HRM-046: Overtime Management for Non-Exempt Employees

Date: 10/29/2015 Status: Final
Policy Type: University
Contact Office: Total Rewards (UHR)
Oversight Executive: Vice President and Chief Human Resources Officer
Applies To: Academic Division and the College at Wise.
Reason for Policy:

The University has established requirements to provide clarity on overtime pay practices and management’s responsibility for cost-effective overtime management. In addition, these requirements assist the University in complying with the Fair Labor Standards Act (FLSA) (29 U.S.C. 201, et. seq. and regulations 29CFR 500 et. seq.).

Policy Summary:

This policy clarifies overtime compensation requirements under federal law, and encourages management best practices contributing to cost-effective, fair and equitable employee treatment, as well as facilitation of work/life balance. Non-exempt staff members are provided overtime compensation for all hours worked in excess of 40 hours in a standard workweek at either one-and one-half times the staff member's regular rate of pay or with overtime leave (one and one half leave hours for each hour worked in excess of 40) at the manager’s discretion. Non-exempt staff members are provided either straight time payment or compensatory leave for time worked beyond the required hours in a scheduled work week where no more than 40 hours are worked.

Definition of Terms in Statement:
  • Exempt Employee:

    An employee who, based on salary and duties performed, is exempt from the Fair Labor Standards Act (FLSA) minimum wage and overtime provisions.

    • Fair Labor Standards Act (FLSA):

      Federal law establishing overtime pay, minimum wage and child labor requirements affecting full-time and part-time employees. Overtime pay at a rate of not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek for those employees covered by the Act (non-exempt.)

  • Non–Exempt Employee:

    An employee who, based on salary and duties performed, is not exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act and must be compensated at a rate of one and one-half times the employee's regular rate of pay for hours worked in excess of 40 in a workweek.

  • Scheduled Workweek:

    An employee’s scheduled workweek includes the hours of the day and the days of the week the employee is regularly scheduled to work.

  • Staff Wage Employee:

    A staff employee who is hired to perform a short-term work assignment and is ineligible for leave or other benefits, with the exception of pre- and post-tax savings plans, and the Wage Health Plan when requisite criteria are met. These employees are not covered by the Virginia Personnel Act and may be compensated in one of two ways:

    1. Hourly: The terms and conditions of employment stipulate an hourly rate of pay rather than a fixed salary and paid on an hourly basis for actual hours worked. Positions paid on an hourly basis are, in most cases, non-exempt.

    2. Goal-pay: The terms and conditions of employment stipulate a set rate for the performance of FLSA-exempt, short-term, goal/deliverable based assignments where payment is a certain reoccurring dollar amount. The payment for staff goal assignments must be greater than the equivalent FLSA salary exemption threshold.
  • Standard Workweek:

    The University standard workweek (for payroll purposes) begins at 12:01 a.m. Monday and ends at 12:00 midnight the following Sunday.

  • Supplemental Pay:

    Payments that apply to specific positions designed to address unique needs of the University (i.e., shift differential). Supplements are not included as part of the employee’s base pay.

Policy Statement:

The University complies with the Fair Labor Standards Act (FLSA) by providing time and a half overtime payment or overtime leave to non-exempt staff who physically work over forty (40) hours in a standard workweek. This includes University staff, classified staff and wage employees who are non-exempt. The manager has discretion as to compensating with overtime payment or overtime leave and should communicate this decision to the employee in advance. Exempt employees are excluded from the overtime provisions of FLSA. Managers are encouraged to use short-term wage employees (refer to policy HRM-029, Managing Staff Wage Employment) and schedule adjustments to limit the usage of overtime. Overtime payment is to be used primarily for situations of an emergency or temporary nature.

Non-exempt employees who independently work overtime hours, for example, working through meal breaks or beyond the scheduled workweek, must be paid for hours worked but may be subject to discipline for not seeking prior approval.

Under the state government exemption in FLSA, managers have the option of providing overtime leave in place of cash. Overtime leave is the accrual of one and one-half leave hours for each hour worked after working 40 hours in a workweek. Employees consent to be compensated with overtime leave in lieu of overtime cash, or a combination thereof as part of the terms and conditions of their employment. Accrued overtime leave does not expire.

  1. Supplemental Pay:
    Supplemental pay may be used when there is a business need to compensate non-exempt staff for shift differentials, working conditions, and other factors. There are four types of supplemental pay relevant to overtime management:

    1. Call Back Rate: A management option of payment of a minimum number of hours which may be provided to employees who must return to work between regularly scheduled shifts.

    2. On-Call Pay: A management option of payment for time that employees are waiting to be engaged - where the employee may engage in personal business while remaining (1) available to work; and (2) in a capacity that is fit for duty should they need to respond to agency business. If an employee only has to leave word as to how he/she can be contacted or carry a pager/cell phone so that he/she can engage in work activities when called, the employee is considered unrestricted and on-call pay is not required. However, departments may choose to use on-call pay to facilitate maintaining customer service levels and critical business operations.

    3. Shift Differential: A management option of applying a premium to the hourly rate for employees working difficult-to-fill shifts.

    4. Working Conditions: A management option of applying a premium to the hourly rate for employees working in hazardous conditions.

Supplemental pay is not required by the Fair Labor Standards Act.

  1. Other Forms of Overtime Compensation:
    In those instances where a non-exempt employee works beyond the required hours in a scheduled workweek where no more than 40 hours are worked, management may use:

    1. Straight-Time Pay: This may be provided at the non-exempt employee’s hourly rate for time worked beyond the required hours in a scheduled workweek where no more than 40 hours are worked. This may happen when a University holiday or inclement weather day has occurred or when the employee has taken paid leave during the scheduled workweek.

    2. Compensatory Leave: This provides a non-exempt employee with paid leave as compensation for working beyond the normal scheduled hours but not actually working more than 40 hours in a scheduled workweek. The employee accrues one hour of leave for each hour worked beyond the required hours in a workweek where no more than 40 hours are worked. Compensatory leave expires 12 months from the date it was earned.

  2. Responsibilities:
    School/unit senior management or designee(s) are responsible for:
  • authorizing overtime before overtime work is performed by non-exempt staff;

  • assigning overtime primarily on a cost-effective basis based on the University’s business needs and in a fair and equitable manner;

  • monitoring overtime reports to ensure that overtime expenditures are based on business need, appropriate for the situation, fiscally prudent and considerate of an employee’s welfare;

  • scheduling the assignment of overtime to cause the least inconvenience to staff members;

  • compensating with overtime leave when appropriate as determined by the manager and communicated to the employee in advance;

  • reviewing the need for supplemental pay to ensure it meets with a true business need; and

  • applying straight-time pay and/or compensatory leave when appropriate.

Employees classified as non-exempt are responsible for:

  • Understanding that overtime, when assigned, is a position requirement; and

  • Obtaining prior approval from management before working any overtime.

Procedures:

Overtime Leave

Related Information:

HRM-029, Managing Staff Wage Employment

Major Category: Human Resource Management
Next Scheduled Review: 10/29/2018
Revision History: This is the first version of this policy.