2024 FLSA Rule Changes

FLSA Overtime Changes Final 2024 Rule 

On April 23, 2024, the U.S. Department of Labor announced the updated overtime rule in the Fair Labor Standards Act. The updated Department of Labor rule raises the salary threshold for determining who is exempt from required overtime pay. Human Resources is reviewing data and working with leadership to determine the positions likely affected by the new regulations.  

North Carolina A&T is committed to a smooth transition for employees affected, and individuals will be contacted once final determinations have been made. 

Changes: 

The rule takes effect in two stages and does the following:    

  • Establishes $43,888 as the salary threshold required to be exempt from overtime pay requirements, effective July 1, 2024.   
  • Increases the salary threshold to $58,656, effective January 1, 2025.   
  • Requires salary threshold updates every three years based on the latest earnings data. 

It requires that: 

  • Some impacted employees may receive salary adjustments and remain exempt. They will continue to be ineligible to earn overtime for any time worked over 40 hours. 
  • A small number of exempt employees making less than the new FLSA salary threshold will become nonexempt if their position as a whole moves to nonexempt.  
  • Exempt employees who work a part-time schedule may also be impacted. 

Employees who move from exempt to nonexempt will have more detailed timekeeping requirements, but nothing about their work will change. They will not experience changes to their duties, pay, benefits, or leave accrual rates. The final determination of which impacted exempt employees falls into which categories is under review. Information will be communicated of any impact to departments and employees. 

Who is Affected:  

Exempt staff members currently earning less than the updated threshold may be affected. HR continues to review all data to determine who may be affected. HR is working collaboratively with the Division of Business & Finance and the Division of Legal Affairs, Risk and Compliance (DLARC) and continues to monitor reliable resources such as the U.S. Department of Labor Wage & Hour Division, the College and University Professional Association for Human Resources (CUPA-HR), and the Society for Human Resource Management (SHRM) for regular updates and guidance on DOL’s overtime final rule and the court case underway. 

Next Steps: 

  • Employees do not need to take action at this time.   
  • If these changes apply to you, HR will notify your supervisor and you of any changes to your status.   
  • Training will be provided for any directly impacted supervisors and employees
  • As it becomes available, additional information will be shared through emails, townhalls and campus forums. 
  • Employees are encouraged to read through our FAQ’s for additional information.    
  • A list of federal FAQs regarding the rule can also be found on the DOL website. 

 

FREQUENTLY ASKED QUESTIONS

The updated rule raises the salary threshold for determining who can be exempt from required overtime pay. In 2016, a similar rule was issued but was halted by an injunction, which may occur again this year.  If the courts halt any provision of the 2024 rule changes, N.C. A&T will reassess its approach to these changes and update the campus community. The rule takes effect in two stages and does the following:  

  • Establishes $43,888 as the salary threshold required to be exempt from overtime pay requirements, effective July 1, 2024. 
  • Increases the salary threshold to $58,656, effective January 1, 2025. 
  • Requires salary threshold increases every three years based on the latest earnings data. 

The overtime rule could require some employees whose annual base salary is below the new threshold to transition to hourly (non-exempt status) while other employees may see a pay adjustment to maintain their exempt status. Though the rule is being challenged in court, Human Resources is reviewing data and working with leadership to finalize which positions may be affected by the new regulations. If it is blocked by the courts, N.C. A&T will reassess its approach to these changes and update the campus community. 

You and your supervisor will be notified personally by Human Resources. The rule does not apply to faculty. In 2016 a similar rule was issued but was halted by an injunction, which may occur again this year.  If the courts halt any provision of the 2024 rule changes, N.C. A&T will reassess its approach to these changes and update the campus community. 

The Fair Labor Standards Act establishes minimum wage, overtime pay, recordkeeping, and youth employment standards. The Office of State Human Resources (OSHR) policies, UNC System Office policy manual, and the University’s compensation policies and processes comply with the FLSA. 

Non-exempt employees are covered by the overtime and recordkeeping provisions of the FLSA and are entitled to overtime pay if work exceeds 40 hours in one workweek. Overtime is paid at a premium of time and one-half of the employee’s regular hourly rate and compensated either in pay or in accrual of compensatory time. Human Resources is responsible for determining the exemption status for positions at N.C. A&T, consistent with FLSA regulations. 

Exempt employees are not covered by the overtime provisions of the FLSA and are paid an agreed-upon amount for the whole job, regardless of the amount of time or effort required to complete the work. Exempt employees receive a set monthly salary regardless of the number of hours worked. Exempt employees do not record hours of work. 

To be exempt, an employee must meet ALL standards in the following “tests”: 

  • be paid not less than the minimum salary established by the FLSA – the “salary level test;” 
  • AND be paid on a salary basis as opposed to an hourly basis – the “salary basis test;” 
  • AND perform certain duties as outlined in one of the “duties tests.” 

The first stage of the FLSA salary level test revised effective July 1, 2024, requires that an employee’s salary must be at least $43,888 annually to be considered exempt from the overtime provisions. An employee with a salary less than $43,888 annually must be classified as non-exempt. Stage two, effective January 1, 2025, requires that an employee’s salary must be at least $58,656 annually to be considered exempt from the overtime provisions. Salary is one of three standards that must be met for a position to be considered exempt. 

To be exempt, an employee must qualify under one or more of the following tests: 

  • Executive exemption test 
  • Administrative exemption test 
  • Professional exemption test 
  • Computer exemption test 
  • Highly compensated employee exemption test 

Each duties test has specific requirements that must be met for an employee to be exempt. For example, the Executive Exemption requires that an employee a) supervise two or more full-time employees (or their FTE equivalent), b) have authority to hire and fire, or meaningfully recommend hiring and firing, and c) manage a recognized department or subdivision. More information on the exemption tests is available on the Department of Labor website. 

