Overtime and Compensatory Time off Policy for FLSA Nonexempt Employees

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Policy Code: 
3209
Approval Authority: 
Chancellor
Policy Type: 
University Policy
Policy Owner: 
Chancellor's Office
Responsible Office: 
Human Resources - 828.251.6605

I. Purpose

The Fair Labor Standards Act (FLSA), also referred to as the federal Wage and Hour Law, regulates minimum wage, overtime, equal pay, recordkeeping, and child labor. Under the FLSA, positions are classified as either exempt or nonexempt from certain provisions, such as minimum wage, overtime, and recordkeeping.

Employees whose duties and responsibilities have been determined by the Office of Human Resources to be subject to (i.e., not exempted from) the provisions of FLSA are considered “nonexempt” employees. (FLSA Nonexempt).  Employees determined to be FLSA Nonexempt are compensated at time and one half for each hour worked over 40 in a workweek. Public sector employers may provide compensatory time off (“comp time”) in lieu of overtime pay. 

This policy defines the university’s standard work week and outlines the provisions for recording, tracking, and compensating employees in accordance with the FLSA.

II. Scope

All SHRA employees in permanent positions and temporary positions who are subject to (i.e., nonexempt from) the wage-hour provisions of the Fair Labor Standards Act (FLSA Nonexempt) are entitled to overtime compensation. 

SHRA and EHRA Staff: The FLSA exemption status of the employee’s position is determined by the Office of Human Resources. SHRA and EHRA staff designated as FLSA Nonexempt are compensated for overtime in accordance with FLSA requirements. 

SHRA Temporary Employees:  SHRA temporary employees, including student employees, are FLSA Nonexempt and are eligible to receive overtime pay; they cannot receive or use compensatory time.

Employees Engaged in Law Enforcement Activities:  Under Wage and Hour Law, two options are permissible for employees in law enforcement classifications:

  • For schedules requiring a 40-hour workweek, the policies on hours of work and overtime pay for a 40-hour workweek will apply.
  • For schedules requiring more than 40 hours in a workweek, the “work period” will consist of 28 consecutive days.  During that period, total hours worked that exceed 171 hours will receive compensation at a rate of one and a half times the regular rate.  This may be in the form of compensatory time off or pay, depending upon departmental budget and business needs.  See NC OSHR’s Hours of Work and Overtime Compensation Policy for more details.

III. Policy

Employees who are designated as FLSA Nonexempt under the Federal Fair Labor Standards Act (FLSA) must record all hours worked and must receive extra compensation for hours worked in excess of their regular schedule. It is State and University policy to provide compensatory time off in lieu of monetary compensation except as required below. Nonexempt employees are required to maintain a timesheet to track hours worked and leave taken in a workweek. Overtime should only be worked with management approval.

Hours worked in excess of the employee’s regular schedule fall into two categories: extra hours at straight time (gap hours) and extra hours at time and a half (overtime hours).

Gap Hours

A. Gap hours can occur when a part-time employee works more hours than their normal schedule, but less than 40 hours.  These “gap hours” are compensated at straight-time.  These hours would be accrued on an hour-for-hour basis (i.e., for each gap hour the employee works, they earn one hour of compensatory time).

B. Gap hours can also occur in weeks when a full-time employee takes leave, and their total hours for the week including leave exceeds 40 hours.  Overtime is only paid when an employee physically works over 40 hours. Extra hours worked during the university workweek that do not reach the 40 hour threshold for overtime (gap hours) would be compensated at straight time.

Time and One-Half Hours

An eligible employee who works more than 40 hours in a workweek is compensated for overtime at the rate of “time-and-one-half” for all hours worked over 40. 

FLSA Nonexempt employees are compensated at a rate of time and one-half for each hour worked in excess of 40 hours in a workweek.  UNC Asheville’s standard practice is that FLSA Nonexempt employees accrue leave at time and one-half for each hour worked over 40 in a workweek – this is called Compensatory Time Off (also called compensatory time earned or comp time). 

An employee must actually work over 40 hours to earn overtime compensation. Paid time that is not considered time worked (e.g., most leave or paid time off, such as the use of vacation) does not count as time worked for the purpose of determining an employee’s eligibility for overtime compensation.

