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UPDATED 12/9/16: New DoL Overtime Rules Suspended.. For Now.

Posted By Benjamin Bullock, Together SC, Friday, December 9, 2016
Updated: Friday, December 9, 2016

UPDATE:From the National Council of Nonprofits:

The Fifth Circuit Court of Appeals has agreed to expedite its consideration of the Labor Department’s appeal of the nationwide preliminary injunction blocking the Overtime Final Rule, BUT not soon enough for the rule to go into effect before the new Congress convenes and President-Elect Trump is inaugurated. Under the expedited briefing schedule, the last brief will be due on January 31, 2017. See the full briefing schedule here. This means that Congress and the new administration have many options for blocking or altering the rule before it ever goes into effect. Here are some resources worth reading:

o   With DOL’s Overtime Rule in Limbo – Now What?, Nonprofit Knowledge Matters, December 7, 2016.

o   The Status (and Future) of the Overtime Rule, David Heinen, North Carolina Center for Nonprofits, November 23, 2016.

o   Federal Judge Hits Pause Button on Overtime Rule, Nonprofit Knowledge Matters, November 23, 2016.

Original Post on 11/28/16:

Remember those new federal regulations that raised the salary requirement for the overtime exemption to $47,500?  The ones that had many nonprofit leaders excited and anxious at the same time? The ones for which many had already adjusted their policies, practices, and budgets, as they were to take effect on December 1st, 2016?

Well, hold your horses, because they just got thrown in the air. The National Council of Nonprofits reports (emphasis is ours)

On the Tuesday before Thanksgiving, a federal district judge in Texas  issued a nationwide preliminary injunction blocking – at least temporarily – the implementation and enforcement of the Overtime Final Rule that was slated to take effect December 1, 2016. ...The injunction only halts the new rule from becoming law; ... Nonprofit and other employers still must comply with existing federal and state laws regarding fair labor standards, including properly classifying employees as being exempt from or entitled to being paid overtime. 

At this moment, we're not sure what could happen to the new rules. They could be tied up in court until President Trump is inaugurated, in which case he could instruct federal lawyers to drop their challenge to it.

If the matter is settled in court before Jan. 22, and the rules survive, and if the new President wanted to reverse the new rules, then the process is not simple. He'd have to instruct the Department of Labor to issue new regulations, which would take just as long to do (the process for drafting regulations is governed by the federal Administrative Procedures Act, which requires a time-consuming process to be followed) as it took for the current new rules to be drafted and approved. That would mean the new rules could be in effect for at least a year.

And of course, the new Congress could decide to intervene and strike the rules down by disapproving the regulations or amending the Fair Labor Standards Act to forbid the Department of Labor from writing such regulations. Both of these scenarios would be time-consuming as well.

We'll keep you updated as we learn more. Our thanks to our partners at the National Council of Nonprofits for keeping on top of these pressing federal issues. 

Tags:  dol  overtime  Regulations  US Department of Labor 


UPDATED: Final Department of Labor Overtime Regulations Announced

Posted By SCANPO, Friday, May 27, 2016
Updated: Friday, May 27, 2016

UPDATE: In response to the new overtime rule, the Independent Sector and Department of Labor will host two webinars for nonprofits: 

The U.S. Labor Department announced overtime final regulations yesterday that, when they go into effect on December 1, 2016, will mean that most employees earning less than $47,500 per year will be entitled to overtime compensation, regardless of whether they are currently classified as executive, administrative, or professional (white-collar) workers.

The final rule applies to employers in all sectors, but in an effort to address longstanding confusion about how the Fair Labor Standards Act (FLSA) and the overtime regulations apply to nonprofit employers and employees, the Department of Labor (DOL) also published a special overview and guidance for nonprofit organizations:

Overtime Final Rule and the Non-Profit Sector

Guidance for Non-Profit Organizations on Paying Overtime under the Fair Labor Standards Act 

Read more about how this may impact your organization here, here and here. Visit the DOL website for current updates

Here are key details in the new rule and how it will apply to nonprofits:

Salary Level Threshold: The new regulations will raise the standard minimum level for salaried, exempt workers from $455 per week ($23,660 per year) to $913 per week ($47,476 per year). The new level is pegged to the 40th percentile of weekly earnings for full-time salaried workers from the lowest wage Census Region in the country. The final rule also raises the compensation level for highly compensated employees (subject to less-detailed duties tests) from its previous amount of $100,000 to $134,004 annually. That rate was established to match the 90th percentile of annual earnings of full-time salaried workers nationally.

