Tag: Overtime

  • Sen. Marshall Proposes Legislation to Fulfill Trump Campaign Pledge on “No Tax on Overtime” – CUPA-HR

    Sen. Marshall Proposes Legislation to Fulfill Trump Campaign Pledge on “No Tax on Overtime” – CUPA-HR

    by CUPA-HR | May 12, 2025

    On May 6, Senator Roger Marshall (R-KS), along with Sens. Tommy Tuberville (R-AL), Jim Justice (R-WV), and Pete Ricketts (R-NE), introduced the Overtime Wages Tax Relief Act, which is intended to fulfill President Trump’s campaign promise to eliminate taxes on overtime pay. The proposal provides an income tax deduction for overtime pay up to a certain threshold. Marshall explained that his goal with the legislation was to target the benefit to lower- and middle-income workers in industries and occupations that traditionally pay overtime.

    Under the proposal, individuals would be able to deduct up to $10,000 of overtime pay from their income taxes. For married couples, the cap would be set at $20,000. This is an “above-the-line” income tax deduction, so workers would have the ability to claim the deduction whether they itemize their deductions or take the standard deduction.

    Additionally, the proposal phases out the benefit for top earners, identified as individuals earning $100,000 or more and married couples earning $200,000 or more. The deduction is reduced by $50 for every $1,000 in income the individual or married couple earns above their respective threshold.

    The legislation also includes reporting obligations for employers “to ensure transparency and accuracy in claiming the deduction.” Employers will be required to report overtime earnings to employees in their annual wage and tax statements.

    Marshall is hoping to have the legislation included in the Republican’s fiscal year 2025 budget reconciliation bill, which is expected to cover everything from border security to extensions for the expiring 2017 tax cuts President Trump signed into law during his first term.

    CUPA-HR will keep members apprised of additional updates on this bill and others related to overtime laws and regulations.



    Source link

  • Trump administration court filing may spell end of overtime final rule

    Trump administration court filing may spell end of overtime final rule

    This audio is auto-generated. Please let us know if you have feedback.

    U.S. Department of Justice attorneys asked the 5th U.S. Circuit Court of Appeals to temporarily suspend the Labor Department’s appeals in two cases challenging its 2024 Fair Labor Standards Act overtime rule, according to an April 24 court filing.

    Texas district court judges twice blocked DOL’s final rule, which increased the minimum salary threshold for overtime pay eligibility in two steps. First, a November 2024 decision sided with plaintiffs including the state of Texas and enjoined the rule nationwide. A second judgment set aside and vacated the rule in response to a lawsuit by marketing agency Flint Avenue.

    The government asked that the 5th Circuit place its appeals in abeyance “pending the agency’s reconsideration of the rule.” It said counsel for the appellees in both cases did not oppose its request.

    The Biden administration’s effort to expand overtime eligibility to millions of U.S. workers would have pushed the annual minimum threshold under the FLSA to $58,656 in 2025 with automatic, additional increases every three years beginning in July 2027. An initial increase to $43,888 per year took effect before Texas federal judges blocked it along with the rule’s other components.

    The entire policy is almost certain to be erased by the second Trump administration, according to attorneys who previously spoke to HR Dive. Prior to the Biden-era rule, DOL had last increased the overtime-pay threshold during Trump’s first administration in 2019.

    Source link

  • Appeals Court Stays Litigation on Overtime Rule – CUPA-HR

    Appeals Court Stays Litigation on Overtime Rule – CUPA-HR

    by CUPA-HR | May 6, 2025

    On April 29, the 5th U.S. Circuit Court of Appeals issued a stay on the litigation challenging the Biden administration’s overtime rule that will last for 120 days. The order halts further proceedings in the appeals court while the Trump administration’s Department of Labor (DOL) reconsiders the Biden administration’s rule, and it directs DOL to file additional status reports every 60 days.

    In February, the Trump administration’s DOL filed an appeal on a district court’s ruling in Flint Avenue, LLC v. DOL that vacated the Biden administration’s overtime rule. The Trump appeal was the second appeal filed for cases involving the Biden overtime rule. The move to appeal was largely viewed as an attempt for the Trump administration to put a placeholder on court proceedings while Secretary of Labor Lori Chavez-DeRemer settled into her new role and figured out next steps for the overtime regulations.

