Most employees of nonprofit organizations are entitled to the minimum wage and overtime protections afforded by the Fair Labor Standards Act. Until recently, any full-time worker paid more than $23,660 in annual salary was exempt from this provision and therefore not required to be paid overtime. On May 18 the Department of Labor published its long-awaited revisions to the overtime rule. Under the new rule, the threshold for exemption is raised to $47,476 annually for full-time workers. This means that employees earning more than $23,660 up to the new threshold, who were previously exempt from overtime, now must be paid overtime at the rate of time and one half for all hours worked above 40 in a week. The new rule becomes effective December 1 and the threshold will be updated every three years going forward.

The impact to nonprofit budgets could be devastating. Often, executive directors of small nonprofits are paid less than the new threshold amount. As anyone who is involved with nonprofit organizations knows, these individuals put in long hours for their agencies. And they now must be paid overtime for all the hours worked beyond the standard 40-hour week. Organizations will need to assess their workforce and determine how the new rule will impact them. Several remedies are available to mitigate the impact and these approaches will impact organizations differently. The Niles Partners can assess the impact and help sort out the options best suited to the agency.