In late November, a federal judge temporarily blocked implementation of an overtime pay rule promulgated by the Obama administration, saying it exceeded the authority of the Department of Labor to create such rules. Andy Brantley, president and CEO of the College and University Professional Association for Human Resources (CUPA-HR), explains what the rule is and what happens now.
What was the rule and whom would it have affected?
On May 18, 2016, the Department of Labor (DOL) issued its final rule on overtime eligibility, raising the minimum salary threshold from $23,660 to $47,476. Employers were given until December 1 to comply. Had the temporary injunction not been issued, any employee with an annual salary below $47,476 would have become overtime eligible regardless of the duties he or she performed. Many campus professionals, including residence hall directors, student activities professionals, assistant coaches, admissions counselors, and academic administrators, as well as finance, research, human resources, facilities management, and fundraising professionals, would have been required to track hours worked— many for the first time in their careers.
It is important to note that CUPA-HR, AGB, and other higher ed associations supported a change to the salary threshold but made it clear that an increase of more than 100 percent created a tremendous funding and compliance burden. We recommended a figure in the low to mid-$30,000s. Had DOL decision-makers listened to recommendations, I believe that we would have implemented a much-needed, reasonable change to the salary threshold on December 1. Instead, tremendous time, effort, and institutional resources that have been dedicated to complying with the new regulations are now in limbo.
How will institutions and their budgets be impacted?
Issuing the preliminary injunction just a week prior to the implementation deadline has created additional work, confusion, and uncertainty for all. Most organizations had already communicated changes to employees, and many had implemented a portion of the needed compliance changes, including some salary increases. This news required quick action by all. In a CUPA-HR survey conducted in early December, 28 percent of institutions had already implemented changes to comply with the new OT rule; 32 percent had implemented some changes and planned to delay others; 32 percent were delaying implementation of all planned changes; and 8 percent planned to roll back/reverse at least some of the changes that had already been implemented, pending further guidance.
Remember that this is a preliminary injunction. If the end result is that the DOL’s actions are affirmed, we must be prepared to quickly implement the required changes.
What questions should boards be asking?
The planned changes would have impacted every area of campus, including working hours for many positions and funding available to make needed salary adjustments. Moving positions from exempt to nonexempt status could also impact retention of current employees and recruitment of future employees. Boards should ask which actions proceeded, which actions were placed on hold, and how these changes were communicated to employees.
With a new administration, does the overtime rule have a future?
As expected, the DOL did file an appeal on December 1, but the Fifth Circuit Court of Appeals very rarely overturns preliminary injunctions. So for now, the current provisions of the Fair Labor Standards Act remain unchanged. It is likely that this will drag on into the new administration. If that is the case, it is unclear where the overtime mess will fall on the priority list and what the final resolution will be.
Share on LinkedIn
