Effective December 1, 2016, “white collar” salaried employees not otherwise exempted from the overtime rules in the Fair Labor Standards Act (FLSA) will be eligible for overtime pay if their annual salary is less than $47,476. President Obama asked the Department of Labor to revise the exemption threshold of the FLSA from the current level of $23,660, which has not changed for more than a decade. The new amount more than doubles the current salary threshold.
Broad exemptions from FLSA overtime rules exist for executive, administrative, professional, outside sales, and computer employees. These exemptions are based on specific job duties as well as salary thresholds. In other words, an employee might have the duties of an administrator but not be exempt from overtime rules because her salary does not exceed the income threshold.
When this new rule takes effect, employers will have several options for employees who will no longer be exempt from the FLSA overtime rules:
- Pay time-and-a-half for overtime (granting compensatory time may be an option created through collective bargaining)
- Increase salaries above the threshold via regular pay or bonus pay with certain restrictions
- Limit workers’ hours to 40 per week
- Decrease base hourly pay to offset any increased overtime costs
- Combine any of the above options
What This Means to Your School District
Common positions of concern in school districts include technology directors, food service supervisors, maintenance supervisors, and transportation supervisors. Even though these positions might previously have qualified for the administrative exemption, with the increased salary threshold many will no longer be exempt after the revised rules go into effect. The FLSA provides a special exemption from the professional employee salary threshold for teachers. Even if a teacher does not meet the new $47,476 threshold – and many will not – the rules still exempt them from overtime. A similar special rule applies to “academic administrative employees” as long as they are paid at least base teacher pay.
School districts may potentially have professional employees who do not neatly fit into the “teacher” and “academic administrative employee” categories. Ennis Britton attorneys are able to assist districts in identifying such employees and exploring how the new rules affect them.
School districts must track eligible employees’ hours and pay overtime as appropriate. Districts should maintain proper payroll records and require that employees submit time records. The burden is on employers to ensure FLSA compliance. Laws limiting salary reductions for school employees must be considered when planning for the new rules. Ennis Britton attorneys are available to help with any questions regarding these changes, such as which employees are affected by this change, how to maintain payroll records, and how job descriptions and the duties test apply.