Fair Labor Standards Act Impact on Postdoc Employees and Postdoc Trainees

Research Administration Research Resources Fair Labor Standards Act Impact on Postdoc Employees and Postdoc Trainees

Fair Labor Standards Act Impact on Postdoc Employees and Postdoc Trainees

The US Department of Labor has recently announced significant revisions to the Fair Labor Standards Act (FLSA), which establishes minimum wage and overtime pay as well as other earnings standards for employees in the public and private sectors. These revisions, including the new standard salary level of approximately $47,500, will be effective December 1, 2016.

In light of these changes, the University is setting a new minimum salary for postdoc trainees and postdoc employees of at least $47,500 beginning December 1, 2016.  This change recognizes the hard work of postdocs and maintains their FLSA exempt status.  

Postdoc Trainees (Status 20)

For postdocs on NIH training awards (e.g. F32 or T32), we expect that the NIH will provide the additional funds required to adjust their salaries, although we have not yet received official word. The expectation is that these postdocs, as well as those supported by foundation training awards, will remain as trainees (i.e. non-employees). They should, therefore, incur no additional Alabama state tax burden. Full cost of their health benefits will continue to be the responsibility of their departments. 

Postdoc Employees (Status 21)

We are training nearly 200 postdoc employees (i.e. not funded by training grants) who make less than the new salary level of approximately $47,500, some much less.  In order to buffer the effect of this unfunded mandate on our investigators, we are instituting the following for the December 1, 2016, to September 30, 2017, time period. Deans and Central Administration will cover 75% of the required increase up to $500 per month per postdoc for the ten-month period, with the assistance funds being split half-and-half between the respective Dean and Central Administration.

Postdoc Health Insurance Costs

Our long range plan is to compute a separate fringe benefit rate for postdoc employees for FY 2018 that we project will reduce overall costs for mentors, who will be expected to fund the full cost of their postdoc employees beginning October 1, 2017.   Part of this fringe benefit reduction will be achieved by requiring postdoc employees to pay 25% of their health insurance plan premiums beginning January 1, 2017. In our efforts to lessen the impact of this change on the post-docs, Allen Bolton, VP for Financial Affairs and Administration, and Alesia Jones, Chief Human Resources Officer, have agreed to reduce these premium costs. This will cost most of our postdoc employees approximately $900 (single coverage) to $3,000 (family coverage) annually.
 
For postdoc employees who are currently making a salary near or above $47,500, we strongly recommend that mentors provide an increase in stipend to at least compensate for this new expense.  Assistance funds can be requested to cover 75% of such increases. For those making significantly less than $47,500, the insurance cost will be more than offset by their salary increase, so no additional insurance funds need be included.

Going Forward…

We do expect that at least 25% of the required increases for postdoc salaries will be borne by the mentors. For mentors who are not able to fit these increases into their research budgets, please remember that first-year postdocs have an appointment calling for a full year of support, and more senior postdocs must be given at least three-months’ notice. Those postdoc trainees on fellowships from agencies like ACS or AHA will be increased to at least $47,500 and eligible for the supplements described above. 
 
We recognize that this increase is a true hardship to our investigators, but of course it is an issue that is affecting all institutions. We have many demands on institutional funds and hope that this level of investment will be a help as we make this difficult transition. A sample of the effects of the increase, including fringe benefits costs, is shown below.
 
 
Current annual salary
Current total cost
Monthly total cost
Proposed salary
Proposed total cost
Proposed monthly cost
Monthly difference
Investigator share
Central & Dean share
36000
48276
4023
47500
63698
5308
1285
785
500
40000
53640
4470
47500
63698
5308
838
338
500
45000
60345
5029
47500
63698
5308
279
70
209
50000
67050
5588
51000
68391
5699
111
28
83
50000
67050
5588
53000
71020
5918
330
83
247

FAQs - Questions from Faculty

FAQs - Questions from Postdocs