CEO Notebook

It’s no exaggeration to say that properly classifying — and then compensating — employees is one of the most complicated parts of independent school business. The complications stem from the Fair Labor Standards Act (FLSA) and its rules about who qualifies as an exempt and non-exempt employee, and subsequently who must receive overtime pay. With so much variability in employee roles, which is required to lead highly varied school activities, the application of these rules is hardly ever simple. 

NBOA has developed a toolkit and special guidance on the topic, published countless articles and launched an online boot camp, and speakers inevitably address it at our live programs, all to help members understand the nuances specific to our community. These resources were developed following extensive debate in 2015 and 2017, when the Department of Labor (DOL) proposed new standards and then adjusted them following feedback from many sectors. So yes, the issue is complicated, and sticky.

And now the rules may change again. Thankfully the teacher exemption remains in place. However, as NBOA reported in late August, the DOL proposed an update to the salary threshold for “white collar exemptions” to FLSA overtime requirements. Currently set at $684 weekly ($35,568 if paid annually), the DOL proposes raising the salary threshold to $1,059 weekly ($55,068 if paid annually) — a more than 50% increase — with an automatic update every three years. The update would be tied to the 35th percentile of weekly earnings for full-time salaried workers in the lowest-wage Census Region. The proposal also increases the salary level for the Highly Compensated Exemption (HCE).

NBOA’s senior director of human resources programs, Amber Stockham, says that increasing the salary threshold at this level would have a significant and adverse impact on school budgets, and thus could “destabilize the financial sustainability of many schools.” Perhaps even more worrisome is the automatic adjustment written into the proposed rule, which guarantees that schools in economically disadvantaged areas may need to reclassify up to 35% of their staff every three years. “It’s an unrealistic burden for organizations with ballooning expenses and families who struggle to pay tuition,” Stockham said.

When the FLSA overtime rules were debated extensively in 2015 and 2017, NBOA worked closely with NAIS to advocate for reasonable changes, which would ensure our schools could continue to pay our employees a fair wage and not cause undue disruption to the business model that supports our schools’ missions. The final rules proved to be sustainable.

Now we are advocating again on behalf of all independent schools, and we need your voice to make the best possible case to the DOL. To that end, NAIS and NBOA have jointly developed a survey, which opens today and will close on October 6. To avoid duplicate responses from schools, NBOA and NAIS have combined email lists, and the survey link will be sent to the business officer contact via SurveyMonkey, “from” both NAIS and NBOA. The survey takes just 10 minutes to complete, and just one person at the school should complete it. We want to make sure all of our members take note of this important survey and participate before the deadline.

“Our joint study will inform the scope of impact these changes may have on independent schools and allow us to support school leaders. We will be addressing any resulting developments in this important area of compliance for the best interest of schools and their employees.”
—Jennifer Osland Hillen, NBOA

The survey results will help inform a comment letter that is currently being developed by NBOA Chief Learning Officer Jennifer Osland Hillen, NAIS General Counsel Megan Mann and others in our associations. The letter will be signed by NAIS President Debra Wilson and myself when it is submitted to the DOL by the November 7 deadline. “Our joint study will inform the scope of impact these changes may have on independent schools and allow us to support school leaders,” said Hillen. “We will be addressing any resulting developments in this important area of compliance for the best interest of schools and their employees.”

Those who have been dealing with these changing rules over the years will know that what I can share in this short article is just the tip of the iceberg. For more information about the proposed rules, see the resources listed below in Related Content, and watch for further communications from NBOA. Once the final comment letter is developed, we will be sure to share the results of our collective efforts.

We have prevailed before, and I’ve no doubt we can again, but a coordinated response will require significant effort. If you are a business officer receiving this email and survey link, please take 10 minutes and participate for the good of your school and all independent schools, and the unique educational experiences and outcomes they provide.

It’s times like these that demonstrate the value of associations like NBOA, which have the distinctive ability to amplify your collective voice and make a positive impact on our community. Please take this opportunity to be part of the solution for all independent schools.