Temporary Court Injunction on the Dec. 1 Fair Labor Standards Act (FLSA) Overtime (OT) Changes
On November 22nd, 2016, a federal court in Texas issued an injunction that creates uncertainty about how, or if, the Department of Labor’s new regulations on overtime pay exemptions will be implemented. Those rules were previously slated for implementation on December 1, 2016. As a result, a decision has been made to postpone NMSU’s implementation of FLSA conversions until such time as the courts issue further legal guidance. In the interim, we will operate as follows:
- Pay cycles for affected employees will remain unchanged.
- Employees who are currently exempt will remain exempt.
- All previous reclassifications related to the FLSA changes will remain in effect.
- All affected employees will be notified individually.
For additional information, please see the memorandum from Chancellor Carruthers (link pending final version).
In May 2016, the U.S. Department of Labor (DOL) revised a regulation that increased the salary threshold where employees are eligible to receive overtime. This was a major change to employee exemption criteria under the Fair Labor Standards Act (FLSA). The salary threshold, which has been in place since 2004, increased from $455 per week (the equivalent of $23,660 annually) to $913 per week (the equivalent of $47,476 annually).
The regulations specify the change in exempt to nonexempt status, based on the new threshold, must be in effect as of December 1, 2016. NMSU has established an effective date of December 1, 2016 (this date was changed as of 10/5/2016, please see the memo from Chancellor Carruthers for additional details). This date was selected to minimize the financial impact to employees during the holiday period.
Faculty and coaches with a primary responsibility of teaching remain excluded from the FLSA salary requirement and will remain exempt.
The university’s commitment includes supporting affected employees, their supervisors and local units as we work to implement the necessary changes. Employees and supervisors will be offered assistance in learning and implementing updated internal policies and processes.
Five key impacts:
- The salary of affected exempt employees assigned to pay grades 08 and below will be converted to hourly pay, in most cases.
- This reassignment to hourly pay will include employees currently compensated at or above the new threshold, if they are assigned to a pay grade 08 or below.
- Affected employees will be adjusted to the “lag” payroll cycle. This will result in a pay gap of four weeks.
- Affected employees will use the standard non-exempt timekeeping system to track hours worked, and supervisors must approve the timesheet in order for pay to be processed.
- Hourly employees must have overtime approved by their supervisor in advance.
We realize that transitions like this can be challenging. NMSU’s commitment includes:
- Affected employees will be paid for all hours worked, including overtime when you work more than 40 hours in a week.
- Affected employees and supervisors will be offered training on internal systems and processes that are changing.
- Affected employees and supervisors will be offered the opportunity to attend informational sessions to learn about the new FLSA rules and NMSU’s implementation strategy to comply with the law.
- Annual sick and vacation accruals for affected employees will remain unchanged and in accordance with NMSU Administrative Rules and Procedures.
- Affected employees will be offered financial assistance under the Pay Gap Wage Assistance Program. This program will offer affected employees the option of receiving up to the equivalent of the net amount of one pay period rate.
In the meantime, this is a good opportunity to consult with Human Resource Services to learn more about overtime practices.
Updates will be posted here as more details become available.