Category: FLSA overtime

  • Federal Judge Vacates Overtime Final Rule

    Federal Judge Vacates Overtime Final Rule

    by CUPA-HR | November 15, 2024

    On November 15, a federal judge in the Eastern District Court of Texas ruled to strike down the Biden administration’s Fair Labor Standards Act (FLSA) overtime final rule. The ruling strikes down all components of the rule, meaning both the July and January salary thresholds are no longer in effect, and the triennial automatic updates will not take place. The decision applies to all covered employers and employees under the FLSA nationwide.

    The Eastern District Court of Texas held a hearing on the business groups’ lawsuits challenging the overtime regulations on November 8. During the hearing, the judge suggested that it would be problematic if DOL’s salary basis replaced the duties test established under the FLSA regulations. He also noted that the Biden administration’s regulations were projected to have a larger number of workers impacted by the salary threshold increase than the Trump administration’s 2019 rule. The judge did not rule from the bench, but his remarks showed skepticism about the Biden administration’s rule.

    Background

    As a reminder, the final rule implemented a two-phase approach to increasing the minimum salary threshold under the FLSA overtime regulations. The first increase took effect on July 1, increasing the minimum salary threshold from the current level of $684 per week ($35,568 per year) to $844 per week ($43,888 per year). The second increase was set to take effect on January 1, 2025, and it would have increased the minimum salary threshold again to $1,128 per week ($58,656 per year). The final rule also adopted automatic updates to the minimum salary threshold that would occur every three years.

    Soon after the final rule was published, several lawsuits were filed challenging the final rule. The suit claimed that the salary threshold that was supposed to go into effect on January 1, 2025, was so high it would result in more than 4 million individuals being denied exempt status, even though these individuals could be reasonably classified as exempt based on their duties, and in doing so, the rule violated both the statutory language of the FLSA and prior court decisions. The suits also challenged the automatic updates. The Eastern District Court of Texas granted a preliminary injunction for public employers in Texas prior to the July 1 effective date, stopping the rule from taking effect for those employers only. For private employers in Texas and all other employers in the country, the rule went into effect on July 1, and the January 1 effective date was still in play.

    Looking Ahead

    With the decision, the salary threshold set in the 2019 regulations ($35,568 per year or $683 per week) will be the salary threshold employers should adhere to. Whether President-elect Trump decides to increase the minimum salary threshold during his second term remains to be seen, but there will be no effort from his incoming administration to appeal the decision in favor of the Biden administration’s threshold. CUPA-HR will continue to keep members apprised of any updates related to the FLSA overtime regulations.



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  • Appeals Court Upholds DOL’s Authority to Use Minimum Salary Threshold to Determine Overtime Exemptions

    Appeals Court Upholds DOL’s Authority to Use Minimum Salary Threshold to Determine Overtime Exemptions

    by CUPA-HR | September 12, 2024

    On September 11, the 5th U.S. Circuit Court of Appeals issued a ruling in Mayfield v. U.S. Department of Labor that upholds DOL’s authority to implement a minimum salary threshold to determine exempt status under the Fair Labor Standards Act (FLSA) overtime pay requirements. While the ruling does not answer how other lawsuits challenging the Biden administration’s rule will be decided, the ruling is significant and could help other federal judges determine whether or not to strike down the Biden administration’s increased minimum salary thresholds.

    Background

    The case’s plaintiff, Robert Mayfield, filed a lawsuit against the Trump administration’s overtime rule in August 2022. In his lawsuit, he argued that the FLSA language on overtime exemptions only mentions a worker’s job-related duties and that implementing a salary threshold to determine exempt status exceeds DOL’s statutory authority. The Western District Court of Texas, a lower court where the lawsuit was originally filed, sided with DOL, stating that the agency has the statutory authority to implement the FLSA overtime minimum salary threshold. Mayfield appealed the decision to the 5th Circuit soon after.

    The Decision

    In its decision that sides with the Department of Labor, the 5th Circuit Court held that DOL may use a minimum salary requirement as part of its test for determining whether or not an employee qualifies as an executive, administrative and professional (EAP) employee exempt from the FLSA overtime pay requirements. Notably, the 5th Circuit Court argued that DOL does have statutory authority under the FLSA to use a salary threshold to “define and delimit the terms of exemption.”

    Though the decision allows for DOL to use a minimum salary threshold, the 5th Circuit Court did state that there is a limit to the power granted to DOL to do so. Specifically, the decision states that DOL may only use the minimum salary requirement to the extent that the salary threshold established in the regulations is a reasonable proxy for who is and who is not an EAP employee. They argued that DOL’s power to rely on proxy is not “unbounded” and that the agency “cannot enact rules that replace or swallow the meaning” of the FLSA’s terms that they seek to define.

    Looking Ahead

    Outside of the Mayfield case, there are three pending lawsuits in the Eastern District Court of Texas to challenge the Biden administration’s overtime final rule. That rule implements a two-phase approach to increasing the minimum salary threshold under the FLSA. The first increase took effect on July 1, increasing the minimum salary threshold from the current level of $684 per week ($35,568 per year) to $844 per week ($43,888 per year), and the second increase is set to take effect on January 1, 2025, increasing the minimum salary threshold again to $1,128 per week ($58,656 per year).

