New Overtime Regulations Could Affect Nonprofits
The U.S. Department of Labor has announced changes to its overtime regulations that will automatically extend overtime pay protections to more than four million workers, including many who work at nonprofit organizations.
The changes, which were first proposed in July 2015 and then modified after the DOL received more than two hundred and seventy thousand comments, update the salary and compensation levels needed for executive, administrative, and professional workers to be considered exempt, setting the standard salary level at the fortieth percentile of earnings of full-time salaried workers in the lowest-wage census region, currently the South ($47,476 annually for a full-year worker). In addition, the changes establish a mechanism for automatically updating the salary and compensation levels every three years to maintain the new levels and ensure that they continue to provide useful and effective tests for exemption.
As a result of the changes, most salaried workers earning up to $47,476 must receive time-and-a-half overtime pay when they work more than forty hours in a week. The previous cutoff for overtime pay, set in 2004, was $23,660, the New York Times reports. While the change, which goes into effect December 1, will mean many workers receive more pay when they work overtime, it may also cause some employers to limit overtime for their employees and cause others to raise employees’ salaries so they no longer qualify for overtime.
The changes do not exempt nonprofits, but not all nonprofits are subject to the regulations. The DOL also released a guide (10 pages, PDF) for nonprofit organizations to help clarify which ones are subject to the Fair Labor Standards Act and thus the new regulations. Most hospitals and schools, for example, are covered by the rule, while all employees are covered if a nonprofit earns at least $500,000 from “commercial activities.” However, according to the Chronicle of Philanthropy, even if a nonprofit is not covered by the law, an individual employee may be if he or she engages in activities that fall under the interstate commerce category, including making interstate calls, sending mail and email, and processing credit card transactions.
Robert Boonin, an employment lawyer and member of the Wage & Hour Defense Institute, told the Chronicle that nonprofits are “very vulnerable to being seriously hit because they have fewer resources to keep people from being exempt [i.e., from qualifying for overtime]."
