What Nonprofits Need to Know about the Final Overtime Rules

May 23, 2016

The U.S. Department of Labor (DOL) recently released the final rules pertaining to overtime regulations in the Fair Labor Standards Act (FLSA). The final rules raise the salary threshold from $455 a week ($23,660 for a full-year worker) to $913 a week ($47,476 for a full-year worker) effective December 1, 2016.

Neither the FLSA nor the DOL’s regulations provide an exemption from overtime requirements for nonprofit organizations. Further, while ministers are exempt from the FLSA, non-ministerial church staff are not exempt from this new overtime rule simply because they are employed by a church. However, there are limited exemptions under the “enterprise coverage” and “individual coverage” rules that may apply to some organizations.

Generally, hourly workers, workers with regular workweeks of 40 or fewer hours, workers who fail the “duties test” (because they should already be treated as hourly workers), highly compensated workers (those making in excess of $134,004 annually), and workers that meet one or more of the “enterprise coverage” and “individual coverage” exemptions will not be affected by the new rules.

Here are some points to emphasize:

  • A worker, exempt or non-exempt, can be paid a salary and still be subject to overtime rules
  • Even a worker that qualifies under the executive, administrative, or professional exemption must be paid overtime if his or her compensation is less than $913 a week ($47,476 a year), beginning December 1, 2016
  • Overtime for this purpose is considered to be any hours worked in excess of 40 hours per week

The bottom line is that effective December 1, 2016, most salaried workers making less than $47,476 per year (or $913 per week) must be paid overtime for any hours worked in excess of 40 hours per week.

Many options for complying with the new salary threshold are available to organizations. These options include:

  • Raise salaries above the overtime threshold ($47,476 per year)
  • Pay overtime above a salary for hours worked in excess of 40 hours during the week
  • Evaluate and realign employee workload to eliminate overtime
  • Adjust employees’ base pay downward and pay overtime

For questions, call BiggsKofford at 719-579-9090 or email Greg Papineau at gpapineau@biggskofford.com.

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