Reclassification from Exempt to Nonexempt Department of Labor s Fair Labor Standards Act December 1, 2016

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1 Employee Handout: Frequently Asked Questions Reclassification from Exempt to Nonexempt Department of Labor s Fair Labor Standards Act December 1, 2016 General Q: What is the Fair Labor Standards Act (FLSA)? The FLSA is a federal law that establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in federal, state and local governments. Covered nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour effective July 24, Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a work week. A work week is a period of 168 hours, during 7 consecutive 24 hour periods. The diocesan work week is Monday Sunday and diocesan employees are paid bi-weekly (every 2 weeks). The FLSA dates to Q: How am I impacted by the FLSA and why is it important now? In March 2014, President Obama signed a Presidential Memorandum directing the Department of Labor (DOL) to update the regulations defining which workers are protected by the FLSA s minimum wage and overtime standards. The DOL has published the final regulations and they are effective December 1, You are impacted as a result of the new exempt employee requirements. Q: Who is a nonexempt employee? A nonexempt employee is an employee who is not exempt from the overtime and timekeeping/recordkeeping provisions of the FLSA. Nonexempt employees are paid on an hourly basis. If a nonexempt employee works more than 40 hours in a work week, the employee is paid time and one-half the regular rate of pay for all hours worked over 40. Q: Who is an exempt employee? An exempt employee is exempt from the overtime and recordkeeping provisions of the FLSA. To qualify as an exempt employee, effective December 1, the employee must be paid at least $ per week on a salary basis, regardless of the amount of time or effort required to complete the work ($47,476 annually for employees working 12 months). In addition to the salary test, the employee must perform job duties that qualify for one of the duties tests exemptions from the overtime pay requirements in the FLSA. 1

2 Q: What is the effective date of the classification change? The effective date of your reclassification will be at the start of a new payroll period prior to December 1, Most probably your transition to nonexempt status will be November 14, 2016 or before. Q: Is this change retroactive? No. Compensation Q: How will this change affect my compensation? Your current salary will be converted to an hourly rate by dividing your weekly salary by weekly hours. You will be paid the resulting hourly rate for all hours you actually work in a work week. Thus, your compensation will remain similar as long as you continue to work your current regularly scheduled hours. If you work less than your scheduled hours per week, your gross pay would be less, and if you work more, your gross pay would be more. Q: Will I be eligible for overtime? Yes, you are eligible for overtime payments for actual hours worked in excess of 40 hours in a work week. Overtime pay is calculated on actual time worked. Time paid for but not actually worked (vacation, sick leave, holidays, other paid leave) is excluded from overtime calculations. Q: How will my overtime pay be calculated? Your overtime pay will be calculated by multiplying your regular hourly rate by 1.5 and then multiplying that overtime pay rate by the number of hours that you worked over 40 during the work week, to arrive at your overtime wages due. Example: Your hourly rate is $16.25 and you worked 43 hours in the work week. Regular pay $16.25 x 40 hrs = $ OT rate: $16.25 x 1.5 = $ $ x 3 OT hrs = $73.13 total gross pay $ Q: Was I entitled to overtime pay before? Will my location be paying me back wages? No. The Diocese is required to make this change to comply with the new DOL s revisions of the FLSA. We believe that you were properly classified as exempt from overtime pay in the past, under federal and state law. Accordingly, you will not receive back wages. Q: What should I do if the hours worked on my pay check seem incorrect? It is diocesan policy that the employee must advise the employer immediately so that the hours in question can be researched and addressed. Each nonexempt employee should review their biweekly pay check stub and verify that the reported hours worked are complete and accurate. 2