    The decision from the 5th Circuit does not have an immediate impact on the lawsuits challenging the Biden administration’s overtime rule, nor does it provide a definitive answer on how lower courts decide in those legal challenges. As such, the Biden administration’s July 1 salary threshold continues to be in effect,* and the second increase to the salary threshold is still set to take effect on January 1, 2025. CUPA-HR will keep members apprised of additional updates related to the FLSA overtime pay regulations.

    *A preliminary injunction to block DOL from enforcing the overtime final rule was placed for public employees in the state of Texas. Private institutions in Texas and all other institutions outside of Texas need to be in compliance with the July 1 salary threshold.



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  • HR and the Courts — July 2024 – CUPA-HR

    HR and the Courts — July 2024 – CUPA-HR

    by CUPA-HR | July 10, 2024

    Each month, CUPA-HR General Counsel Ira Shepard provides an overview of several labor and employment law cases and regulatory actions with implications for the higher ed workplace. Here’s the latest from Ira.

    University of California and UAW Agree to End Grad Student Strike

    The rolling strike of University of California graduate students at several campuses, protesting the university’s handling of Israel-Hamas war protests is formally over as a result of the university and union agreement to extend the injunction granted by a California state court at the university’s request. The university successfully argued that the rolling strike violated the collective bargaining agreement’s no-strike provision. The UAW represents 38,000 grad students at several University of California campuses.

    UC student workers walked off their jobs at six campuses in May and continued a rolling strike until the court enjoined the strike activity. The university breach-of-contract litigation continues, as there remain issues to be decided by the court as to the breadth of the no-strike provisions and the university’s claim for damages resulting from the breach of the no-strike provisions.

    University Prevails in Title IX Lawsuit Alleging Student Sex Harassment at a Private Party Off Campus

    A federal judge recent ruled that a plaintiff student failed to provide evidence that the university had substantial control over the context in which the assault or sex harassment occurred to make the university liable under Title IX. The judge concluded that even though the university had control over the alleged harasser because of an alleged student code violation, this was not enough to substantiate jurisdiction under Title IX (Roe V. Marshall University Board of Governors (2024 BL 215044, S.D. W. Va. No. 3:22-cv-00532, 6/24/24)).

    When the harassment occurs off campus, the judge ruled that the court must find some nexus between the “out of school conduct and the school.” The court concluded that the incident in question took place at a private party at a private residence and the party was not sanctioned, hosted or sponsored by the university or an entity affiliated with the university. Moreover, permission for the party was not sought from the university, and the university was unaware of the party until it was over.

    The university’s Title IX office determined, four days after the incident, that the matter should be handled by the university’s Office of Student Conduct, which the judge concluded was consistent with Title IX regulations at the time. The student conduct office immediately issued an no-contact order between the student and the alleged harasser and conducted a six-week investigation.

    The male student (alleged harasser) was ultimately placed on probation and required to participate in an alcohol education program, do 20 hours of community service, and accept responsibility for violation of the student code. The plaintiff (alleged victim) was also put on probation and required to participate in an alcohol education program and complete 10 hours of community service, after admitting to underage drinking. In dismissing the case against the university, the judge also concluded that the male student (alleged harasser) also faced possible independent criminal penalties.

    Two Conservative Groups Are Bringing Court Challenges to Large Employers’ Workplace DEI Programs

    America First Legal, led by former Trump adviser Stephen Miller, has filed at least 15 lawsuits alleging that employer DEI programs are illegal under Title VII and has sent more than 30 letters asking the EEOC to probe employer DEI programs at large employers, including Morgan Stanley and IBM Corp. Academic institutions could be their next target.

    The second organization, American Alliance for Equal Rights, led by conservative activist Edward Blum, has claimed that these DEI programs violate Section 1981 of the Civil Rights Act of 1866, which affirms that all citizens are equally protected by the law. The organization has used the 1866 statute in challenging DEI programs at law firms, including Winston and Strawn, Morrison Foerster, and Perkins Coe. The 1866 statute is broader than Title VII. Plaintiffs suing under the 1866 statute avoid the Title VII damage cap and the requirement that a charge be filed with the EEOC before filing suit.

    Transgender Woman Reaches Settlement of Claim That She Was Wrongly Denied Medical Coverage

    A transgender woman plaintiff sued her employer’s group insurance plan, alleging that she was wrongly denied medical coverage for facial hair removal, which she claimed is an extremely important part of gender-affirming care. The plaintiff alleged that the care is deemed medically necessary for treating gender dysphoria by the World Professional Association for Transgender Health. The lawsuit claimed that the denial, based on the conclusion that the surgery was cosmetic and unnecessary, was inconsistent with the evidence presented that the treatment was medically necessary (Cox V. WSP USA Inc. Group Insurance Plan (N.D. Cal. No. 3-24-cv-01312, 6/6/24)).

    The plaintiff sought $5,000 in out-of-pocket expenses plus $20,000 for future services. The case was dismissed after the parties stipulated to the judge that they had reached an undisclosed settlement.

    Supreme Court Raises the Bar for the NLRB to Obtain an Adverse Injunction Against an Employer for Unfair Labor Practices

    The U.S. Supreme Court concluded that the federal courts should give no more weight to an NLRB request for injunctive relief against employers allegedly violating the NLRA unfair labor practice provisions than it would give other litigants in injunction cases (Starbucks Corp, V. McKinney (U.S. No. 23-367, 6/13/24)). The Supreme Court essentially held that a defending employer is entitled to discovery over the NLRB’s alleged evidence before the court can issue an injunction. In the past, the NLRB has been able to maintain secrecy over this information when seeking extraordinary relief (e.g. an injunction requiring reinstatement of employees allegedly terminated for supporting a union).

