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Visit https://www.dol.gov/whd/overtime/final2016/nonprofit-guidance.pdf for more information about the requirements of the new overtime law and to find out if the regulation applies to your nonprofit.
In May, the U.S. Department of Labor released a new law that is going to increase the operating costs of many nonprofits in Chattanooga. Especially in the nonprofit sector, this creates new opportunities for us, as a community, to support those who support so many of our neighbors in need.
The law states that on Dec. 1, the number of employees eligible for overtime pay will increase. In the nonprofit world, this could mean bigger paychecks for some employees - a good portion of whom currently live in poverty. But it could also mean increased overhead for nonprofit employers, whose resources already are stretched thin.
Needless to say, this regulation has been the subject of controversy among nonprofits. Whether we're for or against it, two things are certain: 1) in order to comply, many organizations will have to make changes in the coming months; and 2) those changes could be costly.
So what, exactly, is the new rule? Effective Dec. 1, employees earning less than $913 per week ($47,476 per year), will not be considered exempt, and therefore will be eligible for overtime pay. Previously, workers needed to earn less than $455 per week ($23,660 per year), in order to receive overtime.
Salaried employees who perform executive, administrative or professional tasks can be exempt from overtime only if they receive a salary at or above the new threshold, and if their jobs meet certain "duties" tests.
Not every organization will be subject to the rule. For those that are, some may welcome these changes: better pay helps with recruiting and retaining strong talent, and it can lead to happier, more productive employees. On the other hand, budgets and resources are tight in the nonprofit world, especially when it comes to general operations. What's more, many funders restrict their grants and donations so that the funds can't be directed toward things such as salary, office space or utilities. Consequently, finding the funds to cover higher salaries may be challenging.
Compliance with the new rule can take different forms. Nonprofits can embrace the new rule, track hours for salaried employees and pay overtime to those who earn it. Or they can raise salaries above the threshold to maintain their employees' exempt status. Some will be forced to cut or scale back vital community programs and services to balance their budgets.
However nonprofits choose to comply, and however welcomed or daunting this regulation may be, it serves as an important reminder: nonprofits may not be businesses, but they share many of the same operational expenses and challenges.
So as nonprofits work to meet the requirements of the new rule, it's imperative that the generosity of every community extends not only to the work a nonprofit does, but to the nonprofit itself. Because if we want to help nonprofits fully serve their mission, we have to help them keep their doors open, too.
Maeghan Jones is president of the Community Foundation of Greater Chattanooga.