(In this article learn the importance of this free guide. Help your district prepare for proposed changes to FLSA wage and hour laws)
Update: We recorded a special podcast on FLSA Changes for School Districts to help school leaders with this topic that you can download and listen to. We have also written a more recent article on the topic of FLSA changes to school districts that you can find here.
Do you think you have all your school district’s budget issues for the next year sorted out now that school has come to a close? Think again. Changes to FLSA for school districts are coming and it could mean big changes in how you pay some district employees and the bottom line of your school district. The Huffington Post recently wrote about proposed changes to FLSA.
A couple of months ago Adam Taylor, Vice President at K12 HR Solutions, jumped out in front of the pack and wrote an article signaling a warning to school leaders about changes coming to the Fair Labor and Standards Act (FLSA) for school districts (and all other employers). If that acronym sounds familiar, it’s because their name is plastered on the posters in your teacher’s lounge or break room areas that describe an employee’s right to overtime pay. In our February article Adam explained how employees are classified as either exempt or non-exempt. As you likely know, exempt employees are typically your salaried “white-collar” managerial and professional employees and are not entitled to additional pay if their work week exceeds 40 hours. Obviously then, non-exempt employees are typically those who are typically doing “blue collar” like bus drivers, custodians, cafeteria, and most administrative assistants who should be receiving overtime for all hours worked over 40. When a non-exempt employees work week exceeds 40 hours they are entitled to 1 ½ of their regular rate of pay for every hour worked beyond 40. All of this under FLSA for school districts remains true today and will likely remain true. What will change is how school districts can classify certain employees as Exempt under FLSA and how that may impact a school district’s budget.
Are School District Employees Exempt or Non-Exempt Under FLSA?
The answer is. . . it depends. Generally, school districts have a mixture of exempt and non-exempt employees. To determine employees are exempt under FLSA the Department of Labor’s (DOL) Wage and Hour Division will school districts to determine the both the duties and the salary of employees meet the requirements to be considered exempt.
Salary Requirement or Test:
Under the current regulations, an employee who is performing exempt level duties must also earn more than $455 per week or $23,600 per year are exempt from overtime pay. This is one of the largest changes to be aware of. Under proposed regulations released June 30, 2015 the salary requirement for exempt employees under FLSA will be $921 per week or $47,892 annually. Furthermore, within the current proposal there is a mechanism to automatically update the salary and compensation levels going forward to ensure they continue to provide a fair and useful test for exemptions. If adopted, this means we could see the minimum salary requirement to rise to $50,440 in 2016.
What does this mean? These changes to FLSA for school districts could leave many scrambling to find an FLSA-compliant pay plan for employees whom they can no longer treat as exempt. If a school district has director or manager level positions that are currently classified as “exempt” which they are currently compensating at $45,000 annually, they may have to increase their salaries by appx. $3,000 annually to meet the salary test if they want to maintain the FLSA “Exempt” status and avoid paying those employees overtime for any hours worked beyond 40. We have provided a complimentary resource below, 5 Things School District’s Should Know about Changes to FLSA as well as a tool to measure the impact of possible changes to help districts determine when/if it makes sense to increase an employees pay who may lose their “Exempt” status or when they should just be paid overtime.
Remember, if you choose not to increase employee salaries to the new rate to maintain the exempt status, you must track all hours worked. In general that includes time spent before the scheduled work day or after hours for required training, time worked while responding to emails, phone calls, text messages, or any other work related activity that occurs off the clock. If you allow non-exempt employees laptops, smartphones, or other technology to use after hours, be sure you have policies and procedures that address protocol for use and compensation for work performed.
Duties Requirement or Test:
An employee who meets the salary level test is exempt only if s/he also performs exempt job duties.
(It is worth stressing this point. Salary alone will not determine the exemption status of employees. They must also perform duties that are “Exempt” in nature. These FLSA exemptions are limited to employees who perform relatively high-level work. There are several different categories in which a person can be exempt and again those are covered in the article written in February and we have provided a few guidelines in the complimentary resource offered below).
