April was a busy month for the federal government. They released the new Title IX regs, Pregnant Workers Fairness Act, revisions to the Uniform Grant Guidance, changes to the USDA School Nutrition Standards, and last, but not least, the Fair Labor Standards Act overtime rules. (Wee! Now this is why you all went into education, right?) This change to the FLSA becomes effective July 1, 2024 with an even larger change coming in January 2025, so now is the time for superintendents and business managers to verify compliance.
As a reminder, the Fair Labor Standards Act divides all employees into two categories: “exempt” or “non-exempt.” If a staff member is exempt, a school district is allowed to place the exempt employee on a salary to compensate the employee for all of the hours worked, rather than requiring the employee to keep track of the employee’s hours and pay overtime if earned. Under the FLSA, there are three main exemption categories that apply to school employees (executive, administrative, or professional). To fall within one of the exempt classifications, an employee must meet each of the three requirements as outlined by the DOL: 1) be paid a salary, meaning that they are paid a predetermined and fixed amount that is not subject to reduction because of variations in the quality or quantity of work performed; 2) receive a salary above a minimum amount set by the Department of Labor; AND 3) primarily perform exempt (executive, administrative, or professional) duties, as provided in the Department’s regulations.
So what has changed? As of July 1, 2024, the salary test increases from $684 per week to $844. In other words, the minimum weekly salary under prong 2 of the exemption test has increased. This is the equivalent of $43,888 per year. You might be thinking - that isn’t horrible! But wait - that amount jumps again in January. Starting in 2025, the salary level must be $1,128 per week ($58,656 per year). After that, the minimum salary level will automatically update periodically based on certain wage data. If you recall, the Obama administration proposed a similar change that was promptly stalled through litigation. On May 22, 2024, a group of plaintiffs filed a lawsuit in the Eastern District of Texas challenging the January 1, 2025 increase (but not the one set to go into effect on July 1). We will keep an eye out how this litigation unfolds.
One more quick reminder: certificated/certified educational employees (e.g., teachers, administrators) are excused from the salary minimum under the FLSA, so they are still considered exempt even if they are paid a salary lower than the new thresholds. However, for all of your non-teaching staff currently on salary, you’ll have some analysis to do and decisions to make.
What are your next steps?
Review your non-exempt and exempt classifications. Classified employees who might be exempt typically include head custodians, food service directors, transportation directors, etc. It typically will not include administrative assistants, paraprofessionals, and non-management kitchen and custodial staff members. Analyze your planned salary for exempt employees and ensure it will be compliant both in July 2024 and January 2025. If not, you should either (1) raise the employee’s salary to meet the minimums or (2) reclassify the employee as non-exempt, require the employee to track hours, and pay overtime for hours worked over 40 per week. (Don’t forget about those pesky extra hours spent driving bus, coaching, etc.!)
Review your salaries for related service providers. Positions such as PT/OT/SLP/school psychologist are not really mentioned in the FLSA regulations despite the critical role they play in a child’s education. Court cases have routinely classified these positions under the “learned professional exemption,” but there is very little guidance on whether those employees are “teachers” exempted from the minimum salary thresholds.
Let’s assume for a second that positions like your school psychs and SLPs aren’t “teachers” and must be paid the new minimum salary amount. We believe schools are within their legal rights to calculate weekly pay based on actual workweeks, even if your related service specialists (like other certificated staff) are typically paid over 12 months. This is supported by the FLSA Field Operations Handbook issued by the DOL. By dividing those employees’ salary by their number of workweeks, many districts are likely compliant with the minimum salary thresholds. For easy math, assume a relatively new SLP is making $50,000 for work performed in 42 workweeks. That’s a salary of $1,190 per week, sufficient to meet both the July and January salary minimums.
If the FLSA gives you anxiety, don’t fear! Listen to this classic Abba hit to relax (the title and song are a nod to our more seasoned administrators). If you are unsure or believe you may not be compliant given these new salary thresholds, you should contact your school attorney to discuss your options. Give us a call at 402-804-8000 or shoot us all an email at ksb@ksbschoollaw.com.