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Executive Director
Friday, September 4th is the deadline to submit written comments on the Notice of Proposed Rulemaking (NPRM) regarding changes to the regulations defining which white-collar workers are protected by the minimum wage and overtime standards in the Fair Labor Standards Act. As of this writing, more than 145,000 comments have been received.
Many associations have urged their members to submit comments, and countless blog entries, articles, and statements have been published about the burdens on employers to implement the new regulations. The consensus among the leaders I’ve spoken with this summer is that increasing the salary threshold for calculating overtime eligibility will have negative consequences for their organizations. Yet not a single leader has acknowledged what I believe to be one of our sector’s most shameful secrets: that it has become standard practice to misclassify white-collar workers as “exempt.”
Did you know that in 1975, 62% of full-time salaried workers were eligible for overtime, but only 8% are today? “Non-exempt,” not “Exempt” is intended as the default position in classifying staff. When the current three-pronged test is applied to the positions in most nonprofits, non-exempt positions will be the norm. Yet when I query members of an audience about the number of staff who are “exempt” at their organizations, I repeatedly hear that most, and sometimes ALL employees are exempt. While that may be a legitimate result at a small nonprofit with only professional staff members who each exercise authority and discretion, it is very rarely the correct result in a typical nonprofit.
The two most common reasons given for labeling most or all employees “exempt” is:
These two reasons are simply bad excuses for taking the wrong path. And sadly, even though the core value of the nonprofit sector is a commitment to do what’s right, nonprofit leaders are very susceptible to falling into a mindset focused solely on the financial bottom line. Nonprofit missions make an extraordinary difference in the lives of individuals and communities throughout the world. When have we ever been a sector known for taking the path of least resistance, ignoring basic human needs, or discrediting the importance of work-life balance? Whether leading a social services organization, an educational foundation, or a membership association of professionals, nonprofit sector leaders lead with their values. Yet providing a livable wage or expecting employees to work an 8-hour day is frequently not part of the equation.
When the changes in overtime regulations are released, many nonprofit leaders may finally do something that is long overdue: properly classify their white-collar workers. This means making a decision between encouraging your employees to go home to their families and communities after an honest day’s work, or paying them what’s legally required for overtime work. When you look at it that way, maybe the new regulations are exactly what our sector needs to sync the values we enthusiastically extoll to our donors and external stakeholders, with the values our employees experience each and every day.
To read the RISK eNews on the topic of respect in the workplace, visit: A Little Respect.
Melanie Herman is Executive dDirector of the Nonprofit Risk Management Center. She welcomes your feedback and questions about the topics in this article at 703.777.3504 or Melanie@nonprofitrisk.org.
“First let me congratulate you on a conference well done. I had a great time at the Nonprofit Employee Benefits Conference and walked away with some valuable tools and questions that we’ll need to be addressing in both the short and long term. Thanks to you and your staff for all you do to provide us with quality resources in support of our missions.”
“BBYO’s engagement of the Center to conduct a risk assessment was one of the most valuable processes undertaken over the past five years. Numerous programmatic and procedural changes were recommended and have since been implemented. Additionally, dozens (literally) of insurance coverage gaps were identified that would never have been without the work of the Center. This assessment led to a broker bidding process that resulted in BBYO’s selection of a new broker that we have been extremely satisfied with. I unconditionally recommend the Center for their consultative services.
“Melanie Herman has provided expert, insightful, timely and well resourced information to our Executive Team and Board of Directors. Our corporation recently experienced massive growth through merger and the Board has been working to better integrate their expanded set of roles and responsibilities. Melanie presented at our Annual Board of Director’s Retreat and captured the interest of our Board members. As a result of her excellent presentation the Board has engaged in focused review which is having immediate effects on governance.”
“The Nonprofit Risk Management Center has been an outstanding partner for us. They are attentive to our needs, and work hard to successfully meet our requests for information. Being an Affiliate member gave us access to so many time- and money-saving resources that it easily paid for itself! Nonprofit Risk Management Center is truly a valued partner of The Community Foundation of Elkhart County and we are continuously able to optimize staff time with the support given by their team.”
“The board and staff of the Prince George’s Child Resource Center are extremely pleased with the results of the risk assessment conducted by the Nonprofit Risk Management Center. A thorough scan revealed that while we are a well run organization, we had risks that we never imagined. We are grateful to know that we have now minimized our organizational risks and we recommend the Center to other nonprofits.”
Great American Insurance Group’s Specialty Human Services is committed to protecting those who improve your communities. The Center team has committed to delivering dynamic risk management solutions tailored to nonprofit organizations. These organizations have many and varied risk issues, hence the need for specialized coverage and expert knowledge for their protection. We’ve had Melanie speak on several occasions to employees and our agents. She is always on point and delivers such great value. Thank you for the terrific partnership and allowing our nonprofits to focus on their mission!