FLSA Final Rule Changes Salary Threshold

FLSA Final Rule Changes Salary Threshold

In April 2024, The Department of Labor (DOL) announced a Final Rule increasing the threshold level salary minimum for the “salary test”.  (See the DOL document entitled Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees).

Generally, under the FLSA, employees are exempt from minimum wage and overtime protections if they are employed in an executive, administrative, or professional capacity (EAP) and meet three tests set out by the department which include payment of a specified weekly salary level and performing executive, administrative, or professional duties.

The new rule takes effect on July 1, 2024. On that date, the new salary amount threshold for a nonteaching, salaried supervisor or administrator increases to $844 week/$43,888 annual salary (up from $684 week/$35,568/annual salary.)

Then, in January 2025, the method used to calculate the salary will change again- and the amounts will increase a second time to $1,128week/ $58,656 annual salary.  After that, the salary threshold will be raised every three years after July 1, 2027. 

Whether an employee can be exempted from the payment of overtime by meeting the EAP exception depends upon meeting the “salary and duties tests” set out by the Department of Labor in the law. 

To be eligible for the exemption, the employee 1.) must earn a fixed salary, 2.) that salary is at least equal to the amount in the Final Rule, and 3.) that the employee performs functions that meet the executive, administrative, or professional duties as defined by the DOL. 

The salary amount will increase twice- on July 1, 2024, and then again in January 2025.  Due to that increase, some nonteaching administrative employees’ salaries may likely be lower than the new salary threshold amount. 

The “duties” part of the test must then be applied to the employee’s job duties to determine whether a nonteaching administrator/supervisor is exempt from overtime requirements.

Administrative employees will meet the duties test if they primarily perform office or non-manual work directly related to the operations of the school district.  Their duties must involve the exercise of discretion and independent judgment on matters of significance.

Executive employees are also eligible for the exemption. To meet the “duties test” for these employees means that their primary duty must be managing a particular department or division of school operations.  They must regularly direct the work of at least two full-time (or their equivalent) employees and must have the authority to hire and fire, or have their recommendations for promotion, termination, hiring, or other actions given particular weight.

Teachers are specifically exempt from the FLSA overtime rules as professionals, so this rule change will not affect certificated administrators. 

For highly compensated employees subject to the FLSA, the salary threshold is going up to $132,964 on July 1, 2024, and then up to $151.164.  It is likely some employees formerly covered by this exception may no longer meet the salary threshold.   Even if those employees still meet the requirements for exemption under the highly compensated employee test, the salary threshold to be eligible for the exemption must be met.  If this is no longer the case due to the increases planned to the salary threshold, it is well possible these employees could qualify using the EAP exception. 

Actions to take now:

Survey the salaries of nonteaching administrative employees to determine if any might fall below the new salary thresholds.  Employees that may be affected by this change include supervisors and directors such as technology directors, transportation and cafeteria supervisors, facilities managers, and other similar positions.

If the new salary threshold exceeds a nonteaching administrative employee’s current annual salary, school districts may need to adjust upwards or recognize these employees are eligible for overtime pay.  This means the employees would need to keep track of their time.  Consult with Ennis Britton to review specific situations. 















































































































































































































































































































































































































































































































































































































































































COVID-19 Update: Unemployment Coverage for Public Entities

Many public employers are considering staffing adjustments in light of the coronavirus and its impact on available work. For those employees not covered under contracts that must be paid in the case of an “epidemic or other public calamity” pursuant to RC 3319.08(B) and 3319.081(G), layoffs are being contemplated. In order to have all the information on the financial impact of such a decision, the public employer should consider whether it is a “contributory employer” or a “reimbursing employer.” 

Generally speaking, public employers are reimbursing employers. Essentially, reimbursing employers are self-insured and will be billed dollar-for-dollar by the Ohio Department of Jobs and Family Services for claims paid.   Public entity employers who have elected to become a contributory employer have paid unemployment tax. Contributory employers will have their claims mutualized with other employers in the state and will not have to reimburse on a dollar-for-dollar basis. Determining if the public entity is a contributory employer or a reimbursing employer will be necessary to determine how much will be saved via staffing reductions.

