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New Federal Rule May Make Most Unit 4 Employees Eligible for Overtime

Department of Labor Raises Minimum Annual Salary Requirement for Administrative Exemption to $47,476

05/19/2016

Most Unit 4 employees currently fall within the "administrative exemption" and are therefore not entitled to overtime under the federal Fair Labor Standards Act (FLSA).  This may soon change under a new rule announced yesterday by the Department of Labor (DOL) that more than doubles the minimum annual salary an employee must earn to fall within the exemption to $47,476.  The new rule will go into effect on December 1, 2016.

A DOL factsheet on "Overtim Final Rule and Higher Education" states an important exception to the new minimum salary requirement:

"Academic administrative personnel: The 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 salary threshold that does not apply to white-collar employees outside of higher education. These employees are not entitled to overtime compensation if they are paid at least as much as the entrance salary for teachers at their institution."

(Emphasis supplied.)

The DOL´s "Guidance for Higher Education Institutions on Paying Overtime under the Falir Labor Standards Act" gives the following example, which suggests that some Unit 4 members could qualify as "academic administrative personnel" for this "special salary threshold":

"Example: An academic advisor at a community college assists students with class selection and educational goals. The advisor earns $42,000 a year ($807.70 a week) on a salary basis, which is also the college’s entrance salary for teachers. Among other things, the advisor assists with placement testing and the course registration process, and helps students to develop course selections consistent with their career choices and degree requirements. In this example, assuming the advisor meets the duties test for academic administrative professionals, the employer would not be required to pay overtime for more than 40 hours worked even though the academic advisor is paid a salary less than $913 per week, because the advisor’s salary is at least equal to the entrance salary for teachers at that institution."

However, given that the minimum annual salary for the "Lecturer A - 12-Month" classification - "the entrance salary for teachers" - currently is $49,224, and thus above the new regular minimum salary requirement of $47,476, it is unlikely that any Unit 4 employees who would not be exempt from overtime under the new regular minimum salary requirement will be exempt under the special salary threshold for academic administrative employees.

In the coming months, APC will meet and confer with the CSU over the implementation of the new rule. One option is for the CSU to determine on an emplyee-by-employee basis whether each employee continues to meet the new minimum salary requirement - be it the new regular requirement or the special threshold for academic administrative employees - and to classify them accordingly.  Another option is to declare an entire classification non-exempt as long as it contains any employees who do not meet the new minimum salary requirement, even if other employees in the same classificaiton do meet the requirement. The DOL´s "Guidance for Higher Education Institutions" mentions a third option that many Unit 4 employees would prefer over either of the first two options:

"Employers may choose to raise the salaries of workers who meet one of the duties tests, and who regularly work overtime, to or above the new salary level to maintain their exempt status. For academic administrative employees, educational institutions merely have to ensure that such workers do not earn less than the entrance salary for teachers under that college’s employ to remain exempt."

We will keep you posted.