FLSA – Clarifying the Education Establishment Provision

by Karin M. Smith, MBA, SFO, CFE, Consulting Partner  

Posted on November 15, 2016

There has been a lot of discussion around the recent changes to the Fair Labor Standards Act (FLSA) that go into effect in just a few weeks, December 1, 2016. One of the major changes impacts that salary level minimum for an employee to be classified as exempt from $455 per week or $23,660 to $913 per week or $47,476. This salary level is one of three tests that must be met in order for an employee to be classified as exempt, specifically exempt from overtime and minimum wage. Within the FLSA, there is a provision that allows for a lower threshold for certain education setting positions. Specifically §541.204 allows for the minimum weekly salary amount to be lowered to at least equal to the entrance salary for teachers in the educational establishment whose duty is performing administrative functions directly related to academic instruction or training. This includes positions like principal, curriculum coordinator, superintendent but does not include jobs relating to building management and maintenance, jobs relating to the health of the students, and academic staff such as social workers, psychologists, lunch room managers or dietitians because these positions do not perform academic administration functions.

December 1, 2016 is approaching quickly and likely falls within a pay period for most school districts, therefore it is important to look at positions currently classified as exempt who are paid less than $913 per week or $47,476 per year for areas such as transportation, plant operations/facilities, social workers, nurses, psychologists, human resources, purchasing, accounting, payroll, finance, and other support functional areas. These types of positions may only be classified as exempt if they meet the exemption test including the salary level amount (increasing to $913 per week or $47,476 per year) and the salary basis test and the job duties test.

For more information, please review https://www.gpo.gov/fdsys/pkg/CFR-2006-title29-vol3/pdf/CFR-2006-title29-vol3-sec541-204.pdf

Please contact our consulting team for additional information.