The U.S. Labor Department recently announced new overtime regulations to enforce the Fair Labor Standards Act. The Final Overtime Rule states that qualifying employees who earn less than $47,500 annually will receive overtime wages. The rule goes into effect beginning December 1st, 2016.

Overtime Regulations Nonprofits

How Will Nonprofit Organizations Adapt to the Changes?

Changes in Compensation

The Department of Labor (DOL) additionally published guidelines specifically for nonprofits, suggesting ways to adjust to the changes. Options to monitor salaries include:

  • Staffing: Make sure departments are fully staffed to reduce overtime hours;
  • Raising salaries: If workers are already making close to $47,500 – it may be easiest to raise their salary to keep them exempt from overtime;
  • Adjusting base pay: For employees who work occasional overtime hours, allocating some of their pay to anticipated overtime and reducing their base pay can keep compensation more consistent with their current salaries.

Changes in Processes

Keeping track of employee hours will become increasingly important to ensure their compensation complies with the Final Overtime Rule. Salaried employees who typically work 40 hour weeks will need to carefully keep track of the weeks they work additional hours. This way they may be compensated for overtime within the pay period.

Employees who work flexible hours will need to continuously keep track of their hours. Each organization may choose their methods for time management, as long as hours are tracked accurately.

The Council of Nonprofits points out that organizations whose budget years end on June 30th had to quickly adjust their budgets for the fiscal year beginning June 31st. On the other hand, those whose budget ends December 31st have more time to plan for the year 2017.

How Software Can Help You Plan for the Final Overtime Rule

Abila MIP Fund Accounting helps nonprofit organizations manage, streamline, and simplify budgets. Additional benefits include maximizing grants, managing HR, and quickly generating reports. Furthermore, we offer a fully integrated tool to track and report employees’ time.

Overall, some minor policy and salary adjustments can help nonprofits adapt to new overtime standards. Call Bob Schilling at 877-889-0629, email bschilling@capitalbusiness.net, or fill out our contact form to learn more about how our tools can help you implement budget changes.