New Overtime Rules Could Cost Purdue Millions

Jul 14, 2015

Hundreds of employees would be affected and the school could be on the hook for an additional $20 million or more each year.
Credit courtesy Purdue University

A proposal currently under review by the federal government would make millions more Americans eligible for overtime pay. Those changes could affect hundreds of Purdue employees and cost the university millions of dollars.

According to federal law, a salaried worker needs to hit three goals in order to be exempt from overtime rules -- do administrative, professional or executive work, be paid a salary, not an hourly wage and earn at least $455 a week.

The president’s proposal changes the third part of the exemption, raising the salary threshold to $921 a week. Chris Schrader, a Bloomington-based HR consultant, says that’s a big deal.

“You’ve never seen this large of a jump, this is better than doubling of the current floor," Schrader says.

Purdue Vice President of Human Resources Trent Klingerman says as they’re written, the regulations could affect about 1,500 of the University’s employees and increase costs between $5 million and $24 million.

Klingerman says to offset those costs, the university could raise certain salaries above the new threshold. He says also likely Purdue would have to monitor employees’ hours more closely to make sure they don’t exceed 40 hours a week.

"One of the unfortunate consequences of the proposed rule is we will have to manage their time to a greater extent than we do today to guard against the overtime costs," Klingerman says.

The Department of Labor is accepting public comment on the regulations until the beginning of September before they’re reviewed by different government agencies. The new overtime rules could go into effect as early as next year.