Educate Your Organization on the Overtime Regulation

01 June 2016 Published in News & Updates

Don't get caught off guard and assume the Overtime Regulation doesn't impact your organization.

 

Please educate yourself!

The new overtime regulation becomes effective December 1, 2016. UNA recommends that you have a plan in place to make sure your organization is following the regulation.

Jenny Zachry, SPHR,SHRM-SCP Capacity Development Advisor at CLP Successory has provided UNA with some helpful hints and Dos/Don'ts to assist nonprofits with this transition and in understanding the regulation.

Important Facts about the Regulation:

Nonprofits are NOT automatically exempt from the Fair Labor Standards Act (FLSA) which details overtime and minimum wage laws. There are many articles on the web that say the exact opposite. After hours of asking clarifying questions with the Department of Labor it was learned that there are very FEW organizations in the US that do not fall under the FLSA. So make sure you understand the regulation!

Salary tests for employees being exempt from overtime are NOT new. The old threshold was $23,660. The new threshold has been increased to $47,476, and will increase every three years. Not only must an employee pass the salary test (the only part that has been changed), but they must also pass one of the duty tests – It is quite likely that nonprofits in Utah have employees in exempt (salaried) positions based on just the salary test and they don’t actually pass the duties test.The new regulation is set to take place December 1, 2016. Congress has already pushed forward a bill to shut down this executive change to the law. However it is not recommended that organizations wait for that to happen. Please take the appropriate steps now to be compliant with the regulation on December 1, 2016, assuming it will stay as is.

Recommended Dos and Don'ts:

  • DO use this as an opportunity to review all of your compensation policies and practices within your organization. As an Executive Director, HR Director, or Board Member, you should be pursuing generative conversation within the decision makers to look at the organization’s overall compensation philosophy and ensure that you are budgeting appropriately to attract and retain quality staffDON’T stick your head in the ground and think if you just hide from it, you’ll be immune from the changes. It is not the government who will likely out you, it’s an employee that will feel like they are being slighted when it comes to pay.
  • DO talk with your board of directors and ensure that your organization’s budget includes a line item for overtime and/or increased salaries to bring people up to the necessary salary to remain exempt from overtime.
  • DON’T make any kind of blanket statement or policy stating that your organization does not allow overtime or even worse, that overtime is not paid. Instead, make a policy that if overtime should be necessary, it must be approved ahead of time by a supervisor, and failure to get approval may lead to discipline up to and including termination (BUT, you still must pay them for the hours they work, even if they failed to get permission ahead of time.)
  • DO plan a communication process around changing any employee’s status – believe it or not, some people see being moved from a salaried, exempt position to an hourly, nonexempt position as a demotion.
  • DON’T make rash decisions on making changes. There is a third category which is called salaried non-exempt in which an employee can remain salaried, but receives overtime pay for anything over 40 hours in the week. This is a great option --- as long as you have the proper systems in place (see next item!)
  • DO put into place a time recording system (paper, app, computer based, etc) for all nonexempt employees – even those that you are leaving as salaried nonexempt (meaning, that they don’t meet the salary threshold of the FLSA, but you are keeping them on a salary basis with overtime pay). Note: You should already have a time recording system for your hourly employees and this could be used as an opportunity to review and modernize that system if necessary.
  • DON’T assume that everyone will be happy with this change and will gladly follow the time recording processes. Some people may not have had to track their time their entire career, so this may seem very unnatural to them and they will need help with the process.
  • DO communicate expectations about nonexempt employees doing their work during the work hours. Make sure you clearly communicate that doing email, checking text messages, etc. needs to be contained to the work day – otherwise these are hours you will need to pay for.
  • DON’T encourage your employees to just not report all of the hours they work. In the same vein, don’t transfer some of their hours to “volunteer” work for the organization. There are strict rules on when an employee can volunteer for their own organization.

Below are some resources regarding the regulation. For local resources to assist your organization in working through this transition please visit UNA's Business Marketplace: https://utahnonprofits.org/business-marketplace

Resources and Links: