The Fair Labor Standards Act (FLSA) was enacted in 1938, creating provisions for a 40-hour work week, a national minimum wage, and the time and one half rule, as well as child labor protection provisions. Over the years, there have been changes, challenges and violations through our court systems and legislatures. The Federal Minimum Wage Level has been addressed in state legislative sessions often, with just 22 states/districts remaining that have a minimum wage at the federal level of $7.25 set by FLSA. Litigation brought about by individuals or groups who believe they have been unjustly denied overtime under FLSA rules exist as well. In the early case of Robertson v. Argus Hosiery Mills, Inc., filed in 1938, overtime and interstate commerce laws were challenged unsuccessfully. A more recent incident involving wide spread fraud at Wells Fargo gained notice from eight U.S. Senators regarding possible FLSA violations, when they asked the Department of Labor (DOL) to investigate whether FLSA laws were violated in a letter sent in September of 2016.
Since 2004, the minimum salary level for executive, professional, and administrative employees (or white collar employees) considered exempt has been $455 per week, provided they also meet the Duties Test for their position. The proposed change for 2016, referred to as the Final Rule, intends to nearly double that amount, bringing it to $913 per week. Meaning that employees who meet the Duties Test, would need to be evaluated if they are below this amount. Non-exempt employees, which are those already eligible for overtime under FLSA, would be unaffected by this change.
How does this specifically affect higher education? With tighter budgets in higher education across the nation, the financial burden could have a significate impact on many institutions, but because of the unique role that higher education plays in society, FLSA has several provisions that apply to institutional personnel that make them ineligible for overtime and unaffected by the Final Rule change. This list includes: faculty; coaches, if their primary duties are coaching; graduate and/or undergraduate students; resident advisor; and academic administrative personnel, such as department heads, academic counselors, advisors, etc.
Which employees could be affected in higher education? Positions include: postdoctoral scholars, non-academic administrative employees, part-time employees, and partial-year employees. FLSA could also affect other professional level employees at an institution which can include: administrative officers, executive assistants, research associates, aviation and building service professionals, technology experts, and law enforcement, among others. It is also predicted that this change could significantly limit entry-level job opportunities in higher education.
The Final Rule provides several options for institutions related to this group of employees including: raise salaries for those not meeting the minimum threshold and who meet the Duties Test, evaluate and realign employee’s workloads, pay overtime above the salary, or adjust an employee’s base and overtime pay.
When will the change take place? The original effective date was December 1, 2016, but in September of that year, 21 U.S. states and 50 business groups filed a lawsuit to enjoin the implementation of the “Final Rule,”, arguing it would force states and business to substantially increase their labor costs. The lawsuits were joined and are referred to as State of Nevada et al. v. U.S. Department of Labor. The plaintiffs requested an emergency injunction that was granted and temporarily bars the regulation from going into effect nationwide.
This litigation temporarily exempts employers, including higher education institutions, from making any adjustments to salaries or, to take any of the above listed actions. On December 1, the Department of Justice, on behalf of the DOL, filed a notice to appeal the preliminary injunction moving to expedite the appeal, which was approved by the Court. All of which could be a moot point in the near future if President Trump’s DOL decides to withdraw the appeal, at which point the lower courts could decide to issue a permanent injunction, killing the Final Rule all together.
Tina's role in human resource within higher education revealed that most of our department’s employees already exceeded the minimum salary, making the rule immaterial, which may or may not translate to the majority of the college. In the end, the true question might not be whether $913 is too much for the white collar employee, but might be did the DOL jump too high? After a mere 13 years unchanged, currently the “Final Rule” remains to be seen.
This post was co-authored by Ms. Tina Monette and Dr. David Nguyen. Ms. Monette is a Human Resources Assistant at the University of North Dakota in the John D. Odegard School of Aerospace Sciences and a masters student in the UND Higher Education program.