3 Q: What if I m employed at my location having two different nonexempt jobs, with different hourly rates of pay? If an employee is working two separate jobs at different rates, overtime is owed if the employee works a combined total of more than 40 hours in a work week. The overtime may be calculated based on a regular rate of pay that is the weighted average of the rates for each job. For example, if an employee works 30 hours at $10 per hour ($300) and 20 hours at $8 per hour ($160), the weighted average is calculated as $300+$160 = $460 divided by 50 hrs = $9.20/ weighted hourly rate). The overtime pay is then calculated at one-half of $9.20 per hour = $4.60 x times 10 hours = $46). Total pay for the week: $460 + $46 = $506. Q. How are ordained deacons addressed regarding compensation? Excluding the deacon clergy assignment, should an ordained deacon assume a role as a lay employee, he is paid either as a nonexempt or exempt employee depending on the salary and duties tests. Q. As a musician, how is my hourly rate determined? Nonexempt musicians are paid an hourly rate, not per service. Please also reference the Guidelines for Musician Compensation located on the Employee Extranet. Time Reporting Q: Do I need to start keeping records of the hours I work? Yes, commencing at the start of the new payroll period (prior to December 1, 2016), you will begin recording the hours you work by clocking/signing-in and out using the system at your location (i.e. electronic software capturing via B4 Time, paper timesheet, time clock). It is the employee s responsibility to accurately record all hours worked. Key things to remember about clocking/signing-in and out are: o Sign or clock-in at the start of each workday before you perform any work and clock out at the end of the workday. o Sign or clock-out and in for meal periods. o Volunteering to work off the clock is strictly prohibited. You are paid for all hours worked; you cannot waive your rights under the FLSA. o Work-related activities outside of normal work hours, such as smart phone use for work purposes, i.e., reading or responding to work text or , are not permitted, unless your supervisor/employer has specifically approved in advance. Should unapproved workrelated activity occur after hours, it is compensable under the FLSA; however, continued after hours work without approval may result in disciplinary action. Q: Will there be any changes to my work schedule? Your supervisor/employer will discuss with you any changes or modifications to your work schedule. 3

4 Q: Do I need permission to work overtime? Yes, approval is required by your supervisor/employer before you work any overtime. If circumstances prohibit you from obtaining prior approval, inform your supervisor of the overtime work as soon as possible. You will be paid for all overtime hours worked, even if you did not obtain prior approval; however, continued use of unauthorized overtime may lead to disciplinary action. Q: Who makes the decision that overtime can be worked? The decision for overtime use is the responsibility of the supervisor/employer approving the time and is based on the needs of the location. Q: Do I have to take a meal break? It is diocesan practice that all full time employees (30 or more hours per week) take meal periods. Meal periods (typically 30 minutes or more) are not compensated as work time. For a full-time employee in the Pastoral Center, meal periods are one hour. The employee should be completely relieved from duty for the purpose of eating regular meals. The employee is not relieved if he/she is required to perform any duties, whether active or inactive, while eating. Q: Can I work 50 hours one week and 30 hours the next week within the bi-weekly pay period? Yes, but only with supervisor s/employer s approval. There may be circumstances where it is preferred to adjust a work schedule to balance hours/pay allowing for example, required conference/retreat attendance, while still managing the budget. Hours cannot be carried over from one work week to another as compensatory time outside of the 7-day work week is illegal. You must be paid for all hours worked in a work week. Q: My job requires me to travel. Can I travel as a nonexempt employee? Yes, if you are approved to travel for work purposes by your supervisor/employer. Your supervisor/employer will provide specific details on how to record your time during the travel period. The Diocese follows the DOL s determinations on this matter: o Time spent by an employee in travel as part of their principal activity, such as travel from parish to parish during the workday, is work time and must be counted as hours worked. o Travel that keeps an employee away from home overnight is travel away from home. Travel away from home is work time when it cuts across the employee's normal workday. The time is hours worked on regular working days during normal working hours and also during corresponding hours on nonworking days. Travel time outside of the normal working hours is not considered work time if the employee is a passenger on an airplane, train, boat, bus, or automobile. o When work involves overnight periods, as long as the employee has 5 hours of uninterrupted sleep the time is not considered work time. However, if an employee is interrupted from this period of sleep, the whole period is considered time worked. For overnight events, we encourage the use of a designated leader to be assigned the night shift and that person therefore would be the go to person for any incidences that might occur. Should an employee work during sleeping periods, he/she should notify their supervisor promptly at the start of the next regular day. 4