    Supreme Court to Determine Employer Burden of Proof to Obtain an Exemption From FLSA Minimum Wage and Overtime Provisions

    The Supreme Court has granted certiorari to resolve the split in appellate courts on the precise evidentiary burden applicable to employers attempting to justify an exemption to the application of the FLSA’s minimum wage and overtime provisions. Right now the circuits are split over whether an employer must prove an exemption by “clear and convincing evidence” rather than the lesser standard of “preponderance of the evidence.” The Supreme Court will resolve this split and decide which standard is applicable to employers going forward (E.M.D. Sales Inc. V. Carrera (U.S. No. 23-217, petition granted 6/17/24)).

    The issue involves whether the defendant firm’s sales personnel fall inside the “outside sales exemption.”  The company lost the case at trial, where the federal court held that it did not meet the “clear and convincing” standard, while numerous other appellate courts have applied the less stringent “preponderance of the evidence” standard.



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  • As Effective Date for Biden FLSA Overtime Rule Nears, Opposition Mounts – CUPA-HR

    As Effective Date for Biden FLSA Overtime Rule Nears, Opposition Mounts – CUPA-HR

    by CUPA-HR | June 18, 2024

    On July 1, the first phase of the U.S. Department of Labor (DOL)’s new overtime rule goes into effect. The initial phase of the rule will require employers to pay most white-collar employees a salary of at least $43,888. If employers fail to do so, those employees will be entitled to overtime pay under federal law. As the rule’s effective date approaches, opposition has mounted, with plaintiffs filing three lawsuits challenging the rule, including one filed by the state of Texas requesting that the court delay the July 1 effective date. Additionally, several Republican members of the U.S. House and Senate have introduced a Congressional Review Act (CRA) resolution aimed at blocking the rule.

    Background

    On April 23, 2024, DOL issued a final rule to amend the Fair Labor Standards Act (FLSA) overtime regulations. The FLSA requires employers to pay employees at least the minimum wage (currently $7.25) for each hour worked and 1.5 times the employee’s regular rate of pay for any hours worked over 40 in one week. However, the FLSA contains various exemptions to these overtime pay requirements, including one for white-collar employees. White-collar employees are considered “exempt” if they satisfy a three-part test: (1) the employee must be paid on a salary basis (that is, paid the same amount each week regardless of hours worked), (2) the employee’s salary must meet a minimum threshold (currently $35,568) established by DOL, and (3) the employee’s primary duties must be consistent with being an executive, administrative or professional employee. The final rule will increase the minimum salary threshold from $35,568 to $43,888 on July 1, 2024, and then to $58,656 on January 1, 2025. Thereafter, the rule requires automatic increases to the threshold every three years based on a set formula.

    Lawsuits

    On May 23, a group of 13 local and national associations and Texas businesses filed the first lawsuit in federal court in Texas challenging DOL’s rule. The suit claims that the salary threshold that goes into effect on January 1, 2025, is so high it will result in more than 4 million individuals being denied exempt status, even though these individuals could be reasonably classified as exempt based on their duties, and in doing so, the rule violates both the statutory language of the FLSA and prior court decisions. The suit also challenges the automatic updates.

    On June 3, two additional lawsuits challenging the overtime final rule were filed by a software company in Texas, as well as the state of Texas itself. In both lawsuits, the plaintiffs make arguments similar to those in the lawsuit filed in May, stating that DOL lacks authority to implement the changes provided in the final rule. The state of Texas also filed a motion for a temporary restraining order (TRO) that seeks to block the final rule from going into effect on July 1.

    While it may take the courts several months to issue decisions on the validity of the rule, the judge could decide whether to grant the state of Texas’s motion for a TRO before the July 1 effective date. The TRO would block the rule from going into effect until the court decides whether or not the rule is valid. More updates will be provided via CUPA-HR Washington Insider Alert emails as decisions are released.

    Congressional Review Act Resolution

    On June 3, Rep. Tim Walberg (R-MI) and Sen. Mike Braun (R-IN) introduced CRA resolutions in the House and Senate to block the overtime final rule from going into effect. Unlike traditional legislation, CRAs require only a simple majority in both chambers to pass (as compared to the usual 60-vote threshold to bypass a filibuster needed in the Senate).

    Though House Republicans have the majority, it is unclear if and when the CRA will be brought to the floor for a vote, given the minimal concern with the July 1 effective date from the business community. In the Democrat-controlled Senate, the path for a floor vote seems even more uncertain as Senate Democrats do not appear to support the efforts to overturn the final rule. As such, it seems unlikely that Congress will pass the CRA to overturn the final rule this session.

    CUPA-HR continues to monitor for and keep members apprised of any major updates relating to the FLSA overtime regulations.



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  • Frequently Asked Questions From CUPA-HR’s FLSA Overtime Webinar – CUPA-HR

    Frequently Asked Questions From CUPA-HR’s FLSA Overtime Webinar – CUPA-HR

    by CUPA-HR | May 29, 2024

    Reminder for the July 1 threshold update: Lawsuits challenging the final rule are underway. Though such challenges are ongoing, we expect the July 1 salary threshold to withstand legal challenges and to go into effect on that date. Institutions should therefore prepare to implement changes to comply with the July 1 threshold. We will continue to keep members apprised of any new legal updates on the final rule.

