How New Department of Labor Overtime Rules Effect Your Organization

What are these rules and what impact do they have on the nonprofit community?

Once upon a time there was a nonprofit in Missouri. This nonprofit had a $2M budget and many full-time salaried employees making an average salary of $35,000 each. The nonprofit held many events in the summer, including performances and fundraisers. The happy employees willingly worked 50-60 hours each week to deliver the mission and to pull off successful fundraisers.
Then one day the Department of Labor issued final rules relating to overtime and the nonprofit world was to never be the same…..
Such is the world nonprofits will live in effective December 1, 2016. A world where they will very likely be exposed to paying overtime to employees if they do not understand the new rules and modify the structure of employee pay or work expectations.

What are the rules?

The final rule raises the salary threshold for which nonexempt workers are entitled to overtime, from $23,660 to $47,476
There is no special exemption from the Departments regulations for nonprofits.
Exemptions may apply to nonprofit with receipts less than $500,000, but if your nonprofit engages in “interstate commerce” (for example donor solicitation across state lines) your organization would fall under the new DOL requirements.
Thursday, December 1, 2016, is the implementation date. Employers should be aware that since the First falls on a Thursday the implementation starts on the day the workweek in which the First falls.

Impact on the nonprofit community:

At Support Kansas City the feedback we have received from nonprofits:
“Our employees work events after business hours and may work over 40 hours in one week”
“We have a culture of working overtime without tracking hours”
“We have no tracking system in place for reporting of time worked”
“If we pay all employees salary we are exempt from the new law”

The new regulations will impact many areas of the organization including annual budgeting, compensation structure, time tracking, human resource management and grant tracking.

Do Your Homework:

1.) Understand the rules
a. Read and understand the DOL regulations
b. Utilize Human Resource experts and attorneys for professional advice
2.) Organizational Impact – Assessment
a. Job description – duties and assignment review
b. Employee guide – updated to reflect changes?
c. Employment agreement – updated to reflect changes?
d. Budget impact – calculate payment scenarios and new hires based on needs and costs under the new guidelines
e. Impact on grants and employee allocation to grants
3.) Implement Tracking Tools and Reporting
a. Timesheet for tracking hours for all employees
b. Timesheet for tracking time by grants
4.) Education
a. Educate employees about the new regulations and the impact on their job expectations and compensation

We have provided links to two publications provided by the DOL: Guidance for Non-Profit Organizations on Paying Overtime and Overtime Final Rule and the Non-Profit Sector

If you need more information feel free to contact Support Kansas City and we can connect you with the resources and best practices around the DOL changes.

About the Author

Support KC

For the benefit of the nonprofit sector everywhere, we wanted to provide resources for ways we can continue to operate and grow within this era. And once social distancing begins to fade, what lessons can we take from this to improve our operations permanently. Come back often for more updates.

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