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Fair Labor Standards Act (FLSA) Regulatory Changes being Implemented Dec. 1

UNIVERSITY PARK, Pa. – Penn State will implement new regulations outlined by the U.S. Department of Labor’s Fair Labor Standards Act (FLSA) on Dec. 1, which will impact in various ways a number of current employees as well as the University overall.

The new FLSA rules increase the salary threshold used to determine employees who are excluded from earning overtime pay — often termed “exempt” employees — and those who track their hours and are paid for work exceeding 40 hours per week — often called “non-exempt” employees. The updated FLSA rules raise the annual salary minimum from $23,660 to $47,476 for exempt employees, making more of these full-time salaried employees eligible for overtime pay.

“We understand the concerns employees have about the effect this may have on their exemption status or their job duties and responsibilities, and we’ve taken careful consideration to review the impact that the FLSA changes have on all jobs. No one’s job is changing,” said Nick Jones, executive vice president and provost.

Jones explained that the complex review of positions was fortified by a detailed analyses that Human Resources provided, along with the support and information from other University leaders.

“The decisions the University made to comply with the new FLSA regulations results in almost 880 employees’ salaries being raised to meet the new FLSA threshold, and also will change the status of nearly 1,100 employees from exempt to non-exempt, making them overtime eligible,” said Jones.

The provost said that in addition to individual impacts to employees, the University also will experience a financial impact overall of about $5.5 million, to comply with the new regulations. Training and educational resources for employees who are becoming non-exempt and their supervisors can be found at http://sites.psu.edu/flsa.

Penn State will implement the following FLSA changes on December 1:

Postdoctoral employees’ salaries will be raised to meet the new salary threshold of $913 per week (annualized to $47,476);

  • The majority of full-time, non-teaching academics will have their salaries raised to meet the new salary threshold of $913 per week (annualized to $47,476); and
  • Some staff positions will be raised to meet the new annual salary threshold and those positions will remain exempt, while others will be changed to non-exempt with no salary adjustments.
  • Over the next couple of days, all employees affected by the FLSA changes will receive a letter from their supervisor outlining how they will be impacted by the new regulations.

Vice President for Human Resources Susan Basso noted that there are no changes to the job duties which staff employees perform, and that being designated to a non-exempt, overtime-eligible job in no way diminishes or lessens the value of the work performed. Furthermore, employees who have less than ten years of service and who are moved to non-exempt will continue to accrue vacation at 16 hours a month.

“Whether a person is exempt or now overtime eligible doesn’t change their importance to us, the role they play in the University’s success, and what they do day in and day out on campus,” Basso said. “The important change to note is that some may have to begin tracking their hours worked so they can be appropriately compensated.” 

A full-listing of the impacted staff job codes/titles can be found at http://sites.psu.edu/flsa Teachers (including faculty and instructional academic staff whose primary duties are teaching), lawyers and doctors are not subject to the Department of Labor’s change to the FLSA.

Since the federal government’s original announcement in May, Human Resources, through its HR Strategic Partners (formerly HR Reps), have worked closely with the leadership of each college, campus, and administrative unit to create a thorough analysis of the impact of the regulation, and determine the best recommendations for implementing these new mandated changes.

Penn State has created a website for information regarding the FLSA changes. This site http://sites.psu.edu/flsa is available to assist employees who are in a job title that is changing, including information on how to track hours worked and other information regarding specific overtime rules and expectations. The website also contains answers to frequently asked questions and links to more information. The website also will serve as an online training hub for information regarding the changes. Employees are encouraged to review all materials and to ask questions by contacting their unit HR Strategic Partner or by emailing compensation@psu.edu.

For more on FLSA, visit the Department of Labor website at https://www.dol.gov/WHD/overtime/final2016/