The FLSA What You Need to Know

1. The FLSAWhat You Need to Know University of Illinois at Chicago Office of the Vice Chancellor for Human Resources Compensation 2009

2. Frequently Asked Questions

3. Question: If an employee is exempt, can you still choose to classify him as nonexempt and pay him hourly with overtime? Yes, you can classify an employee as hourly and pay the employee overtime, even employees who could otherwise pass the exemption test. Overtime 2005 B LR Business and Legal Reports 22

4. Question: Can an exempt employee be paid additional compensation without jeopardizing the exemption status Yes. An employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount paid on a salary basis. Caveats: pay basis, duties performed Salary Basis FLSA Online

5. Question: We have an employee who has 2 jobs, one is exempt and the other non-exempt. Do I need to pay her overtime for non-exempt duties? If an exempt employee works a second non-exempt job, it will likely compromise the employee’s exempt status. Please contact the Compensation Department for interpretation of UIC Policies Overtime 2005 B LR Business and Legal Reports 32

6. Question: We have an employee in a management position who is paid by the hour. She earns over $455 per week. She also meets the duties test for the executive exemption. First would this employee be non-exempt? And if so, is it legal to give her an extra week of vacation to cover any overtime? Anyone paid on an hourly basis other than certain employee groups such as exempt computer professionals, would be nonexempt and entitled to overtime. Providing vacation rather than overtime payment is not legal under the FLSA. This person is entitled to overtime for any hours worked over 40 in one week Salary Level 2005 B LR Business and Legal Reports

7. Question: Is it legal to pay overtime with compensatory time in lieu of cash? Not in the private sector. However, the Act provides an element of flexibility to State and local government employers. The exemption authorizes a public agency to provide compensatory time off (with certain limitations). There are several rules to consider. Salary Level DOL 29 CFR 553.20 Introduction

8. Question: Do general standards exist for exempt employees in regards to extra work above and beyond the normal work week? For example, if they travel during the weekend for work, is it expected that they would get a day off later in compensation for this weekend work? UIC does not expected that an exempt employee receive a day off work after working on a Saturday or Sunday. Exempt employees are expected to work when duty calls. Salary Level 2005 B LR Business and Legal Reports

9. Question: What are the rules for deducting pay for violating safety rules? Deductions from pay of exempt employees may be made in certain circumstances. One includes penalties imposed in good faith for infractions of safety rules of major significance. These include infractions relating to the prevention of serious danger in the workplace toward other employees. For example (from DOL), includes rules prohibiting smoking in explosive plants, oil refineries and coal mines Deductions from Pay 2005 B LR Business and Legal Reports

10. Question: If we suspend an exempt employee for disciplinary reasons do we have to pay that person? Deductions from pay of exempt employees may be made for unpaid disciplinary suspensions of 1 or more full days, if imposed in good faith for infractions of workplace conduct rules. There must be a written policy applicable to all employees, (e.g. suspension for violating sexual harassment or workplace violence) Deductions from Pay 2005 B LR Business and Legal Reports

11. Question: We have an exempt employee out 2 days per week on leave under the Family and Medical Leave Act (FMLA). Do I have to pay him for the entire week? No. An employer is not required to pay the full salary for weeks in which an exempt employee takes unpaid leave under the FMLA. And this is the only time you can deduct actual hours taken for exempt employees Salary Deductions 2005 B LR Business and Legal Reports

12. Question: Can an employer deduct paid benefit leave, such as sick leave or personal leave, in half-day increments from an exempt employee if it is a written UIC policy? Yes, you can deduct less than a day’s time from an exempt employee’s allotted sick, vacation, or personal accrued bank time. You cannot deduct from an exempt employee’s paycheck for less than a day’s absence for sickness, disability or sick leave. (Please see policy HRPP 808) Salary Deductions 2005 B LR Business and Legal Reports

13. Question: If an employee needs to be out for a period that is less than a half day or full day, can the unit require that the employee use leave benefits? No , the unit cannot require that an employee use half-day or full-day leave benefits if the employee does not need to be out for that duration. Salary Level 8/28/06 memo from University HR

14. Question: Should employees accumulate or bundle time for multiple absences to reach the half-day or full-day increments? NO. Only report usage against leave banks in half or full day increments for a single day. Salary Level 8/28/06 memo from University HR

15. Question: If I am a full time exempt employee, how do I report an absence that is 5, 6 or 7 hours? 40 hour per week, full time employees should report absences in 4 or 8 hour increments only; therefore you would report an absence of 5, 6, or 7 hour absence as 4 hours against accrued bank time. Salary Level 8/28/06 memo from University HR

