NONPROFIT OVERTIME QUESTION AND ANSWER SHEET: WHAT YOUR ...

NONPROFIT OVERTIME QUESTION

AND ANSWER SHEET: WHAT YOUR

ORGANIZATION NEEDS TO KNOW

ABOUT THE NEW FLSA CHANGES

Q

If all of my exempt staff earn more than $47,476, do I need to do

anything differently?

A

You are in luck in this situation, as you don¡¯t have any immediate action

steps for this cohort. However, as you hire staff around this threshold in

the future, be sure to keep in mind that the salary level minimum will

change every three years beginning January 1, 2020.

Q

Is there any accommodation in the law that would allow employees

working 30 hours a week to be exempt if their pay is proportionate to

the $47,476?

A

There is no accommodation in the FLSA for part-time employees. An

employee is either exempt or non-exempt by virtue of the three tests

(salary basis, salary level and duties) without respect to number of

scheduled hours per workweek. The FLSA looks at actual salary for all

employees so if your part-time employee working 30 hours earns less than

$47,476 (on an actual versus annualized salary basis), he/she would be

considered non-exempt.

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Q

What about staff who are supposed to only work 20 hours/week? If they

work 22 hours, do they only get overtime if they hit 40 hours?

A

The FLSA requires overtime to be paid to non-exempt employees who

work more than 40 hours in a workweek. If they work 22 hours they are

paid their regular rate for those 22 hours (multiply 22 hours by their

regular rate of pay).

Q

What do I do about part-time employees whose workload varies during

the year depending on variations in program activity?

A

It is likely best to pay those employees on an hourly basis. If they pass the

tests to be classified as exempt employees, you can pay them on a salaried

basis. If their workload varies throughout the year, they would be paid the

same regardless of the number of hours worked, which is why paying

them on an hourly basis is probably more appropriate if their positions

demand a non-exempt classification.

Q

Please speak in more depth about the duties test.

A

The FLSA provides an exemption from both minimum wage and overtime

pay for employees employed as bona fide executive, administrative,

professional and outside sales employees. It also exempts certain

computer employees. To qualify for exemption, employees generally must

meet certain tests regarding their job duties and be paid on a salary basis

at not less than $455 per week (this increases to $913 on December 1,

2016). Job titles do not determine exempt status. In order for an

exemption to apply, an employee¡¯s specific job duties and salary must

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meet all the requirements of the Department¡¯s regulations. DOL Fact

Sheets A-E (start with Fact Sheet A then link to the others) detail each of

exemptions ¨C Executive, Administrative, Professional and Computer.

Q

What exactly is due on Dec 1, and do we have to submit it to someone?

DOL?

A

The new regulations go into effect December 1, 2016. Nothing is to be

submitted to the DOL or other government agencies, however, you must

be in compliance with the new rules by that date or you risk being audited

and found in violation. By December 1, 2016 you should plan to have

proper classifications for your employees based on the new rules.

Q

We currently do not require our employees to contribute to their health

insurance costs. Could we raise salaries and then require contributions

toward health insurance and be OK?

A

You can certainly decide to increase salaries and require contributions

toward health insurance, but doing so to comply with the regulations

could have unintended consequences. Consider whether raising salaries

aligns with your compensation philosophy and how it impacts internal and

market equity.

Q

Is "flex time" a viable option to better control weekly hours?

A

Flexible pay for variable hours is a very narrow and complicated aspect of

the FLSA. Without additional information, it would be hard to provide a

recommendation.

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Q

What are the provisions around make-up time?

A

Make-up time allows non-exempt employees to take time off and work

that time earlier or later in the same workweek in order to avoid being

short-paid or accruing overtime. The key to make-up time is to ensure that

it is worked in the same workweek that the time off is taken. For example,

assume an employee works a regular Monday through Friday schedule of

eight hours per day. The employee can take off three hours on Tuesday,

and then work 3 extra hours on Wednesday and Thursday to make up the

time. Likewise, an employee who knows ahead of time that he or she will

need to take off four hours on, say, a Friday, can schedule in advance to

work longer days earlier in the week so that there¡¯s no loss of pay for the

time taken on Friday. The similar works in reverse. An employee who

works 9 hours on a Monday can be scheduled for 7 hours on a day during

the same workweek to avoid accruing overtime. Some states, most

notably California, have special provisions around make-up time, so check

your state guidelines before implementing such a policy at your nonprofit.

Q

Is it possible to categorize an employee as a non-exempt salaried

employee?

A

Yes, non-exempt employees may be paid on an hourly basis or salary

basis.

Q

Can you explain the 10% rule a little more? If I have an employee making

$45,000 in salary, and $3,000 in medical benefits, do they meet the

salary level test?

A

Employers will be able to use nondiscretionary bonuses and incentive

payments (including commissions) to satisfy up to 10% of the standard

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salary level. Such payments may include, for example, nondiscretionary

incentive bonuses tied to productivity and profitability. Employers may not

include the value of medical benefits towards the standard salary level;

this provision is limited to nondiscretionary bonuses and incentive

payments. For employers to credit nondiscretionary bonuses and incentive

payments toward a portion of the standard salary level test, the DOL

permits the employer to make a ¡°catch-up¡± payment which must be paid

no less frequently than quarterly.

Q

With the updated job descriptions, who should sign those? The

employee? The manager? HR? All?

A

There are no legal requirements regarding the signing of job descriptions,

however, it is best practice that the employee and supervisor sign the

position description. This indicates that each are aware of the

expectations and are aligned in terms of the duties and qualifications for

the job, as well as the FLSA classification. Human Resources should be

involved in developing or reviewing position descriptions to ensure

organizational consistency and compliance.

Q

We are a small group of six. Four of us are in the exempt range of

salaries but as far as duties test, we do not all supervise 2 or more, but

would if there was more staff. Is there a problem with qualifying?

A

Supervision of two or more staff is only part of the duties test for the

Executive exemption. These individuals may more appropriately be

classified as exempt under the Professional or Administrative exemption

tests, which focus on other areas of responsibility. DOL Fact Sheets A-E

(start with Fact Sheet A then link to the others) detail each of exemptions

¨C Executive, Administrative, Professional and Computer.

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