The U.S. Department of Labor (DOL) announced last week that it plans to release new proposed regulations on the salary threshold under the Fair Labor Standards Act (FLSA) in October. Currently, FLSA requires employers, including nonprofits, to pay their employees at least $7.25 per hour and to pay employees one-and-one-half time their regular rate of pay when they work more than 40 hours in a workweek. Employees are exempt from the FLSA overtime pay requirement if they:
- Are paid on a salary basis (meaning they are paid the same amount each week regardless of how many hours they actually work);
- They are paid at least $684 per week ($35,568 per year); and
- Exercise job duties that are classified as administrative, executive, or professional.
In 2016, near the end of the Obama administration, DOL attempted to raise the salary threshold for exemption from overtime pay to $47,476 per year. Ultimately, federal courts stopped the implementation of the Obama-era overtime rule, and the Trump administration elected to use a lower salary threshold (the current level of $35,568) for exemption from overtime pay. It is likely that the forthcoming DOL regulations will set a salary threshold closer to that of the 2016 proposal. DOL also could make changes to the duties tests for administrative, executive, and professional employees.
Earlier this year, the Center urged DOL to take into account three nonprofit-specific considerations in the developing new overtime regulations:
- Give nonprofits (and other employers) adequate time to make operational and budget changes that would be necessitated by a large increase to the salary threshold. One way to do this would be phase in a large increase in the salary threshold over several years.
- Provide guidance explaining how common nonprofit jobs that are found in other sectors – like fundraisers, volunteer coordinators, and social service program staff – fit into the administrative, executive, and professional duties tests. DOL currently provides guidance on a variety of positions that are prevalent in for-profit businesses, but it doesn’t currently offer much guidance for nonprofit jobs.
- Take steps to encourage federal, state, and local government agencies that contract with nonprofits to provide public services to increase their payments to nonprofits to cover the additional payroll costs that would come with a higher overtime salary threshold.
These suggestions are based on input the Center received from dozens of North Carolina nonprofits in 2016 and 2019 when DOL revised its overtime regulations. When DOL releases its proposed regulations, it will provide an opportunity for public comments. The Center will share information on how and when your nonprofit can provide timely, substantive written comments to DOL. The Center also will provide comprehensive analysis of the regulations and compliance options for North Carolina nonprofits (similar to what we provided in 2016 and 2019).