Overtime Pay Rules Adopted
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Special News Alert

May 2016
Given the impact of the new federal rules on overtime pay will have on many nonprofits, we are sending this special news alert to all 58,000 nonprofits registered in Washington State.  On issues like these, we want to make sure you have what you need, when you need it.  

Overtime Pay Rules:
What Nonprofits Need to Know

In a far-reaching effort to improve the lot of workers, the Obama Administration announced yesterday that it was making millions more employees eligible for overtime pay.  The new rules go into effect December 1, 2016.  Under the new regulation issued by the Labor Department, most salaried workers earning less than $47,476 a year must receive time-and-a-half overtime pay when they work more than 40 hours during a week. The previous cutoff for overtime pay, set in 2004, was $23,660.  

What are the Options for Nonprofits?
The federal rules on overtime are complex and often confusing.  We've presented some basic strategies to help you understand your options.

Option 1:  Don't allow your employees to work overtime  
This option won't work for all nonprofits but the simplest way to avoid the new overtime rules is to not allow employees to work overtime.  No overtime, no overtime pay.

Option 2:  Raise Exempt Employees' Salaries
If you have exempt employees who regularly work overtime and they are paid less than $47,476 per year, you can raise their salaries to (or above) the new salary threshold. If you elect this option, you should review their job duties to make sure they qualify as exempt.  If they do meet all the tests and you raise the salary to (or above) $47,477 per year, you do not have to pay them for overtime work.  

Option 3: Pay Overtime as Needed
You can reclassify your salaried employees as "non-exempt" and pay them overtime whenever they work more than 40 hours in a work week. If these employees rarely work more than 40 hours per week, simply convert their salary to an hourly wage (divide their weekly salary by 40 hours). 

Example: An exempt employee's current salary is $715 per week, the employee regularly works 50 hours per week, and you want to reclassify this employee as a non-exempt employee.  You have two choices:  
  • Keep your costs the same:

Under this approach, the employee would be paid $13 per hour for the first 40 hours and $19.50 ($13 x 1.5) for each hour of overtime.  This option will be cost neutral to the organization but may be perceived as a decrease in hourly wage by your employee.  

  • Keep your hourly rate the same: The employee making $715 per work and working 50 hours of week has an average wage of $14.30 per hour ($715/50).  As the employer, you can use this wage and pay time and a half for any overtime hours worked.  Under this scenario the employee will earn $786.50 per week.  The employee will experience this as a pay increase and your organization will experience an increase in costs.
How can I get more information?
There are 3 free webinars available to learn more information about the new rules.  Subscribe to our newsletter to stay informed about other upcoming resources. 

501 Commons webinar
“Preparing for Fair Labor Standards Act (FLSA)
June 16- 1:00-2:00pm
To help nonprofits sort through the new FLSA regulations, 501 Commons is offering a free webinar with Nancy Kasmar of Compensation Connections.
 Independent Sector webinars
“Overtime Rules for Nonprofits – Part 1”
May 24 – 10:00-11:00am PST
If you are unsure if your organization is in compliance with FLSA, this is your opportunity to find out exactly what you need to know.
“Overtime Rules for Nonprofits – Part 2”
May 31 – 10:00-11:00am PST
A panel of sector experts will lead a strategy session that will help your organization manage the proposed expansion of overtime coverage.

Are there any Published Resources Specifically for Nonprofits?
Yes, the Department of Labor has issued this guidance specifically for nonprofits.  Additional resources include:


Washington Nonprofits makes sure nonprofits have what they need to succeed. We help nonprofits learn, increase their influence, and connect to people and resources. We are Washington’s state association for all nonprofits. For more information, please visit our website and our calendar of eventsStronger Together.


Copyright © 2016 Washington Nonprofits, All rights reserved.

Washington Nonprofits
120 State Avenue, #303
Olympia, WA 98501
(885) 299-2922

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