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Beware: New overtime rules apply to most nonprofits

By Zachary S. Kester, JD, LLM, CFRM and Kylie Schreiber, Charitable Allies |

To their detriment, many nonprofits believe the new overtime rules going into effect on December 1, do not apply to them since they are not business “enterprises.”

But this overlooks the reality that “individual” employees may qualify for overtime because of their job duties. The majority of employees who make less than $47,476 in annual salary will be entitled to overtime.

Any individual employee who engages in interstate commerce in some shape or form is eligible for minimum wage and overtime pay standards, according to the Fair Labor Standards Act (FLSA) and the U.S. Department of Labor (DOL). Interstate commerce is a rather broad concept, and is explained further below.

To make matters worse, the DOL utilizes language in its recently published guidance [pdf] for nonprofits to suggest that they do not often investigate or take action regarding violations for “individual” employees. But in states like Indiana, employees can use the strict wage and hour laws against employers for nonpayment of wages, which include overtime pay. So organizations should think twice before becoming too complacent.

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