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FAIR LABOR STANDARDS ACT

IMPLEMENTATION –

WHAT YOU NEED TO KNOW

E M P L O Y E E T R A N S I T I O N G U I D E L I N E S

1. The Fair Labor Standards Act

2. Georgia Tech’s Approach to Implementation

3. Pay Rate and Accruals

4. Deductions

5. Next Steps

TABLE OF CONTENTS

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The Fair Labor Standards Act

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The Fair Labor Standards Act establishes guidelines for:

Minimum Wages

Overtime Pay

Record-keeping

Child Labor Laws

A new rule set was announced on May 18, 2016:

It includes an increase in the minimum salary threshold, from $23,660 annually to $47,476 annually

Federal compliance deadline: December 1, 2016

WHAT IS FLSA AND WHAT HAPPENED?

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Certain criteria must be satisfied to qualify an employee as an employee exempt from federal overtime pay requirements.

HOW FLSA WORKS

Employee is paid on salary basis Salary must be more than

$913 per week or $47,476 annually

Note: Teachers – including professors – are not required to meet this portion of test

Primary duties must be consistent with executive, professional or administrative positions as defined by the Dept. of Labor

SALARY TEST DUTIES TEST

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Primarily, it means that nearly 5,000,000 workers across the United States will convert from exempt (salaried) to non-exempt (hourly) to comply with Department of Labor regulations.

Converting from exempt to non-exempt means three important things:

1. You will be eligible for overtime pay.

2. You will move from being salaried to hourly. This means you will be required to report time worked.

• Method of time reporting is specific to department (Kronos, Deltek, Tech Time)

3. You will move from being paid monthly to bi-weekly (every two weeks).

• As a non-exempt employee you will be paid at the same rate of pay for all hours worked in the 26 periods.

A change from exempt to non-exempt status will have no impact on pay grade, benefit elections, or your base hourly rate.

WHAT DOES IT MEAN?

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Georgia Tech’s Approach to Implementation

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How were decisions made?

1. Federal Law

2. University System of Georgia Guidelines

3. GTHR Recommendations

4. Georgia Tech’s executive leadership team retained final decision over all position conversions.

Ultimate goal: Positive outcomes for employees providing opportunities for overtime pay and healthy work-life integration.

GEORGIA TECH’S APPROACH

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949 employees across multiple campus units will be converted from exempt to non-exempt employees.

• October 17, 2016 – Converted employees begin reporting time as non-exempt (hourly).

• October 31, 2016 – Last partial monthly check for new FLSA non-exempt population.

• November 4, 2016 – First bi-weekly check for new FLSA non-exempt population.

• December 1, 2016 – Federal Compliance Deadline.

WHEN AND WHO IS MOVING?

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PAY CYCLES AFTER CONVERSION

Monthly Pay Cycle Bi-Weekly Pay Cycle

Pay Cycle First to last day of the month.Thursday to Wednesday. Two-week period.

Paychecks Per Year 12 26

Paycheck Date Last day of the month Every other Friday after pay period.

OvertimeN/A- Monthly cycle is reservedfor exempt employees

Paid in bi-weekly check when earned.

Employees in Pay CycleExempt: NOT eligible for overtime.

Non-exempt: Eligible forovertime

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GEORGIA TECH BI-WEEKLY PAYROLL CALENDAR

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Final MonthlyEarnings

Your final monthly paycheck on October 31 will include earnings for the period of

October 1-14, 2016.

TRANSITION TO BI-WEEKLY PAY

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PAY DURING TRANSITION PERIOD

Start recording bi-weekly time

Last Monthly paycheck

First bi-weekly paycheck (10/17-10/26)

10 days of October to be paid on 10/31

Days of October to be paid on 11/4

First full bi-weekly pay period (paid 11/18)

Last Paycheck of year for monthly and bi-weekly

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Pay Rate and Accruals

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PAY RATE AND ACCRUALS

Hourly pay rate is converted in the following calculation:

Take annual rate divided by 2,080 to determine hourly rate.

$43,041.00/2,080*=$20.69

*2,088 = 174 workable hours per month x 12 months

Accrual rates for non-exempt employees:

Vacation: http://policies.gatech.edu/vacation

Sick Leave: http://policies.gatech.edu/employment/sick-leave

Annualized accruals will not change.

Monthly accruals will vary, depending on the number of working hours per month.

