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FLSA FAQ What is the Fair Labor Standards Act (FLSA)? What does the term “nonexempt” mean? What does the term “exempt” mean? What are the criteria that enable employees to be exempt from the FLSA overtime provisions? What is the salary level test? Does the salary level test apply to all ASU employees? What does being paid a salary mean in terms of the FLSA? What duties tests are applicable to ASU employees? How is the duties test applied? Who is responsible for knowing when work is performed? Is lunch time or dinner time "work time" or "rest time"? Is a nonexempt employee paid for time to travel between home and the work site? Is a nonexempt employee paid for time to travel between one work location and another work location? What is the definition of overtime? Must overtime be approved in advance? May an employee volunteer hours outside his/her department at the Arizona State University? May a nonexempt employee waive his/her rights to overtime compensation? Can exempt employees maintain separate overtime records and receive overtime? What are the employee time recordkeeping requirements? How long must employee time records be maintained? Who must complete a time record? When does the ASU workweek begin and when does the ASU workweek end? How should employee time records be maintained for employees who earn supplemental compensation? Who is responsible for knowing when work is performed? FLSA/ Exempt & Nonexempt Designations What is the Fair Labor Standards Act (FLSA)? The Fair Labor Standards Act is a federal law that was established by the US Congress in 1938 and has been amended several times since then, most recently August 23, 2004 . It is enforced by the US department of Labor. The FLSA defines the federal minimum wage, employee time recordkeeping requirements, and jobs required to receive overtime compensation after 40 hours have been worked in a workweek. The University administers compensation in compliance with the FLSA, Arizona state law and Arizona Board of Regents (ABOR) Policy. What does the term “nonexempt” mean? “Nonexempt” employees are covered by the overtime provisions of the FLSA and must record each hour worked on the time record. If the employee works more than 40 hours in one workweek, the employee is paid a premium of time and one-half, whether in pay or in accrual of compensatory time. What does the term “exempt” mean? “Exempt” employees are not covered by the overtime provisions of the FLSA and are paid an agreed amount for the whole job, regardless of the amount of time or effort required to complete the work. Exempt employees do not record hours of work on the time record. What are the criteria that enable employees to be exempt from the FLSA overtime provisions? To be exempt, an employee must meet ALL of the standards in the following “tests”: 1) be paid over a minimum salary – the “salary level test” - AND 2) be paid on a salary basis as opposed to an hourly basis - the “salary basis test” – AND
3) perform certain duties as outlined in one of the “duties tests”. What is the salary level test? The FLSA salary level test revised effective August 23, 2004 requires that an employee’s salary must be at least $455 a week in order to be considered exempt from the overtime provisions. An employee with a salary less than $455 a week must be nonexempt. Part time employees may be nonexempt even though their annualized salary is well over $455 a week. For example, an employee with an annualized salary of $40,000 and an FTE of .5 would be paid $385 a week and be nonexempt. Here is the formula to use when determining whether an employee’s employment arrangement meets the salary level test.
When using an annual rate: (Employee’s annual rate x FTE) ÷ 52 weeks Example: ($40,000 x .50) ÷ 52 = $384.61/week – this employee must be nonexempt Does the salary level test apply to all ASU employees? The salary level test applies to all employees except teachers and those practicing law or medicine. The FLSA does not apply to graduate assistants/associates so they are excluded as well.
What does being paid a salary mean in terms of the FLSA? Under normal circumstances, employees paid a salary are paid a predetermined amount each week regardless of quantity or quality of work or hours worked. ASU exempt employees are paid a salary as the term is used by the FLSA. What duties tests are applicable to ASU employees? To be exempt, an employee must qualify under one or more of the following tests: 1. Executive exemption test 2. Administrative exemption test 3. Professional exemption test 4. Computer exemption test 5. Highly compensated employee exemption test Each duties test has specific requirements that must be met for an employee to be exempt. For example, the Executive Exemption requires that an employee a) supervise two or more full time employees (or their FTE equivalent), b) have authority to hire and fire, or meaningfully recommend hiring and firing, and c) manage a recognized department or subdivision. More information on the exemption tests are available on the Department of Labor website at http://www.dol.gov/esa/regs/compliance/whd/fairpay/fs17a_overview.htm. How is the duties test applied? The Compensation area of Human Resources is responsible for determning which of the FLSA exemptions would be appropriate for all jobs employed by the University. This determination is based on an assessment of the job as described/performed compared with the criteria for each exemption test.
Work time is time that a nonexempt employee has been permitted to work, and time for which the employee must be compensated, either in pay or in accrual of compensatory time off (comp time). Examples of work time include a) time worked before the scheduled start time; b) rest breaks less than 20 minutes; c) eating lunch at the desk, while answering the phone, serving clients, or performing any work; and c) time worked after the scheduled ending time. Examples of non-work time include a) eating lunch at desk, but not answering phone nor working, and b) rest breaks or meal periods of 20 minutes or longer. Who is responsible for knowing when work is performed? The employee’s supervisor is always responsible for knowing when work is performed. This is one reason the supervisor must pre-approve overtime and must also approve and sign the time record. Is lunch time or dinner time "work time" or "rest time"? Bona fide meal time is not work time. The meal period generally must be at least 30 minutes. The employee must be completely relieved of all duties, and the employee must be free to leave the duty post. Is a nonexempt employee paid for time to travel between home and the work site? Normally, no. There may be exceptions for travel to sites that are beyond the normal commuting area of the employee. For specific details, please contact Human Resources.
