Whenever a major policy debate about protecting employees comes up in Washington, business groups do all they can to show how their interests are in line with those of mission-focused organizations. They hope that halo effect will tilt the scales in their favor.
At the same time, worker-rights groups presume that charities are on their side when it comes to doing the right thing in setting labor standards. The truth lies somewhere in the middle: Nonprofits generally express moral support for fair employment standards while they often face what’s become known as “operational anxiety” as they try to figure out how to pay for rising costs that for-profit businesses and governments can more easily absorb.
The challenge of this dichotomy is more than academic, because the federal government once again is examining the rules governing overtime pay with an eye toward revising the standards for the white-collar exemption — the rules that determine which executive, administrative, and professional employees do and do not qualify for overtime pay.
The Obama administration wanted to more than double the salary threshold for when workers in these three job categories get paid overtime — meaning everyone who made less than $47,500 would be eligible to be paid overtime when they worked more than a standard 40-hour workweek. Most nonprofits understood the need to live up to fair labor standards, but many were also very worried about how they would bear the cost of extra compensation to a large swath of their work force.
Those fears subsided when the Obama administration rules were blocked by a judge in late 2016. President Trump’s Labor Department opted not to defend the proposed overtime revisions in court and announced it would press reset and come up with another set of rules.
The Department of Labor is now doing just that: seeking fresh comments and recommendations on what changes should be made to the law that determines which workers qualify for overtime pay — and which ones do not.
Right now, in the midst of public-policy chaos in almost every other arena, charitable organizations can and should take advantage of the chance to influence the federal regulation process to help ensure that employment law is crafted not to satisfy the preferences of for-profit businesses or worker-rights organizations but instead to apply to the way work is performed by their nonprofit.
Speaking Up
It’s helpful to think ahead to what overtime rules ultimately will look like — to begin with the likely end in mind, as Steven Covey might recommend. Will new overtime rules make it easier or harder for charitable groups to compete for qualified talent? Given that no new money from governments is on the horizon, are the likely changes going to help the people nonprofits serve and enable charitable organizations to properly meet future staffing needs? The results depend on who answers the Labor Department’s questions.
Barely two weeks after the Labor Department sought feedback on 30 questions about overtime pay, the American Society of Association Executives submitted comments that it asserted represent the views of the “nonprofit community,” including charitable organizations.
One of its recommendations is for the federal government to create a salary threshold for nonprofits and small businesses that is lower than for large for-profits and government employers. This proposal, if adopted, would set a lower value on the work of nonprofit executive, administrative, and professional employees compared with their counterparts in business or other spheres.
It is certainly not “the nonprofit position” but instead is an idea most nonprofits would find abhorrent — both morally and practically — because it would make attracting top-notch workers far harder than it is today.
Nonprofit missions are too important for our organizations to become employers of last resort. But unless the Department of Labor hears from charitable organizations, it will assume ASAE and others are speaking on behalf of nonprofits.
It is equally clear that there’s no reason to think there will be a single nonprofit view on the wisdom of changing overtime rules: The diversity and complexity of employment arrangements in the nonprofit world are far too great.
Hospitals and other large organizations that regularly compete with for-profit and governmental organizations experience different challenges than small nonprofits and those that operate under government grants to provide services. Additionally, there are likely to be wide variations in the impact of potential changes depending on whether a nonprofit operates in a rural area versus a city.
The Labor Department needs to hear about the diverse experiences of many different nonprofits or it will do what previous administrations have done by setting standards that don’t fit nonprofit workplace realities. In short, no one organization can pretend to speak for all. That’s why each organization needs to speak up for itself.
The process for submitting comments is easier than you might think and can really pay off if enough nonprofits share the impact potential changes would have on their work in communities across the country. But time is short: The government will accept comments only until September 25.
What to Keep in Mind
To shape your organization’s response, it’s best to keep your organization’s mission at the forefront.
That means assessing how an increase in the overtime salary thresholds would affect the nonprofit’s operations, resources, and staffing, as well as what impact changed regulations would have on individuals relying on the services and the mission of the nonprofit. While businesses and employee groups won’t be thinking about all of these issues, here are some questions that can help a charitable organization respond.
- What effect — positive or negative — would potential changes to the overtime rules have on your organization’s ability to advance its mission? Variables could include fundraising needs, numbers of people served, or the ability to perform under government grants or contracts that do not cover full costs, among many others.
- What effect — positive or negative — could potential changes have on the individuals and communities your organization serves? For example, would higher compensation, if realized, reduce the number of individuals seeking services from the organization, and thus cut the workload of the organization or enable you to pursue other mission objectives?
- Assuming changes may be made, what transition rules do you think would be appropriate for your nonprofit and similar organizations? Should adoption of final regulations be delayed until a certain date, scheduled for the beginning of an organization’s fiscal year, or phased in over a period of time?
As the great philanthropist Benjamin Franklin wrote, “An ounce of prevention is worth a pound of cure.”
Devoting a few hours now preparing comments is a much better use of time than the alternative that may result.
After all, pressure to host three or four more fundraising events to compensate for the cost of new overtime rules that government grants will not cover is not a fair trade-off for inaction now. Likewise, the answer “but the Labor Department says it’s OK to pay you less than your peers” isn’t likely to keep or attract the talented professionals a nonprofit organization needs in order to be successful.
That’s why it’s time to act.
Jennifer Chandler and David L. Thompson, vice presidents with the National Council of Nonprofits, are former labor and employment lawyers in New Jersey and Washington, D.C., respectively. For more information, see the National Council of Nonprofits analysis.
