Major Changes Coming for Overtime Pay Calculations

Under the previous regulations, a number of campus employees were exempt from receiving overtime pay under the federal Fair Labor Standards Act if they were paid a salary at or above $35,568 and qualified under the so-called "white-collar" exemptions. The new rule raises this salary threshold to $58,656, a nearly 65 percent increase.

Implementation will be phased in, with an initial increase to $43,888 by July 1, followed by the increase to $58,656 on Jan. 1, 2025. The rule includes provisions for automatic minimum salary updates every three years.

ACE has prepared a summary of the final regulation, which can be downloaded here.

ACE President Ted Mitchell said in a statement on Tuesday that the rule is going to cause considerable problems for higher education institutions, the vast majority of which are nonprofits and public entities unable to absorb sudden and massive increases in labor costs.

"Ultimately, students will be harmed if institutions are forced to cut services, reduce financial aid, reduce staffing, and raise tuition to address the rapid growth in costs this rule would produce," he wrote.

Legal challenges are expected, and depending on the courts, the rule's implementation could be affected. Nevertheless, colleges and universities should begin preparations to comply with the new regulations. To help in these efforts, ACE is co-sponsoring a free webinar hosted by CUPA-HR on the rule on Wednesday, May 8, at 1 p.m. ET.

ACE and the higher education association community will continue to advocate around the concerns of colleges and universities and push for reasonable adjustments and additional time for compliance.