Bill Would Erode New Overtime Rules – Will Nonprofits Stand for their Workers?

July 19, 2016; Society for Human Resource Management

When Yogi Berra told a reporter, “It ain’t over until it’s over,” he was talking about baseball, but he might as well have been talking to the millions of American workers who were counting on new overtime regulations for increased earnings come this December. In May, the Department of Labor ended a lengthy review process looking at updating the rules that determined which salaried employees were required to receive overtime pay. The new threshold, $47,476, was good news for the estimated 4 million workers who would become eligible for overtime pay.

The nonprofit community has a history of responding with great ambivalence to such fair labor efforts and, as Rick Cohen observed last year, the overtime question was no different.

But even as a number of nonprofit groups—ironically, including USPIRG—protested the new requirements, NPQ published a piece by labor lawyer Andy Schmidt that baldly asked “Is Exploiting Workers Key to your Nonprofit Enterprise Model?” The conversation began to work its way from “why we can’t do this” to “how can we do this?” And that “how” question in many cases must involve government funders.

In May, NPQ cited a statement released by the New York-based Human Services Council that recognized that new costs would be difficult to implement and hard to pay for, but also saw that “this expansion will not only improve the quality of life for thousands of frontline workers by ensuring that they are fairly compensated for all of the hours that they work, but it will also spur economic growth by enabling them to work their way towards financial security. HSC commends DOL for recognizing the importance of respecting workers’ time and paying them fairly for their labor.”

At the beginning of July, NPQ editor-in-chief Ruth McCambridge noted that a survey conducted by National Council of Nonprofits showed that “the responding nonprofits now supported the law’s intent but worried about the practical measures they might have to take in order both to comply and also balance their budgets.”

Advocacy efforts were turned to government and private funders. Tim Delaney, President and CEO of the National Council of Nonprofits captured this position when he said “Importantly, we are not calling for an exception to the overtime law for nonprofits… we simply call for honest recognition by our government [and private] partners who serve the same constituents in the same communities that governments cannot continue to expect nonprofits to subsidize government obligations.

This week, however, four Democratic members of Congress may have turned the focus away from implementation and back toward opposition when they introduced legislation to limit the impact of the new rules. Their bill, H.R. 5813, raises the threshold to only $35,984 on December 1^st. It calls for two other annual increases, which would bring the standard to $43,645 on December 1, 2018. And it strips the rule of its automatic triennial review to ensure the threshold is indexed to the cost of living.

For-profit industry leaders showed their support quite quickly. According to the Society for Human Resource Management, the American Bankers Association, the U.S. Chamber of Commerce, the National Association of Home Builders, and the American Hotel & Lodging Association have indicated their support of the bill. Jason Brandt, president and CEO of the Oregon Restaurant & Lodging Association, said the bill “represents a common sense compromise that helps protect workers and small business owners as they adjust to new marketplace realities. We hope [Rep. Kurt Schrader (D-OR)]’s legislation can jump-start congressional action.”

With Congress returning home for a long summer recess, there will be ample opportunity for the nonprofit community to weigh in on the debate. Will this veer the focus of nonprofit organizations away from addressing the pay and work-life issues of their staff to again advocating limits on the impact of the new regulations? Finally, will funders support those who provide the services they back by preemptively indicating they’ll adjust their funding to recognize these new costs? This is their chance to play a leadership role in a most influential way. But will they?—Martin Levine