Resources: Administration of Overtime for Non-Bargained for Employees

As administered by the U.S. Department of Labor, non-exempt employees covered by the Fair Labor Standards Act (FLSA) must receive overtime pay (one and one-half times their regular rate of pay) for hours worked over 40 in a workweek.

The employees who are required to receive overtime compensation are called non-exempt. You are required by law and U-M policy to pay them overtime.

Frequently Asked Questions about FLSA and Changes in Exemption Status at U-M

What is FLSA?
The Fair Labor Standards Act (FLSA) establishes certain minimum wage, overtime pay, record-keeping and child labor standards for employers. Regulations issued by the federal government guide employers in determining whether a position should be “exempt” (not entitled to overtime pay) or “nonexempt” (entitled to time-and-one-half overtime pay), commonly known as the FLSA designation or FLSA exemption status.

What does FLSA exemption status determine?
It determines whether a position is eligible for time-and-one-half overtime pay. At U-M, FSLA status also determines whether an employee is paid monthly or biweekly, the accrual rate for paid vacation time or Paid Time Off (PTO) for Health System employees, and how staff report time worked.

If my position is changing from exempt to nonexempt, will I begin to be compensated for overtime?
Yes. Nonexempt staff are required to receive time-and-one-half overtime (including shift premium, if applicable) for time worked in excess of 40 hours in a calendar week (unless working a special schedule). All staff members must seek approval from their supervisor prior to working overtime.

Am I still entitled to receive overtime pay if my position is changing from nonexempt to exempt?
No. Exempt employees are not entitled to overtime pay. Please talk with your supervisor to determine workload expectations for your position and whether there are any compensation or reward plans to recognize extraordinary contributions.

What impact does FLSA status have on time reporting?
Exempt staff report time monthly, with exceptions reported in half-day increments.
Nonexempt staff report time biweekly with exceptions reported to the nearest one-tenth of an hour.

How will my pay period frequency change as a result of a change in FLSA status?
Exempt staff receive a monthly paycheck. Nonexempt staff are paid biweekly.

Is anything else affected by changes in FLSA exemption status?
No. Base pay rate, current job duties, and benefits are not affected by FLSA exemption status changes.

I am used to having flexibility in my work hours. Can this continue?
Yes. Special or alternate scheduling is allowed within the same workweek. For example, if you normally work 8 hours a day, and have a personal appointment on Monday that only allows you to work 6 hours, you and your supervisor can agree that you will make up the time later in the same workweek. Another example would be if your typical schedule is 8 hours a day during the day, and your department needs you to work a special event for 4 hours during the evening. Your schedule may be changed to give you 4 hours of time off at another time during the same workweek. Note: Special or alternate schedules must be within a single workweek.

Will I still get a paycheck if I don't turn in my time report on time?
You must report hours worked and exception time for each pay period before the cutoff. If an unusual event occurs and you are unable to submit your time report before the deadline, you will be paid for your base hours. However, the Payroll Office will not be able to process exception time (i.e., overtime, vacation time, PTO) without your time report. Any exception time will be processed in a future payroll. Therefore, you need to submit time reports prior to the cutoffs to avoid a delay in pay for all hours worked within the pay period and to ensure your leave balances are up-to-date.

How many times per year will I get paid?
If you are changing from exempt to nonexempt, you will be paid 26 times per year. There will be two months each year in which you will receive three (3) paychecks (when there are five Fridays in the month). During the rest of the year you will receive two checks per month. The months with three pay dates change from year to year based on the calendar. All biweekly pay dates can be viewed on the Payroll Office website at http://www.payroll.umich.edu/biweekly.html.

If you are changing from nonexempt to exempt, you will be paid monthly, or 12 times in a year. Monthly pay dates can be viewed on the Payroll Office website at http://www.payroll.umich.edu/monthly.html.

If I am changing from exempt to nonexempt, how will my deductions be affected?
Deductions will be taken based on the table below. For instance, if your medical insurance co-premium is $ 100 per month, the first two checks of each month will have $50 deductions taken from each to cover your total monthly contribution to medical insurance.

Deduction Types and Frequency for Biweekly-Paid Staff

Type of Deduction Taken Over 26 Biweekly Pay Periods Taken Over 24 Biweekly Pay Periods (2 Times Per Month)* Taken Once Each Month
(2nd check unless otherwise indicated)

Medical (Health, Dental, Vision)

 

Yes

 

Life Insurance

 

Yes

 

Long Term Disability

 

Yes

 

Long Term Care

 

Yes

 

Flexible Spending Accounts for Medical Reimbursement and Dependent Care

 

Yes

 

5% Retirement Contribution

Yes

 

 

Supplemental Retirement Account

Yes

 

 

U.S. Savings Bond

 

 

Yes

United Way

 

 

Yes
(1st check)

Gifts to the University of Michigan

Yes

 

 

Parking

 

 

Yes

Athletic Tickets

 

 

Yes

Garnishments, Tax Levies, and Friend of the Court

Yes

 

 

Other Miscellaneous Deductions for Non-Benefit Items

Yes

 

 

  • Deductions that are taken over 24 biweekly pay periods are taken in the first and second biweekly paychecks each month.  During months with three biweekly paychecks, these deductions are not taken from the third paycheck.

If I am changing from nonexempt to exempt, how will my deductions be affected?
Deductions will be taken monthly, based on the table below.

Deduction Types and Frequency for Monthly-Paid Staff

Type of Deduction Taken Once Each Month

Medical (Health, Dental, Vision)

Yes

Life Insurance

Yes

Long Term Disability

Yes

Long Term Care

Yes

Flexible Spending Accounts for Medical Reimbursement and Dependent Care

Yes

5% Retirement Contribution

Yes

Supplemental Retirement Account

Yes

U.S. Savings Bond

Yes

United Way

Yes

Gifts to the University of Michigan

Yes

Parking

Yes

Athletic Tickets

Yes

Garnishments, Tax Levies, and Friend of the Court

Yes

Other Miscellaneous Deductions for Non-Benefit Items

Yes

Will changes in pay frequency impact my Basic Retirement Plan contributions?
No. Your 5% contribution and the 10% U-M match under the Basic Retirement Plan will automatically adjust to deduct according to your pay frequency rate. 

Will changes in pay frequency impact my Supplemental Retirement Account (SRA) contributions?
Yes. The scheduled contribution to your Supplemental Retirement Account (SRA), if you have one, is a fixed amount that is deducted each time you are paid, rather than as a monthly total. If your pay frequency is changing to a biweekly schedule, to maintain the same monthly total, you will need to reduce the current amount by one-half.  Otherwise, the total extra or SRA amount taken each month will double from your current monthly amount since it will be deducted with each biweekly paycheck. It will be deducted three times during the two months each year with three biweekly paydates. 

If your pay frequency is changing to a monthly schedule, you will need to double your current amount in order to maintain the same monthly total. Otherwise, the total extra or SRA amount taken each month will be one-half of what was previously deducted biweekly.

To change the amount of your SRA contribution to adjust for changes in pay frequency, you may download and complete the following form and return it to the Benefits Office: http://www.umich.edu/~benefits/forms/sraonly.pdf.

When will my monthly vacation or PTO accrual be credited? Is it available for use immediately?
Vacation/PTO time is available for use at the beginning of each pay period that includes the first of the month in which it is accrued.