Administration announces final overtime regulations
The Department of Labor (DOL) has finalized changes to the rules governing eligibility for overtime pay. Almost a year ago on June 30, 2015, the Administration put forward proposed regulations to update the overtime rules, including raising the salary threshold for eligibility, for the first time in 12 years. The notice of proposed rulemaking sparked broad discussion among workers and employers, both for-profit and nonprofit, about the potential impact of the sweeping change.
The final rule will increase the salary threshold from $23,660 to $47,476 per year, or from $455 to $913 per week (Updated every three years). This is threshold is based on the 40th percentile of salaries in the lowest income Census region (South). The threshold for highly compensated employees will increase from $100,000 to $134,004 per year. The rule did not include any changes to the “duties” test, but bonus and incentive payments will count toward 10 percent of the new salary level.
The rule will go into effect on December 1, 2016. However, there is an exception for some organizations that provide Medicaid-funded services to individuals with intellectual disabilities. The agency will not enforce the updated policy for this small group of organizations until March 17, 2019. DOL has provided a nonprofit specific fact sheet and guidance that includes more information on how the overtime changes will impact nonprofit employers.
Independent Sector submits comments urging revisions to overtime proposal
On September 4, 2015, Independent Sector submitted comments to the Department of Labor. While IS believes that employees should be paid a living wage and similarly supports an increase in the salary threshold for eligibility to receive overtime compensation, there are many concerns that IS and others in the nonprofit sector have regarding this rule. As expressed in the submitted comments, IS is troubled by the agency’s lack of engagement with nonprofit organizations in developing its proposed new overtime rule, and urged four specific revisions to the plan before it is implemented: moving to a phased-in implementation; revising the terms of federal grants and contracts with nonprofit organizations; allowing for regional market differences to the proposed salary threshold; and implementing an open process for any changes to the duties tests.
Nonprofits request more time for overtime proposal comments
Independent Sector, National Council of Nonprofits, and 145 organizations from across the charitable and philanthropic sector sent a letter to the Department of Labor on August 5, 2015, requesting a 60-day extension of the public comment period for the proposed rule revising overtime pay regulations. “This multi-part proposal is particularly complex for the more than 1.5 million charitable organizations a cross America,” the letter states, “as each attempts to determine not only the proposal’s potential impact on its own workforce, but also on the individuals and communities it serves.”
White House seeks more overtime pay for employees, nonprofits included
The White House released proposed regulations on June 30 that would require employers — including nonprofits and exempt organizations — to pay time-and-a-half wages to salaried employees earning up to $50,440 annually when they work more than 40 hours in a given week. The plan would more than double the current overtime-exemption threshold of $23,660, and would ensure future thresholds remain at the 40th percentile of income. While the proposal would maintain the current carve-out for all teachers, attorneys, doctors, and judges, the Administration asks for public input about whether to alter the current “duties test” that allows employers to waive overtime pay for “executive, administrative, and professional” employees. To view public comments submitted on this issue, please visit the Federal Register.
On June 30, 2015, the Department of Labor (DOL) released a proposed rule that would revise regulations governing overtime compensation related to the Fair Labor Standards Act (FLSA). Specifically, the proposed rule would have increased the salary threshold below which employees qualify for overtime compensation, impacting an estimated 4.5 million employees in the United States, including many working in the nonprofit sector.
Independent Sector developed a summary of the 2016 DOL proposal, including an overview of the overtime rules currently in place. Highlighted are a number of implications the proposal could have had for the nonprofit and exempt sector, which organizations and their Human Resources departments could review when considering whether to contact lawmakers or submit official comments to DOL.
Send your questions and comments about the DOL overtime regulations to the IS public policy team.
- Federal Register Final Overtime Rule (May, 2016)
- DOL General Fact Sheet on the Final Overtime Rule (May, 2016)
- DOL Fact Sheet Overtime Final Rule and the Nonprofit Sector (May, 2016)
- DOL Guidance for Non-Profit Organizations on Paying Overtime under the Fair Labor Standards Act (May, 2016)
- Final Rule Exception for Medicaid Providers to Individuals with Intellectual Disabilities
- Free Digital Learning Event Series on Overtime Rules for Nonprofits
- Comments Submitted by Independent Sector (September, 2015)