Understanding the Impacts of FLSA Changes on Salary Thresholds

FLSA CHANGES FLSA CHANGES Human Resource Services| October 2016

Todays Agenda Provide brief overview of the FLSA changes Review analysis and identified impact Discuss path forward 2

Changes to the FLSA Effective December 1, 2016, the minimum salary threshold at which a position will be considered exempt from overtime pay will increase to $47,476 annually, or $913 per week Up from $23,660 annually, or $455 per week Annualizing an employee s salary based on partial FTE is not permitted The annual threshold may be adjusted for 9- and 10-month appointments by applying the $913 weekly amount (9-Month: $35,607.00, 10-Month: $39,806.80) The salary threshold will be updated every three years Estimated to be more than $50,000 in 2020 Currently exempt positions below the new salary threshold will be eligible for overtime once the change takes effect, with some exceptions 3

Assessing ImpactExemptions According to DOL guidelines, there is no minimum salary requirement for employees whose primary duty is the performance of teaching, tutoring, instructing or lecturing : Given that the performance of these duties is a primary responsibility of any faculty member, including extension county faculty, it is our interpretation that most academic personnel meet that standard The minimum salary requirement also does not apply to certain licensed or certified doctors or lawyers An employee who holds the requisite academic degree for the general practice of medicine is exempt from the minimum salary requirement if he or she is engaged in an internship or resident program for the profession interpreted to apply to residents throughout UF Health, including dentistry and veterinarian medicine Several categories of student classifications such as graduate assistants and pre-doctoral fellows are not expected to be impacted Postdoctoral associates who engage only in research activities and do not teach are explicitly not covered by this exemption and will be impacted 4

As of 5/27/2016 *Salary only Assessing Impact **29 of the 72 are less than 1.0 FTE. In these cases, possible OT was not included in the calculation Total Salary Gap* 5 hours/OT 10 hours/OT Impacted Employees 1,777 13,256,179 12,679,290 25,358,581 Staff 1,213 8,415,974 8,861,458 17,722,916 Academic Personnel (including adjuncts) 72** 1,055,939 308,173 616,346 Postdoctoral Associates 466 3,233,011 3,428,620 6,857,240 OPS Exempt 26 551,254 81,039 162,078 5

As of 5/27/2016 Assessing Impact Total Salary Gap* 5 hours/OT 10 hours/OT Impacted Employees 1,777 13,256,179 12,679,290 25,358,581 Provost 607 5,055,534 4,235,341 8,470,682 HSC 561 3,927,757 4,028,755 8,057,511 IFAS 488 3,668,639 3,500,024 7,000,049 President/ Research 62 278,301 481,775 963,551 COO 59 325,946 433,393 866,786 6

As of 5/27/2016 Total Postdoctoral Associate: 632 Assessing Impact + ~$650,000 for fringe 26 part-time Total Salary Gap* 5 hours/OT 10 hours/OT Postdoctoral Associates 466 3,233,011 3,428,620 6,857,240 Provost 112 892,424 769,937 1,539,874 HSC* 198 1,258,326 1,515,557 3,031,114 IFAS 155 1,081,086 1,134,443 2,268,887 President/ Research 1 1,173 8,681 17,363 *There are 3 adjunct clinical postdoctoral associates not included for whom some additional analysis is warranted 7

Options Raise all employees to protect exempt status Raise some employees to the threshold based on duties Work to minimize impact and give discretion to department/college Not feasible at a cost of more than $13 million Given their strategic role in supporting research and the likelihood of overtime accrual, it was recommended that UF raise full-time postdoctoral associate salaries to the threshold Move employees below threshold to a new Salaried Non-Exempt category Also not desirable: Would create compression issues Disregards performance or years of experience In many cases, not known if overtime worked is an issue Allows time to evaluate and realign employee workload to prevent overtime worked or pursue a market adjustment if possible FSU is expected to increase postdoctoral salaries (160 total postdocs of which 110 will be impacted, with a salary gap of 877,147.55) Will need to pay or provide compensatory leave at 1.5 times the employee s hourly rate of pay if needed 8

After Review: Adjust full-time postdoctoral associates to the new salary threshold Implement salaried non-exempt category for staff and academic personnel who cannot be exempted Allow colleges/departments to adjust based on financial analysis and budget via the special pay increase process With the recommendation of waiting until after January 1 increase if needed 9

University Work Group Members HR: Jodi Gentry, Melissa Curry, Brent Goodman CFO: Mike McKee, Greg Dubois, Linda Orfield, Brian Kuhl, Alan West Provost s Office: Angel Kwolek-Folland, Bill Connellan General Counsel: Ryan Fuller UF Health: Laura Huntley IFAS: Mary Ann Morgan Research: Stephanie Gray, Brad Staats Student Affairs: Norb Dunkel 10

FLSA CHANGES FLSA CHANGES Recommendations for Implementation | October 2016