Working more than eight hours in a work day does not necessarily constitute overtime. Overtime occurs only after working more than 40 hours in a work week.

Management should give as much advance notice as possible of the need to work overtime so that employees can make any arrangements necessary to enable them to perform the overtime work.

Note: Some work units may require occasional or regular mandatory overtime as a condition of employment. Such a requirement should be explained to job candidates during the interview and selection process (and is typically included in the vacancy announcement or position description). Supervisors must notify current employees if job changes necessitate a mandatory overtime requirement.

Avoiding Overtime Liability

If an employee works more than their regular schedule on one day in work week, management may allow or direct the employee to take off an equal amount of time during the same work week (without a charge to leave) so that the total work time does not exceed 40 hours for the work week. The University does not have a policy that allows equal time off (hour for hour) in a subsequent week.

Compensatory Time off

Unless an exception to pay overtime is approved, FLSA Nonexempt Staff will be compensated for overtime in the form of compensatory time off. Temporary SHRA staff are eligible to receive only overtime pay; they cannot receive compensatory time off.

Compensatory time off  is paid time off equal to one-and-one-half times the amount of time worked in excess of 40 hours in a work week.

When the compensatory time has been earned, the time off must be scheduled through normal processes and approved by the supervisor. Effort should be made to accommodate the preference of the employee when scheduling compensatory time off. Compensatory time off may be used for any purpose.  

When compensatory time, vacation, or bonus leave is entered on the timesheet, State policy requires the leave to be processed in the following order, regardless of how it was entered on the time/leave sheet:

• Compensatory Time (time and one-half where available);
• Compensatory Time (gap hours, also referred to as straight time);
• University Closing Comp Time;
• Vacation leave; then
• Bonus leave.

The maximum amount of compensatory time an employee may carry at any time is 240 hours (160 hours of work x 1.5) pro-rated for part-time employees. Any overtime in excess of the 240 hour maximum (120 hours for law enforcement officers on the 28-day cycle) cannot be considered compensatory time off; instead, the overtime must be paid in the employee’s next paycheck.

Paid Overtime

If funds are available and the Vice Chancellor, based on university business needs, approves an exception to pay overtime instead of providing compensatory time, an eligible employee who works more than 40 hours in a work week is paid overtime at the rate of “time-and-one-half” for hours worked over 40.* The overtime pay is determined using the employee’s regular rate of pay. For overtime rate calculation purposes, the regular hourly rate of pay includes shift premium pay, longevity pay, and on-call compensation.  These payments must be included in the calculation in order to comply with the provisions of the Fair Labor Standards Act.

Overtime for an employee working in two positions with different rates of pay is paid at the average of the two rates of pay for each position.

The additional pay should be included in the paycheck for the pay period in which the overtime was worked. If the work and paperwork are not completed by the payroll deadline, the additional pay should be included in the next month’s payroll.

(*Except for law enforcement officers working a 28-day cycle – see NC OSHR’s Hours of Work and Overtime Compensation Policy for law enforcement officers’ overtime compensation maximum accumulations and payout requirements.)

Payouts & Transfers

Compensatory time off (including gap hours) must be taken within 12 months of the date on which it was accrued. If management is not able to schedule the compensatory time off within this time period, the compensatory time must be paid out to the employee no later than in the next pay cycle following the end of the 12 months.

When an employee leaves the University or transfers to another University department, the department where the leave was accrued must pay the employee for all accumulated and unused compensatory time off.

Employees whose FLSA status changes from nonexempt to exempt must be paid for all accumulated and unused compensatory time off at the time of the status change.

Recordkeeping

UNC Asheville’s standard work week begins at 12:00:01 a.m. on Monday, and ends at 12:00 a.m. (midnight) on Sunday. Each department is responsible for recording and monitoring compensatory time off and, if applicable, paid overtime for its employees.  Employees must record time worked and leave taken on a timesheet.  Timesheets are in an electronic format and accessed through OnePort.

Questions

For questions about this policy, contact the Office of Human Resources at 828.251.6605.

Reference:

NC OSHR’s Hours of Work and Overtime Compensation Policy