Policy Number: 154
Overtime Pay and Compensatory Time Off
I. POLICY AND GENERAL STATEMENT
The University of Texas Health Science Center at Houston ("university") will allocate and schedule work appropriately so that non-exempt employees are not required to work over 40 hours in a workweek except when mandated by operating necessities. Supervisors of non-exempt employees are responsible for establishing work schedules and for ensuring adherence to federal and state law and university policy. This policy applies to any and all hours where a non-exempt employee is required or is permitted to work in excess of 40 hours in the standard workweek (see HOOP 23, Flexible Work Arrangements).
Payment to essential employees during university closures due to emergency, disaster or severe weather situations is covered by HOOP Policy 85 University Official Closure Status for Emergency, Disaster or Severe Weather.
Fair Labor Standards Act of 1938, as amended (“FLSA”): Federal law that establishes minimum wage and overtime standards for employees.
Exempt Employee: An employee, who, in general, is paid at least $455 per week, is paid a salary rather than on an hourly basis, and performs the duties of an exempt executive, administrative or professional. Whether an employee is exempt depends on his or her duties, responsibilities and salary. Human Resources will determine a job’s FLSA status based on the duties and responsibilities of the position.
Non-Exempt Employee: An employee whose job duties do not fall under one of the exemptions to the overtime provisions of the FLSA. Human Resources will determine a job’s FLSA status based on the duties and responsibilities of the position.
A. Authorization for Payment of Overtime or Granting Compensatory Time for Non-exempt Employees
A department manager who has an approved or modified budget that includes a dollar amount for overtime is delegated authority by the President and the Senior Executive Vice President, Chief Operating and Financial Officer to authorize payment of overtime for his or her non-exempt employees. It is the responsibility of the department manager to ensure proper advance approval is obtained and funds are available and in the correct object within his or her departmental budget before overtime hours are worked. The signature of the department manager (or designee) on an employee's time record will constitute authorization for payment.
A department manager who signs the employee's timesheet is authorized to grant compensatory time in lieu of overtime to non-exempt employees. It is the responsibility of the department manager to ensure work is scheduled appropriately and compensatory time can be granted for work above the standard workweek. The signature of the supervisor or department manager on a non-exempt employee's time record will constitute granting of compensatory time as recorded on the time sheet.
B. Prior Approval Required
A non-exempt employee must have the prior written approval of his or her supervisor before overtime may be worked. Supervisors are responsible to ensure that non-exempt employees do not work unauthorized overtime.
C. Compensation for Overtime
Non-exempt employees who are authorized or permitted to work in excess of 40 hours in a workweek are entitled to additional compensation in one of the following ways:
- compensatory time off at a rate of one and one-half times for all time actually worked over 40 hours in a workweek, or
- payment for accrued overtime at the rate of one and one-half times the employee’s current, regular rate of pay. The regular rate of pay is defined in the FLSA.
Paid leave or holidays taken during a workweek do not count as hours worked in computing overtime.
D. Compensatory Time
Non-exempt employees may be compensated for overtime by receiving compensatory time off at a rate of one and one-half times for all time actually worked over 40 hours in a workweek. The following limitations apply:
- Non-exempt employees may not accrue more than 120 hours of compensatory time (equivalent to 80 hours of overtime work).
- Supervisors must ensure accrued compensatory time hours do not exceed the maximum limits. Supervisors may require an employee to use his or her compensatory time in lieu of vacation leave to avoid exceeding the limits.
- An employee who has accrued compensatory time and requests to use it must be permitted to use the time off within a reasonable period after making the request if it does not unduly disrupt department operations. Undue disruption is not merely an inconvenience.
- All compensatory time earned by non-exempt employees in any workweek must be taken during the 12-month period following the end of the workweek during which the overtime occurred; otherwise supervisors must pay non-exempt employees for these hours.
E. Payment for Accrued Compensatory Time
A non-exempt employee must be paid for his or her accrued compensatory time under the following circumstances:
- when the employee’s accrued balance exceeds the maximum accrual limits;
- when the employee’s FLSA status changes from non-exempt to exempt;
- when the employee transfers from one department to another for any reason and has a compensatory time balance (the “transferring from” department will pay);
- when the employee is voluntarily or involuntarily terminated; and,
- when compensatory time earned by a non-exempt employee in any workweek is not taken during the 12-month period following the end of the workweek during which the overtime occurred.
In all cases, the institutional time sheet or time card for each non-exempt employee will be the official record of time worked and time taken. Appropriate supporting documentation must be maintained in the department for paid overtime or each granting of compensatory time off made to any employee. All non-exempt employees must record their total workweek hours accurately on their timesheets. (Refer to HOOP Policy 24 Time and Attendance Reporting.)
G. Identifying Total Workweek Hours
To identify total workweek hours for the purpose of calculating compensation for a non-exempt employee, the following possible scenarios should be considered:
- If a non-exempt employee who is scheduled for a 40-hour workweek actually works a total of 45 hours in a workweek that contains no paid leave (e.g., vacation, sick leave, holidays), the employee will be paid for 40 hours at his or her "straight time" rate and will be compensated for the additional five hours at the rate of one and one-half times the employee’s current regular rate of pay.
- If a non-exempt employee who is scheduled for a 40-hour workweek actually works 35 hours, and takes eight hours of paid leave (43 total workweek hours), the employee will be paid for 40 hours at his or her straight time rate and will also be compensated for the additional three hours at the straight time rate.
- If a non-exempt employee who is scheduled for a 40-hour workweek actually works 42 hours, and also takes eight hours of paid leave during that workweek (50 total workweek hours), the employee will be paid for 40 hours at the straight time rate, and compensated for the additional 10 hours as follows: eight hours at the straight time rate and two hours at the rate of one and one-half times the employee’s current regular rate of pay.
H. Exempt Employees
There is no legal requirement, nor is the university obligated, to pay overtime or grant compensatory time to exempt employees.
There are three situations in which, at the discretion of the supervisor and with the advance written approval of Compensation Services, exempt classified employees may be required to work and be paid for overtime hours they are required to work:
- Patient care requires the overtime (Exempt employees, with the approval of the head of the operating unit, may be paid at one and one-half times their base hourly rate when working in a hospital setting operating on a 24-hour basis.);
- A research project or funding would be placed in jeopardy; or,
- A contract would be lost.
Exempt employees will not be granted compensatory time, except for pre-approved situations involving clinical staff at The University of Texas Harris County Psychiatric Center.
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