Is a nonexempt employee paid for time to travel between one work location and another work location? Travel from one work site to another during the workday is work time. Special rules exist for out of town overnight travel. For specific details, please contact Human Resources. What is the definition of overtime? Overtime is time worked by a nonexempt employee that exceeds 40 hours in a workweek. Must overtime be approved in advance? In support of the supervisor’s continued awareness of unit work volume, individual productivity, and available funds to pay overtime compensation, the supervisor must provide prior approval, preferably written, for a nonexempt employee to work overtime. If I am a nonexempt employee, how do I know if my overtime/compensatory time off is earned at straight time or at time-and-one-half? Overtime/compensatory time is earned at straight time when the hours actually worked in that same workweek are LESS than 40. Overtime/compensatory time is earned at time-and-one-half when the hours actually worked in that same workweek are MORE than 40. In accordance with the Fair Labor Standards Act, exempt employees are ineligible to earn or retain a compensatory time off balance, and the balance must be paid off in full, effective with the change to exempt status. May a nonexempt employee volunteer to work unpaid hours in his/her regular job in addition to his/her regular schedule? No. All nonexempt employees are compensated for all hours actually worked in his/her regular job, in his/her regular department. May an employee volunteer hours outside his/her department at Arizona State University ? Under certain circumstances, exempt and nonexempt employees may volunteer time. Specifically, nonexempt employees may volunteer for work outside their regular duties and regular hours, and exempt employees may volunteer for work outside their regular duties. Volunteer services must be both (a) offered freely and without pressure or coercion, direct or implied, from the employer, and (b) performed for civic, charitable or humanitarian reasons. If you have any questions about the appropriateness of volunteering time, contact Human Resources. May a nonexempt employee waive his/her rights to overtime compensation? No. All nonexempt employees are compensated for all hours actually worked at the appropriate rate of pay. Can the supervisor make a nonexempt employee leave early on Friday so the employee’s total hours will not exceed 40 in the workweek? Yes. This is one method to effectively manage work time and the personnel services budget. Can exempt employees maintain separate overtime records and receive overtime? No. Exempt employees are ineligible to receive overtime payment or compensatory time off. There are instances, however, when a supervisor might permit flexible work hours to accommodate, for example, an exempt employee who worked an excessive number of hours in a prior work week or who routinely works more than 40 hours in a work week. What are the employee time recordkeeping requirements? The FLSA requires that all employees complete, and employers approve and maintain, employee work time records. Departmental Record keeping should include: hours worked daily for nonexempt employees, leave taken daily for all employees, compensatory time earned biweekly for nonexempt employees, and the employee and supervisor agreement of time worked or leave taken. How long must employee time records be maintained? According to University records policies, Departmental personnel files should be kept for three years after the individual retires, terminates, or transfers to another department. Who must complete a time record? The FLSA requires that all employees complete, and employers approve and maintain, employee work time records. Nonexempt employees must record all time worked and all paid and unpaid leave used. Exempt employees time is reported on an “exception time reporting” basis. However, some FLSA exempt employees may be required to complete detailed records of hours actually worked, based on the business needs of the work unit (positions funded by sponsored programs, internal billing requirements, etc.). When does the ASU workweek begin and when does the ASU workweek end? The University work period (workweek) is normally seven consecutive days commencing at 12:01 a.m. on Monday and ending 168 hours later at 12:00 midnight Sunday. The typical schedule for full-time employees consists of five consecutive eight-hour shifts within the work period. http://www.asu.edu/aad/manuals/spp/spp306.html How should employee time records be maintained for employees who earn supplemental compensation? FLSA exempt employees (either Classified Staff or Appointed Personnel) who earn supplemental compensation do not track supplemental compensation hours worked, except as necessary for generating appropriate pay in the online time roster system. Supplemental compensation activities for exempt employees are not recorded on an official employee time record. FLSA nonexempt employees who hold a full-time (1.0 FTE) position are ineligible to earn supplemental compensation, as any additional hours worked must be recorded on the official time record and paid as overtime. Part-time (less than 1.0 FTE) nonexempt employees may only earn supplemental compensation in an amount that will not cause their total weekly hours worked to exceed 40 hours. For specific details, please refer to SPP 404-02 Supplemental Pay. http://www.asu.edu/aad/manuals/spp/spp404-02.html Who is responsible for knowing when work is performed? The employee’s supervisor is always responsible for knowing when work is performed. This is one reason the supervisor must pre-approve overtime and must also approve and sign the time record. What is the maximum number of comp time hours that can be earned before the time must be paid in cash? After a nonexempt employee has accrued 240 hours of compensatory time, all subsequent overtime hours worked are compensated in cash. Exceptions to this rule may be approved by the dean/vice president in advance, with notice to the employee, but in no case shall the accrual of compensatory time exceed 240 hours. For specific details, please refer to SPP 404-04 Overtime – General Policy http://www.asu.edu/aad/manuals/spp/spp404-04.html
Must an employee use sick leave or vacation leave for time away from work to go to a doctor’s appointment? The state sponsored paid leave benefits are intended to allow employees the flexibility to continue their income for a specified period when there is a need to be away from work. If an employee earns paid time off, the employee uses the paid time off when an applicable occasion occurs. This applies to Exempt and Nonexempt employees, and Classified Staff, Service Professional and Administrative Staff. However, the employee and supervisor have the flexibility to agree to modify the employee’s schedule to accommodate the absence. Since these benefits have cash values upon the employee’s retirement or separation from employment, supervisors and department heads are encouraged to develop and implement fiscally sound policies and practices regarding the use of paid sick and annual leave. What is the minimum time increment that may be recorded as work time, or charged to sick leave, vacation leave or unpaid leave? The smallest increment of work or leave time recorded is one-quarter hour. Time should be rounded to the nearest one-quarter hour.
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