The U.S. Department of Labor recently issued a final rule to revise sections of the regulations implementing the Fair Labor Standards Act (FLSA). Generally, the FLSA requires employers to pay certain employees a federal minimum wage and overtime at a rate of one and one-half times their regular rate of pay for all hours worked in excess of 40 hours in a workweek. For school districts, there are several notable exemptions to the minimum wage and overtime pay requirements, including:
Executive, administrative or professional employee exemption
The FLSA provides an exemption from both minimum wage and overtime pay for employees who work in an “executive, administrative or professional capacity.” Currently, to qualify under this exemption, an employee must meet certain tests regarding their job duties and be paid on a salary basis at a rate not less than $684 per week (or $35,568 per year).
Effective July 1, 2024, the new rule will increase the minimum salary threshold to $844 per week (or $43,888 per year) and it will increase again to $1,128/week (or $58,656 per year) on January 1, 2025. The higher pay threshold will mean that fewer employees will qualify as exempt employees unless their salaries are raised to meet the new thresholds. This may have the practical effect of expanding the number of employees entitled to overtime pay.
Teacher exemption
Under existing law, teachers are included in the list of employees who do not qualify for mandatory overtime regardless of their salary, so long as: 1) their primary duty consists of “teaching, tutoring, instructing or lecturing in the activity of imparting knowledge” and 2) they are “employed and engaged in this activity as a teacher in an educational establishment by which the employee is employed.” The new regulations did not make changes to this exemption. Teachers continue to be included in the list of employees who do not qualify for mandatory overtime pay under the FLSA so long as they meet the test described above.
School administrators' exemption
School administrators are also subject to a special rule. If administrators perform “administrative functions directly related to academic instruction or training in an educational establishment or department thereof,” they remain exempt as long as they meet the salary thresholds described above or are paid a salary at least equal to the entrance salary for teachers in the educational establishment. The new regulations did not make changes to this exemption. School administrators continue to be included in the list of employees who do not qualify for mandatory overtime pay under the FLSA so long as they meet the test described above.
In light of the new rule, districts should review their list of non-teaching employees who are currently exempt from overtime under the FLSA. Employees on this list who are paid an annual salary of less than $43,888 on or after July 1, or less than $58,656 on or after January 1, 2025, will be impacted by the new rule. Districts should work with their board counsel to discuss how best to comply with the new regulations for each employee, which may include increasing
the employee’s compensation to maintain their exempt status or paying them overtime as non-exempt employees.
If you have general questions about the new rule, please contact OSBA’s division of legal services at 855-OSBA-LAW.