New Overtime Rules Will Hobble Colleges

For colleges like Virginia Wesleyan as well as many small-business and nonprofit operations, the impact will be felt immediately and injuriously.
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The administration of President Barack Obama appears poised to deal a potentially severe financial blow to colleges, universities and businesses through new overtime regulations expected to be unveiled this month.

Under the well-intentioned umbrella of "protecting" American workers, the U.S. Department of Labor has proposed changes to increase the overtime salary threshold from $23,660 to $50,440. These proposed changes could be implemented early next fiscal year.

For colleges like Virginia Wesleyan as well as many small-business and nonprofit operations, the impact will be felt immediately and injuriously.

Staff currently exempt and not eligible for overtime pay would become automatically eligible for any hours worked in excess of 40 per week. Affected campus offices include athletics, admissions, security and the bookstore.

It would mean, for example, that simply paying someone extra to coach a team would not be possible given the hours typically required for practice, travel and recruiting.

Virginia Wesleyan's own financial analysis of the change, campuswide, indicates that it would result in an increase of approximately $657,000 in salary obligations. This does not include the impact to the college's mandatory retirement plan, which will add an additional $55,845 annually. Total increased expenses would be approximately $712,845 under the new regulations.

The Washington-based National Association of Independent Colleges and Universities warns of serious consequences for campus communities, notably the students we serve, who would undoubtedly experience tuition increases and/or reduced services to help absorb the cost. Employees would be affected by the budgetary adjustments of eliminating or consolidating positions.

Our partner associations note in a briefing that "while hourly pay is appropriate for certain jobs, it is not appropriate for all jobs. The employees reclassified as hourly will face increased restrictions on the hours they can work, which will limit opportunities for advancement and training, including attending professional conferences."

In an April 4 memo to Virginia's independent higher-education community, Robert B. Lambeth Jr., president of the Council of Independent Colleges in Virginia, stated that "most parties who oppose the regulations acknowledge that some updating of the current law needs to occur, but that the proposal, in its current form, goes too far. It is very likely that under any scenario, there will be significant changes to current law."

Government oversight of higher education has accelerated in recent years. As calls increase for accountability, including slower growth in rates of tuition and better placement for students, so has government intervention in the business affairs of colleges and universities.

I do not disagree that workplace compensation is always a concern for American workers. That includes the many devoted staff in our colleges and universities who keep campuses running, students comfortable and safe and academic missions fulfilled.

As with many government initiatives, however, the problem lies in how regulations are phased in, how quickly they take effect and how pervasive they will be in their impact on institutional and business budgets.

The proposed changes in overtime regulations appear to be scheduled for rollout by May 16, during a presentation with the theme of "Protecting Workers."

During the busy spring season when most campuses are engaged with commencement, alumni events, trustee meetings, enrollment and budgetary projections for the fall term, Washington appears tone deaf to higher education's special concerns and vulnerability.

Combined with the potential impact on our state's small businesses and nonprofits, the new regulations for overtime appear to be another example of Washington's overreach.

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Dr. Scott D. Miller is President of Virginia Wesleyan College in Norfolk/Virginia Beach. Previously, Dr. Miller served as President at Bethany College in West Virginia (2007-15), Wesley College in Delaware (1997-2007) and Lincoln Memorial University in Tennessee (1991-97).

He wrote this for the May 8 issue of The Virginian-Pilot (Norfolk, VA)

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