Office of
Human Resources

Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act (FLSA) is a federal law that includes:

  • Establishing the criteria for a job to be exempt or nonexempt
  • Establishing the federal minimum wage required for all nonexempt jobs
  • Guaranteeing overtime for nonexempt jobs for hours worked over 40 in one work week
  • Governing the employment of minors

Department of Labor link on FLSA can be found here.

Three Tests

A position may be considered exempt under the FLSA if it meets three tests.

  1. Employee must be paid on a salary basis, not an hourly basis
  2. Duties must meet criteria for executive, professional, administrative, computer or outside sales activities
  3. Compensation rate must be at least a specified weekly salary level (current amount since 2019: $684/week), regardless of full-time or part-time appointment

If any one of the three tests is not met, the employee must be classified as non-exempt and eligible for overtime pay. Please note that exempt classification is an option, not a requirement under the law. A position that meets all three tests may still be classified as non-exempt.

Exceptions to the salary level: instructional faculty, physicians and lawyers. In addition, positions meeting the academic administration provision are subject to a different salary threshold requirement.  

Guidelines/Practices for Nonexempt (Hourly) Employees

  • The University work week begins at 12:01 am on Sunday and ends at 12 midnight the following Saturday
  • All hours worked are paid on an hourly basis
  • Hourly rate of pay is subject to the state of Michigan's minimum wage
  • Total hours worked for the work week under 40 will be paid at the regular rate of pay
  • Total hours worked for the work week above 40 will be considered overtime and be paid at one-and-one-half-times the regular rate of pay
  • Paid-leave and long-term sick leave time are paid at the regular rate of pay and are not taken into consideration for the purpose of calculating overtime for that work week
  • For multiple positions at different rates of pay:
    • The regular rate for overtime calculation purposes will be a weighted average of all hourly rates
    • Overtime pay will be automatically charged to the primary position
    • Overtime charges will need to be reviewed by all departments to determine actual distribution of overtime hours (any reimbursement must be processed through accounting)
  • Under no circumstances is compensatory time (comp time) permitted; instead, an employee's schedule may be adjusted during the work week to provide time-off in place of working at overtime rates

 

UPDATE: FLSA Changes 2024

On Tuesday, April 23, 2024 the Department of Labor (DOL) announced changes to the definition of what compensation amount qualifies to be salaried. You can find the DOL announcement here. Employee changes affected by the July 1, 2024 threshold were put in place effective June 30, 2024 with plans to continue to review the changes needed for the January 1, 2025 threshold. However, on Friday, November 15, 2024 a federal judge vacated all aspects of the DOL update to the FLSA.  The University is currently evaluating the impact of this decision. Information and updates can be found here on the Human Resources website.

On Friday, November 15, 2024 a federal judge in the Eastern District Court of Texas ruled to strike down the Biden administration’s FLSA overtime final rule. The ruling strikes down all components of the rule, meaning both the July and January salary thresholds are no longer in effect, and the triennial automatic updates will not take place. The decision applies to all covered employers and employees under the FLSA nationwide. The University will maintain the changes made to salaried employees but will be reassessing positions that were changed to hourly to determine if adjustments are needed.

FAQs and Guides

Wage & Hour Division Fact Sheets

Office of Human Resources