FLSA Overtime Final Rule to Change the Way Student Affairs Operates

On May 23, 2016 the United States Department of Labor (DOL) released the Final Rule on overtime pay. On the surface it is hard to argue against increasing the minimum pay level of $23,660 for salaried employees which had not been increased since 2004. But, an increase to an annual salary of $47,476 (original DOL recommendation was $54,000), seems excessive at a time when higher education institutions continue to struggle with reductions in funding and criticism for not being more affordable. For student affairs divisions this means employees who currently have salaries less than $47,476 annually will become hourly employees effective December 1, 2016 unless their salaries are increased at or above the new threshold. There are some limited exceptions for coaches, athletic trainers, and those performing direct academic support functions such as an academic advisor or tutor. (See DOL Overtime Final Rule and Higher Education).

The first reaction is to increase all employees current under the threshold to salaries above the new threshold which is quickly followed by the reaction that the division cannot afford to implement the new overtime rule. If you have not already begun to examine the implications for your division, begin immediately. While the tendency is to examine implications at the macro level, it is important to examine each class of positions that are below the new threshold. Review the job descriptions and the actual job duties currently performed in those positions. Evaluate if the work can be performed in a 40-hour work week. If not, can the position be restructured so that necessary tasks can be performed in a 40-hour work week? It is reasonable to expect that a person may work overtime occasionally. If the overtime is occasional, then these positions can be transitioned to hourly. Supervisors will need to understand what is expected of them in supervision of hourly employees and new hourly employees need to understand what is expected of them in managing their work to perform necessary tasks within a 40-hour work week.

Residence hall staff seem to create the greatest challenges. The salaries for these staff members often is low because institutions have considered room and board packages as a benefit. However, the guidance from the Department of Labor is very clear that room and board cannot be considered compensation in meeting the salary threshold unless the institution regularly provides housing to employees; the employee voluntarily accepts the housing; the housing is furnished in compliance with applicable federal, state and local laws; the housing must benefit the employee rather than the employer; and the institution must maintain accurate records of costs incurred in furnishing the housing (utilities, repairs and improvements, cleaning, etc). Since the reason staff are living in the halls is because the positions require them to be available to respond to students and student staff members as needed, housing and a meal plan cannot be considered compensation.

How do you determine the salaries for residence hall staff under the new overtime rule? As was mentioned earlier, examine the position descriptions and the job duties currently performed for each classification. Determine how many hours a week an employee in each classification is likely to work. For example, you might determine that live-in residence hall staff work an average of 55 hours per week. When you model the cost of paying overtime for live-in staff over a year at 55 hours per week and add that number to their current base pay, you may find that the compensation exceeds the new threshold of $47,476. You may want to reexamine the duties for live-in positions and determine if some duties could be shifted to other positions. You may find that some staff can and perhaps should be classified as hourly employees. Of course, things will happen that will require overtime for hourly employees, but supervisors can establish reasonable limits.

These changes are creating significant salary compression issues in residence life. The changes also create significant disparity between the salaries for entry level positions in residence life compared with student activity-type positions. As a residence life colleague at another institution reminded me, those staff chose not to work in housing for a reason. They did not want to live-in and deal with all that comes with living in a residence hall with hundreds or thousands of students depending upon the size of the hall.

There are obvious financial considerations, but I am most concerned how the overtime rule will change the culture of student affairs. We tend to be a group that does whatever it takes to get things done. Those entering student affairs understood this was an expectation and gladly gave of their time. With these commitments came the freedom to not punch a clock, to take two hour lunches, to run errands during the work day, and to come to work late when working the night before. For many new professionals, this will change. They will be hourly employees who will be required to count the hours worked in a week. Supervisors will need to develop work schedules for their student affairs employees and monitor the hours worked. While there are immediate implications, I am most concerned about future implications for the culture of student affairs when hourly staff move into salary positions. I fear they will continue to work as if they are an hourly employee. The challenge to take what time is necessary to help a student with an issue, to insure that a program is successful, to provide services at the highest levels, I fear, will be heightened.

Brent Paterson, Ph.D., currently serves as Assistant to the President at Illinois State University, having recently served as their Interim Vice President for Student Affairs.