The U.S. Department of Labor (DOL) released the highly anticipated final regulations for the white collar exemption 
to the federal overtime pay requirements under the Fair Labor Standards Act (FLSA) on May 18, 2016.
What Is The New FLSA Overtime Rule?
- The rule extends overtime protections to 4.2 million workers who are not currently eligible under federal law.
- Workers who earn as much as $47,476 a year ($913 a week) will have to be paid overtime, even if they’re classified as a manager or professional.
- The Department of Labor will increase the salary threshold every three years. Based on current projections, the salary threshold is expected to rise to more than $51,000 with its first update on January 1, 2020.
- Employers must comply with the new regulations by December 1, 2016.
Proposed Changes
Under the new rules, the minimum salary limit would increase from $23,660 per year ($455 per week) to $50,440 ($970 per week) in 2016. The current “highly compensated employee” exemption would increase from $100,000 to $122,148 per year. According to the DOL, as many as five million American workers who are currently exempt could become eligible for overtime protection.
For higher education institutions, the changes will require paying close attention to the classification of employees, hours worked, assigned job duties, how time is tracked, and how compensation is paid. It’s anticipated that employers will have 60 days to comply with the new regulations. Otherwise, they may be subject to fines and penalties.
One of the first steps educational organizations should take is to conduct an audit of their current employees’ statuses. Determine which positions are considered exempt and who may become non-exempt. Evaluate this through the lens of current compensation, as well as the duties test (e.g., employees must be in administrative, professional or executive positions). Pay special attention to employees who are currently exempt but may soon be eligible for overtime under the new rules. Build financial projections based on previous time worked to better understand the total financial impact.
For more on the new FLSA overtime rules and its impact on institutions of higher education, join expert speaker Erin E. Dolly in a Live Webinar on Thu, July 21, 2016. During the webinar, Erin will discuss the new FSLA rule in detail and create an institutional action plan for evaluating an institution’s current practices and assist in transitioning to the requirements of the final FLSA overtime rules.