16. Question: If an exempt employee calls in sick for a whole day and doesn’t have any accrued sick time on the books, can we dock her pay for the day? Yes. As long as the deduction is made in accordance with a bona fide UIC plan, policy or practice of providing compensation for loss of salary caused by this type of sickness or disability. Remember though, that you cannot deduct pay for less than 1 day’s absence (even when the bank is negative) Salary Level 2005 B LR Business and Legal Reports 18

17. Question: If an exempt employee calls in sick for half a day and doesn’t have any accrued sick time on the books, can we dock her pay for the time? No. You cannot deduct pay for less than 1 day’s absence (even when the bank is empty or negative) Salary Level DOL Opinion Letter – Jan 7, 2005 = FLSA2005-7

18. Question: How should managers address issues with employees who are consistently absent in less than half-day or full-day increments? Unit managers and supervisors have the right to address performance issues related to attendance if work effort or commitment is unsatisfactory, which can ultimately lead to discipline and/or termination. Contact the appropriate campus HR office for assistance in dealing with these situations Overtime 8/28/06 memo from University HR

19. Question: Some of our employees work 24 hour shifts, and we allow them to sleep at night. Are we supposed to pay them for this time? Sleep time is not considered hours work if it satisfies all of the following: EE is on duty 24 hours or more EE and ER agree to exclude from work hours bona fide meal periods and a bona fide, regularly scheduled sleeping period of not more than 8 hours ER furnishes adequate sleeping facilities and the EE can usually enjoy an uninterrupted sleep period The sleep period is uninterrupted. If the EE is awakened and asked to perform work, that time is counted as work; if the EE gets less than 5 hours of sleep, the entire sleep period must count as hours worked. Overtime 2005 B LR Business and Legal Reports 33

20. Question: At times our non-exempt employees travel to another worksite past their normal work hours. Do we have to pay them for the time they are driving to the second site? Travel to and from work or travel outside of the normal workday is generally not considered compensable. However, exceptions include (i.e. travel time must be counted if) Time spent traveling from one worksite to another Driving during normal workday to fulfill employer requirements EE has gone home from the day’s work and is called out again to travel a substantial distance to do emergency work for a customer Overtime 2005 B LR Business and Legal Reports 37

21. Question: Do we have to pay employees for on-call time? Yes, if the employee is required to remain on call on the employer’s premises or so close thereto that he cannot use the time effectively for his own purposes. No, if an employee is not required to remain on the ER’s premises but is merely required to leave word at his home or with company officials where he may be reached. Overtime DOL 29 CFR 785.17 On call time

22. Question: Sometimes we offer training to our employees. Since we are paying for the training, do we have to pay the employee? Anytime that an employer requires an employee to attend training during work hours, that time will be considered work time. Training is not considered hours worked if all of the following are met: Meetings are held outside of work hours Employee attendance is voluntary Training is not directly related to the ee’s job Employee does no work during the training time The course is held after work and is not a requirement even if the subject matter pertains to the job Overtime 2005 B LR Business and Legal Reports 40

23. Question: Does a bachelor’s degree in the field related to the position help to support that the position has discretion and independent judgment, and does the DOL look at that particular element? You have to review the job duties to determine the level of discretion and independent judgment. Often times, jobs that require a high level of education also require discretion and independent judgment, but they are 2 separate factors and must be considered independently from one another. Exemption 2005 B LR Business and Legal Reports

24. Question: What is meant by must exercise discretion and independent judgment, don’t we all use this in our jobs? This involves the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered. For example, whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices, commit the employer in matters that have significant financial impact, negotiate and bind the company on matters of significance, can waive or deviate from policy without prior approval, etc. Salary Level DOL 29 CFR 541.202

25. Question: Is keeping a log sheet for exempt employees to sign in and out as they arrive and leave the office legal if mandated by the employer? Yes, it’s legal.. Remember though, you’re not tracking hours Salary Level 2005 B LR Business and Legal Reports

26. Question: Can employers “make” non exempt employees work overtime? Under FLSA, there are no maximum hour limitations (e.g. restrictions on the number of hours an employee may work in one workday, workweek, or work period) for adult employees. The Act merely requires overtime pay for the time worked in excess of 40 hours per week Overtime SHRM Legal Report , June 2206

27. Question: Can employers deduct money owed to the company from non-exempt employee’s paychecks? Under the FLSA, the applicable minimum wage must be paid to employees free and clear except that deductions are permitted for the reasonable cost of fair value of board, lodging or other facilities. Deductions for items other than facilities are permitted so long as they don’t reduce the employee’s wage below the minimum and the employer does not directly, or indirectly derive any profit or benefit from the transaction. See state law Deductions SHRM Legal Report , June 2206