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There are 26 bi-weekly paychecks in a year (as opposed to 12 monthly paychecks in a year)

10 months/year consist of two (2) paychecks per month, two months/year consist of three (3) paychecks per month

2 (or 3) bi-weekly paychecks per month are not the same as one monthly paycheck

Your monthly salary divided by two weeks DOES NOT equal bi-weekly pay

Over the course of the year, employees will be paid the same gross.

ANALYZING CASH FLOW

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To calculate your gross, bi-weekly paycheck using example annual pay of $43,041:

1. Calculate hours worked per year:

40 (work week hours) x 52 (weeks in year) = 2080 work hours per year

2. Divide yearly salary by number of work hours per year:

$43,041 (yearly salary)/2080 (work hours per year) = $20.69

3. Multiply hourly rate by the hours in a pay period:

40 (hours per week) x 2 weeks = 80 hours per pay period

$20.69 (hourly rate) x 80 (hours per pay period) = $1,655.42 gross per check

Checking our math:

26 (paydays in a year) x $1,655.42 per check = $43,041* per year (*rounded up)

HOW TO CALCULATE YOUR BI-WEEKLY PAYCHECK

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SNAPSHOT OF A YEAR’S PAY

Monthly

Pay Date Gross

9/30/2016 $3,586.75

10/31/2016 $3,586.75

11/30/2016 $3,586.75

12/31/2016 $3,586.75

1/31/2017 $3,586.75

2/28/2017 $3,586.75

3/31/2017 $3,586.75

4/30/2017 $3,586.75

5/31/2017 $3,586.75

6/30/2017 $3,586.75

7/31/2017 $3,586.75

8/31/2017 $3,586.75

Total $43,041.00

Adjusted to Bi-weeklyPay Period Pay Date Gross Check Type

9/1/2016 9/30/2016 9/30/2016 $3,586.75 Full Monthly

10/1/2016 10/14/2016 10/31/2016 $1,707.98 Partial Monthly

10/17/2016 10/26/2016 11/4/2016 $1,324.34 Partial Biweekly

10/27/2016 11/9/2016 11/18/2016 $1,655.42 Full Biweekly

11/10/2016 11/23/2016 12/2/2016 $1,655.42 Full Biweekly

11/24/2016 12/7/2016 12/16/2016 $1,655.42 Full Biweekly

12/8/2016 12/21/2016 12/23/2016 $1,655.42 Full Biweekly

12/22/2016 1/4/2017 1/13/2017 $1,655.42 Full Biweekly

1/5/2017 1/18/2017 1/27/2017 $1,655.42 Full Biweekly

1/19/2017 2/1/2017 2/10/2017 $1,655.42 Full Biweekly

2/2/2017 2/15/2017 2/24/2017 $1,655.42 Full Biweekly

2/16/2017 3/1/2017 3/10/2017 $1,655.42 Full Biweekly

3/2/2017 3/15/2017 3/24/2017 $1,655.42 Full Biweekly

3/16/2017 3/29/2017 4/7/2017 $1,655.42 Full Biweekly

3/30/2017 4/12/2017 4/21/2017 $1,655.42 Full Biweekly

4/13/2017 4/26/2017 5/5/2017 $1,655.42 Full Biweekly

4/27/2017 5/10/2017 5/19/2017 $1,655.42 Full Biweekly

5/11/2017 5/24/2017 6/2/2017 $1,655.42 Full Biweekly

5/25/2017 6/7/2017 6/16/2017 $1,655.42 Full Biweekly

6/8/2017 6/21/2017 6/30/2017 $1,655.42 Full Biweekly

6/22/2017 7/5/2017 7/14/2017 $1,655.42 Full Biweekly

7/6/2017 7/19/2017 7/28/2017 $1,655.42 Full Biweekly

7/20/2017 8/2/2017 8/11/2017 $1,655.42 Full Biweekly

8/3/2017 8/16/2017 8/25/2017 $1,655.42 Full Biweekly

8/17/2017 8/30/2017 9/8/2017 $1,655.42 Full Biweekly

Total $43,038.37NOTE: Over the course of the year,

you will be paid the same gross

Employee Name: George P. BurdellAnnual rate = $43,041.00 Hourly rate = $20.69Bi-weekly Estimate reflects pay for 80 hours*(80 x 20.69= $1,655.42)

