1. Why were the rules changed?
On September 24, 2019, the Department of Labor (DOL) announced a final rule that will make 1.3 million American workers newly eligible for overtime pay. The new thresholds account for growth in employee earnings since the thresholds were last updated in 2004.
2. What do the rules change?
There are three changes. Educational entities should pay closest attention to the first change, as the other two are unlikely to apply to districts.
- The minimum salary required for exemption was increased from $455 per week ($23,660 for 52 weeks) to $684 per week ($35,568 for 52 weeks). If a currently exempt employee earns less than $684 per week, the employee will now be eligible for overtime and subject to the same requirements for things like timekeeping and minimum wage as other nonexempt employees.
- Employers may now use nondiscretionary bonuses and incentive payments that are paid at least annually to satisfy up to 10 percent of the standard salary level.
- The minimum salary for highly compensated employees increased from $100,000 to $107,432 per year.
3. Which employees are impacted by the change?
The rule change impacts exempt administrators and professionals who earn less than $684 per week. This includes registered nurses, physical therapists, speech-language pathologists, diagnosticians, accountants, supervisors, and other non-teaching professionals.
Administrators in an educational establishment such as academic counselors, curriculum coordinators, assistant principals, and principals may also be impacted. However, these positions are subject to a different salary threshold. They must earn $684 per week or the same as an entry-level teacher in your district, whichever is least. Keep in mind that the state minimum salary schedule for teachers is only below the threshold for years 0-2. So, if you pay your teachers above the state minimum schedule, chances are the $684 test will be easier to meet.
The change does not impact teachers. Teachers are currently exempt from the minimum salary requirements, and that did not change with the new rules.
Clerical, paraprofessional, and auxiliary workers are already nonexempt, and the new rules do not impact them.
4. What is the effective date of the change?
The change is effective January 1, 2020. All educational entities must be in compliance by that date.
5. How do I know if an employee is exempt?
Exempt employees must be paid a salary of $684 per week, meet the salary basis test, and meet all the criteria of one of the duties tests (e.g., executive, administrative, professional, or computer professional) as stated in the Fair Labor Standards Act (FLSA). If they do not meet either the salary threshold or the duties test, they are nonexempt and are entitled to overtime pay or compensatory time when they work more than 40 hours in a workweek of seven consecutive days. The criteria for the duties tests can be found in our HR library.
6. Did the duties tests change?
No, the duties tests did not change. Only the minimum salary threshold changed.
7. Most districts calculate annual pay starting on a daily rate basis. Is there a minimum daily rate required for exemption?
No. Although districts frequently use daily rates to determine employee annual pay, the DOL will only consider the amount of pay earned per week. Weekly pay is the shortest period of payment that may be used to determine if the salary threshold is met.
8. How do we determine if 10- and 11-month employees meet the salary threshold when salaries are paid over 12 months?
The DOL considers the amount of pay earned per week, not the amount distributed in the paycheck. The annual salary should be divided by the actual weeks worked to determine if the employee meets the $684 threshold. Any week in which work is performed should be counted, even if it is only one day during the week.
9. If an employee meets the professional exemption but earns less than $684 per week, are they entitled to overtime?
Yes. They must meet the minimum salary threshold, the salary basis test, and all the criteria of one of the duties tests (executive, administrative, professional, computer professional). If they are not paid a salary of $684 per week, they are nonexempt. Districts will be required to maintain accurate time records and pay overtime or compensatory time if they work more than 40 hours in a workweek of seven consecutive days.
10. Will part-time professionals such as occupational therapists, speech-language pathologists, and other licensed professionals be eligible for overtime if they earn less than $684 per week?
Yes. The $684 per week minimum salary cannot be prorated for part-time workers. Employees must earn $684 per week in order to be exempt from FLSA requirements, regardless how many days per week they work.
11. If two exempt employees who are not teachers job share and their combined pay is more than $684 per week, can they still be exempt?
No. Each employee must earn $684 per week. For example, Luz and Ann are registered nurses and job share at the elementary school. They each earn $475 per week. Neither are paid the minimum of $684 per week, so both of them will be nonexempt, eligible for overtime if they work more than 40 hours in a workweek of seven consecutive days, and record all hours worked on timesheets.
