In a joint response submitted to the U.S. Department of Labor, NBOA and NAIS cited examples of independent schools adjusting many employees' salaries and schedules — sometimes at the cost of time and resources that could have spent elsewhere — in anticipation of a proposed overtime rule that was shot down before it took effect. The organizations submitted their response on September 25 on behalf of their collective member schools all over the U.S.
To briefly recap the sequence of events:
In July 2015, the Department of Labor under President Obama proposed new Fair Labor Standards Act regulations that would more than double the salary threshold for exempt employees. Despite widespread employer concern about the higher threshold, including among many independent schools, in May 2016 DOL issued a final rule that would raise the salary level for exempt employees to $47,476/year for full-year employees. The rule was to take effect December 1, 2016, but it was blocked on November 22, shortly after the presidential election. Most recently, on August 31, 2017, a federal judge in Texas dealt what was likely the fatal blow to the rule — but that was after DOL had issued a "request for information" seeking a variety of public input on the rule, including the extent to which employers had adjusted salaries and/or classifications in anticipation of it.
On August 17, NAIS and NBOA asked schools to respond to a survey to inform their response to the RFI. Here are some takeaways of the survey's 369 responses, as summarized in the joint letter the organizations submitted September 25. The full response is also attached.
- 49 percent of school respondents had made salary or hour adjustments in anticipation of the rule. 63 percent of those kept the changes in place even after the rule was put on hold.
- 42 percent said the changes they had put in place affected two or three employees. 76 percent said the changes had only a small impact on their school’s financial well-being.
- 55 percent converted employees who did not meet the higher salary level to non-exempt and limited hours to 40 in a workweek where possible.
- 55 percent increased the salary of exempt employees to the new salary level so employees could remain exempt.
Some schools felt the impact of the proposed changes acutely, NBOA and NAIS reported. For instance, one small school with just 30 employees incurred an unbudgeted additional salary impact of $20,000, even though only two staff members were affected. Another school described the additional salary burden as "a challenge for a small school mid-year and meant redirecting resources that could have been spent more on student experience."
Many schools also reported a negative impact on morale in some cases when employees went from being exempt to non-exempt. Some of these employees felt less professional, the schools reported, and as though they had been demoted when they had to start "counting time" (tracking hours). Others noted issues unique to schools, such as how they would handle volunteers and staff involvement on overnight field trips, coaching and after-school activities.
NBOA and NAIS concluded their response with a recommendation "that nonprofits have a separate minimum salary level, so that employees should be compensated fairly and the unique constraints faced by nonprofits can be recognized in wage and hour law."
The joint comments, along with others submitted in response to the RFI, will be posted on Regulations.gov after DOL has reviewed them.
NAIS_NBOA_Request_for_Information_Comments_9_25.pdf
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