    On May 8, CUPA-HR hosted the webinar “How the DOL’s Changes to Overtime Rules Will Impact Campus.” The webinar — presented by Josh Ulman, CUPA-HR’s chief government relations officer, and Laurie Bishop, partner at Hirsch Roberts Weinstein LLP — provided an overview of the upcoming changes to the Fair Labor Standards Act (FLSA) overtime regulations, including the new minimum salary thresholds and automatic updates that are included in the department’s final rule. Nearly 3,000 people attended.

    During the webinar, CUPA-HR received several questions about the applicability of the final rule’s changes to institutions. To answer these questions, CUPA-HR’s government relations team has put together the following FAQ. We also encourage members to visit CUPA-HR’s FLSA Overtime News and Resources page for more guidance and to discuss potential changes with legal counsel and leadership at their respective institutions.

    Background

    On April 23, the Department of Labor (DOL) issued its final rule to alter the overtime pay regulations under the FLSA. The rule increases the minimum salary threshold to $43,888 on July 1, 2024, and then to $58,656 on January 1, 2025. The rule also implements automatic updates to the threshold that will occur every three years. Institutions will need to make all necessary adjustments by July 1, 2024, in order to be in compliance with the first increase under the final rule.

    FAQs

    1. Do all exempt workers need to meet the minimum salary threshold requirement?

    Not necessarily. Generally speaking, an employee must satisfy a three-part test to qualify as an executive, administrative and professional (EAP) employee and therefore be exempt from the FLSA’s overtime pay requirements: (1) the employee must be paid on a salary basis and paid the same amount each week regardless how many hours they work (unless the employee does not work at all that week), (2) the employee must receive a salary not less than the minimum salary threshold established by DOL, and (3) the employee’s primary duties must involve the kind of work associated with executive, administrative or professional positions.

    Some workers, however, may be “exempt” even though they are paid below the minimum salary threshold. In 2019, DOL issued Fact Sheet #17S, which states that teachers, coaches and “academic administrative employees” that meet certain requirements can be exempt even though they are paid below the minimum salary threshold.

    According to the guidance, teachers need not meet the minimum salary threshold if their primary duty is teaching, tutoring, instructing, or lecturing to impart knowledge, and if they are performing that duty as an employee of an educational establishment. This teaching exemption would include higher ed positions such as faculty, part-time faculty, adjunct faculty and others who primarily engage in teaching while working. Additionally, graduate students and postdoctoral employees whose primary duties are teaching, tutoring, instructing or lecturing may also qualify for the teacher exemption.

    Coaches may also fall under the teacher exemption. As DOL explains, coaches whose primary duty is to “teach” student-athletes how to perform in their sport can qualify for the teacher exemption. The guidance clarifies, however, that coaches whose primary duties are recruiting students would not qualify for the teacher exemption, as their primary duty is not teaching, and are therefore subject to the three-part test used for most other employees.

    DOL also explains that “academic administrative employees” need not be paid the minimum salary threshold if they meet the requirements of a separate exemption test. According to the guidance, “academic administrative employees” are administrative employees whose primary duty is “performing administrative functions directly related to academic instruction or training in an educational establishment.” DOL states that, in order for such employees to be exempt, they must:

    • Satisfy the salary basis and salary threshold tests OR receive a salary of at least the entrance salary for teachers in the same educational establishment, and
    • Have primary duties to perform administrative functions directly related to academic instruction or training in an educational establishment.

    DOL explains that academic administrative employees at institutions of higher education generally include department heads; intervention specialists who respond to student academic issues; and academic counselors that may administer school testing programs, assist students with academic problems, and advise students on degree requirements. As with all exemptions, however, DOL clarifies that exemptions are granted based on the employee’s duties rather than their titles.

    1. Are students/graduate students exempt from overtime pay requirements?

    In Fact Sheet #17S, DOL states that most students that work for their institution are hourly nonexempt workers who typically do not work more than 40 hours per week. However, DOL provides guidance on three types of student workers who may receive salaries or other non-hourly pay. These include graduate teaching assistants, who can fall under the teacher exemption if their primary duty is teaching; research assistants, who DOL says typically have educational relationships when performing research under faculty supervision and do not have employment relationships; and student residential assistants, who DOL states are not generally considered employees under the FLSA, as they are often students enrolled in educational programs and receive reduced room or board charges or tuition credits.

    1. How do the overtime pay requirements apply to part-time workers?

    Part-time workers are required to meet all three tests (the duties test, salary basis test and salary level test) to be exempt from overtime pay requirements. Regardless of full- or part-time status, employees must be paid at least the minimum salary threshold on a weekly basis in order to be exempt from overtime pay requirements. That means that, beginning July 1, 2024, full- and part-time employees must be paid at least $833 per week in order to maintain exempt status, so long as the salary basis and duties tests are also met. The same will be true beginning January 1, 2025, when full- and part-time employees must be paid $1,128 per week per week to maintain their exempt status. It is important to note that the minimum salary threshold cannot be prorated for part-time employees.

    1. How do you determine nonexempt/exempt status for partial-year employment? For example, how do you determine exemption status for employees who work for less than 12 months per year but are paid their salary over a 12-month period?

    According to the Wage and Hour Division (WHD) Field Operations Handbook, institutions “may prorate the salary of an otherwise-exempt employee who has a duty period of less than a full year.” For example, an employee who works a nine-month schedule but receives paychecks over a 12-month period may have their checks prorated over the actual period of work (nine months) to determine whether the employee is paid at least the salary threshold.

