Every industry has specific payroll requirements and regulations it must abide by. The education field is no different, especially concerning universities.
With the recent alteration to the overtime regulation within the Fair Labor and Standards Act, this sector faces changes they need to follow to avoid noncompliance penalties. PTM has a closer look at the specifics of this ruling and how it will impact many higher education organizations.
The final rule
In May 2016, President Obama signed the U.S. Department of Labor’s final rule for the FLSA's overtime regulation into law. The mandate will nearly double the salary threshold for white-collar employees exempt from receiving additional compensation for working more than 40 hours per week. Starting Dec. 1, 2016, people who make more than $913 per week, or $47,476 per year, are not eligible for overtime pay. Additionally, the final rule calls for highly compensated employees earning $134,004 or more annually to take a minimal duties test to decide whether they qualify for extra compensation.
“Bona fide teachers are unaffected by the FLSA’s overtime mandate.”
Certain parties are unaffected by the change
The FLSA includes a number of provisions related to employees of educational institutions. Although there are some exceptions, many of these regulations make these workers ineligible for additional compensation even if they earn above the salary limit or not. This means the new ruling won’t affect them.
To begin, the law considers bona fide teachers those whose primary duty is teaching, tutoring, instructing or lecturing as a means of imparting knowledge and is employed in this capacity by an educational establishment. Under the FLSA, the salary level and compensation basis requirements do not apply to this group of educators and will not affect them. As a result, bona fide teachers, including professors, teachers of skilled and semi-skilled trades and occupations and adjunct instructors, will be exempt from receiving extra pay.
Graduate and undergraduate students who are in an educational relationship with a school and engaged in research under a faculty member’s supervision are not eligible for overtime pay. Furthermore, those students who assist with teaching responsibilities or act as resident advisors to receive tuition credit or reduced room and board expenses are also exempt from the FLSA’s final rule. Coaches or assistants whose primary task is instructing athletes for better sports performance do not qualify, while employees who spend their time recruiting or performing manual labor have the possibility to be eligible for additional compensation.
Lastly, administrative personnel – such as academic counselors, advisors and department heads – working for educational institutions must meet a special salary threshold to be considered exempt. They are not eligible for extra pay if they’re compensated at least as much as the entrance salary for teachers at the organization in question.
Higher-ed workers facing changes
While bona fide teachers, coaches, graduate and undergraduate students and administrative personnel won’t feel the effects of the FLSA’s new overtime ruling, there are other educational employees who will witness a change.
Postdoctoral researchers in science and humanities fields are two such examples. Since the latter are not covered under the teaching exemption, they are grouped into the professional employee category. As a result, these workers must meet the salary threshold to be exempt from overtime pay. People working in humanities sector, on the other hand, often teach in addition to their research obligations. Those who teach as a primary duty will fall under the teaching exemption – meaning the rule won’t affect them, as they weren’t eligible for overtime in the first place. Humanities employees who don’t instruct and earn less than the salary threshold will qualify for extra compensation.
Non-academic administrative employees and other salaried workers – including food services or security managers or supervisors – who earn less than the pay limit and work more than 40 hours per week are eligible for overtime.
Next steps for educational institutions
Although there is action being taken against the DOL’s ruling and the effective date of the regulation right now, according to The Washington Post, higher education leaders – similar to business executives – need to prepare for the change.
There are multiple steps these parties can take to get ready for the alteration ahead, according to Entrepreneur. Human resources and payroll teams should assess the number of employees eligible for overtime compensation and how that will affect the organization’s budget in the long run. Higher-ed establishments have the option to raise salaries to avoid paying additional wages and alter workload distribution so people won’t need to work more hours. This could mean hiring more employees or continue to pay qualified workers the overtime they’re owed. Ultimately, the action employers take is of their own discretion and ability.
It’s important for educational institutions to comprehend and comply with as well as educate their personnel about the FLSA’s new overtime ruling. Clear communication will ensure both parties are prepared come Dec. 1.
PTM can help educational institutions with all their payroll needs. From figuring out overtime compliance to controlling your payroll budget and much more, higher-ed organizations have a true partner in PTM.