The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) provides that reimbursing employers may be reimbursed for one-half of the amounts paid into a state unemployment trust fund between March 13, 2020, and December 31, 2020.

If you have any questions regarding unemployment compensation issues, please reach out to any of the Ennis Britton lawyers.

UPDATE – Legislators Grapple with EdChoice Program Expansion Amendments

Efforts to curb the impact of EdChoice accelerated towards the end of January as legislators in the Senate and House searched for ways to reduce the negative financial impact that the program is anticipated to have on Ohio’s public schools starting next year. Legislators and the governor approved language in last year’s budget bill which was designed to dramatically increase the number of students eligible for the scholarships by more than doubling the number of eligible buildings. Prior to the program expansion, EdChoice was available in 31 school districts and 255 schools. After the expansion, EdChoice eligibility would have extended to at least 426 school districts and 1,227 schools. 

Lobbying efforts and contacts from districts to their legislators and to House and Senate committee members to reduce the impact of the changes resulted in the last-minute action to delay implementation of the changes. The 2020-2021 application window for EdChoice would have opened on February 1st, of this year; now, the program application is delayed to April 1st.  The House and Senate are expected to review the EdChoice program expansion in the next two months and hopefully will develop amendments to the budget expansion which will better support Ohio’s public school system.

The House initially proposed changes to EdChoice through HB 9. With a deadline of February 1st (the start of the applications of EdChoice scholarships) looming, the Senate passed alternative language late in the evening on January 29th. The Senate’s plan would have reduced the number of school buildings eligible under the traditional EdChoice program, but would also have increased the number of families eligible for the EdChoice expansion program by changing eligibility from 200% to 300% of the federal poverty guidelines for the income-based vouchers. 

The bill was sent back to the House, which rejected the changes, and a conference committee convened. The House elected instead to pass House Bill 120, including language delaying the EdChoice application window until April 1st. HB 120 also contained separate provisions that authorize the auditor’s office to conduct performance audits of all state institutions of higher education and also modified requirements for College Credit Plus informational sessions. The bill included an appropriation of $10 million to help fund the EdChoice program. The Senate passed HB 120 on January 31st and the governor signed the bill the same day. The bill is considered an emergency measure and is effective immediately. This move buys the legislature more time to develop a plan that both houses are willing to pass.

February 3rd, 2020 Update: A group of families and private schools filed a lawsuit in the Ohio Supreme Court challenging House Bill 120 changes to EdChoice. The lawsuit alleges that the legislature failed to properly execute an emergency measure and therefore HB 120 should not go into effect for 90 days. The parties also claim that the HB 120 application delay will cause irreparable harm to new EdChoice eligible students who planned to apply for the scholarship. If successful, the state may be forced to accept applications starting February 1st.

We will keep you posted on developments. The education associations have sent out multiple calls of action on the bills and you are encouraged to continue to stay apprised of developments and let your legislators know how the expansion would affect your district. 

Ohio’s School Funding System

A complaint challenging the constitutionality of Ohio’s school funding system was filed in the Perry County Court of Common Pleas in 1991. The plaintiffs alleged that vast disparities and shortfalls in per pupil funding, among other concerns, meant the State of Ohio was failing in its Constitutional obligation to ensure that there is a “thorough and efficient system” of public schools throughout the state. In his 1994 decision in the DeRolph case, Judge Lewis agreed.

Over the course of the next decade there were several more court rulings, including several rulings by the Ohio Supreme Court finding the system to be unconstitutional. While some changes in funding occurred during that time, including the creation of the Ohio School Facilities Commission (now Ohio Facilities Construction Commission) and the funding of billions of dollars of new and renovated school facilities, the underlying per pupil funding system remains largely unchanged.

Over the course of the past year Representative Bob Cupp and John Patterson convened workgroups of stakeholders throughout the state and developed a new school funding plan. This plan was introduced as House Bill 305 in the Ohio House on June 26, 2019. The bill was referred to the Finance Committee and hearings have taken place over the past two months with testimony from legislators and educators from across the state.

