Today, the U.S. Department of Labor finalized a long-awaited rule increasing the minimum salary requirement for employees who are exempt from overtime under the Fair Labor Standards Act (press release and summary here). The rule will be effective January 1, 2020, which is consistent with the DOL’s announcement of the proposal last March. As predicted, the final rule tracks the proposed rule closely, so you’ve probably heard us talking about this for awhile now. Here’s what you need to know:
For employees to be “exempt” from overtime under the FLSA, they must have exempt duties, must be paid on a salary basis, and must be paid the weekly minimum salary amount for each week they are treated as exempt. Only the third portion is changing under the new rule. Please note: simply paying someone above the weekly minimum does not make them exempt if their primary job duties are not exempt.
Under the new rule, the minimum weekly salary is increasing from $455 per week to $684 per week. Annualized, that’s an increase from $23,660 to $35,568. If employees you treat as exempt do not make the new minimum amount each week, you cannot treat them as exempt unless you increase their weekly pay accordingly.
HUGE EXCEPTION ALERT: The FLSA explicitly states that the minimum salary requirement does not apply to teachers and administrators. Yes, you read that correctly. You are not required to increase the salary for teachers or administrators to continue treating them as exempt, in the unlikely event you have any certificated staff member making less than that amount. (Note: There are a few unique situations here, such as technology coordinators or nurses who do not hold NDE certificates that you should flag for review with legal counsel).
The rule becomes effective on January 1, 2020. You should immediately check all contracts for your non-certificated employees you are currently treating as exempt. For schools and ESUs, this may include head custodians, head kitchen staff, and some other employees. If any of your currently exempt employees will be set to make less than the new weekly minimum as of January 1, 2020, you will need to decide how to address their exempt status under the FLSA, either by increasing their weekly pay or treating them as non-exempt and thus entitled to overtime.
Now is a great time to assess your overall compliance with the FLSA. You should compile a list of all of your non-certificated exempt staff, review their weekly compensation, and double check that their “primary duty” is actually exempt. Please, please, please do not fall into the trap of thinking that just because you pay a salary, an individual is exempt from overtime. If you have any questions about the new rule or other FLSA exemption questions, you should contact your district’s or ESU’s attorney or email us at ksb@ksbschoollaw.com.