What the DOL Overtime Reform Proposal Means for Nonprofits

On July 6, 2015, the Department of Labor (DOL) issued a proposal to more than double the minimum salary level that white-collar workers must be paid to be exempt from overtime, from $23,660 to $50,400 annually (or from $455/week to $970/week).  With a debate centering around if the proposed salary levels are set correctly (and how future increases will be considered), a public forum for written comments is open until September 4th, 2015.  The proposed amounts are at the 40th percentile of weekly earnings for US employees, and apply only to non-exempt employees (e.g. any employee not considered “executive, administrative or professional”). If approved, the Obama administration says that these changes would impact nearly 5 million US workers within the first year.

However, the data being considered in this proposal only takes into account the salaries of for-profit and public sector employees – not those of cash-strapped nonprofits. So what does this mean for nonprofit organizations that are struggling to balance overhead fees – including compensation – with programming costs?  The National Council of Nonprofits has issued a plea to all nonprofits to conduct a mission-based analysis of how this new law will impact their organization, and to post concerns/comments to the DOL before September 4th.  While it’s a certainty that all nonprofits would be affected by changes in overtime exemptions, the actual impact varies widely depending on the size, services, and location of individual organizations.  As such, its imperative that as many nonprofits as possible contribute to the discussion. 

Specifically the National Council of Nonprofits recommends that nonprofit organizations consider questions around how “minimum salary levels would affect operations, resources, and staffing, as well as what impact the draft regulations would have on persons relying on the services and the mission of the nonprofit.”  To support nonprofits in conducting an in-depth analysis, the Council has provided an extensive list of questions to guide the process, including queries regarding: mission advancement; impact on communities served; clarifications of “gray areas” specific to the independent sector; revisions based on nonprofit salaries; and considerations around the actual transition of the new law.