2024 FLSA Department of Labor Ruling FAQs

FLSA Basics

What is the Fair Labor Standards Act (FLSA)?

The FLSA establishes federal minimum wage, overtime pay and recordkeeping requirements for all employees in the private sector and in federal, state and local governments, including higher education. Employees are either “exempt” from overtime or “non-exempt” from overtime pay based on FLSA regulations. The United States Department of Labor (DOL) administers the FLSA regulations.

Who are exempt and non-exempt employees?

Exempt Employees: The FLSA provides an exemption from its overtime pay requirements for certain positions and duties. Employees whose duties meet the tests for exemption are commonly referred to as "exempt” employees. This means that the overtime provisions of the FLSA do not apply to those positions, and employees within these positions are not eligible for overtime. It is important to note that exempt status must be determined based on the duties for that specific position. Titles alone are not sufficient to determine the status of a position under the FLSA.
Non-Exempt Employees: Non-exempt employees are subject to the overtime rule, and must typically be paid at least one and one-half times their regular rate of pay for any hours worked beyond 40 in a workweek. A special provision of the FLSA for public agency employers like UofL allows for the use of compensatory leave accrual at a rate of not less than one and one-half hours for each overtime hour worked. Non-exempt employees at UofL must complete time sheets to accurately document their hours worked. For additional information, see the U.S. DOL Fact Sheet #22: Hours Worked Under the Fair Labor Standards Act (FLSA).

What are the current exempt level criteria under the FLSA?

To qualify for exempt status, positions must meet all three of the following tests:

Salary Level Test: The minimum weekly pay rate for exempt employees must be at least $844 per week, or $43,888 annually. (Effective January 1, 2025, the salary threshold for exemption status will increase to $58,656.
Salary Basis Test: Generally, exempt employees must be paid full salary for any week in which any work is performed. Variations in the work product or the actual hours worked typically does not impact compensation. The regulations are complex, and cases should be referred to the Classification & Compensation team for review in consultation with the Office of the General Counsel, as needed.
Duties Test: The specific position’s duties must qualify under the duties test provided by the FLSA for the exemption. The Classification & Compensation team utilizes these duties tests to make determinations when reviewing position descriptions. For more information on the duty’s tests, refer to the fact sheets available on the DOL’s website.

FLSA Ruling (General)

What is changing in the new FLSA Overtime Rule?

On April 23, 2024, the Department of Labor (DOL) announced a new salary threshold to qualify for overtime pay exemption under the Fair Labor Standards Act (FLSA). Per the final rule, the new threshold applies to standard salary level exempt employees. Effective July 1, 2024, the salary threshold for exemption status increased to $43,888. This means exempt employees making less than that amount received a salary increase to $43,888. Effective January 1, 2025, the salary threshold for exemption status will increase to $58,656.

When did the DOL last revise the exemption regulations for Executive, Administrative and Professioonal employees?

The DOL last updated the EAP exemption regulations in 2019. That update set the standard salary level test at $684 per week (equivalent to a $35,568 annual salary).

Why is the DOL revising the exemption regulations for Executive, Administrative and Professional employees?

The changes are intended to keep the earnings thresholds up to date for the benefit of both workers and employers and to address wage growth since the last update. The changes are also intended to more effectively identify who is employed in a bona fide executive, administrative or professional capacity and ensure that the FLSA’s overtime protections are fully implemented.

Does the final rule change any of the current duties’ tests for exemption?

No. The DOL’s final rule does not make any changes to existing job duty requirements. Currently, the DOL favors keeping the current standard duties test, which is well known to employers and employees.

FLSA Rule (Impact on UofL)

Does the University of Louisville have to comply with this new overtime rule?

Yes, this is a federal mandate and the university must comply.

What are the main impacts to UofL?

Employee Classification Changes: Exempt employees may be changed to non-exempt employees. Non-exempt employees must submit and supervisors must approve via Workday employees' time sheets for hours worked following the 2025 Biweekly Payroll Processing Calendar.
Financial Impacts: The main financial impact at UofL will be the payment of overtime to employees who become eligible. The practice of earning compensatory time instead of paying overtime will continue. There will also likely be an expense associated with increasing the salary for certain employees to maintain exempt status.
Modification of Processes/Structures/Systems: Modifications of internal processes, structures and/or systems may be needed to accommodate the number of employees moving from exempt to non-exempt status. Exempt employees who are changed to non-exempt will have to track start times, end times and meal breaks. Other modifications may include resource allocation, workload distribution and timekeeping procedures.

When is UofL required to implement the changes to the salary levels for exemption?

The changes detailed in the final rule will be implemented January 1, 2025.

How do I know if I am impacted by the FLSA change?

An analysis is currently being conducted to determine which positions may be potentially impacted by the updated salary thresholds. Human Resources will work with departments to determine next steps. Thereafter, the results will be communicated to the impacted employees and their supervisors.

Are part-time employees impacted?

The 40-hour equivalent compensation is not used to make this determination. The actual weekly pay is used to determine whether an employee is over the salary threshold.

How will the rule change affect staff members who work less than full time?

The new ruling does not allow for prorated time. Part-time employees in a job title classified as exempt, but that do not meet the salary threshold of $58,656 (effective January 1, 2025), must be considered non-exempt, report their hours and are eligible for overtime pay (straight overtime pay to 40 and time-and-a-half pay over 40). If the employee changes their standard hours, there will be a review to determine if the exempt salary threshold is met or if the job title will remain non-exempt.

Are faculty members impacted?

Faculty will not be impacted. Faculty are exempt under the FLSA, regardless of their annual/weekly salary if their "primary duty is tutoring, instructing or lecturing in the activity of imparting knowledge."

Are athletic coaches impacted?

Typically, athletic coaches also qualify as FLSA exempt under the "teaching exemption" and will not be affected by the changes.

Payroll and Benefits Deductions

Will employee benefits change for positions that are reclassified from exempt to non-exempt?

No. Benefits elected for the 2025 benefits plan year (January 1, 2025 to December 31, 2025) will not change. Flexible Spending Account deductions will not change. Employees whose positions are reclassified to non-exempt will change to the appropriate leave accrual schedule. However, the annual accrual rates will not change.

Is this change considered a Qualifying Change in Status event, allowing me to make a change to my benefit elections?

No. The change from exempt to non-exempt status is not considered a Qualifying Change in Status event under IRS regulations and does not allow you to change your current benefits elections. Only if there is a change in FTE (appointment percentage) or a change in salary, would there potentially be an impact on benefits eligibility and the cost-sharing percentage for benefits, respectively.

Will becoming non-exempt affect my retirement contributions?

No. The same contribution rules apply, and these contributions are calculated off a percentage of your base pay.

Leave, Holidays and Comp Time

Do holidays count as time worked?

Holidays are not counted the same as hours worked for overtime purposes. Rather, administration employees who work on a holiday get a delayed holiday. See the Human Resources Policy on Compensatory Leave Time and Holidays.

Do annual and sick leave count as time worked?

No. The use of leave should be adjusted in a workweek so that annual leave and sick leave do not cause an employee’s total hours to exceed 40.

Will my sick and annual leave accruals be affected?

No. Administration employees who are converted to non-exempt will continue to earn 6.769 hours of annualleave and 4 hours of sick leave biweekly. Leave accruals are prorated for appointments less than 1 FTE.

More Information and Resources

Is there support available for employees to understand their rights under the FLSA?

Yes. Additional resources, including online materials and training workshops, will be provided to employees and supervisors to enhance their understanding of FLSA regulations and compliance. If employees need clarification or additional information related to the FLSA changes, they are encouraged to reach out to their supervisors or HR via email.

Who do I contact with questions?

For questions about the FLSA ruling, email comphr@louisville.edu.
For questoins about time sheets and paychecks, contact Payroll Services at 852-2978.

Other Resources