College Athletics Next Great Money Issue: Overtime Pay and the FLSA

September 18th, 2015 | by Jeff Troxclair
College Athletics Next Great Money Issue: Overtime Pay and the FLSA

College Overtime Pay FLSA

Over the last couple of years, the vast majority of conversations across the country concerning the increased costs of doing business in college athletic departments have focused on the angst associated with this past August’s implementation of the Cost of Attendance supplements. For Power Five athletic administrators this meant a certain, non-standardized increase in operating costs that would have to be offset, somehow; for those in the non-Power Five, it was likely the latest salvo in the ongoing  debate of whether failing to immediately follow suit would only intensify the ever-increasing gulf between the haves and the have-nots. And while the dollar figures associated with the Cost of Attendance allowances certainly rise above the level of mere de minimis expenses, there is a different, rarely-mentioned, potential financial maelstrom that could fundamentally alter the way many college athletic departments operate: the US Department of Labor’s (the “DOL”)  proposed revisions to the Fair Labor Standards Act’s Overtime Exemptions (hereinafter simply referred to as the “FLSA” and its “OT Exemption”).

At its most basic level, the FLSA excludes certain executive, administrative, and professional employees from federal minimum wage and overtime requirements; that is, it says that you don’t have to pay certain employees overtime even if they work over 40 hours a week. Generally, for an employee to qualify for this OT Exemption, said employee must be a few things: 1) salaried; 2) tasked with certain duties (mainly of the executive, administrative or professional variety); and, 3) be paid an amount over a specified salary threshold, which the DOL currently sets at $23,660/year. After over a decade of not revising this $23,660 annual salary threshold, however, the DOL released a proposal in late June of this year that seeks to raise this annual level to $50,440/year (a more than 100% increase in the minimum threshold amount).  Should these proposed DOL changes go into effect in the near future, every employer and athletic administrator in America will be faced with a similar dilemma: more than double an employee’s salary so that the employee is above the threshold, or start paying that employee minimum wage and overtime for any hours worked over and above forty a week. For conceptualization sake, the DOL estimates there are about 4.6 million workers who make between $23,660 and $50,440/year and would immediately become entitled to overtime protection, absent any intervening action on the part of their employer.

I’m less interested in addressing the policy concerns inherent in these proposed rules (my sympathies if you went looking for well-reasoned policy analysis and discussion and wound up here), and much more interested in discussing how these proposed changes to the FLSA will immediately impact college athletic departments. The issues should be immediately apparent to anyone with even a cursory knowledge of how athletic department staffs are traditionally comprised. How often have we read or heard stories of the quality control assistants or video coordinators, willing to subject themselves to 80-hour-plus work weeks for comparatively low salaries, either out of love for the game or any chance to “catch on” at a college program? Or stories of recruiting coordinators who embark on epic seven-states-in-six-days road trips in an effort to be front and center at the games/practices of multiple recruiting targets? I would be willing to wager two things, sight unseen: that these folks are all paid a hair above the previous $23K and change threshold but nowhere near the new $50K limit, and that now having to pay them overtime for these same duties would be a financial impossibility for many athletic departments. And if such a revolutionary change in the way athletic departments are organized is seemingly on the horizon, why has there been next to no discussion of these issues (especially in comparison to the deluge of Cost of Attendance stories in recent memory)?

I was fortunate to speak with several college administrators with respect to this very topic, and each has done extensive research into how these proposed DOL changes would affect their respective departments. Dr. Richard Sander, Athletic Director at East Tennessee State University, is acutely aware of the DOL’s proposed changes, and has already undertaken an analysis into how his department would be affected.

College Overtime Pay FLSA

According to Dr. Sander, there are 29 individuals currently employed by his department that would be immediately impacted should these proposed changes become effective. Of these 29 individuals, Dr. Sander states that eight individuals have primarily administrative roles, resulting in their hours being more stable and controllable so as to avoid onerous amounts of overtime (absent a substantial raise up to the new $50,440/year limit). That, however, leaves 21 individuals occupying positions – coaches, trainers, assistants, and ticket office personnel, for example – in roles where the overtime hours cannot be so easily contained, and where long hours are essential to the requirements of the position. Given that these new DOL rules would either mandate substantial raises or substantial overtime amounts being paid  to these 21 individuals (assuming no other changes are made), Dr. Sander estimates the final cost of compliance to his department would be in the additional 300-400K range. When compared to the 70K amount that Dr. Sander estimates will be spent on Cost of Attendance-related issues, the impact of these changes to the FLSA is, quite frankly, staggering.

