Charter and Independent Schools Prepare for the Latest Federal Overtime Pay Rule
The Department of Labor (DOL) has recently updated the guidelines for overtime pay with a new final rule. Under this rule, eligible employees authorized to work in the U.S. who exceed 40 hours in a workweek may qualify for overtime pay. As a result, charter and independent schools must evaluate their pay strategies to meet industry standards, preserve fair compensation among staff members, and maintain compliance with the ruling. Keep reading to learn what changes the rule introduces and how charter and independent schools will be affected.
The rule breakdown
On April 23, 2024, the DOL updated the Fair Labor Standards Act (FLSA)* with its latest overtime rule. This aims to further the department’s goal of protecting the working class from being exploited, overworked, or underpaid by companies. Here are the main regulatory changes introduced by the law.
Extended minimum salary threshold: Most salaried workers are currently eligible for overtime pay if they earn less than $684/week, or $35,568 per year. This salary threshold will rise on July 1, 2024, making those who earn less than $844/week, or $43,888 annually qualify for overtime. The minimum salary will get another increase on January 1, 2025; at this time, overtime pay will be available to most salaried employees earning less than $1,128/week, or $58,656 per year.
Increased total annual compensation requirement: Highly compensated employees (HCEs) are deemed exempt from overtime when their total annual compensation is $107,432 or higher. Under the new rule, the total yearly compensation rate to be considered a HCE will rise to $132,964 by July 1, 2024. The exemption rate will increase again to $151,164 on January 1, 2025.
New earnings threshold renewal period: Starting July 1, 2027, the earning thresholds will be updated every three years to ensure the fairness of overtime pay.
*Please be advised that the FLSA establishes overtime pay guidelines on a national level. Additional overtime requirements may apply to schools due to state regulations. The state of California, for instance, requires businesses to pay non-exempt employees double their regular rate when they work over 12 hours in a workday, or over 8 hours on the seventh consecutive day in a workweek. It is crucial to review the specific regulations and rules of your local jurisdiction to ensure compliance with all applicable laws. Failure to adhere to state-specific overtime regulations may result in legal consequences. For accurate and detailed information, please consult with a legal expert or refer to your state’s labor department.
The rule’s effect on charter and independent schools
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The introduction of the FLSA rule is causing schools to revisit their approach to overtime pay. In general, overtime is defined as paying an employee 1.5 times their regular rate for hours worked after the 40-hour threshold is met. The recipients of overtime, however, are determined by job type, duties, and salary basis. Employees are exempt from getting overtime if their role matches the following criteria:
- Earns a base salary or fee
- Has their paid salary meet the minimum weekly salary threshold
- Meets the “white collar” exemption by performing executive, administrative, and/or professional duties
To abide by the new federal guidelines, schools must update who is exempt and non-exempt from overtime pay. Numerous school professions are categorized as learned professional exemptions, which applies to salaried employees whose career requires them to complete specialized training. School nurses, for example, often fall under this category for needing advanced healthcare knowledge to perform their job.
Teachers and school administrators may also fall under the professional exemption because their primary duty is teaching or providing administration for academic instruction for more than half of their workweek. However, the National Education Association (NEA) encourages schools to consider equitable pay raises for their staff’s learned professionals since 46% of teachers are paid below the new income thresholds.
The new rule significantly impacts certain non-instructional roles including security officers, custodians, librarians, school sports coaches, and athletic trainers. These workers will most likely be eligible for overtime pay once the new thresholds are placed.
In any case, charter and independent schools must reclassify some of their staff as workers qualified for overtime or fairly offer wage increases to maintain specific employees’ exemption statuses.
Six ways schools can prepare
With the starter deadlines fast approaching, charter and independent schools should proactively discuss methods for handling the new overtime pay rule. Here are six tips schools can utilize to prepare for the latest DOL change.
Revisit budgets: Higher salary and weekly pay thresholds will cause more staff employees to have overtime access. Reanalyze your budget to ensure overtime payment expectations can be met and plan for obstacles that could influence other financial obligations such as fundraising.
Update employee classifications: Whether due to the new rule or a recent change in employee status, checking and reclassifying your staff could be a wise choice. Some classifications to clarify are whether a worker is exempt, non-exempt, full-time, part-time, salary, or hourly.
Review other labor regulations: Maintaining regulatory compliance is an HR challenge for many charter and independent schools. That’s why it’s crucial to examine local and state overtime laws while familiarizing yourself with the new FLSA additions. This precaution helps your school abide by all relevant labor rules while adopting the latest federal updates into your workforce operations.
Optimize time and attendance management: Staff eligible for overtime need a practical time and labor management system to record their hours accurately. Make sure your current system has up-to-date time entry and scheduling features, which improve payroll recordkeeping and practices.
Rewrite policies: Active employee policies should show your school’s overtime pay strategies. Include these details across all documents that reflect corresponding policies, from employee handbooks to official compliance documents.
Keep employees informed: Don’t leave educators and faculty in the dark about the overtime pay rule. Promptly notify staff members about how the FLSA rule will affect wages and what next steps they can expect from the school to remain compliant. Such steps could include revising employee contracts, sending verification emails, or granting relevant employees access to overtime functions within the school’s timekeeping system.
Master overtime regulations with ExtensisHR
Working with a professional employer organization (PEO) strengthens a school’s ability to craft an effective overtime pay strategy. ExtensisHR empowers charter and independent schools by offering a comprehensive and customizable PEO solution for HR management. When it comes to the new FLSA rule, our highly trained experts provide the following support:
- Access to ExtensisHR’s robust SchoolCloud™ technology that securely stores employment data and manages automated communications such as overtime notices and policy documents needing signatures
- Payroll management and tax administration so staff members are adequately paid and categorized
- In-depth compliance management to confirm all labor and industry laws are followed
- Risk assessments to help decisionmakers stay ahead of and develop effective emergency response plans that are crucial for ensuring a secure learning environment
- Attendance tracking, shift scheduling, and time entry through our Time & Labor solution
- Professional consultations to review the progress and efficiency of any overtime pay operations
- Human-first customer support from a designated school account team, including an HR Manager and a School Account Manager (SAM)
Regulation changes don’t have to sidetrack charter and independent schools’ daily list of responsibilities. While your loyal staff focuses on shaping brighter futures for students, ExtensisHR’s suite of services will address high-end concerns and produce the most rewarding outcomes for your employee operations. Best of all, we convert compliance confusion into actionable strategies that protect your workforce and employees’ access to equitable compensation.
Schedule a meeting with ExtensisHR today to discover how our HR services can improve your school’s overtime management and fair labor processes.