    The ruling from the appeals court followed a request from Trump’s DOL to hold the case in abeyance while the agency reconsidered the rule. Further updates from the Trump administration regarding the overtime regulations are likely to follow.

    CUPA-HR will continue to monitor for updates related to the overtime regulations.



    Source link

  • DOL Files Appeal in Overtime Legal Challenge

    DOL Files Appeal in Overtime Legal Challenge

    by CUPA-HR | March 12, 2025

    On February 28, the Department of Labor (DOL) filed an appeal in Flint Avenue, LLC v. U.S. Department of Labor, which previously led a district court to strike down the agency’s overtime final rule set forth under the Biden administration. The action is the second pending appeal from DOL with respect to cases involving the Biden administration’s overtime rule and may be acting as a placeholder to provide time for the Trump administration to determine how they want to move forward with the Biden administration’s overtime rule.

    Background

    As a reminder, the Biden administration’s final rule implemented a phase-in approach to increasing the minimum salary threshold under the Fair Labor Standards Act (FLSA) overtime regulations. Specifically, the rule increased the minimum salary threshold, effective July 1, 2024, from the previous level of $684 per week ($35,568 per year) to a new level at $844 per week ($43,888 per year). This first increase used the same methodology set by the first Trump administration’s 2019 overtime rule to determine the new salary threshold level. The rule also aimed to increase the threshold a second time effective January 1, 2025; however, the Biden overtime rule was struck down in federal court before the second increase could take effect. This increase would have changed the minimum salary threshold again to $1,128 per week ($58,656 per year). Finally, the rule adopted automatic updates to the minimum salary threshold that would occur every three years.

    Shortly after the Biden overtime rule was published, lawsuits were filed challenging the final rule. These lawsuits resulted in two district court orders to vacate the final rule. On November 15, 2024, a federal judge in the Eastern District Court of Texas ruled to vacate the Biden administration’s FLSA overtime final rule in State of Texas v. U.S. Department of Labor. Similarly, on December 30, 2024, another federal judge in the Northern District Court of Texas ruled to vacate the Biden administration’s overtime rule in Flint Avenue, LLC. Both rulings vacated all components of the rule, meaning both the July and January salary thresholds set under the final rule were no longer in effect and automatic updates to the minimum salary threshold would not take place.

    DOL’s Appeals

    Soon after the federal judge ruled in the State of Texas case, the Biden administration’s DOL filed an appeal. The appeal was filed in the 5th U.S. Circuit Court of Appeals, where it remained through the presidential transition. On February 24, the Department of Labor under the Trump administration requested an extension to file its opening brief in the State of Texas appeal. The 5th Circuit Court agreed to the extension, allowing for opening briefs to be filed by May 6, 2025.

    Soon after, on February 28, DOL filed its second appeal to the 5th Circuit Court in the Flint Avenue case. Both actions may be intended to give time to newly confirmed Labor Secretary Lori Chavez-DeRemer to settle into her new role and determine how the Trump administration will move forward with litigation and the Biden administration’s rulemaking.

    CUPA-HR will continue to keep members apprised of legal updates regarding the overtime regulations.



    Source link

  • DOL files fresh appeal of a Texas decision vacating its new overtime rule

    DOL files fresh appeal of a Texas decision vacating its new overtime rule

    This audio is auto-generated. Please let us know if you have feedback.

    Dive Brief:

    • The U.S. Department of Labor has appealed a Texas federal judge’s 2024 decision blocking its Biden-era final rule which sought to expand overtime pay protections under the Fair Labor Standards Act, according to a Feb. 28 court filing.
    • Last December, Judge Sam Cummings of the U.S. District Court for the Northern District of Texas ruled against DOL in Flint Avenue, LLC v. U.S. Department of Labor, vacating and setting aside the final rule. Cummings’ decision came just over one month after another Texas judge similarly vacated and set aside the rule in a separate lawsuit filed by the state of Texas and parties including the Plano Chamber of Commerce.
    • The appeal takes Flint Avenue to the 5th U.S. Circuit Court of Appeals, the same court in which DOL filed an appeal of the decision in the State of Texas case last year. DOL’s public affairs staff did not immediately respond to a request for comment. The U.S. Department of Justice, which represents the DOL, did not respond to a request for comment submitted via its online form.

    Dive Insight:

    The Feb. 28 notice of appeal may come as a surprise to employers who expected the Trump administration to abandon the final rule; attorneys who previously spoke to HR Dive said that the rule was effectively “dead” despite DOL’s State of Texas appeal because of the Trump administration’s conservative policy stance on overtime.

