Overtime Rule: Special Guidance, Special Situations


State and local governments, nonprofits and higher education institutions received guidance on complying with the new overtime rule, but did not receive anticipated exemptions or extensions.

The final rule released May 18 by the Labor Department more than doubled the annual salary an employee must earn to be considered exempt from the Fair Labor Standards Act’s overtime requirements. The salary threshold is to increase Dec. 1 to $47,476 from $23,660.

State and local governments, nonprofits and institutions of higher education received clarification on which workers likely would be affected by the rule. Strategies to adapt to the updated threshold were included in three technical advice documents released by the department. Existing exemptions in the FLSA cover some positions in the public sector and at higher education institutions and would prevent the new rule from affecting those employees, the department said.

Coverage Requirements  

State and local governments, nonprofits and higher education institutions received guidance on complying with the new overtime rule, but did not receive anticipated exemptions or extensions.

Elected officials, their staffs, policymaking appointees and legal advisers are not covered by the FLSA and would not be affected by the rule, the department said in guidance for state and local governments. Employees in the legislative branches not covered by civil service laws also are exempt from overtime, the department said. Additionally, employees of small police and fire agencies are exempt from FSLA overtime requirements, the guidance said.

Employees with teaching as a primary duty are not required to meet a minimum salary level to be considered exempt under the FLSA and will not be affected by the increased threshold, the department said in its guidance for higher education. Additionally, the teaching exemption applies to coaches who primarily coach, or instruct athletes in a sport. A coach whose main duty is not instructing, such as recruiting or manual labor, would need to meet the salary threshold to be considered exempt, the department said.

Administrative personnel who help run institutions and interact with students outside of the classroom may be considered exempt from the salary threshold if their salaries are at least as high as those of entry level teachers at the institutions, the guidance said. This includes department heads, academic counselors and advisors, intervention specialists and others with similar job duties.

Graduate and undergraduate students performing research under faculty supervision are considered to have an educational rather than employment relationship with the institution and are exempt from the salary threshold, the department said.

Postdoctoral researchers may be exempt from the salary threshold depending on how much of their time is devoted to teaching, the department said. Postdoc researchers in science often research and do not teach, so likely will not meet the requirements for the teaching exemption and will have to meet the salary threshold to be exempt from overtime, the guidance said. Humanities postdocs often teach in addition to doing research. If the postdoc’s primary duty is teaching, the position qualifies for the teaching exemption. However, a humanities postdoc researcher who primarily researches instead of teaching would be eligible for overtime unless the salary threshold was met, the department said.

Compliance Options for Employers

Nonprofits and private higher education institutions may comply with the new rule using the same options as other employers. Options include raising salaries for employees who meet the duties test, realigning employee workload so that no more than 40 hours a week of work is required, adjusting the base pay of employees who work a small amount of predictable overtime, or paying overtime, guidance said.

Public higher education institutions and employers in the public sector have the option of offering compensatory time instead of cash overtime, the department said. The employee must agree to the substitution beforehand. Comp time, like cash overtime, must be issued at a rate of time-and-a-half, the guidance said.

Take a free trial to Bloomberg BNA’s Payroll Decision Support Network, your one-stop resource for reliable, up-to-date guidance and analysis in every area of payroll administration and compliance.

Follow Bloomberg BNA on Twitter  @BloombergBNA  and join the Bloomberg BNA U.S. and Global Payroll group on  LinkedIn.