The long-anticipated changes to the Fair Labor Standards Act (FLSA)
regulations were released today. If you need help falling asleep tonight, you
can access all 508 pages of the final rule here.
The FLSA has always required that employees treated as exempt from
the overtime rules: (1) be paid on a minimum weekly amount, (2) on a
salary basis, and (3) perform exempt duties. The regulations (thankfully!)
did not make changes to the duties tests for executive, administrative and
professional employees. These are the primary classifications of exempt
employees used by schools. However, as promised, the weekly salary
minimum did increase. Here are the highlights:
Weekly salary minimum raised from $455/week ($23,660/year) to
$913/week ($47,476/year). Note that the regulations specifically
exclude teachers, administrators, and some other certificate holders
from the minimum salary requirement. Many schools have asked if
this will require an increase to the district’s base salary for teaching
staff. The short answer for the vast majority of schools is “no.” For
the most part, the new rules will apply to non-teaching employees that
schools have treated as exempt in the past (e.g. head custodian,
transportation director, head secretary, etc.) In order to avoid the
recordkeeping and overtime requirements for exempt employees for
any particular workweek, the employee must receive at least $913 per
week in gross wages.
The new regulations are effective December 1, 2016. This will
provide schools with some time prior to the new salary minimum going
into effect.
The weekly salary minimum for exempt employees will be raised
every three years. This is different than the proposed regulations,
which considered raising the weekly salary minimum every year. This
outcome is better for schools which most often contract on a yearly
basis with classified staff members who may be exempt. The
increases will become effective on the first day of the applicable year,
with the first automatic update taking effect on January 1, 2020. The
Department must publish the updated rates at least 150 days before
they go into effect. This means you’ll be considering your options
again prior to finalizing 2019-2020 contracts.
The Department of Labor (DOL) also issued a guidance document for
“State and Local Governments” which describes the regulatory changes and
the methods available to those entities for complying with the new rule. You
can access that document here, but in sum, it lays out generally the options
we’ve been discussing with KSB clients for several months now. Here is the
DOL’s list of options for schools and other local governments to comply with
the new rules:
Raise salaries: to the new minimum threshold;
Pay overtime above a salary: this is the fluctuating
workweek/variable wage rate method we’ve discussed at presentations
and with many clients;
Evaluate and realign employee workload; and
Utilize compensatory time off (aka, “comp time”).
Generally, boards and administrators fall into two camps. Some have
elected to set up employment agreements for the entire 2016-17 school
year in light of these new rules, either increasing salaries or converting
employees to hourly earners entitled to overtime beginning right away.
Others will wait to make changes until the December 1, 2016 deadline is
closer and may make contract revisions effective for that date. In either
case, we recommend that administrators and boards begin or continue
discussions regarding these new rules. Some of the strategies for
compliance may require changes to employment agreements, policies, and
handbooks, so keep those things in mind as you work on implementing
these new rules for your district.
If you have questions or concerns about your board’s options, we
recommend that you consult with your school district’s attorney or call
Karen, Steve, or Bobby.