UPDATE: On November 30, Miami University announced that in response to the federal judge’s injunction it will suspend, indefinitely, changes it planned to comply with the new FLSA overtime eligibility rules.
UPDATE: On November 22, a federal judge in Texas issued an injunction agains the FLSA action described below. It is likely these changes will not take effect December 1 as planned.
Recently the U.S. Department of Labor announced changes to the Fair Labor Standards Act (FLSA). This post summarizes those changes, discusses how they are being implemented at Miami University, and explains how those changes might affect researchers’ grant budgets.
What is FLSA?
The FLSA is a law that contains overtime pay provisions for U.S. workers. Currently, U.S. workers earning an annual salary of less than $23,660 are entitled to overtime compensation if they worked greater than 40 hours per week. U.S. workers who are paid an annual salary of at least $23,660 and are engaged in executive, administrative, or professional duties are exempt from this provision.
What changes are being made to the FLSA?
The changes made to the FLSA relate to the salary level that determines if an employee is exempt from the FLSA provisions for overtime (such as is the case for unclassified staff at Miami) or non-exempt from those provisions. In other words, the new FLSA provisions affect which employees are overtime eligible.
Effective December 1, 2016, the minimum annual salary threshold for exemption from overtime provisions will be set at $47,476 and will increase every three years thereafter.
What does this mean for grant budgets and for grant-funded employees?
In general, this means that full-time employees who earn less than the $47,476 threshold will be required to track their work hours and must be paid overtime if they work greater than 40 hours a week. Researchers cannot allow or expect these non-exempt employees to work more than 40 hours per week without paying overtime.
Which grant-funded positions are most likely to be affected?
Postdoctoral researchers are the most likely to be affected by these changes. Postdoctoral candidates currently making under the threshold will be overtime eligible. Grantees may be able to raise the postdoc salary above the exemption threshold if there is room in the budget and if budget revisions are allowed by the sponsor. Alternatively, researchers who oversee grant-funded employees must monitor employees’ work hours and compensate them for any overtime beyond 40 hours per week.
How should I plan for future grant budgets?
For all new proposals, researchers are encouraged to budget their postdoc compensation at a minimum of $48,000, with 3% increases yearly.
What are some of the Federal-granting agencies doing to help researchers compensate for the increased threshold for exemption?
The National Institutes of Health (NIH) will increase postdoctoral stipends to levels at or above the proposed FLSA revisions. Projected postdoctoral stipends for Federal FY2017 can be found here. Look for the NIH to post guidance in the NIH Guide to Grants and Contracts regarding re-budgeting for current postdocs and employees over the new exemption threshold.
The National Science Foundation (NSF) postdoctoral fellowship programs already includes a stipend in excess of the FLSA final threshold. For grant-supported postdoctoral researchers making under the new threshold, NSF is leaving it up to principal investigators (PIs) and their institution to re-budget existing awards to comply with the new federal overtime rule. If additional funds are needed to cover any overages, grantees should contact their NSF Program Officer to discuss supplemental funding. See the NSF FLSA FAQs for additional information.
What is Miami doing about reclassification of impacted positions?
Definitions of unclassified and classified service can be found in the Miami University Policy Library. Specific questions regarding FLSA and employment at Miami University should be directed to Human Resources or Academic Personnel, as appropriate.
Starting August 1, 2016, Miami is centrally funding any increase in postdoctoral salary necessary to bring an individual above the new FLSA minimum so that all postdoctoral associates will be exempt from overtime. Because it is funded centrally, the salary increase will not affect current grants this fiscal year. However, central university funding will not be available indefinitely, so PIs affected by this increase are expected to seek supplements from their funding agencies during the upcoming year.
Updated November 28 to include information about the Federal court injunction. Updated November 30 to include information about Miami University’s response to the federal judge’s injunction.
Written by Tricia Callahan, Director of Proposal Development, Office for the Advancement of Research & Scholarship, Miami University.