Department of Labor’s Overtime Rules

On January 1, 2020, the overtime salary threshold for workers increased for the first time since 2004. The increase is designed to make more U.S. workers eligible for overtime pay.

Adoption of regulations finalized during the Obama Administration would have meant greater cost increases for many employers – including colleges and universities. However, with the U.S. District Court in Texas striking down the rule on August 31, 2017, the Obama regulations never took effect - allowing the Trump Administration to move forward with a more moderate increase.       

About

The Wage and Hour Division of the Department of Labor (DOL) proposed changes to the Fair Labor Standards Act (FLSA) in March of 2019 that would increase the threshold for overtime pay from $455 to $679 per week ($35,308 annually) under a new Notice of Proposed Rulemaking (NPRM) published by DOL.  DOL projects that this adjustment will make more than one million additional U.S. workers eligible for overtime pay.

In September of 2019, DOL announced a final rule that increases the threshold for overtime pay from $23,660 to $35,568, a slight adjustment over what was proposed.  This rule took effect on January 1, 2020, for all sectors of employers.
 

Recent History

During the Obama Administration, the White House called for an expansion of the number of workers who qualify for overtime pay. That rule would have more than doubled the salary threshold from  $23,660 to $47,476. That rule, and all guidance on implementing it, is now dead, having been struck down by a U.S. District Court in Texas.

The DOL under the Trump Administration took the first step in a new rulemaking process by asking for public comment on the overtime threshold.  The request for information asked for specific recommendations on salary levels, duties test, and other methodologies.  The College and University Professional Association for Human Resources (CUPA-HR) submitted comments, which NAICU signed on to, on behalf of the higher education community in 2017.  
 

Compensatory "Comp" Time and Higher Education

For over three decades, public employers – including public colleges and universities - have had the option of offering comp time arrangements to their employees.  Employees may decide between comp time or overtime pay, under certain guidelines.  Unfortunately, private employers – including private colleges and universities – are not able to offer employees the same option.  Having the ability to offer comp time would have lessened the blow of the Obama overtime pay rule had it been implemented.

The House has passed legislation four different times, most recently in 2017, to allow private employers to offer comp time arrangements to employees.  Unfortunately, these bills were not taken up in the Senate.  

The DOL cannot allow private employers to offer comp time arrangements until both chambers of Congress pass legislation that is signed into law by the President. 
 

Outlook

The business community, both small and large, as well as nonprofit employers, including colleges and universities, have been more supportive of the overtime threshold adjustment implemented by the Trump Administration.  However, additional significant adjustments are possible if a president is elected who is more aligned with organized labor.  Labor unions fully supported the proposed increase during the Obama Administration, and opposed the salary threshold set by the current administration.  A Trump DOL would likely not pursue any additional adjustments to the overtime threshold.

What You Can Do

 
  • Keep your eye on the presidential election and assess how the current overtime threshold is affecting your institution.
  • Assess how an overtime threshold closer to $50,000 would affect your institution if proposed by a different administration. 

Resources  

  • CUPA-HR resource page on the overtime rule specific to the concerns of colleges and universities. 
  • CUPA-HR has developed additional details on the new proposed rule.
  • NAICU's outside counsel, retained to assist members with implementing the Overtime Rule during the Obama Administration, developed guidance to help employers understand their options when the original rule looked imminent.
  • The Obama Administration's Overtime Rule.
  • Higher education community comments on the proposed Obama overtime rules.
  • Partnership to Protect Workplace Opportunity

NAICU Contact

Karin Johns: Karin@NAICU.edu

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