Is your organization prepared to make any changes regarding employee salaries to comply with the new FLSA laws, which will take effect beginning December 1, 2016? If not, take note!
The first thing you need to understand is what it means to be covered under FLSA. There are two ways that organizations and employees can be covered over FSLA; one being enterprise coverage and the other being individual coverage. Enterprise coverage, for a non-profit, kicks in when there is any income outside of donations that generates more than 500,000 dollars per year. This could include books sales, gift shop revenue, concession sales, etc. Any revenue collected to further the mission of the organization, such as providing counseling services, membership fees, or dues would not be included in those revenue generating activities. Individual coverage is focused more on specific employees and whether or not their job engages in interstate commerce or the production of goods for interstate commerce.
What does this mean for your organization? If your employees are covered under FSLA it is very important to do a salary audit. If you have any employees who are currently classified as salary exempt and they make under the new salary requirements of 47,476 dollars per year you will need to reassess their salary and possibly their job duties. There are three main ways you can change an employee salary and status to comply with the new regulation. First, simply increase their salary to the minimum requirement of 47,476 dollars per year. Second, change their status to salary non-exempt. This would mean they need to start tracking hours worked. Likewise, they’d be eligible for overtime for anything over 40 hours in a work week. Third, change the employee status to hourly non-exempt. This would also bring the need for tracking hours worked and eligibility for overtime. A great way to combat overtime is the use of volunteers. A volunteer is not considered an employee and while they may not have the full capabilities that an employee would, they are typically able to provide great support.
Bottom line, it’s better for your organization to be in compliance with the new regulations to avoid any differences down the road. For further information and guidance on this topic you can visit https://www.dol.gov/whd/overtime/final2016/nonprofit-guidance.pdf