College Overtime Pay FLSA

Randy Eaton, Athletic Director at Western Carolina University, has undertaken similar efforts to ready his department for the eventual implementation of the DOL’s proposed changes. Eaton estimates that two-thirds of his staff will be affected by these changes, and that compliance will ultimately cost his department somewhere in the neighborhood of a half-million dollars (a positively huge amount when you consider that it is about 5% of his annual $10 million budget, and a hefty 12.5% of the salary and benefits portion of his budget). Further, Eaton has taken the remarkable step of tracking the hours of each employee over the months of July and August, in an effort to identify ahead of time particular areas of concern. But Eaton sees an even more oblique, global concern inherent in these proposed changes, and one that should garner an emotional response from anyone with children who have yet to matriculate: that this change will, at the university level, only serve to increase the already high cost of a college education. By his estimation, Eaton reasons that 50% of athletic budgets come from student fees. The fear, then, is that the necessary offsetting of these increased salary or overtime costs will simply be passed along to the student in the form of higher fees – making an already pricey college education even more expensive for the average student.

College Overtime Pay FLSA

Kim Record, Athletic Director at UNC-Greensboro, shares in the concerns of her Southern Conference colleagues regarding this approaching issue, and has been similarly vigilant in her preparation for its eventual adoption. By Record’s estimation, approximately 20 employees in her department will be affected. Record shared a hypothetical regarding some of the certified athletic trainers her department employs, and how not allowing these folks to travel with the team in order to keep their hours below the overtime level (as remember, travel time will now need to be compensated and count against the 40-hour work week under this new model) would be detrimental to both the employee and the student-athletes (from both a student-athlete health and competitive advantage standpoint). And while this is not the route her department will go given these concerns, it nevertheless illustrative of Record’s larger point – that very soon, the proposed changes will force everyone, at all levels of competition, to make tough decisions about what they can and cannot afford.  And while she, Eaton, and Sander all seem to be ahead of the curve regarding the financial concerns associated with the changes to the FLSA overtime rules, Record emphasized that all college athletic administrators are facing similar challenges here, and that a degree of uniformity and a consistent approach to this issue would behoove everyone, down the road.

Perhaps the most concerning aspect of this entire topic is that there appears to be no ready-made answer to address the issues that the DOL’s proposed rules will present.  Employment-related costs will undoubtedly go up, and already-stressed athletic budgets will be forced to somehow find creative ways do more with less. Everyone that I spoke with acknowledged that the possible responses to the increased operating costs associated with these proposed rules could run anywhere from reductions-in-force to unintended consequences like large-scale underemployment and a loss of benefits amongst the existing staffs. Nor could any of Sander, Eaton, or Record  comprehend why – when the amounts at issue dwarf those involved in the Cost of Attendance debates – this issue hasn’t gotten more attention nationally. And while the DOL’s changes to the FLSA OT Exemption are currently only proposed and there is no definitive timeline by which these regulations will be in place, this issue will undoubtedly find its way, in some form, to the desks of athletic administrators at every level in the not-too-distant future. By that point, the time for dialogue regarding a unified approach will be long past.

About Jeff Troxclair
Jeff Troxclair is an executive, lawyer, and life-long college sports fan. He is a graduate of both NC State University and the University of Notre Dame, and is a hopelessly optimistic Wolfpack and Irish fan. Jeff is originally from New Orleans, LA, but has lived for extended periods of time in both Raleigh, NC, and Chicago, IL. He currently resides in Oakland, CA, with his wife and daughter. Having seen the New Orleans Saints actually win a Super Bowl, he is now convinced that we live in a world where no sports-related achievement is impossible.

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