Changes to the Fair Labor Standards Act (FLSA) Affect Employees and Budgets on Research Grants and Contracts

Changes to the Fair Labor Standards Act (FLSA) Affect Employees and Budgets on Research Grants and Contracts

The Department of Labor has now announced changes which will be effective December 1, 2016.  Since some grant funded positions such as postdoctoral associates (postdocs) and research technicians will be affected by this change, we wanted to provide some general guidance to departments and PI’s.

What are the changes to the FLSA?

The changes relate to the salary level which determines whether an employee is exempt from the FLSA provisions for overtime (ineligible for overtime), or nonexempt from those provisions (overtime eligible).

The FLSA requirements increase the minimum salary threshold for exemption from overtime provisions to $47,476 ($913 weekly or $1826 bi-weekly).  The revisions also include a provision to update the threshold automatically every 3 years, with an estimated threshold of $51,168 in 2020. 

How will this affect grant funded positions?

The changes to FLSA could impact research budgets through increased overtime costs, since any affected employee who earns less than $47,476 (annualized) and who works more than 40 hours a week will be entitled to overtime compensation, at 1.5x the normal hourly rate.

Postdoctoral researchers are subject to the salary threshold for exemption from overtime.  The National Institute of Health (NIH) did announce, however, that NIH will be increasing the individual fellowship grant awards for postdoctoral National Research Service Awards (NRSA) recipients to above the threshold.

Generally the DOL views graduate and undergraduate students who are engaged in research and under a faculty member’s supervision in the course of obtaining a degree to be in an educational relationship. As such, DOL does not assert that they are overtime eligible.

How should PIs with existing grants plan for these changes? 

For PIs with staff members earning salaries below the threshold, there are several options:

If funding is available, PIs may be able to raise the employee’s salary above the FLSA threshold. PIs are encouraged to reach out to HRS to discuss specific cases, and to contact their agency program officers to determine if a supplement to existing grants is possible to cover the added expense. If not, re-budgeting existing funds would be necessary.

Where base salaries cannot be increased, the supervisor or PI must authorize/monitor and pay employees for all hours worked including any time worked over 40 hours per week. Alternatively PI’s may wish to review and adjust employee schedules to ensure that the work week does not exceed 40 hours.  Please note that you may not allow or expect non-exempt employees to work more than 40 hours per week without paying overtime.

How should PIs plan for these new overtime rules in future proposals?

For all new grant proposals going forward, PIs are strongly advised when planning their budget for postdoc compensation to keep in mind the new salary threshold, internal salaries, as well as external competitiveness and NIH salary scales.  For other employees, PIs should consider how the increased salary threshold might impact budget if staff are now eligible to receive over time and should plan accordingly.

Are there any other changes that will affect future research budgets?

The Research Foundation for SUNY is examining the fringe rates associated with postdoc positions and has advised that recommendations are expected by 2017.

What are the next steps at SBU?

OVPR, HRS and the Office of Postdoctoral Affairs are reviewing the impact of the FLSA change and will be reaching out to departments to provide additional information and guidance.

Where can I find more information?

For general information about FLSA changes, please contact your HRS Classification and Compensation Analyst through email to hrs_FLSA@stonybrook.edu. The Office of Postdoctoral Affairs is available to consult about postdoc-specific issues and will continue to update a resource page at: www.stonybrook.edu/postdocs/overtime

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