New rules could affect overtime pay for higher ed employees

The Obama administration's proposal could result in high costs for colleges and universities

A proposal by the Obama administration to increase the salary threshold for overtime protection has garnered concern among higher education leaders and faculty, Ellen Wexler reports for Inside Higher Ed.

Background

Under the Fair Labor Standards Act, employees who earn less than $23,660 a year are guaranteed overtime pay, but only some employees who earn more than the threshold are required to receive overtime pay. Most post-doctoral researchers earn much more than $23,660, making them ineligible for mandatory overtime protection. Most admissions officers, coaches, financial aid administrators, librarians, and IT workers also have no overtime pay guarantees.

Last summer, President Obama announced a proposal to increase the salary threshold for guaranteed overtime pay to $50,440. Employees earning less than that amount would be guaranteed overtime pay if they work more than 40 hours a week. Colleges and universities would be required to pay such employees for any hours put in past 40 each week or raise workers' salaries. 

Why higher ed shouldn't panic about new overtime rules—yet

Colleges fear new high costs

Many colleges are hesitant about the proposal, especially in terms of cost. Under it, some schools would have to pay millions of dollars in overtime pay and increased wages, and after the rule is finalized, they may have as few as 60 days to comply.

"There is general agreement that the salary threshold is long overdue for a change, but the transition—such a huge transition—to $50,440 is a major concern," says Andy Brantley, president of the College and University Professional Association for Human Resources (CUPA-HR). "Every area of campus would be impacted."

CUPA-HR submitted a comment letter signed by 18 other higher education groups to the Department of Labor, arguing that the threshold was too high and 60 days did not allow enough time to comply with the new rules. The group proposed three lower options: $29,172; $30,004; or $40,352.

At the Florida State University system, more than 6,500 employees would be affected under the new rules, according to El pagnier Hudson, an assistant vice president of human resources at Florida International University. It would cost more than $62 million to increase employees' salaries to meet the higher threshold.

At Indiana University, the proposal could cost the school anywhere between $5 million and $15 million, depending on whether the school chooses to increase salaries or pay overtime wages. Most will likely do a combination of both, Wexler writes.

"There are no dollars that are coming with the regulation," Hudson says. "They're just saying, 'Make it happen."

Faculty work hours could make compliance harder

University faculty members also have concerns about the effects of the new rules. The National Postdoctoral Association supports higher salaries for postdocs, but fears some institutions will cut the number of postdocs they employ to increase the salaries or pay overtime to others. The new law also would not make adjuncts and most faculty members eligible for overtime protections.

What you need to know about the proposed changes to overtime laws

However, many faculty members often work overtime for no extra pay. In its comment letter to the   Labor Department, the Service Employees International Union noted that many employees feel pressured to volunteer for certain responsibilities and fear they will not be rehired if they refuse to take on additional tasks.

"The reality is that organizations don't necessarily have that extra funding, so the result will be paying the employee the same amount they make now and restricting their hours," says John Whelan, Indiana University's associate vice president for human resources.

Employees who meet the threshold for overtime pay will have more flexibility than employees who must finish their work within the allotted 40 hours each week, which could cause "a compliance issue" for employees who work more than 40 hours and are not paid overtime, Whelan says (Wexler, Insider Higher Ed, 2/25).


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