MI - Federal act prompts U-M to adjust payroll process

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Federal act prompts U-M to adjust payroll process

Saturday, August 26, 2000



Thousands of University of Michigan employees have received unexpected bonuses totaling more than $500,000, after university officials re-calculated the way they pay overtime to some employees.

The adjustment affected 2,346 employees during 1998-99 fiscal year and 2,343 workers during the 1999-00 fiscal year, which ended in June.

In all, the U-M paid out $552,875 in adjustments during July and August.

Human Resources Administrator Laurita Thomas said the pay-outs stem from a new interpretation of the federal Fair Labor Standards Act, which defines relationships between employers and employees.

Historically, the university has not factored one-time, lump-sum payments - particularly longevity pay - into its calculations for determining overtime-rate payments.

In other words, under the act, overtime pay rates should be based not only on hourly wages or weekly salaries, but also on whatever one-time payments employees received during a fiscal year.

"It's very complicated and pretty subtle," Thomas said. "But, basically, it's a matter of reevaluating our practices and deciding that this was a better way to do it."

U-M spokeswoman Julie Peterson said the adjustments stemmed from a committee's recommendation that they be paid. However, she said the university was under no obligation to issue the adjustments.

"We made a voluntary choice," she said. "It isn't that black and white.

"But we looked at the ways that other institutions were doing it and decided that this was the best way for us to proceed.

Jim Smith, district director of wages and overtime for the U.S Department of Labor's office in Detroit, said no grievances were filed against the U-M to prompt the adjustments.

However, he said such bonuses should be calculated into overtime payments.

"The calculations get a little complicated," he said. "But one-time payments such as longevity pay are considered part of the regular rate under the Fair Labor Standards Act and overtime premiums must be calculated and paid.

Thomas said the two fiscal years were chosen in order to be fair to employees who missed out on the benefits.

"It had to do with a sense of fairness," she said. "You can decide whether to address some history around it or just make the change and we decided to go back and make the adjustments."

Peterson said the adjustments are available to any current U-M employees who worked overtime and received one-time payments during the two fiscal years.

Meanwhile, the payments have come as a pleasant surprise to workers, according to Warren Jenkins, bargaining chair for AFSCME local 1583, which represents 2,400 hourly workers on the U-M's campus.

"If the Fair Labor Standards Act said they're supposed to be doing this (and) if they do it without us having to file a grievance, then that's great," he said.


-- Doris (reaper1@mindspring.com), August 26, 2000

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