Q: I have heard that they are changing the overtime rules, and I'm getting worried. Will these changes greatly increase our budget?
A: The Department of Labor's division of Wage and Hour issued proposed rules on July 6, 2015, with a comment period that ended September 4, 2015. These rules will change who is considered an exempt employee for overtime rules. The rules would also change the minimum weekly salary amount from $455 ($23,660 a year) to $970 a week ($50,440 a year) in 2016. These figures would be updated annually.
How does this effect the school? First, the salary level test for exempt employees does not apply to teachers and academic administrative personnel. (Remember that for academic administrative personnel to be exempt employees, they must be paid at least as much as your entry level teacher.)
The salary level test means these rule changes will not impact the school's budget in relation to your academic staff. Where this may affect your school is in non-academic administrative staff or other employees who you may have on salary:
- your heads’ assistant,
- receptionists,
- security officers,
- cafeteria and custodial staff,
- admission officers,
- marketing and communications staff,
- business office employees,
- development officers,
- and other non-education positions.
As a reminder, whether employees in non-education positions are classified as exempt from overtime requires them to be paid more than the salary minimum (currently $455/week) AND meet the professional skills standards.
Therefore, if you want to control the cost based on the proposed rules for employees in non-education positions, you will have to determine whether you should increase their pay so they are exempt, or whether you budget for the additional overtime these employees normally incur.
Ultimately, the question comes down to seeing whether the person works over 40 hours per week on a normal basis, or if the person logs only an occasional increase in hours to cover a specific event. If the former, it might behoove you to boost their wage to the new weekly minimum; if the latter, keeping their pay below the salary threshold and paying occasional overtime might be the better course.
Final rules should be out by the beginning of 2016, which will be halfway through your school's yearly budget. However, it would be wise to assume that the rules will go through as proposed and be enforced immediately, so make plans now to be in compliance.
Curious about your school's health care policies and the reform's changes? Ask ISM’s Health Care Reform Expert a question. We respect your privacy. You can also view ISM’s health care solutions.