Common exempt level duties are the management of two or more employees, the authority or significant weight given to opinions regarding the hiring or firing of employees, discretion or independent judgment on matters of significance while overseeing a department or administrative function. There are also exemptions for computer and learned professionals, such as teachers, accountants, lawyers, but don’t stress out too much at the mention of teachers. They are treated differently under FLSA which will be covered in more detail below.
There have been discussions prior to the recent Department of Labor’s release of new FLSA guidelines indicating the DOL might change the definition of “primary duties” and require an employee to perform exempt level “primary duties” more than 50% of the employee’s work week. A similar regulation currently exists in California. The proposal released on June 30th does not provide clear updated language for this change, but the DOL is seeking comments from stakeholders to see if these changes are warranted.
What does this mean? The DOL has clearly indicated they are raising the bar to classify an employee as exempt. It would not be surprising to see additional future changes that require similar and more strict regulations that California uses. If they do, updated and accurate job descriptions based on the ratings of school district employees and their supervisors are among the most reliable and legally defensible methods to identify which employees may be impacted by these changes to FLSA exemptions.
Do Changes in FLSA Affect a School District’s Teachers?
You may be concerned as you read about these changes to FLSA for school districts and think, “Most of my teachers make more than $23,600 now, but less than $47,892. How can we be expected to pay all of them as non-exempt employees at an hourly rate and afford the overtime that so many teachers work?”
Within the DOL Wage and Hour guidelines there is an exception for bonafide teachers. Here’s what the guidelines read:
“Teachers are exempt if their primary duty is teaching, tutoring, instructing or lecturing in the activity of imparting knowledge, and if they are employed and engaged in this activity as a teacher in an educational establishment. Exempt teachers include, but are not limited to, regular academic teachers; kindergarten or nursery school teachers; teachers of gifted or disabled children; teachers of skilled and semi-skilled trades and occupations; teachers engaged in automobile driving instruction; aircraft flight instructors; home economics teachers; and vocal or instrument music teachers. The salary and salary basis requirements do not apply to bona fide teachers. Having a primary duty of teaching, tutoring, instructing or lecturing in the activity of imparting knowledge includes, by its very nature, exercising discretion and judgment.”
While this does provide some relief for school leaders, there are other areas in which school districts may want to begin to estimate potential budget impact and begin to update the job descriptions for their school district, specifically manager or director level positions where the “bona fide teacher” exemption does not apply. We have put together some action items school district leaders and school district human resource professionals to assist them with the potential changes to FLSA and how to plan the business and operational impact for school districts.
What Do School District Leaders Need to Do About Changes to FLSA?
Click on the link below to receive our bundle of complimentary resources to help your district get prepared. Here is what you will receive:
- A Budget Impact and Estimation Tool to evaluate the cost of potential changes to and possible solutions.
- 5 Tips for School District Leaders to Prepare for Changes to FLSA.
- A Quick Guide to FLSA Exemptions with school district benchmark jobs
- FLSA Exemption and Overtime FAQs for School Districts
We know these changes only add to your already full plate as a school leader. We hope these tools assist you as you begin planning for likely changes.
As you begin to work through the process of ensuring your district is prepared, keep K12 HR Solutions in mind as a resource to assist your school district with developing accurate job descriptions. Updated and accurate job descriptions provide greater visibility in ensuring your district is compliant with likely changes to FLSA. Our cloud based Job Analysis Software tool allows a school district’s employees to complete a full job analysis online where the information is stored on virtual servers. Once questionnaires are completed by staff members and reviewed by their managers, school districts can generate electronic or paper copies of their job descriptions. Our software gives districts the capability to update the entire district’s job descriptions in a few key strokes while electronically tracking changes to job descriptions for audit and change history purposes (no more tracking down employees and dragging them to the HR or administrative office). Most importantly, updated job descriptions with essential duties as well as knowledge, skills, and abilities for each job increase a school districts ability to utilize legally defensible human resource tools.
We hope we have helped you get in front of these likely changes and at least begin to plan for likely changes. If you would like to read more about these proposed changes, we’ve provided a few links to recent articles that describe the changes in more detail.