    Example: An employee who works for nine months (39 weeks) of a year but is paid over a 12-month period receives a salary of $40,000 ($769.23 per week), which would fall below the new July 1 salary threshold of $43,888 per year ($844 per week). Without prorating the salary, it would appear that the employee would need to be classified as nonexempt for failing to meet the minimum salary threshold. However, because DOL allows for employers to prorate the salary of the partial-year employee, the nine-month employee would actually meet the salary level requirement because the prorated weekly salary is $1,025.64 ($40,000/39 weeks), which is well over the July 1 level of $844 per week. As such, the nine-month employee could be classified as exempt, so long as they also meet the salary basis and duties tests. It is important to note, however, that the nine-month employee cannot perform any work outside of the nine-month period if employers choose to prorate their salary to meet the minimum salary threshold.

    1. Can room and board be included in total compensation to meet the salary threshold?

    No. In the existing overtime regulations, DOL specifies that “an [exempt] employee must be compensated on a salary basis at a rate of not less than $684 per week … exclusive of board, lodging or other facilities.”*

    CUPA-HR has historically advocated for the inclusion of room and board in the total compensation considered when determining whether an employee meets the salary level test, and we most recently included this request in our comments responding to the 2023 proposed rule. Despite these efforts, DOL has declined to update the regulations to allow for this. In the 2024 final rule, DOL states that they received comments about granting employers the ability to credit the value of board and lodging towards the salary level, but they declined to address the issue as they view it as outside of the scope of the rulemaking.

    *Note that the $684 per week refers to the current salary threshold. Beginning on July 1, 2024, the new minimum salary threshold will be $844 per week, and beginning January 1, 2025, the new minimum salary threshold will be $1,128 per week.

    1. Can other benefits, such as health insurance, dental insurance and tuition reimbursement, be counted toward an employee’s salary to meet the salary threshold?

    No. Similar to room and board, benefits provided to an employee such as health and dental insurance or tuition reimbursement cannot be counted toward an employee’s salary to meet the salary threshold. These would fall under “other facilities” as included in the regulatory language.

    1. Can institutions provide compensatory time to nonexempt employees in lieu of overtime pay?

    Under the FLSA and its implementing regulations, nonexempt employees at a “public agency” may be compensated with compensatory time off in lieu of overtime pay. Fact Sheet #17S explains that a public institution may be considered “a public agency under the FLSA if it is a political subdivision of a state.” To determine whether a public institution falls under the definition of a “political subdivision,” DOL considers “whether the state created the [institution]” or “if individuals administering the [institution] are responsible to public officials or the general electorate.”

    At qualifying public institutions, nonexempt employees may be compensated with compensatory time off at a rate of not less than one and one-half hours for each hour worked over 40 hours in a given workweek. Most nonexempt employees are not allowed to accrue more than 240 hours of compensatory time off, but nonexempt employees who work in public safety, emergency response or seasonal activity may accrue up to 480 hours of compensatory time off.

    1. My institution is in a state where the minimum salary threshold for overtime pay exemptions is higher than that of the federal standards. Does the federal level take precedence over my state’s salary threshold?

    No. The minimum wage and overtime requirements under the FLSA are meant to establish a floor for pay requirements. This means that institutions in states that have minimum salary requirements for overtime exemptions that are higher than the federal FLSA requirements must adhere to the state levels. For example, in 2024, California mandates that employees must earn an annual salary of at least $66,560 to be exempt from overtime pay requirements. This is significantly higher than the July 1, 2024, level established in DOL’s recent final rule ($43,888 per year). In this case, institutions in California must adhere to the state’s level for overtime exemptions.

    1. Will the final rule be challenged in court?

    Yes. On May 23, a group of 13 local and national associations and Texas businesses filed suit in federal court in Texas, challenging the U.S. Department of Labor’s rule setting new minimum salary thresholds for the white collar overtime pay exemptions under the FLSA. The suit claims that the salary threshold that goes into effect on January 1, 2025, is so high it will result in more than 4 million individuals being denied exempt status, even though these individuals could be reasonably classified as exempt based on their duties, and in doing so, the rule violates both the statutory language of the FLSA and prior court decisions. The suit also challenges the automatic updates.

    CUPA-HR will continue to provide regular updates on DOL’s overtime final rule and the court case underway.

    Disclaimer: The purpose of this blog post is to provide additional information from existing guidance, regulations and laws from the federal government on the FLSA overtime regulations. Content included in this blog post does not constitute legal advice. We encourage members to speak with their institution’s legal counsel about appropriate ways to implement changes on their respective campuses.



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  • CUPA-HR Participates in OIRA Meeting on FLSA Overtime Rule – CUPA-HR

    CUPA-HR Participates in OIRA Meeting on FLSA Overtime Rule – CUPA-HR

    by CUPA-HR | April 9, 2024

    On April 4, CUPA-HR’s government relations team, President and CEO Andy Brantley, and four national board members met with officials at the Department of Labor (DOL) and the Office of Information and Regulatory Affairs (OIRA) to discuss the upcoming overtime regulations to increase the minimum salary threshold. During the call, the group expressed CUPA-HR’s broad concerns with the rule, as well as the specific challenges implementation of the new rule could create for different types of institutions in various areas of the country.

