How Will President Obama’s New Overtime Regulations Affect Your District?

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AASA Advocacy is pleased to share this joint blog post, penned in coordination with our friends at ASBO International

Last month, President Obama announced his proposal to raise the overtime salary threshold under the Fair Labor Standards Act (FLSA), which would extend overtime protections to nearly 5 million Americans next year. In his executive order, President Obama instructed the Department of Labor (DOL) to make specific changes to the FLSA, including raising its current salary threshold for overtime pay from $23,600, which is below the poverty level for a family of four, to $50,400. In other words, workers who earn less than this new threshold must be paid time and a half for each hour they work beyond the typical 40-hour work week.

As a quick refresher, the FLSA determines how employees are compensated and the standards for minimum wage and overtime pay (unless an employee meets one of the available exemptions). The FLSA was signed into law by President Franklin Roosevelt on June 25, 1938 to “end starvation wages and intolerable hours,” and set a national minimum wage in the U.S. for the first time. It also established a 44-hour work week (which was later decreased to 40 hours), but anything beyond that required employers to pay their employees time and a half. However, DOL Secretary Tom Perez notes that the overtime regulations “haven’t been meaningfully updated in decades,” and the salary threshold has been eroded by inflation over the years. No statistic highlights the underlying problem as well as this: in 1975, more than 60% of full-time salaried workers were eligible for overtime pay; today, only 8% qualify under the current threshold.

“We've got to keep making sure hard work is rewarded. Right now, too many Americans are working long days for less pay than they deserve,” President Obama said in a Huffington Post op-ed. “That's partly because we've failed to update overtime regulations for years—and an exemption meant for highly paid, white collar employees now leaves out workers making as little as $23,660 a year—no matter how many hours they work.”

With the President’s proposal, the salary threshold would be adjusted so that managers and executives can qualify for overtime pay. While these employees have been exempted in the past, this effort partially aims to counter employers who deliberately use the title “manager” for employees in low-wage occupations to avoid paying for overtime. At this point, the proposal is expected to impact nearly 5 million workers, but you can see how many workers would be affected state-by-state here. It should be noted however, that employees who make more than $122,000 a year will continue to remain exempt from overtime pay.

So what does this mean for schools?

Generally speaking, teachers, principals, and superintendents will not be affected by this change, thanks to the FLSA’s “learned professional” exemption. The “learned professional” exemption applies to employees who are compensated with a salary of $455/week or more, whose performance of work requires advanced knowledge that is primarily intellectual in character, and whose knowledge is in a field of science or learning and is acquired via “a prolonged course of specialized intellectual instruction.” Teachers are exempt from overtime pay regulations if their primary duty is “teaching, tutoring, instructing, or lecturing in the activity of imparting knowledge, and if they are employed and engaged in this activity as a teacher in an educational establishment.” This includes regular academic teachers, Pre-K and K–12 teachers, gifted and special education teachers, music teachers, and others. 

School administrators are also exempt in most cases, thanks to the “administrative” exemption under FLSA. To qualify, the employee must earn a salary of $455/week or more, and his or her primary duties must involve office or non-manual work that is “directly related to the management or general business operations of the employer,” and must require them to exercise discretion and judgment on significant matters. Primary duties involve working in areas like finance, accounting, budgeting, auditing, purchasing, quality control, personnel management, and related fields—all of which relate to the duties of the school business official in particular. For more information, please refer to this FAQ (see questions 16–22) about exemptions for administrators, district leaders, and other non-curriculum school staff. 

Learn more about the FLSA and President Obama’s new overtime proposal with these related resources:

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