The Department of Labor’s (DOL) Wage and Hour Division announced its proposal to amend the Fair Labor Standards Act (FLSA), including the regulations governing the “white collar” exemption for executive, administrative, and professional employees.  While there are several important implications for higher education institutions, the key aspect of the proposal is an increase to the overtime pay threshold from the current amount of $35,568 to $55,068.  

Last adjusted to $35,568 during the Trump Administration, the new proposal calls for a $19,500 increase that would include automatic adjustments every three years.  While this is a significant increase, it’s far lower than the $82,000 amount that was pushed by several members of Congress and organized labor groups.

The proposed salary level increase to $55,068, which is intended to force higher salaries for exempt employees, is substantial - and employers will need to consider the impact it will have on their organization or institution.  

The FLSA requires that employers pay employees overtime based on a formula in excess of 40 hours per week.  The FLSA exempts certain employees from the overtime pay requirements, most common are those in the executive, administrative, or professional fields (white collar exemptions).  

There is no exemption for non-profit organizations under the FLSA or in the proposed rule, and there are no exceptions made for small employers or regional cost of living differences across the country.  The proposal does retain the “teaching exemption,” meaning faculty and other campus employees who provide instruction and are currently exempt from the threshold requirements will remain exempt.  

Employers, including colleges and universities, have until November 7, 2023, to submit comments (instructions for submitting comments can be found on the second page of the proposal).  It’s unclear when DOL might announce a final rule and implementation date.