The U.S. Department of Labor has issued rules about which employees have to be paid overtime, effective January 1, which could have an impact on non-profit organizations, including private schools.
The rules, which involve multi-part tests that help determine who qualifies, identify the specific amount of salary that an employee must be paid to be eligible for overtime pay.
In general, teachers are exempt from the rules. However other employees of a nonprofit organization are affected, including school administrators/principals.
As soon as possible, you should consult with your school accountant and/or attorney to discuss the changes and whether your school is in compliance and what, if anything, needs to be updated to conform with the law.
Background
The Fair Labor Standards Act (FLSA) guarantees a minimum wage for hours worked and requires that many types of employees be paid overtime for work over 40 hours per week. New rules for the law are becoming effective January 1, 2020.
Most importantly for schools, the new rule raises the salary threshold for “white collar” employees from $455/week to $684/week (meaning a yearly salary minimum of $35,568).
Teachers are exempt from the overtime rule as long as their primary duty is teaching, tutoring, instructing or lecturing in the activity of imparting knowledge and working at an educational establishment. Teachers and teacher aides do not need to meet the salary threshold. Administrative staff must meet the salary threshold to be exempt from the new overtime rules.
Prior to this change, administrative staff who were paid $23,660 or more were not subject to the overtime requirement. The rule change now requires “white collar” employees be paid overtime, who make less than $35,568 per year. Thus, to continue to treat administrative staff as exempt from overtime, a school would need to pay such staff member a minimum salary of $35,568 per year.
Additionally, the salary requirement will be automatically updated based on fixed percentiles of weekly earnings every three years. Lastly, the rule permits employers to count bonuses and incentive payments up to 10 percent of the new salary level.
The FLSA and Department regulations do not provide an exemption from overtime requirements for non-profit organizations. The regulations specifically identify schools as “named enterprises” and require compliance, regardless of their non-profit status.
More information can be found at the U.S. Department of Labor’s Overtime Pay website, reference guide, and fact sheets.