Human Resources is responsible for determining which of the FLSA exemptions would be appropriate for all staff jobs employed by the University. This determination is based on an assessment of the job as described/performed compared with the criteria for each exemption test. 

According to the Wage and Hour Division (WHD) Field Operations Handbook, institutions “may prorate the salary of an otherwise-exempt employee who has a duty period of less than a full year.” For example, an employee who works a nine-month schedule but receives paychecks over a 12-month period may have their checks prorated over the actual period of work (nine months) to determine whether the employee is paid at least the salary threshold. 

No. The new rule states “Total annual compensation does not include board, lodging, or other facilities.” 

No. Similar to room and board, benefits provided to an employee such as health and dental insurance or tuition reimbursement cannot be counted toward an employee’s salary to meet the salary threshold. These would fall under “other facilities” as included in the regulatory language. 

Time worked under the FLSA includes all time spent performing job-related activities (a) that genuinely benefit the employer, (b) which the employer “knows or has reason to believe” are being performed by an employee, and (c) which the employer does not prohibit the employee from performing. These can include activities performed during “off-the-clock” time, at the job site or elsewhere, whether “voluntary” or not. Examples of work time include a) time worked before the scheduled start time; b) eating lunch at the desk, while answering the phone, serving clients, or performing any work; and c) time worked after the scheduled ending time. Examples of non-work time include a) eating lunch at desk, but not answering phone nor working, and b) meal periods of 30 minutes or longer. 

The employee’s supervisor is responsible for monitoring when work is performed. Overtime should be pre-approved by the supervisor and recorded on the time record. The supervisor is responsible for verifying and approving time records.  All hours worked must be paid even in instances where pre-approval has not been granted. 

Bona fide mealtime is not work time. The meal period generally should be at least 30 minutes. The employee must be completely relieved of all duties, and the employee must be free to leave the duty post. We recognize the importance and benefits of taking regular breaks and lunch periods. These key benefits include increased productivity, improved mental health, better physical health, enhanced creativity, and greater job satisfaction. While the North Carolina Wage and Hour Act does not mandate employers to provide rest breaks, an employee’s full-day work schedule should include a lunch break of at least 30 minutes.

Travel from one work site to another during the workday is work time. Special rules exist for out-of-town overnight travel. For specific details, please contact the University Travel Office and review the University Travel Policy. 

Overtime is time worked by a non-exempt employee that exceeds 40 hours in one workweek. 

In support of the supervisor’s continued awareness of unit work volume, individual productivity, and available funds to pay overtime compensation, the supervisor must provide prior approval for a non-exempt employee to work overtime. While overtime must be approved in advance, all worked time, whether approved or not, must still be compensated. Supervisors facing scenarios in which an employee works unapproved time, should consult with Employee Relations & EEO for guidance. 

Under the FLSA, comp time is paid time off the job earned and accrued by an employee in lieu of cash payment for work performed in excess of 40 hours per workweek. The FLSA requires that comp time be earned at a rate of one-and-one-half hours for each hour worked over 40 in one workweek. Accrual of comp time in lieu of pay must be agreed upon by the employee and supervisor prior to the work being performed. 

In accordance with the Fair Labor Standards Act, exempt employees are ineligible to earn or retain a compensatory time off balance, and the balance must be paid off in full, effective with the change to exempt status. As per the University’s Policy on Overtime and Compensatory Time for SPA [SHRA] Non-Exempt Employees, “When an employee leaves the University or transfers to another University department, the department the employee is leaving must pay the employee for all accumulated and unused CTO (Compensation Time Off).” 

No. All non-exempt employees must be compensated for all hours worked in their regular job. 

No. All non-exempt employees must be compensated for all hours worked at the appropriate pay rate. 

This is one method to effectively manage work time and the department budget. 

Exempt employees are ineligible to receive overtime payment or compensatory time off. There are instances, however, when a supervisor might permit flexible work hours to accommodate, for example, an exempt employee who worked an excessive number of hours in a prior workweek or who routinely works more than 40 hours in one workweek. Any such accommodation should be on an hour-for-hour basis. 

Regardless of exemption status, all employees are required to maintain accurate timekeeping and use of leave. For non-exempt employees, you must ensure accurate recording of your work hours, including start and end times, lunch breaks, and any overtime. Non-exempt employees must record all time worked and all paid and unpaid leave used. Exempt employees do not record their hours worked but must record all leave used. However, some FLSA-exempt employees may be required to complete detailed records of hours worked, based on the business needs of the work unit. 

Yes. On May 23, a group of 13 local and national associations and Texas businesses filed suit in federal court in Texas, challenging the U.S. Department of Labor’s rule setting new minimum salary thresholds for the white-collar overtime pay exemptions under the FLSA. The suit claims that the salary threshold that goes into effect on January 1, 2025, is so high it will result in more than 4 million individuals being denied exempt status, even though these individuals could be reasonably classified as exempt based on their duties, and in doing so, the rule violates both the statutory language of the FLSA and prior court decisions. The suit also challenges the automatic updates. 

N.C. A&T Human Resources is working collaboratively with the Division of Business & Finance and the Division of Legal Affairs, Risk and Compliance (DLARC) and continues to monitor reliable resources such as the U.S. Department of Labor Wage & Hour Division, the College and University Professional Association for Human Resources (CUPA-HR), the Society for Human Resources (SHRM) for regular updates and guidance on DOL’s overtime final rule and the court case underway.