Recently, stakeholders and legislators have raised concerns about whether HB 305 does enough to address and fund the needs of impoverished students. Witnesses testified before the Finance Committee citing several studies showing that the cost of educating an impoverished child is about 30% higher than non-disadvantaged students. This indicated that additional funding ranging from $85 million to $350 million may be required on top of the current estimate of $1.5 billion per year of increased funding under HB 305.

Following that testimony, House Speaker Larry Householder stated that “we need to do something about those economically disadvantaged students. Maybe we need to find a new way, that I don’t know what it is yet, of funding our schools.” Speaker Householder raised the possibility of imposing a uniform tax “effort” across the state, meaning a comparable property tax rate in all districts, and pooling the funding at a state level for redistribution based on need. He offered this as a way to address inequities arising from widely varying per pupil property tax valuation across the state. Speaker Householder also raised the possibility of putting a new funding plan before Ohio’s voters next year.

Because HB 305 already has bipartisan and majority sponsorship in the House, many see this as the most viable proposal to alter school funding since DeRolph was filed. Now is the time for interested parties to provide input and raise concerns with their legislators. Any Ennis Britton attorney can discuss HB 305 and its implications with interested parties. Hollie Reedy, an attorney in our Columbus office, is a registered lobbyist and can provide support for representatives of client districts and entities that may wish to provide testimony on HB 305. Legislators should hear your district’s story; bringing the real numbers and local challenges in your district helps them understand how the complicated formula and system is (or is not) working for you.

Arming School Personnel

The Ohio Attorney General’s Office recently released an opinion in response to a request for legal advice on the issue of arming school staff. The letter requested, among other things, an analysis on how the training requirements under R.C. 109.78(D) apply to school employees authorized by the board of education to carry or possess a deadly weapon on school property under R.C. 2923.122(A).

R.C. 109.78(D) in full provides:

“(D) No public or private educational institution or superintendent of the State Highway Patrol shall employ a special police officer, security guard, or other position in which such person goes armed while on duty, who has not received a certificate of having satisfactorily completed an approved basic police officer training program, unless the person has completed twenty years of active duty as a police officer.”

As noted, R.C. 2923.122(A) prohibits any person from knowingly conveying, or attempting to convey, a deadly weapon into a school safety zone. However, there is a specific exception set out in R.C. 2923.122(D)(1)(a) which excludes any other person from this prohibition:

“who has written authorization from the board of education or governing body of a school to convey deadly weapons… in a school safety zone or to possess a deadly weapon… in a school safety zone and who convey or possesses the deadly weapon… in accordance with that authorization.”

The letter sought advice on whether or not a school employee who has been authorized to carry a deadly weapon by the board of education under R.C. 2923.122(D)(1)(a) is subject to the training requirements of R.C. 109.78(D). The Attorney General’s Office reiterated their argument laid out in their amicus brief in the appeal of Gabbard v. Madison Local School Dist. Bd. of Edn. The court in that case concluded that school employees authorized by the board of education to carry firearms on school premises were not subject to the training requirements of R.C. 109.78(D) because they were not employed by the district in a security capacity. The Attorney General’s Office agreed and opined that in order to determine which provision outlined above is applicable to an employee hired by a school district, we must analyze whether the individual is employed in a role comparable to that of a security guard or police officer. In doing so, we must look to the person’s job title along with the duties and responsibilities assigned to them.

If an employee is hired by the district in a security capacity, then they are subject to the training requirements expressed in R.C. 109.78(D). (I.e. approved basic training police program, or twenty years active duty of a police officer). However, any other employee hired by a school district who does not serve in such a role, i.e. teacher, principal, custodian, and who is authorized by the board to carry or possess a firearm under R.C. 2923.122(D)(1)(a), is not subject to the training requirements of R.C. 109.78(D).

Federal Procurement Spring Survival Guide

As of this fiscal year, all school districts that purchase goods or services with federal grant funds must comply with new federal regulations that were adopted a few years back. This is an important issue for schools to consider as they enter into contracts this spring to obtain federally funded goods and services.

