The U.S. Department of Labor (DOL) this week released a proposed increase in the salary level below which employees may not be considered “exempt” under the Fair Labor Standards Act (FLSA), thus setting a new minimum compensation level for “white collar” employees who are not paid on an hourly basis.
DOL proposes increasing the threshold to $55,068 from the current $35,568 – a nearly 55% hike. This substantial increase echoes a similar large boost that the Obama administration proposed but was later blocked in federal court. The Trump administration subsequently withdrew the proposal.
DOL is also proposing to automatically update the threshold every three years by tying it to the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region. Regular increases of this nature might avoid the jolts created by the policies of the Obama and Biden administrations.
How it affects community colleges
It is important to note that faculty are not affected by this proposed change. However, executive, administrative and professional personnel – in other words, the vast majority of other “white collar” campus employees – are. Community colleges have widely differing compensation policies and employment structures, and the impact of DOL’s proposal will vary accordingly. However, thousands of community college employees would be affected by the proposed change.
An increase in the current FLSA exemption level would place campuses in the position of either having to reclassify currently exempt employees as hourly, when their jobs are commonly thought to be “executive, administrative or professional” in nature, or increase their compensation. Many community college campuses will therefore face stark personnel and financial decisions if the proposed overtime rule is finalized in a form anything close to what is proposed. (The rule has yet to be formally published in the Federal Register, after which a formal 60-day comment period begins.)
Typically, changes in one area of personnel compensation and/or job classification categories also affect others — there is a ripple effect.
A political reality to the proposed change is that non-governmental entities will bear the primary cost of this change. It does not require congressional approval.
The American Association of Community Colleges (AACC) has filed comments on previous DOL efforts in this area and has formally presented its views in oral testimony. It will do so again, given the tremendous campus implications. Although higher education is far from the only segment of the economy that would be impacted by this change, it is hoped that the Biden administration will pay close attention to community college perspectives.
AACC members are urged to closely monitor this issue and register their views accordingly. AACC will assist them in this process as it develops comments on behalf of all community colleges. AACC also encourages college officials to register for a webinar sponsored by the College and University Professional Association for Human Resources that will take a closer look at the proposed rule and its implications for higher education.