Be Prepared for New Overtime Rules

Whether the final regulations are released tomorrow, next week or any time thereafter, rest assured that they WILL impact your school's administrative staff. Once they are issued, every indication is that your school will have 60 days to comply with them.

In a nutshell, the implications for your school are that employees who previously have not been eligible for overtime pay may become eligible to receive one and a half times their "regular rate of pay" if they work more than 40 hours in a workweek.

Here's a more detailed look at how the revised regulations will work.

Currently under the FLSA, the minimum salary level for a worker to be exempt from overtime pay is $455 a week ($23,660 for a full-year worker). The new regulations are expected to raise the minimum salary level to $970/week ($50,660 for a full-year worker) and then regularly raise the salary benchmark so that it continuously reflects the 40th percentile of salaried workers nationwide. While there have been reports that DOL may set that salary level closer to $47,000 a year, we will have to wait and see what the final rules state. Either way, many more employees will be eligible for overtime pay simply because they are not paid the minimum salary amount.

In addition, the new regulations will raise the minimum salary for "highly compensated employees" who routinely engage in exempt duties from $100,000 a year to $122,148 a year, also subject to regular increases. There may also be some changes to the job duties criteria for exempt employees, although no such changes were included in the proposed rules.

Based on the proposed changes, independent schools have been forced to review their exempt classifications and, in many cases, prepare to reclassify positions from exempt to non-exempt. Among positions within independent schools that are most likely to be impacted are those in the business office, admissions office, IT department and advancement office.

From a practical standpoint, employees who previously had the flexibility to work more than 40 hours a week without closely recording their hours may now have to track their hours (and duty-free breaks), and, further, may be restricted in their ability to work at home or after hours. In addition, employees who work more than one job, travel for work or work on weekends will be eligible for overtime pay if reclassified as nonexempt. This could have a significant impact not only on school budgets, but also on school cultures and the morale of affected employees.

While the impact of these rules on independent schools cannot be overstated, it is important to note that there are two exceptions to the minimum salary level requirement for educational establishments.

• First, teachers are exempt under the professional exemption, even if they are paid less than the minimum salary level and not paid on a salary basis.
• Second, employees who meet the criteria of the education administrative exemption are exempt from overtime pay if they are paid at least the salary of a new, incoming teacher at the school. To meet this exemption, employees must perform functions "directly related to the academic instruction or training in an educational establishment or one of its departments of subdivisions." For most independent schools, these positions include department heads, learning specialists, college counselors, curriculum developers and other roles.

NBOA has been closely monitoring the proposed changes to FLSA overtime rules since they were first issued last summer. We teamed up with NAIS to conduct a joint survey of the potential impact of the changes on independent schools, and submitted our collective comments and concerns to the DOL based on survey results. In addition, NBOA has delivered webinars and developed resources for member schools to help them prepare for the changes and better comply with wage and hour laws. You can find these resources and more in the NBOA HR Toolkit:

1. New Wage and Hour Guidelines and How They Impact Independent Schools
2. NAIS Legal Advisory
3. FLSA Proposed Regulations: What Independent Schools Can Do Now to Prepare
4. FLSA Overview
5. NBOA and NAIS Joint Comments to the DOL
6. A Higher Salary Threshold for Overtime Eligibility? Independent Schools Just Say No
7. Sleeping on the Job? (...and Other Compensable Time Questions)

We will post an announcement in NBOA Connect as soon as the final rules are issued. If you have any questions, please use these resources developed especially for independent schools. You may also contact Grace Lee, Vice President, Legal Affairs at grace.lee@nboa.org.

As always, NBOA is here to help.

From Bottomline, May 17, 2016.