New Federal Overtime Law Raises Concerns For Nonprofit Industry
Cathy Arft’s cubicle is an industrial kitchen at the Osceola Council on Aging in Kissimmee.
Every week day she makes sure 1,000 meals make it out of the door and into the homes of senior citizens. On weekends, she oversees banquet catering that helps pay for the nonprofit’s meal program.
Her schedule is hectic.
“One week it could just be a normal 8 a.m. to 5 p.m. Sometimes I’m here from 5 a.m. to 7 p.m. We had a Hindu wedding one time and I was here for almost three days straight,” she remembers.
Arft started at the Council at 12 years old as a volunteer. Today at 50 years old, she calls what she does a labor of love at a place with a critical mission: To serve as many people in need as possible, from in-home personal care for the disabled to respite care and adult day care services.
“You don’t work here for the paycheck,” she smiles. “You work here for the mission. You’re in the community to make sure people don’t go hungry. It’s more of a way of life and there’s no way to track that.”
But come December, the Council and mission-based nonprofits like it will have to track that. It used to be if a federal workers made $23,660 they were exempt from overtime pay. The new law nearly doubles that amount to $47,476.
Michele Bronson handles human resources at the Osceola Council on Aging. She says compliance is going to mean making some tough decisions.
“We have approximately 40 employees that right now are exempt. And with the changes, that will change to only approximately ten.”
Those positions run the gamut, from case managers to grant writers.
“The people who work here full time need to work full time. Either we pay overtime for all of those hours, we hire someone else to do that part, which costs money, or look at doing the increase in the salary so we won’t have to have this person go non-exempt.”
Bronson has started having employees log their hours. When they’re taking sporadic phone calls…or checking email or even taking files home. With that data she’ll analyze whether its worth paying overtime or offering creative incentives such as flex time.
David Thompson with the National Council of Nonprofits says it does not take much analysis to see this new law will put nonprofits across the country between a rock and a hard place.
In a recent national survey he found many are bracing themselves to pay overtime.
“A third said that they’re going to have to reduce staff to make ends meet and another third said they’re going to have to reduce services,” he adds. “To a nonprofit, reducing services is the absolute worst thing you could do.”
But national workers’ rights groups like Jobs with Justice—also a non-profit—can think of one thing that is worse: employee burnout.
“That leads to people leaving,” says labor policy analyst Michael Wasser. “Making sure that they can go home and recharge can have long-term sustaining benefits because you don’t have to go out and recruit, train up, rebuild that knowledge.”
But, experts expect tough decisions in the coming months from agencies that get state and federal grants, which have special rules for how nonprofits can use them.
Nonprofits aside, Mark Neuberger, employment attorney at Foley & Lardner LLP, says how employers deal with overtime is simply counterintuitive.
“The law was passed at a time when men—and I mean men—went to work—and if the man wore a white shirt, they didn’t get overtime and if they wore a blue shirt, they punched the clock and got overtime. Life today is not nearly so simple.”
He says the law could change depending on who gets elected in November.
But while that is percolating, his biggest advice for nonprofits is to do what they do best: