Issue Briefs

Department of Labor's Overtime Rules

On August 30, 2023, the Department of Labor (DOL) announced a proposal to increase the salary threshold for overtime pay requirements from $35,568 to $55,068. The proposal includes automatic adjustments of the salary threshold every three years.
 
The proposal was published in the Federal Register on September 8, 2023, and included a 60-day public comment period that will expire on November 7, 2023.

Overview

The federal overtime rules are contained in the Fair Labor Standards Act (FLSA) . Unless exempt, employees covered by the Act must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. The DOL updates and revises the regulations issued under section 13(a)(1) of the FLSA, including setting a minimum standard for the threshold under which employers who work more than 40 hours per week must be paid overtime. The timing of proposing and implementing adjustments differs from administration to administration.  In addition, states may set higher levels if they choose, and currently six states do so. Importantly, teachers are always considered exempt no matter their pay level.  Other aspects of the regulations affect the types of positions that are also exempt and those that are not.

The current salary threshold for exemption from overtime is $35,568.  The Biden Administration has proposed raising this level to $55,068. While the current DOL proposal does not reflect a salary threshold increase to $82,000 backed by organized labor groups, the proposal represents a 55% increase just three years after the last increase went into effect.  In addition, the proposed automatic adjustments every three years would be based on a formula using the 35th percentile of salaried workers in the south.  Considering only “salaried workers” at the new threshold level could result in significant increases every three years and could cause the final rule to actually be closer to $60,000 than $55,000 when it comes out.

The current DOL proposal does not include a repeal of the exclusion for teaching.  This means that campus employees who provide instruction, and who have previously not been subject to the overtime salary threshold, will remain excluded.  The repeal of this exclusion was backed by several labor groups.
 

Background

During the Obama Administration, the White House, for the first time in ten years, 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, was never implemented having been struck down by a U.S. District Court in Texas near the end of President Obama's term in office.

The DOL under the Trump Administration also proposed to raise the salary threshold.  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.  The current threshold of $35,568 went into effect on January 1, 2020.
 

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 Biden Administration’s proposal will be extremely problematic for many private, nonprofit colleges and universities, particularly smaller institutions and those in regions with lower costs of living.  While a few states have state salary thresholds at or above the federal proposed level, the three-year automatic adjustments could also become problematic for those states in the not-too-distant future. It is  unclear when a final rule will be published or go into effect.

  • Assess how an overtime threshold of $55,000 or $60,000 would affect your institution.
  • Submit comments to the DOL by November 7, 2023 (please also send a copy of your comments to Karin Johns at NAICU at Karin@NAICU.edu) 
  • CUPA-HR resource page on the overtime rule specific to the concerns of colleges and universities. 
  • NAICU's former 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.  This information may still be useful to institutions. 
  • Partnership to Protect Workplace Opportunity

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