Analysis of Department of Labor’s Increased Overtime Threshold

Last week, the Department of Labor released its final rule modifying exemptions to overtime pay requirements under the Fair Labor Standards Act.

While APLU continues to review the rule, it is clear the impact on institutions will be substantial. Below are some of the major provisions and changes from the initial proposed rule.

• The minimum income threshold for exemptions will be set at $47,476, double the current salary threshold. The initial proposed rule included an increase to $50,440.
• The salary threshold will adjust every three years based on the standard salary level at the 40^th percentile of full-time salaried workers in the lowest-wage Census region. The initial proposed rule included updates every year.
• The effective date is December 1, 2016.
• No changes were made to the “duties test” for exemptions.
• No changes were made to the Fair Labor Standards Act “teaching exemption.”

In response to many of the concerns raised by APLU and its members, the Department of Labor has released guidance for higher education institutions. The guidance does not change exemptions, but may provide some clarity as to the applicability of present exemptions.

Post-Docs
The Huffington Post published a joint op-ed by National Institutes of Health (NIH) Director Frances Collins and Secretary Perez commenting on the impact of the rule specifically on postdoctoral researchers. They announced in the op-ed that in response to the rule, NIH will increase the awards for the Ruth Kirstein National Research Service Awards (NRSAs) to levels above the new income threshold. The current award level for NRSAs begin at $43,692. Additionally, NIH Deputy Director for Extramural Research Mike Lauer posted a blog post, further discussing the NRSA change and acknowledging “that increased salaries will impact other financial and staffing operations at grantee institutions.”

Dr. Lauer offers that NIH will work with the scientific community to help with the transition and will provide further information and guidance in the months ahead. APLU has reached out to other science agencies to inquire about transition plans they may also offer since the rule will impact postdocs and other research positions supported by federal grants.

Congressional Efforts Underway to Block New Overtime Rule
Efforts by congressional Republicans are already underway to block implementation. Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-TN) said that he would introduce a resolution to block the overtime rule under the Congressional Review Act. Legislation that was previously introduced in the House and Senate, the Protecting Workplace Advancement and Opportunity Act, S. 2707 and H.R. 4773, will receive increased attention.

APLU Response
APLU President Peter McPherson noted in a blog post that “the size of the increase that the administration announced…and its rapid implementation will have a significantly negative impact on public universities and its students and staff…and puts a further financial strain on them as they continue to deal with dramatic state funding cuts.” APLU had advocated in meetings with the White House for broadening the FLSA “teaching exemption” to include other positions critical to the academic, research and outreach missions of universities, in addition to a reduction in the level of increase of the income threshold, and a phase-in over years.