5 o An employee who regularly works at a fixed location in one city is given a special one-day assignment in another city and returns home the same day. The time spent in traveling to and returning from the other city is work time, except that the employer may deduct/not count that time the employee would normally spend commuting to the regular work site. A nonexempt employee should travel during normally scheduled work hours if possible. Q: How am I paid if I am on-call? An employee who is required to remain on call at home, or who is allowed to leave a message where he/she can be reached, is not working (in most cases) while on call. Additional constraints on the employee's freedom could require this time to be compensated. Q: Is there compensatory time? No, nonexempt employees must be paid in dollars for their overtime worked in a work week and cannot receive compensatory time instead. With approval, employees may adjust hours worked on specific days within the same work week only. Q: When offices close early for holiday or weather related issues how do nonexempt employees record time? An employee should receive administrative paid leave when the employing location is officially closed due to inclement weather, electrical power outage, etc., if in fact, the employee was scheduled to work during the day and hours impacted. Q: I want to work over 40 hours and I don t care if I am paid. Can I work unpaid hours and just volunteer my time? No, an employee cannot work unpaid hours in their assigned position as a volunteer. All actual hours worked must be reported on your timecard (or other timekeeping means), processed through IOI and paid to you via a payroll check. We cannot pay you correctly if you do not report your work hours. It is your responsibility to accurately record all hours that you work. If you wish to volunteer, legally it must be in a volunteer role that is approved by your supervisor/employer and is completely different from your assigned position, such as a bookkeeper volunteering to assist with food preparation for a Religious Education event. Q: How do I control the work during off hours? Any work to be completed after the normal scheduled work day must be discussed and approved, in advance, by the supervisor. If approved, the supervisor/employer should have a good understanding of the work that is to be completed, as well as the approximate time it would take to complete the tasks. A specific time should be designated when giving the approval and work time recorded accordingly. Smart/mobile phones and computers cannot be used for any work-related activities while off the clock, without the prior approval of the supervisor and well documented understandings. Q: What if I work during off hours without approval from my supervisor/employer in advance? Your time worked will be paid. However, further incidents of unapproved work may result in disciplinary action. 5

6 Q. How does the supervisor handle unapproved overtime? If unapproved overtime is worked, the time worked will be paid. However, further incidents of unapproved overtime may result in disciplinary action. All overtime work must be pre-approved by the supervisor. Q: What if an employee does not record overtime but works it anyway? All hours worked under and over 40 must be recorded and paid to you, this is not an option. If an employee continues to do so, disciplinary action may be taken. Working off the clock is illegal. Q: When I attend meetings/events that are after my regularly scheduled hours, am I going to be compensated? If attendance at any after hour parish/school/diocesan event is required by the supervisor/employer, then time at the event will be paid. If attendance at the event is voluntary time then the event can be unpaid. Work schedules within the same work week can be adjusted to accommodate required attendance at an after hour event to maintain normal hours/minimize the need for overtime. Q: Is my time involved in coursework taken for my personal development paid? In most cases, pursuit of personal development is not paid, for example personal pursuit of a bachelor s degree, LEMI program or a certificate program. Perception Q: I worked hard to get into an exempt position. I feel like I am being demoted. Am I? No. You are not being demoted. Whether a position is exempt or nonexempt from overtime pay requirements is a matter of federal and state law, and has nothing to do with your value and contributions to the Diocese. An employee s value or professionalism is not gauged on their FLSA classification. Q: I have been in the role for some time, why is there a change now? The Diocese is required to change in response to the FLSA. It s the law. Q: I have a college degree, why am I being reclassified? A college degree has no bearing on whether an employee is classified exempt or nonexempt. Q: What is the key message we want employees to understand about this change? This change is not a demotion. This change has nothing to do with the employee s value to the company. This change has nothing to do with the employee s performance or contribution. This change is being driven by changes in FLSA by the DOL. Job duties, unless specified otherwise by the supervisor, will not change. 6

7 Benefits Q: How will this change affect my benefits? Benefits are based on weekly schedule of hours not FLSA classification. Please refer to Called to Work in Harmony. Q: How will an employee on a leave of absence or Workers Compensation be informed about these changes? The business manager/bookkeeper at your location will notify employees on leaves of absence and on Workers Compensation leave. Miscellaneous Q: Will my job title be changed? No, your title will not necessarily be changed as a result of FLSA reclassification; however, the supervisor/employer determines the job duties of a position which could result in a title change. Q: Will my responsibilities change? In general, no. If any aspect of your job needs to change, your supervisor/employer will discuss this with you directly. Q. Can I be an independent contractor and not an employee? Most probably the answer is no. The Internal Revenue Service continues to tighten the guidelines as to qualification for contractor status. This definition is very narrow and rarely does an individual fall within the regulation which is based on an economics reality review. Q: Our office is always busy. What if I cannot complete my work within my assigned weekly hours? It will continue to be important that you communicate with your supervisor/employer about your progress on work assignments and prioritize accordingly. Q: Will there be employee training on time recording? Please see your parish/school business manager or bookkeeper. Q: Who can I contact if I have more questions? The employee s business manager/bookkeeper will be the first line of contact, then the supervisor/employer. Office of Human Resources, August