Evaluating Positions for the New Overtime Rule
With potentially hundreds of positions likely to be affected if DOL’s proposed overtime rule becomes reality, you may be wondering where or how to even begin evaluating positions on your campus. Following are some considerations for evaluating position classifications to ensure compliance.
1) Review positions that are below the new salary threshold ($47,476) and determine which ones, if any, your institution might want to adjust to the new threshold, so that those positions can remain exempt. This exercise would be particularly useful for positions that are already fairly close (within a few thousand dollars) to the new threshold.
2) If your institution chooses not to move these employees to the new threshold, you’ll need to convert them to an hourly equivalent (typically the annualized salary divided by 2080) and make them FLSA non-exempt. If an employee never works above 40 hours a week, this approach will not cost the institution any additional money. Work that exceeds 40 hours a week, however, would need to be compensated at time-and-a-half. The institution may also want to calculate the resulting overtime cost if all of the “switched to non-exempt” employees were to work 41 hours every week, rather than 40 (or 10 times that if the employees were to regularly work 50 hours rather than 40).
3) Once it is decided which positions will be raised to the new threshold, you then need to consider the collateral impact on internal salary equity against similarly situated positions and against positions higher up the same “job family tree.”
4) It is usually important to maintain a salary differential between positions that are adjusted to the new threshold and those currently at or near the threshold, so institutions would need to consider what salary adjustments might be needed.
An example: Development Officer I is currently paid $42,000 and Development Officer II (higher-level development officer) is currently paid $51,000. The institution decides that it is important for the Development Officer I to be an exempt position, so the salary is raised to $47,476 (the new threshold). However, this change will also require a salary adjustment for the Development Officer II to acknowledge the different expectations, knowledge and experience for the higher-level position. Simply moving the Development Officer I to the threshold would solve the immediate compliance challenge, but it would also create a significant internal equity challenge (salary compression).
DOL Releases New Overtime Rule – Exemption Threshold Raised to $47,476
Webinar – FLSA Final Overtime Rule: What You Need to Know and Do Now
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NEW – Essentials Videos – FLSA: Then and Now and FLSA: Impact on Your Institution
FLSA in Higher Ed: Minimizing Risks and Managing Challenges
CUPA-HR FLSA Overtime Regulations Advocacy and Compliance Web Page
CUPA-HR FLSA Toolkit
7 Things to Know About the New Overtime Regulations