In the next couple of months, the U.S. Department of Labor (DOL) will release new proposed regulations on the salary threshold under the Fair Labor Standards Act (FLSA). 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.
Some nonprofits from around the country met with DOL to discuss nonprofit-specific considerations in the forthcoming overtime regulations. They explained that nonprofits had expressed “moral support, but operational anxiety” about the 2016 overtime rule, since the proposed increase to the salary threshold would have meant significant pay raises for many low-income workers, but also would have created immediate new payroll expenses for many nonprofit organizations.
When DOL releases its proposed regulations, it will provide an opportunity for public comments. The Alliance will share information on how and when your nonprofit can provide timely, substantive written comments to DOL.