On September 24, 2019, the U.S. Department of Labor (“DOL”) issued its long-awaited Final Rule increasing the earnings thresholds necessary to exempt executive, administrative, and professional (“white collar”) employees from the Fair Labor Standards Act (“FLSA”) minimum wage and overtime requirements. The Final Rule takes effect on January 1, 2020.
The most relevant change in the Final Rule is the increase to the minimum salary threshold for executive, administrative, and professional employees:from $23,660/year ($455/week) to $35,568/year ($684/week). (Note – the “duties test” used to determine if an employee is an executive, administrative, or professional employee has not been altered).
The DOL estimates that, as a result of the increased salary thresholds, more than 1.3 million additional employees will be eligible for overtime. Some of those employees could be working in your school district.
Impact on School Districts and Potential Remedies
If a school district employs an exempt employee (administrator or a supervisor) making less than $35,568/year, such employee will be eligible for overtime as of January 1, 2020 – as they will no longer meet the salary threshold. In that event, the school district has a few options:
- Raise the employee’s salary to maintain the exemption;
- Reorganize the employee’s workload so he/she does not work over 40 hours/week; or
- Continue paying the same salary, with any overtime over 40 hours.
The increase marks the first change to the minimum salary threshold since 2004, better accounting for increases to employee earnings in the intervening years. The threshold lands at approximately the midway point between the current threshold ($24,660) and the threshold proposed by the DOL in 2016 ($47,476), which never took effect after it was enjoined and invalidated by a federal court. It remains to be seen whether a similar fate awaits this Final Rule.
With only three months remaining before the Final Rule takes effect, school districts are encouraged to consult with counsel with any questions or concerns about how the changes may affect them.