public-policy newsletter

Final Overtime Rule Scheduled to Take Effect January 1st, 2020

October 23, 2019

By Marie Camino

Last month, the Department of Labor (DOL) published its final overtime rule , which revises provisions within the Fair Labor Standards Act that pertain to minimum wage and overtime pay exemptions for executive, administrative, and professional employees. The rule will raise the salary threshold for overtime exemptions from $455 weekly to $684 weekly, or a salary of just over $35,000 annually. Salary is one of three determinants of overtime exemptions, along with a job duties test and a requirement that employees be salaried rather than paid hourly. It also increases the minimum salary for “highly compensated workers” from $100,000 to $107,432 annually.

This rule is a substitute for a proposed rule from the previous administration that would have raised the overtime exemption threshold to $47,500 annually and was blocked in the courts.

Impact on Nonprofits

The DOL estimates that up to 7 percent of nonprofit workers will be affected by the rule. Compliance may cause some nonprofits to reduce employee hours, and consequently, scale back on essential services and supports that help all members of our communities thrive.  It is incumbent on the sector to advocate for funding sources to allow for these potential increased staffing costs so services can continue to meet our communities’ needs.

For example, organizations that receive grants or contracts from any level of government will be required to comply with the new regulation. This compliance will impose additional costs that the current nonprofit structure is not equipped to offset. For more on how the regulation will impact grants, see the public comment submitted by the National Assembly and our partners at the National Council of Nonprofits, YWCA, YMCA, and Easterseals here,advocating for an increase in the funding levels of  government contracts to ensure that services will not be reduced.

For more information on whether the rule will impact your organization, and how, check out this fact sheet from our partners at the National Council of Nonprofits.