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Human Resources  |  Compensation  |  Fair Labor Standards Act (FLSA) - Exempt Part-time Classifications

 FLSA - Exempt Part-time Classifications

Fair Labor Standards Act (FLSA) - Exempt Part-time Classifications

General Information

The University of New Mexico recently received an opinion from the US Department of Labor (USDOL) regarding the application of current FLSA laws to regular and term part-time staff employees in "Exempt" position classifications.

In accordance with FLSA law, an employee who earns less than $455 per week must be considered "Non-Exempt" (accountable for hours worked and eligible for overtime payments) regardless of whether or not the generic position classification to which s/he has been assigned has been otherwise determined to be "Exempt" from FLSA provisions.

The USDOL opinion has further clarified the appropriate application of this part of FLSA in relation to part-time employees. The essence of the opinion is as follows:

Any employee in an otherwise "Exempt" position classification who, by virtue of reduced appointment percentage (FTE), receives an actual salary rate that is less than the equivalent of $455 per week must be administered as Non-Exempt during that period, regardless of the amount of the employee's annualized FTE pay rate.

Example

An employee is correctly classified as a "Program Specialist", which is an "Exempt" classification. The employee's full-time-equivalent pay rate is $45,000/year, which translates to $865.38/week.

This employee, however, works at a reduced appointment percentage equivalent to 0.5 FTE. Therefore the actual amount being paid to this employee is $22,500/year, which translates to $432.69/week.

In this case the actual pay rate is below the FLSA exemption minimum of $455/week. According to the USDOL opinion, the employee must be administered as "Non-Exempt" even though the position classification passes the FLSA exemption test for employees earning more than this amount.

Exceptions

The above ruling applies to most Exempt position classifications, but there are exceptions, as follows:

  • Part-time employees in otherwise exempt teaching, licensed medical practitioner, licensed attorney, or outside sales classifications are not affected by this rule.
  • Part-time employees in otherwise exempt computer-related classifications are not affected by this rule if they earn at least the equivalent of $27.63/hour ($57,470.40/year @ 1.0 FTE).

In cases where the ruling does apply, it may affect both employees in part-time positions and employees who are job-sharing in a full-time position.

It will not, however, affect other employees assigned to the same position classification if:

  • Actual pay is equivalent to $455/week or more
  • And position can be demonstrated to meet all other exemption requirements as outlined by FLSA.

Departmental Procedures

Employing departments must ensure that any employee in an exempt classification who receives a reduction in appointment percentage is changed to non-exempt status if his/her actual base salary falls below the equivalent of $455/week as a result of the reduction.

Note: The above amount translates to $1,971.67/month, or $23,660/year.

In these cases, the change in exemption status should be noted both on the ePAN and a copy of this form, which has been developed for this specific purpose. The completed package should then be forwarded to the Division of Human Resources.

All FTE changes must coincide with the beginning of a biweekly pay period. For the payroll schedule go to http://www.unm.edu/~payroll/schedule.html and click on "Payroll Schedule 2014". An hourly pay rate must be established based on the actual weekly rate of pay divided by the nominal hours worked per week (calculated from the appointment percent.)

The employee will at that time become subject to all provisions of the Fair Labor Standards Act. The department must ensure that all hours worked are accounted for on timesheets, that the employee is paid for any time worked over his/her established FTE, and that overtime rates are paid for any hours in excess of 40 that are worked during a given week.

Departments will be expected to exercise due diligence by monitoring each employee falling into this category on a monthly basis and ensuring that s/he is reinstated to exempt status if the actual weekly salary over the period is subsequently increased above $455 for any administrative reason. The Division of Human Resources will carry out second-level campus reviews on a quarterly basis, and departmental records are subject to internal audit.