Risk Management Initiative:Wage and Hour Issues for Employees and Supervisors Module

Office of the Vice President for Ethics and Compliance

Office of the Vice President for Human Resources

Learning Objectives

Describe Purdue’s miscellaneous pay practices

Understand the provisions of Purdue’s overtime policy

State the difference between exempt and non-exempt employees

Explain the general provisions of the Fair Labor Standards Act

(FLSA)

Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) is a federal law which establishes

• Minimum wage• Overtime pay• Child labor provisions• Recordkeeping requirements• Equal pay standards

Non-Exempt vs. Exempt Employees

Non-Exempt• Paid on a hourly basis • Paid bi-weekly• Paid for overtime based

on weekly hours worked – time and a half for

hours in excess of 40 per week

• Record time– Must record all

hours worked– Must record unpaid

break periods such as lunch

Exempt• Paid on a salaried basis

– At a rate of not less than $455 per week

• Excluded from overtime pay

• Daily hours are not recorded– Record time on an

“exception” basis– Only record paid

time off

Criteria for Exempt Work• Exercise of discretion and judgment • Have authority to

– formulate and/or interpret University policies

– waive or deviate from established policies and procedures

– commit the University in matters which have significant financial impact

– negotiate and bind the University on significant matters

– hire or fire other employees• Involved in planning long- or short-term

business objectives

Discretion and Independent Judgment

Discretion and independent judgment does not include:

• Applying well-established techniques, procedures or specific standards described in manuals or other sources

• Clerical or secretarial work

• Recording or tabulating data

• Performing mechanical, repetitive, recurrent or routine work

Purdue’s Overtime Policy• Overtime pay is calculated

at 1.5 times the regular rate for every hour worked in excess of 40 during the work week

• Payment of overtime cannot be waived by employee or employer

• Hours cannot be averaged over two workweeks

• Normally scheduled holidays, vacation and sick leave are included to determine overtime hours

Purdue’s Overtime Policy – Maximum Overtime

Maximum Overtime• Scheduled in a 24-hour period = 8 hours• Worked in any work week = 20 hours

NOTE: Overtime worked by the employee, whether it is authorized or unauthorized by the supervisor, must be counted and compensated as “worked overtime”

Hours of Work

Workweek• Monday through Sunday

Work Schedule• Can be changed to support a business need

Flexible Work Schedule• Request to flex must come from the employee• Must be mutually agreeable

Compensatory Time• Purdue policy does not allow the use of compensatory

time• Hours cannot be carried to another week

*Exceptions to the University pay policies must have Human Resources approval

Hours Worked – On Call Pay

• Restricted use of time while “on call” requires compensation

• Unrestricted time while “on call” means employees are not considered in pay status– Unrestricted means the employee is free to

do normal daily activities• When not in “on call” status, but responding to

a phone call or email, employees will be paid for the length of the phone call or email at the overtime rate

Hours Worked – Callback Pay• Callback is when an employee

is required to return to the workplace outside of their normal work schedule

• Not provided when:• extra work is scheduled

in advance • employees are asked to

extend their regular work shifts

• Employees must receive a premium equivalent to two hours of regular pay and be compensated for all hours worked

• All time worked is included to determine overtime eligibility

Hours Worked – Training, Lectures & Meetings

Employees are not paid if all of the following criteria are met:

• Attendance is – outside of regular

work hours– voluntary

• Information is not directly job related

• Employee does not do any productive work during the session

Nonexempt Employee Travel

General Rules• An employee’s commute is not compensable• Work related travel during the employee’s

normal working time is paid time• Travel outside those normal working hours is

not paid• Work performed while driving will be paid if

not de minimis

Nonexempt Employee Travel Examples

• Carrying a heavy briefcase of files on a weekly basis during the commute is de minimis, given that the employee is still free to do other things during the commute . However, when transporting specialized or heavy equipment is a principal activity and a regular part of the employee’s daily travel, such time may be compensable.

• Talking occasionally on a cell phone on work-related matters during the commute may be de minimis, but an extended period of time (i.e. 10 minutes or more) may be paid time.

Nonexempt Employee Travel - continued

• Travel between worksites during the same work day is compensable

• Out-of-town travel, when an employee returns home the same day, is compensable

• Out-of town travel overnight:– Compensable for the driver and passenger during

regular work hours – Compensable for the driver outside of regular work

hours– Not compensable for the passenger outside of

regular work hours unless the employee performs work while riding

Miscellaneous Pay Practices

Shift Differential• If an employee works

more than 4 hours between 4pm and 8am they are paid an additional .45 cents/hour

Holiday Pay • If an employee is required

to work a holiday they are paid a premium rate of 1 ½ times their regular rate of pay

Summary• FLSA is a Federal Law that establishes minimum wage, overtime, child

labor provisions, record keeping requirements, and equal pay standards • The law discusses two classifications of employees

• Exempt employees are exempt from the overtime provisions of FLSA• Non-exempt employees are subject to the overtime provisions of

FLSA• Purdue’s overtime policy corresponds to FLSA with an overtime rate of 1.5

times the normal rate for all hours worked in excess of 40 in a workweek• Defines a workweek beginning on Monday and ending on Sunday

• For overtime purposes, it’s important to detail time worked • Flexible schedules, on-call status, call back status, training, meetings

or lectures and travel time can impact time worked • Some of the more commonly occurring premium pay situations include:

• Shift differential of .45 cents per hour for non-exempt employees who work more than 4 hours between 4pm and 8am

• Holiday pay at a rate of 1.5 times their regular rate of pay for each hour they work on a holiday.

Conclusion

• For questions about this training please contact vpeceducation@purdue.edu.

• Please be sure to complete the certification quiz in WebCert.

Thank you!