Department of Labor’s Overtime Rules

Adoption of new regulations announced by the Department of Labor (DOL) on May 18, 2016, would mean significant cost increases for employers – including colleges and universities. However, with the U.S. District Court in Texas issuing a nationwide injunction of the rule on November 21, 2016, the regulations are now in limbo.  A final court action is not expected until after Donald J. Trump becomes President.

About

The Wage and Hour Division of DOL proposed changes to the Fair Labor Standards Act (FLSA) in July 2015, after President Obama called for an expansion of the number of workers who qualify for overtime pay. The new rule will more than double the salary threshold (last adjusted in 2004) from the current level of $23,660 to $47,476.  The final rule was announced on May 18, 2016, with a deadline for compliance of December 1, 2016.  However, the rule is now on hold, pending the ruling of the U.S. District Court in Texas.
 

Overtime Rules and Higher Education

The FLSA generally requires that employers pay employees overtime, based on a formula, for work in excess of 40 hours per week. The FLSA exempts certain employees from the overtime pay requirements if they earn above a certain baseline salary and meet a job duties test. Most of the exemptions apply to employees who work in the executive, administrative, or professional fields (known as “white collar” exemptions). The main change in the new rule is an increase in the salary amount that would trigger the “white collar” exemption. The new rule would more than double the salary threshold (last adjusted in 2004) from the current level of $23,660 to $47,476. It would also provide for automatic adjustments to that amount every three years going forward.

Lawsuits filed by 21 states, as well as business groups, led to the nationwide injunction issued by the U.S. District Court in Texas.  The district judge agreed that the new rule will lead to increased costs for businesses, and layoffs - rather than salary increases.  The Obama Administration filed an appeal, followed by a request for an expedited decision.  Even the timing of an expedited appeal will not be final until after Donald Trump is sworn in as the next president. 

What You Can Do

  • Evaluate all employee positions and develop an implementation plan.
  • Keep NAICU and your elected representatives informed of your overall costs and strategies for compliance. 

Resources  

NAICU Contact

Karin Johns: Karin@NAICU.edu

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