Federal Overtime Change Could Affect Staff

Some BU employees may be newly eligible for overtime pay under an update of Labor Department regulations.

Some nonfaculty BU employees could see a difference in the way they are paid as a result of a US Department of Labor update of the Fair Labor Standards Act, affecting employers across the country.

The key change more than doubles the minimum salary at which an employee can be exempted from overtime, raising the figure to $47,476, or $913 a week. The new threshold, effective December 1, 2016, means some employees—those who earn more than the current threshold of $23,660, but less than $47,476—will be eligible for overtime pay for the first time.

At a large research university like BU, says Carolyn Brownawell, executive director of Human Resources, making that change requires careful study of all areas of academic and administrative operations. “We are carefully examining the impact of the new rule and will implement it with the least disruption,” Brownawell says.

Over the next two months, Human Resources will be working with leaders in affected areas of the University to analyze the impact of the new regulations on the estimated 570 employees whose salaries fall within the affected range. That group includes employees from postdoctoral researchers and research assistants to athletic coaches and trainers and admissions and enrollment counselors.

There are several options for employers who must make changes in order to comply with the new rule. The four most common changes will involve refining job responsibilities, moving staff to overtime-eligible status, adjusting work schedules, and raising salaries.

Brownawell says each option has its own implications, depending upon the employee’s employment status and role at the University. Alternatives need to be examined “on a nearly individual basis to ensure we comply with the new regulations in the fairest and most cost-effective manner,” she says.

Certain categories of employees who were exempt from overtime before the update because of the nature of their job responsibilities will remain unaffected. For example, the change does not apply to employees with faculty appointments or to graduate students whose primary duty is teaching, both of whom are already covered by a teaching exemption. Students involved in research as part of their studies or who work as resident assistants are also not affected.

While the change seems simple, its implementation at a place like BU is complicated. For example, staff on grant-funded research projects may be affected. The National Institutes of Health has already said that it will increase grant funding to boost postdoctoral stipends (National Research Service Award fellowships) to levels at or above the new threshold. Many other funding sources have yet to be heard from.

When the Fair Labor Standards Act was written in 1938, it established the 40-hour workweek and national minimum wage, and set the exempt threshold at a salary of $30 a week. The regulations were last updated in 2004, when the threshold was set at $455 a week, or $23,660 annually. In 2014, President Obama ordered an update of the act that resulted in the new regulations. The act is scheduled for updates based on wage growth every three years.

A working group consisting of Brownawell and a dozen other administrators from across campus held its first meeting last Friday and will spend the next month collecting information on affected employees, potential change scenarios, and expected costs. They intend to present final recommendations for administration approval in August and turn the project over to an implementation team at the end of the summer.

BU could choose to comply with the change a few weeks before the December 1 deadline to better synchronize with payroll periods and nonfaculty employees’ annual reviews, Brownawell says.