Department of Labor’s Overtime Rules

The Department of Labor (DOL) proposed an adjustment to the overtime salary threshold on March 22, 2019.  While the overtime threshold had not been adjusted 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 significant cost increases for employers – including colleges and universities. However, with the U.S. District Court in Texas striking down the rule on August 31, 2017, the Trump Administration is now moving forward with a new and different proposed rule for overtime pay.       

About

The Wage and Hour Division of the Department of Labor (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 rule would have more than doubled 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 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 on behalf of the higher education community on September 25, 2017.  NAICU joined this effort and signed onto the CUPA-HR letter to DOL.

DOL announced a new proposed rule on March 22, 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.
 
Under current law, employees with a salary below $455 per week ($23,660 annually) must be paid overtime if they work more than 40 hours per week. This salary level was set in 2004, and has not been adjusted since.
 

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). 

Lawsuits filed by 21 states, as well as business groups, led to the nationwide injunction issued by the U.S. District Court in Texas, and the eventual decision to strike down the rule proposed by the Obama Administration.  The judge agreed that the rule would have led to increased costs for businesses, layoffs - rather than salary increases, and was simply too high.  
 

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

There is currently a 60-day public comment period in effect, ending on May 21, 2019.  DOL is likely to issue a final rule a few months after the comment period ends.  The final rule could change from the proposed rule depending on the comments and feedback received by DOL.  Once a final rule is issued, there will be an additional period of time before implementation.

What You Can Do

 
  • Assess how the current proposed overtime threshold adjustment will affect your institution and begin having your HR department develop a plan for implementation.  If you feel the rule will be difficult or unworkable for your institution, please let NAICU know so we can make sure your concerns are reflected in the community comments.

Resources  

NAICU Contact

Karin Johns: Karin@NAICU.edu

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