By Vince Nicastro*

 Overview

Last summer, the US Department of Labor announced proposed revisions to the Fair Labor Standards Act (FLSA) overtime regulations.  The revisions include a dramatic increase to the minimum salary provision required to qualify as an overtime exempt employee.

One consequence of the proposal will be the impact it may have on many athletics departments around the country – at all levels.  So, athletic directors need to be prepared for this change, which is likely to become effective in the second half of 2016, and which could impact department operations and budgets in a significant way.

Fair Labor Standards Act – Overtime Regulations and Exemptions

The FLSA “exempts” certain categories of employees from federal minimum wage and overtime provisions.  One of the exemptions is currently based upon a minimum salary threshold of $23,660 annually, or $455 per week (assuming some other job-related tests are met).  This provision has been in place since 2004 and has not been adjusted since.  The Department of Labor has proposed moving the minimum annually salary amount to $50,440 ($970 per week), noting that the existing salary threshold falls below the poverty level definition for a family of four.  The intention is also to make an annual adjustment to the salary level in order to keep pace with inflation.

Although the proposed new regulation is a strong step forward for employees, almost doubling the salary figure will have a significant effect on small business owners and athletics departments alike.  The DOL estimates that the new regulation would potentially impact over 4.5 million American workers.

Potential Impact on Athletic Programs

Despite public perception to the contrary, most athletic programs across all divisions have traditionally relied on coaches and staff who are modestly paid.  Although I suspect the practice is more prevalent in D-III, my experience as an Athletic Director in Division I supports that many schools have targeted the $23,660 threshold for a number of their positions in order to meet the salary level test.  It would not come as a surprise if several dozen positions would be impacted (coaching and staff) in many athletic departments, possibly resulting in hundreds of thousands of dollars required to meet the new minimum salary.  In addition, there likely would have to be adjustments to workers who are close to the new salary line in order to create a buffer and/or to avoid salary compression issues.

Why would so many employees potentially be impacted in college athletics?  Generally speaking, coaching and working around athletics is a labor of love.  Despite the prevailing public perception regarding the escalation of salaries in college sports, there are a plethora of people who would literally work for nothing to be in the business.  Combined with the limited resources at many schools, this results in a dynamic that actually keeps salaries relatively modest (a simple supply and demand equation).

In my experience, when having discussions with coaches and staff regarding the FLSA issues, they seem understandably perplexed.  The regulations are rather technical.  In particular, people working in athletics become even more mystified when you talk about limiting the number of hours worked each week in order to avoid overtime payments.  It’s simply a foreign concept to people who are competitive, committed to their profession, and pride themselves on “outworking” the competition to be asked to work less.  And in most cases they don’t necessarily care about the extra money.  In many ways it is simply ingrained in the DNA of the world of athletics.

The nature of the work and the “ethos” are some of the primary reasons that leaders in athletics should be concerned.  Coaches and staff in college athletics generally work non-traditional schedules – nights, weekends, holidays, travel.  All told, the time commitment can be significantly more than the usual 9-5 job –  all the more reason to conduct a thorough review of the impact of the proposed regulation.

What Can ADs Do to Plan for the Change?

What should athletic departments do to plan for the change?  Engagement with the university’s human resource department and/or legal counsel is critical and should happen ASAP.  The law is quite technical and requires the counsel and expertise of those with strong backgrounds in labor regulations.

From a practical perspective, the university should conduct a thorough analysis of each affected position (including those that are close to the cutoff line).  The options beyond that are relatively simple.  Departments can do nothing and simply pay the federally mandated overtime; raise the annual pay to meet the new threshold; cap hours to avoid or mitigate overtime costs (or a combination of these).  Whatever the case, this is an issue that will certainly impact athletic programs in a significant way, and it’s not too early to start preparing.


* Vince Nicastro is the former Athletic Director for Villanova University, and currently serves as Associate Director for the Jeffrey S. Moorad Center for the Study of Sports Law.

 

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