    On March 1, DOL sent the final rule to update the Fair Labor Standards Act overtime regulations to OIRA for review. As previously noted, the OIRA review marks one of the last steps required before DOL can publish the final rule for public viewing. While the rule is at OIRA, the text and details of the final rule are not public, but interested stakeholders are able to request meetings with the administrator to discuss the proposed changes.

    During the meeting, Andy Brantley and Bailey Graves from the CUPA-HR government relations team reiterated the concerns that were addressed in CUPA-HR’s comments submitted in November 2023. The comments made the following four recommendations for DOL to consider prior to issuing a final rule:

    1. DOL should not update the salary threshold at this time.
    2. DOL should lower the proposed minimum salary threshold and account for room and board.
    3. DOL should not implement automatic updates to the salary threshold.
    4. DOL should extend the effective date of any final rule implementing a higher salary threshold.

    Brantley and Graves were joined by CUPA-HR Board Chair Jami Painter, Chair-Elect Robyn Salvo, and board members El pagnier Hudson and Kristi Yowell, who discussed the impact of these potential changes on employee exempt/nonexempt status and employee morale and benefits. They also discussed the impact of the rule on higher education’s efforts to offer competitive wages to employees, the difficulties of having employees in areas with different costs of living, and the impact this rule could have on an institution’s ability to provide student services.

    Looking Forward

    It is unknown when the final rule will clear OIRA review and be published for public viewing. OIRA review typically lasts 30-60 days, and OIRA meetings are currently set through April 11. However, the Biden administration has incentive to move quickly to publish the final rule in order to avoid the rule being overturned via legislation if Republicans win Congress and the White House in the November election.

    The final rule will also likely face legal action once it is published, which could delay the effective date or stop the rule from going into effect in its entirety. CUPA-HR will keep members apprised of when the final rule clears OIRA review and is published, as well as any legal challenges that may arise.



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  • DOL Accelerates Regulatory Actions – CUPA-HR

    DOL Accelerates Regulatory Actions – CUPA-HR

    by CUPA-HR | July 25, 2023

    The Department of Labor (DOL) has accelerated release of proposed and final regulations as the agency strives to meet the self-imposed deadlines in the Biden administration’s Spring 2023 Unified Agenda of Regulatory and Deregulatory Actions (Regulatory Agenda). Multiple DOL sub-agencies are issuing rules and proposed rules in July and August on independent contractor classification, overtime pay exemptions, workplace inspections, and workplace injuries.

    Overtime Pay Exemptions

    As previously reported, on July 12, DOL’s Wage and Hour Division (WHD) sent to the White House Office of Information and Regulatory Affairs (OIRA) a proposed rule on “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees” (1235-AA39) for review. OIRA is part of the Office of Management and Budget (OMB) and is charged with reviewing the costs and benefits of regulatory actions. In the Regulatory Agenda, DOL targeted August for release of a Notice of Proposed Rulemaking (NPRM) on overtime exemptions. OIRA review signals DOL is trying to publish the NPRM at or close to that deadline.

    While the content of the proposed rule has not yet been released to the public, we expect that the proposal will increase the minimum salary an individual must be paid to qualify as a bona fide executive, administrative, and professional employee exempt from the Fair Labor Standards Act (FLSA)’s minimum wage and overtime pay requirements.

    WHD first announced that it planned to “update the salary level requirement of the section 13(a)(1) exemption” to overtime pay requirements within the FLSA in the Fall 2021 Regulatory Agenda (125-AA39). In early 2022, CUPA-HR and other employer groups requested that DOL hold stakeholder meetings before issuing any regulations. DOL held these meetings, and employer groups urged DOL to delay moving forward with changes to the overtime rule, which DOL did until July 12 when it sent the proposal to OIRA.

    While OIRA may take up to 90 days to conduct a review, the agency generally completes review within 30 to 60 days. In the meantime, as with any proposed rule under review, OIRA is accepting input from stakeholders who would like to voice their potential concerns with the rulemaking. CUPA-HR will be requesting a meeting to reiterate the objections made to the rule in letters that CUPA-HR and other associations have sent to DOL since the introduction of the proposal in the Fall 2021 Regulatory Agenda. Most recently, CUPA-HR and 103 other signatories sent a letter to DOL in May 2023, requesting the abandonment or, at minimum, postponement of the anticipated overtime regulation due to the supply chain disruptions, workforce shortages, inflationary pressures, and shifting workforce dynamics that are already prevalent and could be exacerbated by the rulemaking. CUPA-HR has also participated in several DOL listening sessions on the matter.

    Independent Contractor Classification 

    WHD announced in the Spring 2023 Regulatory Agenda that it plans to release the final rule for “Employee or Independent Contractor Classification Under the Fair Labor Standards Act” (1235-AA43) in August. While DOL has not sent the rule to OIRA yet, we expect it will do so any day now. WHD published the original NPRM on October 13, 2022, and allowed the public to provide comments on the proposal until December 13, 2022. Although DOL has not released the text of the final rule, we expect it will be substantially similar to the NPRM and will replace the existing Trump-era rule (1235-AA34) issued on January 7, 2021.

    In evaluating whether a worker is an employee or independent contractor under the FLSA, the courts and DOL have long considered the following five factors: the opportunity for profit or loss; investment and permanency; the degree of control held by the employer over the worker; whether the work is an integral part of the employer’s business; and skill and initiative. In the Trump-era 2021 rule, DOL concluded two of the five identified factors — the nature and degree of control over the worker and the worker’s opportunity for profit or loss — are most probative in the analysis and should be considered “core factors” given additional weight. DOL asserted that this streamlined approach was consistent with how courts had historically applied the five-factor test. The 2021 rule also explained that whether the work is “integral to the employer’s business” depends on whether the work is part of an integrated unit of production and not whether the work is critical, necessary or central to the employer’s business, as the latter is subjective, confusing and difficult to apply.