12. Would an exempt employee who earns more than the annual salary threshold remain exempt?
Yes. However, they must also meet all the criteria of one of the duties tests (executive, administrative, professional, computer professional).
13. Are LSSPs considered administrators in an educational establishment and therefore subject to either the $684 weekly amount or the entrance salary for teachers?
No. LSSPs, like nurses and SLPs, do not meet the definition of administrators in an educational establishment and are subject to the $684 per week threshold and not allowed to be compared to teacher pay.
14. Are special education co-op or grant-funded employees impacted by the rules change?
Yes. Funding source does not affect the exemption status of an employee. They must earn $684 per week and meet the duties test to be exempt. If the employee meets the definition of an administrator in an educational establishment, the salary must be at least the same as an entry-level teacher in your district.
15. We have a child nutrition director employed by contract, and her pay does not meet the minimum salary threshold. Is she still exempt?
Being employed by contract has no impact on FLSA exemption status. An employee must earn at least $684 per week and meet the criteria of one of the duties tests (executive, administrative, professional, computer professional) to be classified as exempt.
16. Are retire-rehire employees who are not classroom teachers subject to this rule change?
Yes. All exempt employees must earn at least $684 per week. Status as a retire-rehire employee does not have any impact on FLSA exemption status.
17. Does the teacher exemption still apply if the teacher is a retiree working less than half time?
Yes. It doesn’t matter if a teacher is working half time or a retiree. If they are a teacher, they are exempt.
18. If a teacher also drives a bus, is the teacher still exempt from the minimum salary threshold requirement?
Yes. If an employee’s primary duty is teaching, he or she is exempt from the salary requirement.
19. Are band directors subject to the rules change?
Band directors would qualify under the teacher exemption and are not subject to the rules change.
20. The district has several exempt employees who do not earn $684 per week. What do we need to do to comply with the new rules?
The district has two choices:
- Increase the employees’ pay to $684 per week and ensure they meet the criteria of one of the duties tests.
- Make them nonexempt and treat them like other nonexempt employees, including keeping accurate time records and paying overtime or compensatory time if they work more than 40 hours in a workweek of seven consecutive days.
This decision may be driven by the potential additional costs to the district. If an employee’s pay is currently close to the salary threshold, the cost increase might be minimal. However, if the employees are making considerably less than $684 per week, the district may choose to make them nonexempt.
21. If we are going to change an employee from exempt to nonexempt status, should we make it effective now?
This is a local decision. You can make the change any time as long as it is made by January 1, 2020.
22. How do I calculate the potential cost increase of paying overtime?
First, visit with the employee and manager to estimate the number of hours worked over 40 in the district’s workweek of seven consecutive days defined in Policy DEAB (LOCAL). Then, calculate the cost of paying time and one-half of their regular rate on those hours.
23. How do we know how many weeks employees work?
You will need to look at the starting and ending dates of all duty schedules and count any week where work is performed, even if it’s only one day. For example, if a 195-day duty schedule starts on a Tuesday in August and ends on a Monday in June, both the first and last week count as full workweeks, even if only a few days were worked in each week.
24. Do we have to include summer school when counting workweeks?
Yes. For each employee, any week where work is performed—including summer school—should be counted, even if it is only one day.
25. Do we need to count spring break and winter break as workweeks?
Our conservative advice is to count these weeks if there is any possibility that work might be performed. Opening and checking e-mail, responding to phone calls, or coming into the office to “catch up” is considered work, and the week in which it occurs should be counted as a workweek.
26. We will have exempt and nonexempt employees in the same job title. Is that acceptable under the FLSA?
Yes. The nonexempt employees are subject to the timekeeping requirements and eligible for overtime if they work more than 40 hours in a seven-day workweek. The exempt employees are not required to keep track of their time and are not be eligible for overtime pay.
27. Are timeclocks required for nonexempt employees?
No. The DOL requires employers to maintain accurate time records for all nonexempt employees. The DOL does not mandate the method of maintaining the records, such as timeclocks, but the records must be accurate.
Erin Kolecki and Keith McLemore are Compensation and HR Consultants at TASB HR Services. Send Erin or Keith an email at email@example.com or firstname.lastname@example.org.
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