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    June 2016

    How the New FLSA Overtime Rule Affects Educational Institutions

    math professor teaching class

    Under the Fair Labor Standards Act (FLSA), employees who work more than 40 hours per week must be paid overtime unless they fall under various exemptions. Under the white-collar exemption, employees are exempt from receiving overtime if:

    • They are paid on a predetermined salary basis that is not subject to reduction based on the quality or quantity of work
    • Their salary meets a minimum salary level
    • Their primary job duties involve executive, administrative, or professional functions

    In May 2016, regulations (Final Rule) issued by the Department of Labor (DOL) made certain changes to the white-collar exemption. Effective Dec. 1, 2016, schools may need to pay overtime to some employees who previously were exempt. However, other FLSA provisions will limit the impact on schools.

    What Changed?

    The change most likely to affect schools is a significant increase in the minimum salary level required for the white-collar exemption, from $455 per week ($23,660 per year) to $913 per week ($47,476 per year). Beginning Jan. 1, 2020, the minimum salary level will automatically adjust every three years to equal the 40th percentile of earnings in the lowest-wage Census region. For more information on changes to the white-collar exemption that may affect your institution, see “Guidance for Higher Education Institutions on Paying Overtime under the Fair Labor Standards Act.”

    Provisions Limiting Impact 

    Teachers are exempt if their primary duty is teaching, tutoring, instructing, or lecturing. This includes nursery school teachers, high school vocational teachers, and professors and adjunct instructors in higher education. However, preschool employees do not qualify as teachers if their primary duty is caring for children’s physical needs. Athletic coaches qualify if their primary duties involve instructing student-athletes in performing their sports, but not if they focus primarily on recruiting.

    Academic administrative employees whose primary duties are directly related to academic instruction or training in higher education, such as department heads, academic advisors, or intervention specialists, are exempt if their salaries are at least as high as the entrance salary for teachers at their institutions.

    Public institution employees who otherwise are eligible for overtime may be required to take compensatory time off instead, as long as the institution qualifies as a “public agency” under the FLSA.

    Students who work for an institution, including graduate teaching assistants, research assistants, and resident advisors, usually are exempt. The DOL does not consider them employees subject to the FLSA.

    Who Is Covered by the Final Rule?

    Postdoctoral researchers in higher education, especially those in the sciences, often don’t teach. Therefore, they don’t qualify for the teachers’ exemption and are subject to the new minimum salary level  test for exemption. If they teach—and teaching instead of research is their primary duty—they qualify for the teachers exemption. Whether that exemption applies to postdoctoral researchers requires careful assessment.

    Nonacademic administrative personnel in higher education are those whose duties do not relate directly to academic training or instruction, such as recruiters or admissions counselors. They are not exempt under the Final Rule.

    Employers can choose among various options to comply with the Final Rule, including raising salaries, evaluating and realigning workloads, or paying overtime above a salary. United Educators recommends that schools consult counsel experienced with the FLSA to determine which, if any, employees are covered by the Final Rule, and what action to take as a result.

    Resource

    Department of Labor, Wage and Hour Division, “Questions and Answers”


    By Hillary Pettegrew, senior risk management counsel

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