By way of background, in 2013 the U.S. Office of Management and Budget (“OMB”) published the Uniform Guidelines requiring states and non-federal agencies to follow and adopt procedures and policies for purchasing goods and services with federal grant funds. The Uniform Guidelines became effective in 2014. However, the OMB granted a series of grace periods that delayed implementation of the new rules. The most recent grace period expired in December 2017 and therefore the rules became effective at the expiration of each entity’s fiscal year that occurred after that date.

For most Ohio schools, the new rules took effect July 1, 2018. This means that auditors will begin to audit districts on those procedures this school year. Some districts may have been audited this past year if the district adopted new policies and procedures before the expiration of the last grace period and failed to indicate in writing that they planned to take advantage of the final grace period. It is also important to note that the standards set out in the Uniform Guidance will not apply to contracts that were executed prior to the effective date of the rules.

The Uniform Guidance requires non-federal entities to use one of five specific purchasing methods for all nonpayroll purchases. 2 C.F.R. §200.371-318. The five procurement methods included in the Uniform Guidance are as follows:

  1. Micro Purchase Method – for purchases with an aggregate dollar amount that does not exceed the Micro Purchase Threshold, which is currently set at $10,000 (note that districts may set a lower threshold in board policy). Under this method, a district must consider costs, but is not required to solicit competitive quotes. To the extent practicable, the district must distribute micro-purchases equitably among qualified suppliers.
  2. Small Purchase Method – for purchases that do not exceed the Simplified Acquisition Threshold, which is currently set at $250,000 (note that districts may set a lower threshold in board policy). Here, an agency must obtain price quotations from an “adequate number of qualified suppliers.” The entity’s policy should define the number of quotes they believe to be adequate.
  3. Sealed Bid Method – for purchases that exceed the small purchase threshold where bids are publicly solicited and a firm fixed price contract is awarded to the responsible bidder who confirms all the terms and conditions of the invitation and has the lowest price. School districts will likely not use this method very frequently.
  4. Competitive Proposals – for purchases that exceed the small purchase threshold with more than one source submitting an offer for a fixed price or cost-reimbursement type contract. This method should be used when the Sealed Bid Method is not appropriate. The district is to evaluate the bidders on cost and other factors it has established in order to select the most qualified candidate.
  5. Noncompetitive Proposals – for purchases through a non-competitive solicitation under one of the following conditions:
  • The item is available only from a single source;
  • The public exigency or emergency for the requirement will not permit a delay in purchase;
  • The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-federal agency or;
  • After solicitation of a number of sources, competition is determined to be inadequate.

A school district’s compliance with the Uniform Guidance will be subject to audit each year. The state auditor’s office has stressed that it is critical for school districts to maintain documentation to demonstrate that it has complied with the regulations set forth in the Uniform Guidance. This documentation should illustrate why a particular method was selected and how the district went about purchasing in accordance with their policies and guidelines. School districts should also be aware that a decision to use noncompetitive proposals may trigger stricter scrutiny and review than purchases made with other methods.

It is also important to note that there have been many questions about how the new regulations impact service contracts with Educational Service Centers (“ESCs”) in particular. Many services obtained through ESC contracts are paid for at least in part with federal funds. Two separate statues, R.C. §§3313.843 and 3313.845, define what types of contractual relationships that districts may have with ESCs. State law also specifically requires most districts to have a contract and be affiliated with an ESC if they have a student population at or below sixteen thousand. Unfortunately, this statutory structure does not fit neatly into the new Uniform Guidance, and it is unclear at this time whether school districts may use noncompetitive proposals, specifically through sole source, to procure federally funded services through ESCs. The Ohio Department of Education plans to publish additional guidance about how it believes the new procurement regulations apply to ESC contracts. The guidance is expected in the near future. In the meantime, contact legal counsel if you have questions about which method of procurement you should use for these and any other types of federally funded contracts.

What this means for your district
Districts should carefully review board policies and guidelines that pertain to federal procurement with staff who may be responsible for obtaining goods and services with federal grant funds. They should carefully consider how purchasing will be documented in anticipation of an audit. Districts should also review the terms adopted in policies and procedures with their policy providers to make sure that the policies are up to date.

Legal References: 2 C.F.R. Part 200, R.C. 3313.843, R.C. 3313.845