    DOL now asserts that the 2021 rule does not fully adhere to the text and purpose of the FLSA and thus intends to replace it with the new method outlined in the NPRM. This new method would shift away from the core factors test to a test in which the factors are all weighted equally and given full consideration. In addition, the DOL is reversing its position on the interpretations and clarifications of factors in the 2021 rule, including the aforementioned clarification on the integral factor.

    Many in the business community filed comments opposing the NPRM and supporting the 2021 rule, and we expect that some of those same groups will challenge DOL’s final rule in court if it is substantially similar to the proposal.

    Workplace Walkarounds 

    On July 17, the Occupational Safety and Health Administration (OSHA) sent the “Worker Walkaround Representative Designation Process” (1218-AD45) rule to OIRA for review. As mentioned above, this is an initial step in releasing the proposed rule, the target date for which was June. Again, we are not certain how long the OIRA review process will take, and OIRA is allowing for meetings with individuals and organizations interested in this NPRM.

    Under current rules, a union may designate an employee to accompany an OSHA inspector during their facility walkaround. According to the Regulatory Agenda, this NPRM would allow an employee representative to accompany the OSHA inspector, regardless of whether that representative is a direct employee of the company subject to inspection.

    Workplace Injuries and Illnesses 

    On July 17, OSHA released the text of the “Improve Tracking of Workplace Injuries and Illnesses” (1218-AD40) final rule, which was published in the Federal Register on July 21. DOL had projected in the Regulatory Agenda that it would release the rule in June 2023.

    The rule amends OSHA’s occupational injury and illness recordkeeping requirements to mandate that certain employers electronically submit specified workplace injury and illness reports to OSHA on an annual basis. More specifically, the new rule will require employers with 100 or more employees in certain industries to electronically submit content from their OSHA Forms 300 and 301 once a year. To be included in the requirements, industries must meet certain criteria that establish them as high hazard. Meanwhile, employers with 20 or more employees in designated industries will continue to be required to electronically submit content from their OSHA Form 300A annually. Finally, employers with 250 or more employees in any industry will need to continue submitting content from their Form 300A on an annual basis.

    OSHA plans to publicize the data from the annual electronic submissions. The data would be inputted to a searchable database after removing anything that could help identify the individuals in the reports. Employers will not be required to submit to OSHA details from Forms 300 and 301 related to employees’ names or addresses, the healthcare professionals involved, or the facilities where treatments were provided. In addition to these reporting requirements, the rule also updates the NAICS codes used by OSHA to select which industries should be included in these reporting obligations.

    CUPA-HR will continue to keep members apprised of further details concerning the DOL’s advancement of its Spring 2023 Regulatory Agenda, along with opportunities for advocacy.



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  • Supreme Court: Highly Compensated Employee Entitled to Overtime Because Employer Did Not Pay on a Salary Basis – CUPA-HR

    Supreme Court: Highly Compensated Employee Entitled to Overtime Because Employer Did Not Pay on a Salary Basis – CUPA-HR

    by CUPA-HR | February 23, 2023

    On February 22, the U.S. Supreme Court issued its decision in Helix Energy Solutions, Inc. v. Hewitt, finding that an employee making over $200,000 per year was entitled to overtime pay under the Fair Labor Standards Act (FLSA) because he was not paid on a salary basis. The case is a reminder that exempt status depends not only on how much the employee is paid, but also on how they are paid. Employers may want to be particularly careful when providing exempt employees — including part-time exempt employees — with different weekly pay based on hours worked.

    Under U.S. Department of Labor (DOL) regulations, an employee must meet the following three requirements to be considered an executive, administrative or professional employee exempt from the FLSA’s overtime pay mandates: (1) perform duties consistent with those exempt categories as set forth by the DOL, (2) be paid a minimum salary (currently set at $684 per week), and (3) be paid on a salary basis. The employer in the case argued that the employee was exempt because he was paid $963 per day, therefore making at least the minimum salary of $684 per week, and he met the duties test for an executive.

    The court found, however, that the employee was not paid on a salary basis as set forth in Section 541.602 of DOL regulations and was therefore not exempt. Section 541.602 requires exempt employees to receive the full pre-determined salary for any week in which they perform any work without regard to the number of days or hours worked. Specifically, the court said the employee “did not get a salary (of $963 or any other amount) because his weekly take-home pay could be as little as $963 or as much as $13,482, depending on how many days he worked.” The court did say, however, that daily-rate workers could qualify as paid on a salary basis if the pay met the conditions set out in DOL regulations §541.604(b).

    In a dissenting opinion, Justice Brett Kavanaugh contended that the salary threshold and salary basis test — both of which DOL created through regulations — may not be consistent with the FLSA itself. Specifically, Kavanaugh said:

    “The Act focuses on whether the employee performs executive duties, not how much an employee is paid or how an employee is paid. So it is questionable whether the Department’s regulations — which look not only at an employee’s duties but also at how much an employee is paid and how an employee is paid — will survive if and when the regulations are challenged as inconsistent with the Act. It is especially dubious for the regulations to focus on how an employee is paid (for example, by salary, wage, commission, or bonus) to determine whether the employee is a bona fide executive. An executive employee’s duties (and perhaps his total compensation) may be relevant to assessing whether the employee is a bona fide executive. But I am hard pressed to understand why it would matter for assessing executive status whether an employee is paid by salary, wage, commission, bonus, or some combination thereof.”

