As you are now likely aware, President Obama released the final rule to increase the new minimum salary requirement. The new increase goes into effect on December 1, and will have significant impact to school employees’ compensation. While this serves as sound guidance, this article cannot replace legal advice from your attorney.

The first thing to recognize is that a Christian school is a business. This is important from the standpoint that each of us recognize our roles in Christian education as a “ministry”. Ministries typically are considered non-profits and exempt from many areas of regulation. However, as a collector of tuition (revenue), your Christian school is really considered a business and must be treated as such for many legal issues. The collection of tuition is likely the point upon which the Department of Labor (DOL) will argue that Christian schools are engaging in “ordinary commercial activities.”

Who is affected by this new rule? We have created a helpful table for you to use to determine which employment categories should be awarded overtime for hours worked over 40 in a regular workweek. To download the table along with footnotes, please visit our website.

[button size=”medium” type=”normal” style=”square” color=”primary” icon=”” new_window=”yes” link=”http://www.ilcs.education/wp-content/uploads/2017/04/2016-Overtime-Rule.pdf”]Download Overtime Table and Sample Policy[/button]

Generally speaking, the job categories affected are:

  • Support staff such as facilities maintenance and janitorial, groundskeepers, security officers, and cafeteria workers.
  • Administrators and officers certain school offices like finance, athletic directors, and other non-teaching, non-administrative personnel.
  • Secretaries, assistants, registrars, and database administrators
  • In-house specialists like IT personnel
  • Admission offices, marketing, recruiters, etc…

Job Function

Overtime Status[1]

Minimum Pay

School administrators (Superintendents, Principals, Vice or Assistant Principals, etc.) Exempt[2] Must be salary and equivalent to entering teacher salary.
Preschool Director Eligible for Overtime Minimum Wage or Equivalent Salary up to $47,476
Bookkeeper/Finance Manager Eligible for Overtime Minimum Wage or Equivalent Salary up to $47,476
Administrative Support (School office personnel) Eligible for Overtime Minimum Wage or Equivalent Salary up to $47,476
Janitorial/Maintenance Staff Eligible for Overtime Minimum Wage or Equivalent Salary up to $47,476
K-12 Teachers Exempt No salary requirement
Preschool Teachers Preschool teachers are exempt only if all they do is teach. However, if they are involved in before school or after school care, naptime or “caring” for the children in any way, then they are not exempt. No salary requirement
Guidance Staff Exempt Same as School Administrator above.
Teacher’s Aide Eligible for Overtime Minimum Wage or Equivalent Salary up to $47,476
Librarian Exempt. This category will likely follow the exemption for school administration. There is no specific guidance.
IT Personnel Depends[3] See Special Provisions Below.

Solutions

There are a few options for ensuring compliance with these new rules.

  1. Track Hours and Pay Overtime. Many schools have the positions listed above paid on a salary basis. This does not necessarily need to change. However, to ensure compliance, you will need to track hours for these employees to ensure that they are either NOT working more than 40 hours, or are being compensated for all hours above 40. Please note that employees may not “volunteer” hours past 40 as a “donation to the ministry.
  2. Paying a Straight Time Salary. If your finance manager is expected to work 50 hours each week, and earns a salary of $26,000 ($500 per week, or $12.50 per hour), you can adjust the salary to reflect the 50 hour week including overtime by adding that to the salary. The current salary of $12.50 for 40 hours, would come out to $500, plus 10 hours of mandatory overtime at 1 1/2 times salary would add $187.50 per week to the salary (10 hours multiplied by $18.75 which is 1 1/2 times $12.50 equals $187.50). So her new salary would be 50 hours for $687.50 per week, or $35,750 per year.
  3. Reorganize Workloads. Adjust Schedules. One way to better manage the overtime issue is to hire new employees, or redistribute work hours in excess of 40 across current staff, such as by increasing the work hours of staff who work less than 40 hours per week.

Employers may use their own system to keep track of employees’ work hours or require employees to enter their own time into payroll programs. See the record keeping requirements from the Department of Labor.

[button size=”medium” type=”normal” style=”square” color=”primary” icon=”” new_window=”yes” link=”https://www.dol.gov/whd/regs/compliance/whdfs21.pdf”]Recordkeeping Requirements under the Fair Labor Standards Act (FLSA) [/button]

Special Consideration

Please be aware that Athletic Directors and Coaches may fall under either category depending on their actual duties. Teachers who teach full day and then coach for additional hours may be eligible for overtime pay.

Non-exempt employees who are expected to be present at programs, events, and meetings held outside of the regular 40 hour week (i.e. Parent orientation night, conferences, Christmas programs, etc…) must be compensated for their time.

2.    Moving forward, you may choose to reduce your employees’ hourly pay to compensate for the time-and-a-half overtime they’ll now be paid. Legally, you maynot retroactively reduce your employees’ wages. In the next contract, however—and with enough notice given—you may adjust your compensation to account for the anticipated overtime work of the various positions. (Remember, overtime pay must be paid for any after-hours events or communications they’re expected to have within the community if employees are nonexempt and have worked more than 40 hours in a given pay period.) If you decide to go this route, then consulting your school’s lawyers is an absolute must!

3.    You can give your employees a raise to elevate their pay above the minimum salary requirement for exemption. Depending on how close their current salaries are to the new minimum and how much overtime their job requires, this may be a financially sound decision for your school’s budget.

Your school has until December 1, 2016, to figure out how to best comply with the new salary exemption minimum. You’ll want to consider both the budget side of this new regulation, as well as employee morale. If you choose to raise the salary of certain employees to be above the exemption minimum, for example, but keep your teachers’ salaries stagnant, you may be creating a compensatory imbalance that might boil over in years to come—despite the cultural expectation that employees shouldn’t discuss compensation with coworkers.


[1] Overtime pay is 1 ½ times normal pay per hour worked beyond 40 hours in one work week.

[2] They must be paid on a salary basis which is at least equal to the entrance salary for teachers in the same educational establishment, and whose primary duty is performing administrative functions directly related to academic instruction or training in an educational establishment. Academic administrative functions include operations directly in the field of education, and do not include jobs relating to areas outside the educational field.  Employees engaged in academic administrative functions include: the superintendent or other head of an elementary or secondary school system, and any assistants responsible for administration of such matters as curriculum, quality and methods of instructing, measuring and testing the learning potential and achievement of students, establishing and maintaining academic and grading standards, and other aspects of the teaching program; the principal and any vice-principals responsible for the operation of an elementary or secondary school; department heads in institutions of higher education responsible for the various subject matter departments; academic counselors and other employees with similar responsibilities.

[3] To qualify for the computer employee exemption, the following tests must be met:

  • The employee must be compensated either on a salary or fee basis at a rate not less than $455 per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour;
  • The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below;
  • The employee’s primary duty must consist of:1)The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;

2)The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;

3)The design, documentation, testing, creation or modification of computer programs related to machine operating ; or

4) A combination of the aforementioned duties, the performance of which requires the same level of skills.