    In fact, the new administration had already filed motions in the 5th Circuit pertinent to overtime rule litigation. On Jan. 22, two days after President Donald Trump’s inauguration, DOJ attorneys sent a letter to the 5th Circuit requesting a 30-day extension on the deadline set by the court to file an opening brief in the State of Texas appeal. The court granted the request and the agency’s filing deadline is currently set to March 7.

    The April 2024 final rule proposed a two-step process that would have eventually raised the minimum annual salary threshold for overtime pay eligibility under the FLSA from $35,568 to $58,656 by Jan. 1, 2025. The rule would then have implemented a mechanism for automatically adjusting the threshold every three years using current wage data beginning in July 2027.

    But a series of Texas court decisions froze the rule. The judge in State of Texas held that the rule exceeded DOL’s authority and was unlawful. Likewise, Cummings said in his decision that he found the State of Texas judge’s reasoning “persuasive,” and he adopted the same reasoning in ruling for the plaintiffs.

    There is some intrigue in how the 5th Circuit might rule on the two appealed judgments given that the court signed off on DOL’s overall use of a salary basis test for determining overtime pay eligibility in last year’s Mayfield v. U.S. Department of Labor. The Mayfield plaintiffs alleged that the salary basis test had no basis in the FLSA’s text, but the 5th Circuit disagreed. The court did hold, however, that DOL “cannot enact rules that replace or swallow the meaning” of the FLSA’s text, adding that particular salary threshold may raise legal issues because of their size.

    Source link

  • 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.



    Source link

  • 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.



    Source link

  • Overtime Rule Blocked for Public Institutions in Texas; House Advances Legislation Aiming to Block Overtime Rule – CUPA-HR

    Overtime Rule Blocked for Public Institutions in Texas; House Advances Legislation Aiming to Block Overtime Rule – CUPA-HR

    by CUPA-HR | July 1, 2024

    Update: On November 8, the federal judge from the Eastern District of Texas is set to hold a hearing on summary judgement in the business community’s challenge to DOL’s overtime final rule. While it is unknown how soon after we could get a decision on the validity of the rule, the judge could rule from the bench or quickly after the hearing. CUPA-HR will send out updates on the rulings as soon as we know.

    On June 28, a federal judge in the Eastern District of Texas Court granted a narrowly scoped preliminary injunction for the overtime rule in the state of Texas, blocking the Department of Labor’s overtime final rule from taking effect on July 1, 2024. The judge only blocked enforcement for employees of the state of Texas (i.e., public institutions), so private institutions in Texas and all other institutions outside of Texas will still need to comply with the overtime rule beginning July 1, 2024.

    The motion for a preliminary injunction was filed by the state of Texas alongside a lawsuit challenging the validity of the final rule in its entirety. At least two other lawsuits are currently pending before the Eastern District Court of Texas. The preliminary injunction will block the final rule from taking effect on July 1 for public employers and employees in Texas until a later decision is issued on the lawsuits challenging the validity of the final rule.

    As a reminder, the final rule implemented a two-phase approach to increasing the minimum salary threshold under the Fair Labor Standards Act overtime regulations. The first increase was expected to take 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 is set to take effect on January 1, 2025, and it would increase 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.

    Given the judge’s narrow decision granting the preliminary injunction, private institutions in Texas and all institutions outside of Texas are still required to implement adjustments to comply with the July 1 minimum salary threshold until a later decision is made on the validity of the rule as a whole. CUPA-HR will be monitoring the pending cases closely.

    House Appropriations Subcommittee Bill

    On June 26, the House Appropriations Subcommittee on Labor, Health and Human Services, and Education released their fiscal year 2025 funding legislation for the Department of Labor (DOL) and other related agencies, which included a provision to prohibit any funding provided to DOL under the bill from administering, implementing or enforcing the overtime final rule. The Subcommittee passed the legislation out of Committee during a markup on June 27. It will now be sent to the floor for a vote, where House Republicans have a slim majority and could pass the bill along partisan lines. The fate of the overtime provision appears uncertain in the Senate, however, as the Democrat-controlled chamber is unlikely to include such language in their appropriations bill. CUPA-HR will continue to keep members apprised of any updates on the status of the overtime final rule.



    Source link

  • 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.



    Source link

  • 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.



    Source link