The Overtime Rule and Not-For-Profits

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New Federal Regulation, known as the “Overtime Rule” for employees making less than $47,476 will have a major impact on not-for-profit organizations.  The new rule, requires all employees earning less than $47,476 a year to either receive overtime for working more than 40 hours or receive a salary increase to $47,476 a year.

But how does this effect not-for-profits?  In 11 states, including Illinois, the new legislation is going to increase the salary threshold of salaried employees and/or give overtime to employees who work more than 40 hours a week.  But this won’t be all positive for not-for-profit employees.  Employers may choose to address the change by giving salaried employees less money per hour to compensate for the overtime pay instead of increasing their income.

Making decisions about pay increases in pay will continue for the near future too.  Every three years, up to 2020, there will be an increase to the U.S. Department of Justice’s salary thresholds.  This new legislation could severely affect not-for-profits (NFP) employment decisions.

There is more to the overtime rule than making a decision of how to pay employees.  These new regulations will affect not-for-profits who have already earned accreditation, grants or other awards contingent on compliance of Federal Laws.  If the not-for-profit fails to comply with the new federal mandate, the grants or awards can be taken away from them.

Employers are responsible for updating their employee manuals, policies concerning payroll and making various decisions for hourly and salaried employees.  Most importantly, the employers will have to notify the employees of any changes to their employment contracts, pay and benefits.

The legislation was set to take effect on December 1, 2016, but U.S. District Court Judge Amos Mazzant granted an emergency motion preventing the U.S. Department of Labor from implementing the rule on December 1, 2016.    The U.S. Department of Labor has appealed the injunction.

You can learn more about the United States Department of Labor Overtime Rule by Clicking Here:  https://www.dol.gov/featured/overtime

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