    Since the employer in this case failed to raise the challenge to the regulations properly, the issue was not considered before the court.  As such, it remains unclear how many justices agree with Kavanaugh and whether the majority of the court would overturn the DOL’s salary basis and threshold tests.

    CUPA-HR continues to monitor all updates relating to the FLSA and its implementing regulations and will keep members apprised of significant news with respect to the overtime issue.



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  • CUPA-HR Participates in DOL Overtime Regional Listening Sessions – CUPA-HR

    CUPA-HR Participates in DOL Overtime Regional Listening Sessions – CUPA-HR

    by CUPA-HR | June 14, 2022

    In May and June, CUPA-HR participated in five regional listening sessions hosted by the Department of Labor (DOL) on the anticipated Notice of Proposed Rulemaking (NPRM) to update the criteria for the “executive, administrative and professional” exemptions for overtime pay under the Fair Labor Standards Act (FLSA). The listening sessions provided regional employers the opportunity to discuss their support or concerns with changes to the minimum salary level required to be exempt from overtime payments under the FLSA.

    CUPA-HR joined each of the five sessions to express concerns with the timing of the proposed increase to the minimum salary threshold to qualify for exempt status under the FLSA. Specifically, we raised concerns with the timing of such changes, as they would come while institutions, employees and students are still grappling with the challenges of the COVID-19 pandemic, a tight labor market and historically high inflation. Additionally, several CUPA-HR members joined the calls to raise similar concerns and discuss issues more specific to their individual institutions.

    Though many in higher ed and other industries are expressing similar concerns about raising the overtime minimum salary threshold level at this time, labor unions and worker advocates have led efforts to both raise the minimum salary threshold and expand coverage of overtime regulations to workers currently not covered under the FLSA. Notably, the National Education Association sent a letter to DOL urging the agency to remove the teacher exemption that currently exempts teachers from the FLSA requirements to receive overtime payments regardless of how much they are paid.

    The overtime NPRM that was targeted for release in April 2022 is now expected to come anytime within the next couple of months, though more information on when it will be released may be included in the anticipated Spring 2022 Regulatory Agenda. CUPA-HR will continue to monitor for the NPRM and will keep members apprised of any updates to the overtime regulations.



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  • DOL to Host Regional Listening Sessions for Proposed Overtime Rule Regulations – CUPA-HR

    DOL to Host Regional Listening Sessions for Proposed Overtime Rule Regulations – CUPA-HR

    by CUPA-HR | April 7, 2022

    In the Biden administration’s fall 2021 regulatory agenda, the Department of Labor (DOL)’s Wage and Hour Division (WHD) announced that it planned to release in April 2022 a Notice of Proposed Rulemaking (NPRM) changing criteria for the “executive, administrative and professional” exemptions from the overtime pay requirements under the Fair Labor Standards Act (FLSA). In May and June, the DOL will host five regional listening sessions allowing stakeholders to discuss the anticipated proposed rule aimed at changing the exemptions to the federal overtime pay requirements.

    With listening sessions extending into May, the WHD will not be able to meet the April target date, but we do expect the agency will release a proposed rule in 2022 with compliance likely required in 2023. While the DOL has not shared how it may change the exemptions, it is holding listening sessions to elicit stakeholder input as to whether changes are appropriate and what changes would be appropriate at this time.

    Background

    According to the regulatory agenda, one of the goals of the NPRM would be “to update the salary level requirement of the section 13(a)(1) exemption [under the FLSA].” Changes to the overtime exemption minimum salary threshold have been proposed recently under both the Obama and Trump administrations. In 2016, President Obama’s DOL issued a final rule to increase the salary threshold from $23,660 to $47,476 per year and impose automatic updates to the threshold every three years, but the rule was subsequently struck down by federal court before taking effect in 2017. In 2019, the Trump administration issued a new final rule that raised the minimum salary threshold from $23,660 to $35,568 annually, which went into effect on January 1, 2020. The $35,568 threshold remains in effect today.

    On March 29, in anticipation of the upcoming Biden administration rule, the DOL held a virtual higher education-specific listening session for D.C.-based higher education associations, including CUPA-HR. The listening session was scheduled after CUPA-HR and 14 other higher education associations submitted a request that the DOL hold such meetings prior to releasing the anticipated NPRM. CUPA-HR and several other higher education associations joined the session to discuss potential concerns institutions may have with an increase to the minimum salary threshold at this time.

    Regional Sessions

    In addition to the D.C. meeting held in March, the DOL is planning to host five additional regional listening sessions for employers. The sessions include the following:

    • Northeast Employers: May 13 at 3:30 p.m. EDT
    • Southeast Employers: May 17 at 2:00 p.m. EDT
    • Midwest Employers: May 20 at 3:30 p.m. EDT
    • Southwest Employers: May 27 at 3:00 p.m. EDT
    • West Employers: June 3 at 3:30 p.m. EDT

    If your institution is interested in participating in any of the regional meetings, please reach out to CUPA-HR’s Chief Government Relation Officer Josh Ulman at [email protected]. Additional information about the D.C. listening session and CUPA-HR’s talking points will be provided upon inquiry.



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