New Fair Labor Standards Act rule for white-collar job exemptions from overtime pay may 2016
In 2014, President Obama directed the Department of Labor (DOL) to update and modernize the regulations governing the exemption of executive, administrative and professional employees from the minimum wage and overtime pay protections of the Fair Labor Standards Act (FLSA).
FLSA is the federal law which establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state and local governments.
The DOL published a notice of proposed rulemaking on July 6, 2015, and received more than 270,000 comments. On May 18, 2016, DOL announced a “final rule” to update the regulations.
Here are a few quick facts about the new rule:
- The new minimum salary threshold to be eligible for overtime pay has been set at $47,476 per year. The current threshold is $23,660 annually. This means employees paid up to $47,476 will be eligible for overtime pay.
- Employers will need to be in compliance with the new regulations by December 1, 2016.
What this means for DU
The new rule changes the federal guidelines for overtime pay requirements under FLSA for higher education institutions along with all other organizations.
University of Denver’s Human Resources department has been following the DOL proposal for quite some time and is preparing to meet with each division/unit leader to discuss the impact in their areas.
As with most federal regulations, it will take time to fully understand the impact of this rule. So while it’s too soon to talk about specific impacts to individual positions within units, we will be meeting with division/unit leaders and sharing information as it relates to their units.
There are many websites, news stories and expert opinions covering the new FLSA rule. When you read more about it, it’s clear that not everything about the DOL rule is clear yet. Here are some articles and websites that give you some idea of the complexity around this change while helping you understand it better.
- University of Denver's Exemption Status Comparison Chart
- Department of Labor, Division of Wage and Hour, Final Rule: Overtime
- CUPAHR: 7 Things to Know about the NEW Overtime Regulations
- The White House, Statements and Releases, Fact Sheet of Overtime Rule
The University of Denver recognizes that to fulfill its mission it requires a diverse group of highly qualified employees – educators, researchers, administrators and support staff. To ensure that faculty and staff are recognized and rewarded appropriately for their contributions and that University resources are used efficiently and effectively, the University supports a compensation system that:
- Provides comprehensive compensation (base salary, supplemental payments, and benefits) that is competitive within the appropriate labor market and is aligned with the availability of institutional and unit resources.
- Attracts highly skilled and competent employees and retains them by providing opportunities for learning, growth and career development.
- Encourages and rewards excellent performance by individual staff and teams and assures contributions toward meeting the mission, goals and objectives of the University by basing salary increases on merit and performance.
- Assures a fair "living wage" for all employees who work full time.
- Provides academic and administrative units flexibility in applying the principles of the University's compensation system.
- Allocates compensation in a fair yet flexible manner in compliance with all applicable legal requirements.
- Balances the need for internal equity while recognizing the desire to be market competitive subject to resource availability.
- Assures communication of system principles, goals, design, procedures and relevant external market information to all units and individuals.
- Remains open to emerging compensation practices to address changes in the workforce and the workplace over time.