Here's what athletic departments need to know about new overtime rules

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Today, I’m happy to pass the mic to longtime Friend of the Newsletter Katie Davis, CPA, Partner and Collegiate Athletics Practice Leader at James Moore & Co. Davis has long been one of my trusted voices whenever I have questions about accounting and regulations, and today, she wanted to share her thoughts about another massive regulatory change.

No, not House. This is about the Department of Labor’s new overtime rules. I’ll turn the time over to her:

The spotlight in college athletics has been fixated on the chaos surrounding NIL and the House settlement. Meanwhile, the hits keep coming. A silent storm is brewing that could have an equally profound impact on athletic departments nationwide: the recent changes to the Department of Labor’s (DOL) overtime rule under the Fair Labor Standards Act (FLSA).

These changes are flying under the radar, but they promise to disrupt the financial and operational framework of college sports. The increasing salary threshold for overtime exemption will particularly hit smaller, resource-strapped institutions hard — potentially costing them hundreds of thousands of dollars annually. It’s time to shift focus to the new overtime rule before it catches athletic departments off guard.

The New Overtime Rule: An Overview

Effective July 1, 2024, the annual salary threshold for overtime exemption increased from $35,568 to $43,888. By January 1, 2025, it will rise further to $58,656. Many employees previously exempt from overtime pay will now be eligible, significantly impacting the financial planning of college athletic departments. The two bumps combined result in a 65% increase in the minimum salary threshold in a six-month period. 

It is important to note that salary thresholds vary by state. While states like Florida adhere to the federal standards, others, such as California, have higher thresholds, currently set at $66,560.

This ruling marks the latest adjustment in a series of changes to salary thresholds. In 2016, the DOL attempted to raise the threshold, but the effort was blocked by the courts. The threshold was then adjusted to its pre-July 1 level in 2019. Currently there are multiple cases attempting to block the increases effective January 1, and so far a Texas court has blocked the increase for employees in the state of Texas.

These changes will significantly impact many organizations in both the corporate and nonprofit sectors. Starting in 2025, the DOL estimates these adjustments will affect 4 million workers.

Positions Affected

Several key areas within athletic departments may be affected by the new overtime rule:

• Assistant coaches

• Strength and conditioning

• Trainers

• Equipment room 

• Facilities

• Marketing 

• Business office 

• Other lower-level coordinators

These positions often involve significant amounts of overtime due to the nature of their responsibilities, which include not only their primary job functions but also a growing list of “other duties as assigned.” 

Financial Impacts

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