New Overtime Guidance Tries So Hard to Make Overtime Less Confusing for Nonprofits

You may have heard that the United States Department of Labor (DOL), the most benevolent of our bureaucracies, recently announced its release of the “Final Rule on Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees under the Fair Labor Standards Act (FLSA).”  More commonly, it’s known as “The New Overtime Rule” or, if you’re a business lobbyist, “The End of The World.”  Its biggest feature: effective December 1, 2016, only employees who make at least $47,476 annually can be exempt under the “white collar exemption.”  The old threshold was $23,660. Thus, 4.5 million more workers will go to work on December 1st eligible for overtime.

This rule has sent small businesses – including non-profits – scrambling to understand how it will impact them and sent employment lawyers scrambling to find creative strategies for compliance.  A unique consideration for nonprofits (as opposed to for-profits) is to return to question #1:   “Are we covered by the FLSA at all?”

Sensing this and noting with understatement that “the rulemaking process has brought into focus several issues and misunderstandings about the FLSA’s decades-long applicability to non-profits,” the DOL last week released a guidance specifically for nonprofits.  For the first time, it has provided a map specifically for nonprofits to navigate the morass of overtime regulations.  Most importantly, it leads the reader through the fundamental question of whether a nonprofit falls within the FLSA’s purview under either an “enterprise coverage” or “individual coverage” basis.  While not for the faint of heart or slightly drowsy, the publication is the best explanation I have yet seen, and includes helpful examples.  It is essential reading for all nonprofits concerned about the new overtime rule and could provide backup for concluding that you need not worry at all about the whole overtime shebang.  

Todd McKee is an attorney focusing on business, nonprofit and employment law at McKenzie Laird PLLC.  He can be reached at 615.916.3224 or

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