The University has reached an agreement with the Department of Labor (DOL) for the resolution of a Fair Labor Standards Act (FLSA) compliance matter. The University proactively contacted the DOL for assistance in late 2015 after discovering an error in the calculation of overtime pay for certain non-exempt employees. These system errors resulted in both small underpayments and overpayments for certain employees, with the vast majority of underpayments amounting to less than $5 per paycheck. The University will not seek reimbursement for overpayments to employees.

The University’s agreement with the DOL includes repayments to certain current and former employees for back wages from January 1, 2014 through December 31, 2016. Beginning July 14, 2017, employees who are affected will be notified of the amount and timing of their repayment from the University.

UC is moving toward fully implementing UCPath, a single payroll system for all UC employees, which deploys software that calculates pay in accordance with federal standards and minimizes the risk of these issues occuring in the future. UCPath will replace the current payroll system in which the miscalculations occurred. In the meantime, UC has taken the necessary steps to correct errors within the existing payroll systems. This includes an adjustment of the overtime rate for employees at locations that have not yet migrated to UCPath. 

1. Why did UC contact the Department of Labor about overtime pay?

The University has been working on a project to replace its 35-year-old payroll systems and processes with a new, single payroll system for all of UC’s over 200,000 employees. In the process, the University identified small miscalculations in overtime pay. The University contacted the DOL for assistance in resolving the error.

2. What is the nature of the error?

Employees who are eligible for overtime pay under the FLSA receive premium pay for overtime work. That premium pay is based not only on the employee’s hourly rate, but also includes other factors such as shift differentials, incentive awards, or stipends. The payroll system at times did not include some of these other factors in the overtime pay rate calculations; also, it calculated the overtime pay rate for each pay period, rather than each work week. These system errors have resulted in both small underpayments and overpayments for certain employees. The vast majority of underpayments caused by these errors amount to less than $5 per paycheck, with most affected employees being underpaid by less than $1 per paycheck.

3. What is UC doing to correct this error and compensate affected employees?

UC has corrected the current payroll system to make sure that those types of pay (such as incentive awards, shift differentials, and other additional types of pay) that should be incorporated in the overtime rate are consistently and accurately included in calculations. These changes were effective as of December 2015 paychecks. Moving forward, UC’s agreement with the DOL also provides for an adjustment to the overtime rate for all eligible employees paid through the legacy payroll system.

To identify affected employees, UC calculated the payment discrepancies for each person based on the overtime hours he or she worked and the impact of any errors. Employees included in the settlement will thus receive repayments for back wages, based on their actual experience. 

4. How many and which employees were affected?

This settlement involves about 14,000 current and former employees. This number represents less than 20% of UC’s hourly employees, and the vast majority of underpayments addressed by the settlement amount to less than $5 per paycheck. In fact, most of these underpayments represent less than $1 per paycheck. 

5. How much does UC owe employees?

The average amount of back wages owed to an individual employee included in the DOL settlement is under $55. The University will not seek reimbursement from employees who may have been overpaid due to these errors.

6. How do I know if I’m an affected UC employee?

If you are a current employee eligible for a repayment through this settlement, you will be notified by email (or by intra-office mail if you do not have a work email address) in July 2017. UC will then include your repayment with your paycheck scheduled for September 6, 2017 for biweekly paid employees and September 1, 2017 for monthly paid employees. If you are a former employee affected by this settlement, your notification and repayment check will be sent to your last known address. 

7. How will UC prevent future problems like this from happening?

UCPath deploys software that calculates pay in accordance with federal standards and other organizations’ practices, minimizing the risk that these types of issues will occur in the future. The migration to UCPath has been in stages, with all campuses scheduled to be using the updated system by December 2018. 

8. If employees have questions that are not addressed by these FAQs, where should they be directed?

Employees should contact “UC Overtime Payment” at ucovertimepayment@ucop.edu or (510) 987-9442 if they have questions or concerns.