Any day now, the U.S. Labor Department is expected to overhaul federal overtime rules in a way that the higher education community knows will have unintended negative consequences for our institutions, their employees and the students we serve.
The proposed rule would more than double the minimum salary required for white collar employees to qualify as exempt from federally mandated overtime pay (113% increase from $23,660 to $50,440). Essentially, it would turn roughly 5 million professional, salaried jobs into hourly positions overnight. Such a drastic increase in overtime pay for employees would put a major strain on college and university budgets, requiring cutbacks in other areas such as student services, degree offerings, and research. It would also result in limited flexibility and opportunity for workers at colleges and universities as well as nonprofits and public sector employers that operate on fixed budgets.
The higher education community understands that the federal government needs to reevaluate overtime rules to ensure the law remains relevant for today’s workforce. But we’re deeply concerned about such a massive overnight increase and such a narrow implementation window, which will seriously affect our institutions, employees and students.
Here’s what will happen if this rule takes effect as proposed: many employers across the country will suddenly find themselves needing to reclassify large amounts of employees from salaried to hourly. Unable to absorb such a large and quick increase in administrative and labor costs, colleges and universities around the country will be forced to increase tuition or cut positions in order to afford compliance burdens – or even change service models, limiting student opportunity. With this rule, students will face higher tuition rates for fewer services.
We are sympathetic to the good intentions of the policymakers who drafted this rule, but their approach of immediately and drastically increasing the threshold is simply not sensible. While hourly pay is appropriate for certain jobs, it is not appropriate for all jobs; otherwise Congress would not have created any exemptions to the overtime pay requirements.
There is a wide range of employees within a higher education organization, from residence hall directors, to admissions counselors, to postdoctoral researchers, all of who are drawn to the specific flexibility and opportunity their positions provide. A residence hall director lives in their residence hall 24/7 – they do not think of their position as hourly. When a student approaches them past 6 p.m., they do not consider that conversation overtime. Many postdoctoral researchers choose these positions because it enables them to work with world-renowned scientists on potentially life-changing research. Restructuring these positions as hourly could greatly limit the amount of these positions available, reducing opportunity and advancement in research.
The higher education community is not alone in their concern. Thousands of public and private sector employers across the country have expressed concern with the rule. That’s why 139 national organizations and 201 regional, state, and local organizations joined letters urging Members of Congress to support the Protecting Workplace Advancement and Opportunity Act, which would simply delay the rule long enough for the Labor Department to conduct a more comprehensive economic analysis on the impact of mandatory overtime expansion to high education, small businesses, nonprofits, and public employers.
Members of Congress and even the Obama Administration’s own Small Business Administration (SBA) have urged the Labor Department to take a closer look at the economic impact on small businesses, nonprofits and local governments before issuing this rule. The SBA specifically warned the Labor Department in a letter last September about the rule’s troubling compliance costs and paperwork burdens on small entities, noting the Department had underestimated their compliance costs.
We’re not asking the government to abandon its well-intentioned initiative to update our country’s overtime rules. But we are asking it to take a close look at the impact of the rule before moving forward. And we’re urging our state and local representatives to make our voices heard in Washington and in the White House.
Andy Brantley is President and CEO of the College and University Professional Association for Human Resources in Knoxville, TN.