A federal judge last week struck down a new rule governing overtime pay in the Fair Labor Standards Act (FLSA). The decision applies to all covered employers and employees nationwide and nullifies changes first shared last spring.
In April, the U.S. Department of Labor announced a two-phase increase to the minimum salary threshold for employees to become eligible for overtime pay. To comply with the new rule, Iowa State implemented phase 1 changes on July 1 and was preparing to implement phase 2 changes to meet a Jan. 1, 2025, deadline. In phase 1, the minimum salary threshold for overtime eligibility rose to $43,888. In phase 2, the threshold would have risen to $58,656.
The university proceeded to comply with the new rule, despite the possibility that legal challenges might result in a court-ordered halt to its implementation. Last week, that halt was realized. The judge's decision means these changes no longer are in effect. In addition, updates to the salary threshold that were to take place automatically every three years no longer will apply.
Earlier this week, university human resources leaders notified impacted employees and managers of the court decision.
What does it mean?
The salary threshold for overtime eligibility reverts to the previous FLSA rule, which is $35,568.
Employees who moved on July 1 to nonexempt status -- in other words, became eligible for overtime -- will return to exempt status on Dec. 1. These employees will change back to an annual salary instead of a time-tracked hourly rate, but will remain on the semimonthly pay schedule implemented Oct. 1.
Employees who were preparing to move to nonexempt status Jan. 1 will remain exempt and will continue to be paid on a monthly basis.
Salary standard will hold for post docs
In September, the university notified postdoctoral scholars that their minimum salary standard would increase to align with the Jan. 1 salary threshold of $58,656. That new minimum salary will remain in place for post-docs.
Questions about FLSA can be directed to UHR classification and compensation at uhrcc@iastate.edu.
