Higher education institutions around the country are gearing up for a significant increase in personnel cost due to President Barack Obama’s administration-imposed rules regarding overtime-pay.
The Labor Department is expected to release the final version of its revamped regulations that would more than double the salary threshold for roughly 5 million workers eligible for overtime pay. The final version of the proposal is due as early as this summer.
Although every American employer will be affected by the new regulations, higher education officials say their institutions will suffer a great deal more because they face pressure to keep tuition from rising, which means schools may have to resort to painful cuts to student services, degree offerings and extensive research on key issues like climate change and cancer.
"I have several issues with the new overtime rules as they would apply for colleges,” Aparna Mathur, resident scholar for Economic Policy for the American Enterprise Institute, told the Higher Education Tribune. “First, they essentially impose new costs on colleges since by basically doubling the salary threshold for who qualifies for overtime, they are bringing many more employees into the net.”
The second issue Mathur has with the new overtime rules is they impose administrative costs since colleges have to find ways to monitor the hours of these new overtime-eligible employees to keep track of hours worked, especially hours worked over 40, she said.
“I have argued before that this is particularly tough in today's economy since many of these new overtime-eligible employees comprise post-docs, adjuncts and other types of researchers or teachers who are not engaged in 9-5 jobs but may spend many hours off-campus or on-campus engaging in research and mentoring, and it is not clear that it is easy to monitor and report all these hours,” Mathur said.
Mathur added that the very nature of such work requires flexibility and may span beyond traditional work hours and include weekends, which makes it difficult to assess how much of that time should be counted as overtime work.
“Finally, these new costs may cause colleges to cut down on other types of funding and programs, which students and faculty may depend upon," Mathur said. "So I am really concerned about how these rules would apply to schools, even though I understand that the purpose of these rules is to benefit teachers, staff and mentors."
The new rule seems to create conflict between two major Obama administration agendas – enforcing measures requiring companies to pay employees more thereby strengthen the country’s middle class and providing tuition relief for college students.
Last week the Labor Department forwarded the proposal to the White House’s Office of Management and Budget, which will perform an in-depth review of the proposal’s costs and benefits. The department will have 90 days to complete the review, although the time period may be extended.