Written by Natalie Jones, Director of Advocacy and Research, Tennessee Nonprofit Network
The Department of Labor (DOL) recently finalized an update to the Fair Labor Standards Act (FLSA) that will raise the salary threshold for overtime eligibility. The DOL estimates that this will have a significant impact on the nonprofit sector and will effect approximately 15% of our workforce in comparison to roughly 13% of the for-profit sector. This change will go into effect in two phases starting on July 1, 2024 and again on January 1, 2025.
To help nonprofits prepare for these changes, below is a summary of the key points that will impact Tennessee nonprofits and some suggestions on how to navigate the upcoming changes and remain in compliance with federal regulations.
For additional support, we are planning to host a webinar in early June to provide additional guidance and help answer your questions.
The key changes under the new rule are:
- Increased Salary Threshold: The minimum salary for overtime exemption will increase from $35,568/year to $43,888/year on July 1, 2024, and then to $58,240/year on January 1, 2025.
- Duties Test Remains Unchanged: The core responsibilities of employees (administrative, executive, professional, computer-related) will continue to be a factor in determining overtime eligibility or exemption, regardless of salary.
To remain in compliance, nonprofits have a variety of options and choices that they can make to achieve their mission while supporting their staff and being good stewards of their funding.
- Salary Adjustments: Raise salaries of affected employees to meet the new threshold.
- Overtime Pay: Pay overtime for hours worked over 40 hours per week.
- Workload Management: Review staffing and workloads and potentially reassign responsibilities and tasks to ensure employees don’t exceed 40 hours.
- Adjust Your Organization’s Definition of a Work Week: Depending on the type of work you do, you may want to redefine your work week (i.e., Wednesdays – Tuesday) so employees are able to adjust their time to remain under 40 hours per week.
Some potential next steps for nonprofit leaders include:
- Identify Impacted Staff: Analyze your workforce to determine which employees will be affected by the new salary threshold.
- Communication: Inform staff about the changes and how it might impact them.
- Policy Review: Update your personnel policies to reflect the new overtime regulations.
Resources:
While this provides a general overview, it’s recommended to consult with an employment law attorney or refer to the Department of Labor’s website for the latest information on FLSA compliance: https://www.dol.gov/agencies/whd/flsa
Remember, this is a significant change that may require adjustments to your staffing and budgeting. By taking proactive steps and seeking guidance, you can ensure compliance and minimize disruptions to your organization.