Dive Brief:
- The idea that nonprofit employers can basically ignore the new Department of Labor overtime rule is erroneous, meaning they will have to either boost fundraising results or possibly reduce services, according to SHRM.
- Even though employers engaging in charitable activities are exempted from overtime pay requirements as enterprises, individual employees may still be eligible for overtime pay, SHRM reports.
- To try and sort it all out, SHRM notes that the Labor Department released a fact sheet and guidance that clarify how and when nonprofits or their employees are covered by the Fair Labor Standards Act (FLSA).
Dive Insight:
Michael Eastman, an attorney with NT Lakis in Washington, D.C. (he also serves as counsel for SHRM), told SHRM that enterprise coverage will not apply to nonprofits engaged in certain charitable, religious or educational activities who do not have $500,000 or more in business-related revenue or sales. But, he adds, even if enterprise coverage does not apply, individual employees may still be under the FLSA’s protections. The SHRM article notes that Eastman disagrees with a recent opinion column saying that nonprofits shouldn't worry about the new overtime rules, calling the column "highly misleading."
The SHRM article goes into a detailed description of the FLSA’s enterprise coverage and how it impacts nonprofits. Eastman told SHRM that the overtime rule’s increase in the exempt salary level would "unduly burden" nonprofits, which he said “face funding constraints that limit their flexibility in responding to new labor costs.” The end result may be cuts to the services that nonprofits offer.
Notably, SHRM is testifying today, June 9, before the U.S. House of Representatives Education and the Workforce Committee on nonprofits and the final overtime rule.