Colleges are worried about how to cover the costs of overtime pay that dozens of coaches, counselors, and other employees may soon become entitled to under a new federal rule designed to ensure they’re paid equitably.
The new law, a change to the Fair Labor Standards Act that takes effect in December, makes more full-time salaried employees eligible for overtime pay. Those employees who earn up to $47,000 per year will be eligible for extra pay for work over 40 hours a week; now only those who earn up to $23,000 per year are.
Colleges are scrambling to sort out who on their campuses will become eligible for overtime pay and how to budget for the increased costs. Any employee whose primary responsibility can be defined as teaching is exempt, but determining that can be complicated. Many of the people likely to fall under the new threshold have a lot of contact with students and work long, often sporadic hours: student-life coordinators, residence-hall directors, athletics staff members, admissions counselors. Administrators are grappling with how to effectively serve students if they need to reduce the hours of some employees who help them.
Administrators agree that an update to the rule was overdue. While living costs have risen, the salary threshold hadn’t been changed since 2004. But many observers expected a gradual increase. “Doubling it in one step shocked a lot of people,” says Scott M. Fitzgerald, director of human resources at Otterbein University.
The rule change is likely to prove especially challenging for small, private colleges, already facing tight budgets, and campuses outside major urban areas, where living costs and salaries are lower and more employees may be affected. Given how many small, rural colleges are already struggling financially, the new rule “has created some really grave concerns on the part of a number of administrators about the type of impact it’s going to have,” says James H. Newberry Jr., a lawyer who counsels colleges.
Many of those impacts may remain unknown until after December 1, despite intense efforts from colleges to wrestle with the change. The College and University Professional Association for Human Resources held a webinar about the new rule in May, just after the Department of Labor issued guidance on applying the rule in higher education. A typical webinar hosted by the organization might have 500 virtual attendees, says Andy Brantley, its president and chief executive. The one for the new overtime rule drew more than 8,000.
Counting the Hours
The first thing colleges had to do after the rule change became official was to determine how many of their employees would be affected. Some institutions have discovered that as few as 10 employees fall under the new threshold, according to Amy Felix Polefrone, president of HR Strategy Group, a human-resources consulting firm that works with colleges.
At other colleges, the number is much larger. The 23 campuses of the California State University system employ about 20,000 workers who may now be eligible for overtime, says Marc D. Mootchnik, general counsel for the system. That’s about 40 percent of total system employees.
Once employees who fall under the new threshold have been identified, colleges have to determine whether they are exempt from overtime under department-issued guidelines, including the so-called teaching exemption. Any employee whose primary responsibility can be defined as teaching is exempt from overtime, but for some positions that may not be clear from the title. An assistant coach whose job is to help student-athletes improve at their sports could be exempt, while an assistant coach whose primary role involves recruiting could be eligible for overtime pay. A postdoctoral fellow in the humanities who teaches might be exempt. A postdoctoral fellow who works in a science lab would not be.
Since few jobs share the same titles and duties, even within an institution, sorting out eligibility comes down to a position-by-position analysis of all employees under the new threshold, says Mr. Brantley of CUPA-HR.
The new rule also raises difficult questions about how some types of positions will operate on an hourly wage basis. Serving students must remain the priority, “whether it’s 3 o’clock in the afternoon or 3 o’clock in the morning,” says Mr. Fitzgerald of Otterbein. If a student shows up at a residence-hall director’s door with a crisis in the middle of the night, the director must respond. But what if a casual conversation with students in the dining hall turns from sports to an issue with parking? Is the director now on the clock? The challenge of providing services when required while controlling overtime spending means that colleges will “really need to review how we conduct business so that we have the most efficient processes in place,” Mr. Fitzgerald says.
Keeping track of overtime not only clashes with the hours many college employees often work, it goes against work habits enabled by technology. “No longer can they sit on their smartphones at night reviewing emails and sending emails, because that’s hours worked, and we need to track that time,” Mr. Fitzgerald says.
A Demotion?
Many college employees whose salaries are just a few thousand dollars shy of the $47,000 threshold will receive raises this fall, in order to keep them exempt from overtime. Employees who fall further under the threshold, and whose positions are not exempt will have to adapt to being hourly workers. Institutions must also adapt.
Colleges are weighing many options on how to handle a new wave of employees who can earn overtime. Public institutions will be able to give employees time off to compensate them for extra work rather than paying them for it. In other cases, the rule change may bring shifts to staffing. If four people on a campus perform a particular function, and each of them works about 50 hours a week, it may make sense to hire another full- or part-time employee and keep everyone’s hours to 40 or less to avoid overtime.
The fact that many staff positions at colleges are cyclical, with periods of intense activity sometimes followed by fallow months, presents a particular challenge. East Carolina University is considering converting some full-time employees to nine- to 10-month contracts, or to fluctuating work weeks, says Melissa Bard, associate vice chancellor for human resources.
Campbellsville University, in rural Kentucky, employs about 400 full-time faculty and staff members. About 90 of those employees could be eligible for overtime pay under the new rule, according to Michael V. Carter, the president. In central Kentucky, “a dollar is not the same as a dollar in New York City or Chicago,” he says, and the university will be hard-pressed to adjust. Mr. Carter has no idea yet what projected overtime costs will be. “To be honest, we’re nervous about it,” he says. “We could wind up with several hundred thousand dollars of overtime that I have not budgeted.”
The college is hoping to use more work-study positions and student help to fill potential gaps in services, but otherwise “we’re going to have to do our very best to live within these 40-hour work weeks,” Mr. Carter says.
Employees are also uncertain about what’s going to happen. Most colleges have not made final determinations about whether specific employees will be converted to hourly pay. The point of the law is to make sure that employees are paid fairly for their work, but salaried employees at colleges often see a transition to hourly status as a demotion, Mr. Fitzgerald says, even if their pay remains the same or increases. At a previous institution, he adds, he had employees cry in his office when informed of the change.
Stephanie Holcomb-Kreiner, director of corporate and foundation relations at Campbellsville, doesn’t know whether she will be converted to an hourly employee, but she is already wondering how she will be able to do her job if she’s held to 40 hours a week. Her work for the office of development sometimes involves networking at evening events, and a recent application for a state grant meant several long days and nights within a week. “When things like that come up, it’s not just a couple of hours here and there,” she says.
Ms. Holcomb-Kreiner says she doesn’t mind long, sometimes irregular hours. Writing a proposal sometimes comes easier on Sunday afternoon than on a Friday morning.
“You are working quite a bit, but the tradeoff is that flexibility with your schedule, and that autonomy,” she says. A shift to hourly status wouldn’t feel like a demotion, she says, “but it would certainly, in a lot of ways, feel like I was not treated as a professional.”
Lee Gardner writes about the management of colleges and universities, higher-education marketing, and other topics. Follow him on Twitter @_lee_g, or email him at lee.gardner@chronicle.com.
