highly compensated employee and is exempt from earning overtime.

Pay Docking for Non-Family Medical Leave Act (FMLA) Leave Usage: Under the FLSA, you may reduce an exempt salaried employee’s pay during the workweek if you can document that the employee:
• Missed work for personal reasons other than illness or accident (BGSU – Vacation or Personal Leave), and you reduce the salary according to a bona fide leave plan, policy or practice;
• Was absent because of illness or accident (BGSU – Sick Leave), and you reduce the salary according to a bona fide sickness/accident plan, policy or practice;
• Was absent for an entire workweek (exempt employees do not have to be paid for any week in which they perform no work), and you reduce the salary according to a bona fide leave plan, policy or practice;
• Received compensation for serving in the military or on jury duty;
• Broke a major safety rule, you can reduce the employee’s salary as a good faith penalty;
• Received an unpaid disciplinary suspension of one or more full days imposed in good faith for infractions of workplace conduct rules; or
• Did not work some days during the first or last week of employment.

Pay Docking for FMLA Leave Usage: Employees qualifying for an FMLA leave may take leave in one continuous segment or, under certain circumstances; leave may be taken intermittently or on a reduced leave schedule. Intermittent leave or leave on a reduced leave schedule may be taken when medically necessary. In order to take leave intermittently or on a reduced leave schedule after the birth of a child or the placement of a child for adoption or foster care, the employee must have the employer’s agreement. Intermittent (partial day) docking of pay is permitted under the FMLA.

Disciplinary Deductions: The new regulations permit an employer to suspend an exempt employee without pay for serious conduct violations for a partial week. Previously deductions could only be made for one or more full workweeks.

1.  Is there a time limitation on reporting an improper pay deduction?
2.  Is there a form I need to complete if I think an improper deduction was made?
3.  What do I do if I think my position should be eligible for overtime pay?
4.  If I have a dental appointment and am absent from the office for three hours, do I have to use sick time?
5.  If I need to take care of some personal business which requires my absence from the University, do I need to use personal leave or vacation time?
6.  Can I flex my hours any way I want to (including working less than 40 hours) as long as I get the work done?

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Q. 1 Is there a time limitation on reporting an improper pay deduction?
A. It is the employee’s responsibility to review their pay advice at the time issued and to report any improper deductions as soon as practicable. For most administrative staff employees the pay advice is issued by the 20th of every month. Nevertheless, the law does have a general two year statute of limitations. Claims for adjustments to back pay will be reviewed in the context of the law that was applicable at the time of the alleged underpayment and should be accompanied by the appropriate documentation that supports the claim. All such claims will be reviewed by this Office in consultation with the Office of General Counsel.

Q. 2 Is there a form I need to complete if I think an improper deduction was made?
A. No, there is no specific form you must complete. You need to immediately report the improper deduction to the Assistant Vice President (AVP) of Human Resources. It is strongly suggested that your report be in writing and that it contains the specific amount of the deduction that is at issue and a statement of the reasons why you believe the deductions were improper.

Q. 3 What do I do if I think my position should be eligible for overtime pay?
A. Immediately send your concerns in writing to the AVP of Human Resources. The AVP of HR, or their designee, will then review and reply to your concerns.

Q. 4 If I have a dental appointment and am absent from the office for three hours, do I have to use sick time?
A. Leave usage for scheduled medical appointments must be approved by your supervisor. After you have exhausted all of your available sick leave your supervisor may authorize the usage of vacation or leave without pay. For administrative employees (determined to be FLSA “exempt employees”), absences of less than a day without charging an approved leave category may result in an hourly docking of pay, as required by state principles of public accountability as implemented through departmental practice.

Q. 5 If I need to take care of some personal business which requires my absence from the University, do I need to use personal leave or vacation time?
A. Leave usages for personal business must be approved by your supervisor. Remember that exempt employees are expected to work until the job gets done. This means some weeks you may need to work more than a “normal 40 hour workweek” and some days you will be expected to work more than eight hours. You must be flexible with your schedule to meet work unit needs. The “trade-off” for that flexibility is that administrative employees (determined to be FLSA “exempt employees”), will not be charged for absences of less than a day unless charging a leave category is required by state principles of public accountability as implemented through departmental practice.

Q. 6 Can I flex my hours any way I want to (including working less than 40 hours) as long as I get the work done?
A. You need to discuss your work schedule and workload with your supervisor. Flexible scheduling is allowed in some units if approved by your supervisor. It is expected, however, that any full-time salaried position will normally require 40 plus hours of work a week.

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