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BENEFITS DEDUCTION SCHEDULE

Adjusted to Bi-weekly Deduction Schedule

Pay Period Pay Date Gross Benefits Deduction Type

9/1/2016 9/30/2016 9/30/2016 $3,584.80 Full monthly deduction

10/1/2016 10/14/2016 10/31/2016 $1,706.90 Full monthly deduction

10/17/2016 10/26/2016 11/4/2016 $1,324.34 Full biweekly deduction

10/27/2016 11/9/2016 11/18/2016 $1,655.42 Full biweekly deduction

11/10/2016 11/23/2016 12/2/2016 $1,655.42 Full biweekly deduction

11/24/2016 12/7/2016 12/16/2016 $1,655.42 Full biweekly deduction

12/8/2016 12/21/2016 12/23/2016 $1,655.42 No benefits deduction

Employee Name: George P. BurdellAnnual rate = $43,041.00 Hourly rate = $20.69Bi-weekly Estimate reflects pay for 80 hours*(80 x 20.69= $1,655.42)

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Deductions

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Payroll deductions for benefits and taxes are taken from paychecks either as:

Flat dollar deduction amount

or

Percentage deduction based on earnings

UNDERSTANDING PAYROLL DEDUCTIONS

$ or

%

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Deductions

• Benefits (medical, dental, etc.) as well as parking deductions will be split between bi-weekly checks for non-exempt employees.

• Non-exempt employees enrolled in Flexible Spending Accounts (accounts designed to save money on taxes for health care or dependent care expenses) will not have to do anything. Deductions will be recalculated automatically to be deducted in the remaining checks for 2016.

• Deductions for retirement savings plans will be recalculated automatically to spread over the remaining pay checks for 2016.

• Wage garnishments and flat additional deductions for taxes and retirement plans that were coming out monthly will need to be adjusted to prevent the same amount from coming out per check as a bi-weekly employee.

CHANGING FROM EXEMPT TO NON-EXEMPT

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FLAT DOLLAR AMOUNT DEDUCTIONS

Flat Amount deducted Twice Per Month (24 paychecks)

Insurance • Health Insurance

• Life & Dependent Life

• Accidental Death & Dismemberment

• Supplemental Life Insurance

• Supplemental Disability

• Health Care/Dependent Care

Other • Additional flat dollar

• Garnishments depending on withholding order

• Transit and Parking, etc.

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PERCENTAGE-BASED DEDUCTIONS

% based on earnings are deducted every paycheck

Taxes

• Federal

• State

• OASDI (Social Security)

• Medicare

Retirement• USG Retirement Plan (TRS or ORP)

• 403B or 457B if elected % Deduction (for example, 3% of every check)

Other • Garnishments depending on withholding order

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There are certain, after-tax deductions that will not automatically change with your new pay schedule. To account for the different deduction schedule and to be effective for your first bi-weekly paycheck, update your withholdings in the systems indicated below from October 26-October 30, 2016.

SPECIAL AFTER-TAX DEDUCTIONS

• Flat amount direct deposits• Flat amount of additional tax• Credit Union deductions (e.g. loans, percentage-based deductions)• Payroll deductions to load BuzzCard with BuzzCard Account Funds • 529 College Savings Plans

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• 403B or 457B if elected % Deduction (e.g., 3% of every check)

Go into Retirement Manager to manually update:

Go into TechWorks to manually update:

Failure to update withholdings may result in a smaller than anticipated paycheck.

Next Steps

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1. Plan ahead for new gross pay.

If you have elected additional tax withholdings, check your W-4 on TechWorks

2. Review your budget and adjust for new check amounts and paydays.

3. Make adjustments to automatic withdrawals from your accounts to align with new pay schedule.

4. Update withholdings in TechWorks and Retirement Manager if necessary (Oct. 26-30, 2016)

5. Contact Lenders, Banks, Landlord, etc. and request to:

Move bill due dates to later in the month or

Split monthly bill in two payments

TRANSITION PLANNING RECOMMENDATIONS

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October 17, 2016 – Converted employee population begins reporting time as non-exempt (hourly).

October 31, 2016 – Last partial monthly check for new FLSA non-exempt population.

November 4, 2016 – First bi-weekly check for new FLSA non-exempt population.

December 1, 2016 – Increases processed for exempt employees moved to new salary threshold.

December 1, 2016 – Federal Compliance Deadline.

December 23, 2016 – Last check of calendar year for monthly (salaried) and bi-weekly (hourly) employees.

IMPORTANT IMPLEMENTATION DATES

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WWW.OHR.GATECH.EDU/FLSA

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