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Fair Labor Standards Act (FLSA) Exemption Status

FLSA Exemption Status Process

In 2016, the U.S. Department of Labor (DOL) proposed an overtime rule increasing the minimum salary threshold for Exempt employees to $913 per week (approximately $47,476 per year). This proposed increase was challenged in court and a federal judge issued a nationwide preliminary injunction blocking implementation of the U.S. DOL’s rule, which meant that employers were no longer required to meet the December 1, 2016 implementation deadline. University of California, like other large organizations, had already implemented the increased salary level for staff employees and chose to maintain this salary level ($913 per week / $47,476 per year) while waiting for the final ruling.

In the final ruling, the United States Department of Labor (DOL) approved a change in the federal Fair Labor Standards Act (FLSA) effective January 1, 2020. The revised rule increased the minimum salary threshold for overtime-exempt employees from the currently enforced level of $455 per week (equivalent to $23,660 per year for a full-year worker) to $684 per week (equivalent to $35,568 per year for a full-year worker).

The University will continue to retain the higher salary threshold of $913 per week (equivalent to $47,476 per year for a full-year employee) for staff jobs.

Determining if an employee is Exempt or Non-exempt:

  • Staff employees who hold a part-time Exempt position or a combination of Exempt positions (including academic and staff) resulting in a salary of less than $913 per week, will be considered FLSA Non-exempt, and eligible for overtime consideration.  
  • FLSA status is based on the intent of the job, and not individual monthly changes (e.g., furlough or leave of absence). If an employee in an Exempt position were to permanently decrease their percent time, resulting in their monthly salary dropping below the monthly threshold, then the employee’s FLSA status would change to Non-exempt. The FLSA status could also change if a Non Exempt employee increased their percent time and now meets the salary threshold.
  • Some Exempt staff employees are not subject to the salary level test, which means they are overtime-exempt even if they earn a salary that is below the salary threshold. For example, University coaches who have the primary duty of teaching or instructing student athletes are overtime-exempt even if they earn less than the $913 salary threshold.

Staff HR/Unit Responsibilities:

  • New Hires or Transfers: SHR Talent Acquisition will work with SHR Compensation to make an FLSA determination for the employee prior to providing an offer to the selected candidate.
  • Existing Employees: If an Exempt employee’s percentage of time worked in their job decreases permanently, the unit should contact SHR Compensation to run a salary test to determine if the employee’s FLSA status should be changed to Non-exempt.
  • Staff Research Associate II, Marine Tech II, or Marine Tech III positions need to be evaluated for Exempt or Non-exempt status according to FLSA guidelines. Complete the top section of the FLSA/RX Exemption Status Review Questionnaire. Submit checklist, job description and application/resume (needed to answer questions in section 2) to the Classification Analyst who will review the position and determine the proper exemption status and title code.
  • Compensation will be running a quarterly report of Exempt staff that fall below the threshold; in which case, they will contact the unit to work out a resolution.
  • Compensation can provide guidance and is the ultimate authority for this process.

Process for changing FLSA exemption status from Exempt to Non-exempt:

  1. SHR Compensation will update the employee’s FLSA status on the position in UCPath.
  2. SHR Compensation will consult with local Payroll about the timing of any pay cycle changes related to the change in FLSA status, and enter any changes in UCPath as directed by Payroll.
  3. SHR Compensation will notify the employee of the change and copy the supervisor and SHR Timekeeper (may be sent via e-mail).
  4. From the effective date forward, the employee must use a non-exempt timesheet and be treated as non-exempt.  SHR Timekeeper will provide information to the employee about changes in time reporting, if applicable.

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