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New Department of Labor Regulation

2016 Department of Labor Regulation

On May 18, 2016, the Department of Labor announced it's final rule updating overtime regulations.  

U.S. Department of Labor - Final Rule:  Overtime

Key provisions of the Final Rule:

  • Sets the standard salary at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker)
  • Sets the total compensation requirement for highly compensated employees subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004)
  • Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles
  • Allows employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level
  • Effective date of the final rule is December 1, 2016 (updates to thresholds will occur every three years, beginning on January 1, 2020)

U.S. Department of Labor Questions and Answers

The Final Rule includes some special provisions for employees working in higher education, including:

Guidance for Higher Education Institutions on Paying Overtime under the FLSA:

  • The salary level and salary basis requirements for the white collar exemption do not apply to bona fide teachers
  • Academic administrative personnel that help run higher education institutions and interact with students outside the classroom, such as department heads, academic counselors and advisors, intervention specialists and others with similar responsibilities, are subject to a special alternative salary level
  • To the extent that a postdoctoral fellow's primary duty is teaching, higher education institutions can classify such an employee as exempt from overtime under the teacher exemption
  • Coaches may be identified as teachers, as defined by the DOL, if their primary duty is teaching, tutoring, instructing or lecturing in the activity of imparting knowledge and who is employed and engaged in this activity as a teacher in an educational establishment by which the employee is employed
  • Adjunct instructors may also be exempt as teachers if they are employed and engaged as teachers
  • Graduate teaching assistants who have teaching as their primary duty are not subject to the salary tests
  • Research assistants are generally viewed as being in an educational relationship with the school and would not be defined as an employment relationship
  • Student residential assistants enrolled in bona fide educational programs who receive reduced room or board charges or tuition credits from the university are not generally considered employees

There are several options for compliance with the Final Rule:

  • Increase workers' salaries to the new threshold
  • Spread employment by reducing or eliminating work hours of individual employees working over 40 hours per week.

 

 

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 Last Modified 6/15/16