The Hill: Non-Profits Are Ready for the New Overtime Regulations

Should an employer be able to make someone who’s paid far less than a middle-class salary work long overtime hours without paying anything for that work? Say no, and you agree with most Americans. Unfortunately, under long-standing federal overtime rules, employers have often given employees managerial-sounding job titles, paid them salaries as low as $23,660, demanded long work hours that involved little actual managing—and paid them nothing at all for their overtime. This is a perversion of the nation’s overtime law—and it’s time to fix it.

The Fair Labor Standards Act, which guarantees time-and-a-half pay for work exceeding 40 hours a week, has always exempted certain employees with high-level duties and salaries from overtime pay. (The idea is that their high-level position gives them sufficient bargaining power to ensure they won’t work excessive hours without adequate compensation). Like many laws, it’s good in theory, but not so good in practice. That’s because the U.S. Department of Labor, which is responsible for defining and updating the so-called white-collar exemption rules, failed to do so over most of the past 40 years. When it finally did act in 2004, it set such a woefully inadequate salary threshold for mandatory overtime pay (below $23,660) and such a toothless test for who’s an exempt manager or executive that employers have easily manipulated the rules, robbing millions of low- and middle-income workers of the benefits intended by the overtime premium: more pay for longer hours, fewer workers with unpaid hours, and additional jobs to meet the need for labor.

Fortunately, the Labor Department is fixing this problem with an update that aligns the exemption’s rules with today’s economy and the purpose of overtime pay protections. Not surprisingly, opponents are ratcheting up their doomsday predictions of catastrophe if more working people are paid for all the hours they work. And one of the more disquieting objections, fanned by business interests like the Chamber of Commerce, is that the rules will bankrupt non-profits and undermine their services.

As leaders of two non-profits—one providing direct services to thousands of Northern Virginians, and the other an advocate for low-wage workers and the unemployed—we strongly believe the overtime update is sorely needed for our clients and constituenciesand our own workforces. We also feel the rule’s implications for non-profits are misunderstood, and its potential impact vastly (and by some, purposefully) overstated. Here’s why.

Many non-profits are not typically engaged in “commercial sales” or “business transactions” that lead to “enterprise” coverage under the Fair Labor Standards Act. As a result, the final rule will not apply to employees engaged solely in carrying out any non-profit’s direct charitable functions. It’s true that individual non-profit employees engaged in interstate commerce (e.g., a development director) are covered under the FLSA, regardless of whether their non-profit employer is covered; and a non-profit’s ancillary business operations—a thrift store to support the charity, for example—may lead to “enterprise” coverage for employees of the business. But neither of these bases converts the charitable operations into covered enterprises. Nor is the number of employees potentially affected under these coverage scenarios nearly as great as opponents’ alarmist estimates suggest.

Raising the salary threshold for the white-collar exemption will certainly benefit huge numbers of workers elsewhere, including our organizations’ clients and constituents. With wages flat, the minimum wage low, and the current overtime salary threshold below the poverty line for a family of four, people trying to make a living from work are swelling public assistance and private charity rolls. Many low-paid employees currently treated as exempt, especially in retail and food service, need the protection that the updated rule will provide to ensure overtime pay for overtime hours, or less unpaid overtime and more time for themselves, their families or other pursuits, including education or second jobs. And individuals who are unemployed or under-employed will benefit as employers add more hours or new jobs to make up for the loss of uncompensated overtime.

We believe that covered non-profit employees earning below the salary threshold should also benefit from the rule. The current salary threshold for exemption is a disaster and disgrace, consigning millions of workers across the economy and in every sector to long hours with no pay when what they need and deserve are higher wages and fairer schedules. Non-profits should be in the vanguard of this movement for just wages and work hours.

We recognize it may be challenging for some non-profits to accommodate the new rules. As mission-driven organizations, non-profits don’t always have the time, flexibility or luxury to pay as much or allocate work hours as we’d like. And work in the non-profit sector can take a toll, with longer hours, lower pay and often wrenching emotional demands spelling burn-out for many. By encouraging non-profit leaders and employees alike to be mindful of how we spend our time and more intentional in allocating work among employees and staffing levels, overtime reform can help us achieve a balance that works best for us all, including the clients we serve.

Read the original article at The Hill.

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Christine L. Owens

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