It is important to remember that white-collar employees can be exempt from overtime only if their jobs meet all three tests for executive, administrative, or professional employees. In addition to receiving a salary at or above the new thresholds, each exempted employee must also exercise the job duties of those categories and be paid on a salaried basis. For more information, see the Background section (below) and Classifying Employees Correctly in the resource section of the National Council of Nonprofits' website.

Effective Date: December 1, 2016. The new rule does not phase in the higher salary thresholds over a longer period of time, as had been requested by many commenters during the rule-making process.

 Budget Adjustments: Nonprofits with budget years ending on June 30, 2016, will need to develop new budgets for the fiscal year beginning in six weeks that take the new changes into account. Nonprofits with budget years ending on December 31, 2016, have more time to adjust and plan for 2017.

Automatic Increases: The final rule establishes a mechanism for automatically updating the salary and compensation levels every three years, with the first update to take place in 2020.

Does this Regulation Apply to My Nonprofit? This is a simple question with a complicated answer for each nonprofit, and depends on where your employees perform their duties, the nature of your revenues, and the work that individual employees perform.

o Coverage Through State Law
In at least 11 states, the changes to the federal rules will automatically apply to virtually all   employees and employers. The reason is that these states expressly incorporate by reference the FLSA regulations into state law by way of statute, regulation, or administrative ruling. These states are Alaska, District of Columbia, Illinois, Maine, Maryland, Massachusetts, Missouri, New Jersey, New York, North Carolina, and Ohio. There may be more states in this category as the result of court decisions; nonprofits are advised to check with local legal counsel for more information.

o Enterprise Coverage 
All employees of an organization will be covered by the FLSA and overtime regulations if the entity has annual revenues of at least $500,000, measured by volume of sales made or business done. The DOL special guidance for nonprofits states that “non-profit organizations are not covered enterprises under the FLSA unless they engage in ordinary commercial activities,” which it explains “are activities such as operating a business, like a gift shop.” The guidance further provides that “income that a nonprofit organization uses in furtherance of charitable activities is not factored into the $500,000 threshold. Such income might include contributions, membership fees, monetary and non-monetary donations, and dues (except for any portion for which the payer receives a benefit of more than token value in return).”

o Individual Coverage
Even if the employer does not meet the standard for “enterprise coverage,” an individual employee will be covered by the FLSA if he or she engages in interstate commerce or in the production of goods and services for interstate commerce. This can include such activities as regularly making out-of-state phone calls, receiving and sending mail or email, ordering goods from out-of-state suppliers (such as Amazon), and handling credit card transactions. The DOL special guidance for nonprofits provides three examples to help nonprofit employers understand their obligations.

Duties Tests:  The Labor Department asked during the rule-making process whether the itemized changes were needed in the duties tests for executive, administrative, and professional employees. DOL decided not to make any changes in the new regulations.

Non-Enforcement Special Exception: The Labor Secretary announced that the Department will not enforce the higher salary thresholds until March 17, 2019 for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds. This means that those employers will have an additional 28-month grace period before being required to pay overtime for affected employees. See Non-Enforcement Policy statement.

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. See Part III of the DOL special guidance for nonprofits for more information.

Tags:  Overtime Regulations  US Department of Labor 

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National Council Survey Seeks Input from Government funded Nonprofits on Proposed Federal Labor and OMB Regulations

Posted By SCANPO, Thursday, May 12, 2016

Policy changes coming out of Washington, D.C. are expected to affect the costs and operations of nonprofit organizations that have government grants and contracts.

The policy changes involve the expected publication of the Labor Department’s revised overtime regulations AND potential revisions to the OMB Uniform Guidance affecting how nonprofits spend grant funds.

If your nonprofit has grants or contracts with the local, state, tribal or federal government, please take a few minutes to complete the National Council of Nonprofits' brief but important survey:

Visit the National Council's website to learn more about these policy changes

Chances are your organization is not subject to the Fair Labor Standards Act (FLSA), and thus any new regulations would not have impact.  Here's an opinion that nonprofits are not subject to FLSA. 

Here's an opinion on why not to fret.

Tags:  OMB Uniform Guidance  US Department of Labor 

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