Category Personnel/Employment
Title The Department of Labor Decides Not to Defend the DOL Final Rule Regarding Overtime
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Preview The Department of Labor Decides Not to Defend the DOL Final Rule Regarding Overtime
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The Department of Labor Decides Not to Defend the DOL Final Rule Regarding Overtime

On June 27, 2017, the U.S. Department of Labor (DOL) sent a request for information (RFI) on the 2016 DOL Final Rule on overtime finalized under the Obama administration to the Office of Information and Regulatory Affairs. This means that the DOL will seek to begin a new rulemaking process that will likely lower the salary threshold for overtime exemptions.

Background  

Last year, the DOL announced the new Final Rule on exemptions that was to go into effect on December 1, 2016. The new regulation would have raised the exemption salary from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). However, on November 22, a federal district court temporarily blocked the DOL's Final Rule on overtime. The DOL's motion to stop the lawsuit was denied on January 3, 2017.   

The DOL appealed the ruling. They requested and were granted three extensions until June 30 to file its reply brief in order to give the Trump administration and the new Secretary of Labor time to review the issues.

With this RFI, it looks like the new administration will begin drafting new rules in order to obtain public input on these proposed new rules. It is believed that the Trump administration could raise the salary threshold for exempt status, but not as much as the previous administration wanted. Most opposition to the DOL Final Rule was that the increase in the threshold was a large jump from the previous amount and would have caused businesses some undue hardships.   However, everyone recognizes that the cost of living has increased and that an increase in the salary threshold is needed. The new Secretary of Labor, Alexander Acosta, signaled at his confirmation hearing that the level should be raised from the one set in 2004. "I think it's unfortunate that rules involving dollar values can go more than a decade without adjusting," Mr. Acosta said. "Life does get more expensive." He didn't offer a dollar amount, but noted that if the 2004 level was adjusted for inflation, it would be about $33,000.  

The Bottom Line  

For Christian schools, this means that for now, the minimum salary for exempt employees remains at $455 a week or $23,660 for annual employees. This is where it has been since 2004.  

The Fair Standards Labor Act (FLSA) states that every employee is to be paid a minimum wage, given a 40-hour workweek, and paid time-and-a-half for hours worked over 40 in a workweek. However, there are some exemptions to this law.  

There are three categories of exemption from overtime. Each has specific duties requirements, as well as a minimum wage of $455 per week. The categories and the qualifications for exemption are as follows:  

Executive Category
To qualify as exempt under the executive category, the individual must:

  1. Manage an enterprise, department, or subdivision as a primary duty
  2. Direct the work of at least two full-time employees
  3. Have authority to hire and fire or to make recommendations on hiring and firing  

Administrator Category
To qualify as exempt under the administrator category, the individual must:

  1. Be responsible either for office work directly related to management or general operations or for work directly related ro academic instruction or training at a school
  2. Regularly exercise discretion and individual judgment in matters of significance (as opposed to merely following procedures) and have authority to make important decisions
  3. Regularly assist an owner or an executive or perform work that requires special training or experience under only general supervision

Professional Category
To qualify as exempt under the professional category, the individual must:

  1. Have knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study or has talent in a recognized field of artistic endeavor
  2. Do work that requires the consistent exercise of discretion and judgment in its performance
  3. Do work that is predominantly intellectual and varied in character-not routine physical, mental, manual, or mechanical  

What about administrators and teachers? Do they have to meet the salary of $455 per week? The answer is no. Here is a short summary of both administrators and teachers.  

Academic Administrators
This exemption falls under the administrative category and is available only to academic administrators in the school. This would include principals, assistant principals, guidance counselors, admissions directors, and others who are administrators involved in the academic functions.  

This exemption is available to employees compensated on a salary or fee basis at a rate not less than $455 a week, or on a salary basis which is at least equal to the entrance salary for teachers in the same educational establishment, and whose primary duty is performing administrative functions directly related to academic instruction or training in an educational establishment.  

Teachers
There is a subcategory under the professional exemption for teachers. Surprisingly, it does not require a college degree to qualify for the exemption. Simply teaching in a classroom setting qualifies a person as exempt.  

Teachers serving in K-12 automatically qualify for the professional exemption category whether or not they earn $455 per each week employed. A teacher qualifies for the overtime exemption by virtue of the position alone. Also some state laws do require a minimum salary for teachers.  

This is a short summary. More details of FSLA for Christian schools can be found at www.acsi.org/leg-resources.  

LLU 28.1

Notice: This article is designed to provide accurate and authoritative information in regard to the subject matter covered. It has been provided to member schools with the understanding that ACSI is not engaged in rendering legal, accounting, tax, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Laws vary by jurisdiction, and the specific application of laws to particular facts requires the advice of an attorney.  

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