Overtime and Compensatory Time for FLSA Non-Exempt Employees

Eligible employees who work more than 40 hours in a work week may be compensated in one of two ways: overtime pay or compensatory time off. For additional information, refer to the applicable Hours of Work and Overtime Compensation Policy and/or CSS Employee Handbook.

Eligibility

SHRA, CSS, and EHRA Non-Faculty permanent and temporary employees who are FLSA Non-Exempt are subject to the wage-hour provisions of the Fair Labor Standards Act are entitled to overtime compensation.

Permanent SHRA, CSS, and EHRA Non-Faculty who are FLSA Non-Exempt employees are eligible to receive either overtime pay at a rate of one-and one-half times the regular hourly rate or compensatory time off. It is management’s decision whether to provide overtime pay or compensatory time off based upon fiscal availability and operational needs of the work unit.

Temporary SHRA, CSS, and EHRA Non-Faculty employees, including student employees, are FLSA Non-Exempt and are eligible to receive overtime pay, but cannot receive compensatory time off.

Coverage

Eligible employees earn time-and-one half for all hours worked in excess of 40 hours in a work week. An employee must work over 40 hours to earn overtime compensation. Paid time that is not considered time worked (most leave or paid time off packages) does not count as time worked for the purpose of determining employee eligibility for overtime compensation. With the new DOL FLSA regulations, ECU can and will have EHRA who are non-exempt, if they do not meet the new salary threshold both temporary and permanent.

Paid Overtime

When management selects the paid overtime option, an eligible employee who works more than 40 hours in a work week is paid overtime at the rate of “time-and-one-half” for all hours worked over 40. The overtime pay is determined using the employee’s regular rate of pay. The additional pay is to be included in the paycheck for the pay period in which the overtime was worked. Lack of funds does not relieve a department from its liability to compensate overtime work at the rate of time-and-one-half.

Compensatory Time Off

If overtime pay is not possible due to budgetary constraints (or for other reasons), compensatory time off is a second option for compensating employees for overtime. Management considers existing workloads, staffing requirements, and availability of funds in deciding which compensation option will be used. The maximum amount of compensatory time off an employee may carry at any time is 240 hours (160 hours of work x 1.5) pro-rated for part-time employees. Any overtime in excess of the 240-hour maximum cannot be considered compensatory time off; instead, the overtime must be paid in the employee’s next paycheck.

Payouts & Transfers

Compensatory time off must be taken 12 months of the date on which it was accrued. If management is not able to schedule the compensatory time off within this time period, the liability must be paid to the employee no later than in the next pay cycle following the end of the 12 months. When an employee leaves the University or transfers to another University department, the department the employee is leaving must pay the employee for all accumulated and unused compensatory time off. Employees whose FLSA status changes from Non-Exempt to Exempt must be paid for all accumulated and unused compensatory time off at the time of the status change.

Fair Labor Standards Act (FLSA)

Since August 23, 2004 the U.S. Department of Labor (DOL) implemented regulations for the administration of the Fair Labor Standards Act (FLSA). The regulations provided updated criteria for employers to use in determining which employees are subject to or exempt from the overtime provisions of the Act.

Employees who are subject to overtime and record-keeping stipulations mandated by the FLSA regulations are considered Non-Exempt; employees who have an Exempt FLSA regulations status are not covered by the overtime and record-keeping requirements of the Act. The Department of Labor considers all employees subject to overtime and minimum wage requirements unless their positions have been specifically determined to be Exempt. This exemption is based on an evaluation of the employee’s duties and responsibilities, which may offer an exemption if the position is considered executive, administrative, professional, or in certain computer-related occupations.

The Department of Labor and US Courts interpret the FLSA regulations by first assuming that employees and positions are Non-Exempt. Therefore, the employer is required to demonstrate that exempt status can be substantiated based on the Department of Labor’s narrow exemption criteria. The Classification and Compensation unit within Human Resources makes the determination of FLSA regulations status. The determination is based on the nature and the requirements of work performed and are not directly related to job title, salary grade, or EHRA/ SHRA (Exempt from or Subject to the State Human Resources Act) status. Failure to comply with the FLSA regulations carries substantial legal risk.

The above-mentioned updated criteria produced a format which is more easily understood. The primary purpose of the new regulations is to ensure that employees are properly classified in regards to being eligible or not eligible for overtime and receive proper pay for the number of hours they work. The rules have been designed to “end the confusion that has led to an explosion of class action lawsuits that failed to protect workers’ rights.”

Some of the highlights of the regulations are as follows:

As of July 1, 2024, employees must be paid at least $844 weekly ($43,888 annually) in order to qualify for executive, administrative, professional or computer job exemption (not subject to the provisions of FLSA and therefore not required to complete weekly time records). Employers are able to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices.
Exemptions will not apply to “first responders” including all law enforcement, firefighters, paramedical and related occupations.
Exemptions will not apply to “blue collar” workers involved in production, maintenance, construction or similar occupations.
A short-form exemption test for highly compensated employees whose total cash compensation is at least $132,964 annually is in place.
The Executive Exemption requires and defines the authority that employees must have in regards to personnel decisions regarding their subordinates; namely, that an executive must have the “authority to hire or fire,” or have their suggestions as to the “hiring, firing, advancement, promotion, or any other change of status given particular weight.”
The Administrative Exemption requires independent judgment and discretion in matters of significance.
The Learned Professional Exemption is available only for employees who have attained advanced knowledge through intellectual instruction or a combination of experience and instruction which enables them to perform the same work as degreed professionals.
The regulations allow employers under certain circumstances to make deductions in pay from exempt employees without affecting their exempt status.

The regulations do not apply to teachers (faculty), lawyers or doctors, full-time or part-time.