On the same day that the U.S. Department of Labor (DOL) announced its Final Rule revising the salary requirements for the “white collar” exemptions from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime requirements,1 it released supplemental guidance for non-profits, state and local governments, and institutions of higher education.
Colleges and universities are unique employers because of the number and variety of workers on campus. The DOL opines that the final rule may not impact many of the workers employed by academic institutions because special exemptions for educators and academic administrators are not affected by the new rule.
First, the salary level and salary basis tests for the white collar exemptions do not apply to teachers whose primary duty is teaching in an educational establishment. Accordingly, the increased salary requirements2 will not apply to many professors, instructors, and adjunct instructors in higher education. Further, to the extent that an athletic coach’s primary duty is teaching, the increased salary minimum will not apply to the coach.
Second, academic administrative employees whose primary duty involves administrative functions directly related to academic instruction or training are subject to a special exemption with a modified minimum salary requirement. To qualify for the exemption, academic administrators must be paid on a salary basis that is at least equal to the entrance salary for teachers at the same institution, or be paid not less than the minimum salary level. Examples of positions that might qualify for the academic administrator exemption include department heads and academic counselors.
On the other hand, there are numerous positions that will be affected by the new rule. For example, the increased salary requirement will apply to the learned professional exemption. This exemption may cover certified public accountants, certified athletic trainers, librarians and postdoctoral fellows.3 The new salary minimum also applies to the administrative exemption, which may cover positions such as admissions counselors and student financial aid officers. In order to maintain the exemption for these workers, schools will have to ensure that their salaries meet the new minimum. Otherwise, the exemption will be lost, and the employees are entitled to overtime pay.
So does this mean that schools will have to install timeclocks in their labs, libraries and weight rooms? No. The DOL has made it very clear that employers may use any method they choose for recording hours worked so long as the record is complete and accurate. An employer and employee who works on a fixed schedule may even agree to a default schedule that reflects daily and weekly hours, and simply indicate that the employee followed the agreed-upon schedule. In that case, the employer would only be required to record the number of hours worked each day when the employee deviates from the set schedule. Furthermore, schools can continue to pay workers on a salary basis, even if the workers are no longer exempt from overtime requirements.
The DOL maintains that there are many options for compliance with the new rule. For example, schools may:
- raise salaries to meet the new threshold;
- pay overtime;
- redistribute workloads for employees who will lose the exemption to ensure that the employees’ weekly tasks can be completed in 40 hours or less;
- adjust employees’ schedules so that hours at work best match expected workload;
- adjust wage rates to account for anticipated overtime; or,
- for public institutions that qualify as public agencies under the FLSA, award compensatory time off in lieu of overtime pay.
Like other employers, colleges and universities need to identify positions that will be affected by the new minimum salary requirements and make adjustments where necessary. In conjunction with this process, job descriptions should be carefully reviewed and updated. Some institutions have elected to audit all positions in order to ensure continued pay equity and to avoid salary compression as some exempt employees’ salaries are raised solely to comply with the new minimum. Strategy for communicating with the campus community regarding the changes in job structure and classification will be an important component of each school’s implementation plan.
Our attorneys are experienced in all aspects of FLSA compliance, and we are ready to answer your questions and assist with employment audits. Contact Wyatt’s Education Law Team for additional information.
1 Our blog post about the Final Rule is available here.
2 Effective December 1, 2016, the minimum salary threshold for the white collar exemptions will increase to $913 per week ($47, 476 per year).
3 The National Institutes of Health (NIH) has announced that it will increase the amount of grant money it awards to postdoctoral researchers to levels that meet or exceed the DOL’s new minimum salary threshold.