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May 26, 2016

Pitt is reviewing new overtime regulations

The University is evaluating some 2,000 positions in light of new federal regulations that will make more workers eligible for overtime pay.

The U.S. Department of Labor estimates that 4.2 million workers nationwide will become entitled to overtime protection under changes to the Fair Labor Standards Act (FLSA) that will take effect Dec. 1.

The new rules raise the threshold for mandatory overtime pay from the current $23,660 per year to $47,476.

That amount represents the 40th percentile of earnings of full-time salary workers from the lowest-wage census region in the nation. The salary threshold will be reset to that level automatically every three years.  This is the first time since 2004 that the threshold has been raised.

The Department of Labor estimates that U.S. workers will see some $1.2 billion more in earnings each year under the new rule, either in overtime pay for newly overtime-eligible workers or in the form of raises to maintain workers’ exempt status. The rule also is expected to create new jobs because it creates a financial incentive for employers to spread out the overtime hours of employees who are newly entitled to overtime pay.

In addition to strengthening overtime protections, the FLSA changes are expected to improve workers’ health, productivity and work-life balance.


In a May 20 memo to employees, Greg Scott, senior vice chancellor for business and operations, said the University would re-evaluate exempt (not eligible for overtime pay) positions that are paid at less than the new threshold.

“In some cases, it will make sense to reclassify the position as non-exempt, pay overtime as needed and leave the position at its current pay level. In others, a change in compensation to the salary threshold to maintain the exempt classification may be the most appropriate choice for the position under consideration,” he stated.

“This is a 506-page final rule,” Senior Vice Chancellor and chief legal officer Geovette Washington said in an overview to Senate Council last week. “There is a lot in this rule that we still need to go through and pore through.”

The final document appeared in the Federal Register on May 23.

Washington clarified that the overtime pay requirement doesn’t apply to those who teach.

“If your primary responsibility is to teach, lecture, instruct, then you are exempt — it doesn’t matter what your salary level is, you’re not entitled to overtime,” she said. That extends to postdocs who teach, she said.

The labor department’s guidance for higher education clarifies “that to the extent that those post-doctoral students’ primary responsibility is to teach, they fall into the exemption — not entitled to overtime,” Washington said.

“To the extent that their primary responsibility is to do research, then the salary test applies,” she said. “If you have postdoctoral students who are doing research and they’re getting paid below that $47,000 level, they would be entitled to overtime.

“It’s our understanding that NIH and other funding agencies will be looking to increase some of their funding to account for that,” said Washington.


Stephen Ferber, assistant vice chancellor for Human Resources, said it’s been known for some time that changes in overtime regulations were on the way. However some provisions, including the salary threshold, weren’t known until the final rule was announced last week.

Human Resources teams have been working with departments since last fall to gather data on employees who may be close to the salary threshold. The 2,000 positions to be reviewed include staff, postdocs and research associates, he said, adding that close attention is being paid in areas including admissions, athletics and student affairs, among others.

He couldn’t estimate the potential cost to the University, adding that it is premature to speculate on which options Pitt may implement until the deeper dive into the data is completed.

Complicating the calculations is the upcoming start to a new fiscal year on July 1, when salary increases typically take effect. “That could be a factor if people are close to the salary limit,” he said.

It’s too soon to say when affected employees will be notified, or when decisions will be made, except that Pitt must be in compliance by Dec. 1, Ferber said.

Human Resources has posted FAQs and details on the changes at
“Our goal is to be communicative,” Ferber said, promising updates when additional information is available.

—Kimberly K. Barlow  

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