How Will New Overtime Rules Affect Your Organization?

In May, the United States Department of Labor released new overtime rules that will take effect on Dec. 1.

Since December will be here before we know it, nonprofits are already making adjustments, as the new rules will have significant implications for the nonprofit sector.

According to the National Council of Nonprofits, it all comes down to salary requirements.

With limited resources, many nonprofits can’t afford to pay their staff big bucks. Under the new regulations, most employees earning less than $47,500 will be entitled to overtime compensation. So think about your events and meetings. What will that mean?

That said, it’s a complex formula for understanding compliance, but the U.S. Department of Labor has published resources.

According to DOL, employers have a few options:

• Pay time-and-a-half for overtime work.
• Raise workers’ salaries above the new threshold.
• Limit workers’ hours to 40 hours per week.
• Combine options above.

The council offers some tips, as well.

“Employers have various options to comply with these change in overtime rules, ranging from increasing exempt employees’ salaries to the new level, converting them to hourly employees and paying overtime or making other changes to benefits or operations,” the National Council of Nonprofits said. “Nonprofits with budget years ending on June 30 will need to develop new budgets for the fiscal year beginning in six weeks that take these new changes into account. Nonprofits with budget years ending on Dec. 31 have more time to adjust and plan for 2017.”

In addition, the rules allow for the use of volunteers under certain circumstances, but DOL warns nonprofits shouldn’t use volunteers to skirt the regulations.

The department contends its new regulations will ensure companies – including nonprofits – adhere to the Fair Labor and Standards Act. It also says the new regulations will lead to a better work-life balance while increasing productivity and reducing turnover.

“Job titles never determine exempt status under the FLSA,” DOL said. “Additionally, receiving a particular salary, alone, does not indicate that an employee is exempt from overtime and minimum wage protections.”

Regardless of the exemptions the new rule provide, associations are concerned about the ramifications. According to ASAE, more than 250,000 associations submitted comments on the proposed rule to the department last year.

“Because the rule would dramatically expand the number of employees now eligible for overtime pay, associations and other employers could be forced to lay off staff or limit employees’ work outside of core business hours, stinting employees’ career growth and harming productivity,” wrote Chris Vest on June 1 in “Associations Now.”

Additionally, Alex Beall wrote about the new regulations, offering advice from Julia Judish, special counsel with Pillsbury Winthrop Shaw Pittman LLP.

“Once the employer has identified which of its currently exempt employees would convert to nonexempt, the employer should start now requiring those employees to do the equivalent of clocking in and clocking out and track their average hours,” Judish said.

As December approaches, we’ll track the new DOL overtime rules and report changes and their implications for nonprofits.

Until then, if you’ve got tips to share, please email Kristen Parker at [email protected]. We’d love to share them!