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Questions and Answers from the Overtime Webinar for the Non-Profit Sector


Q. Will the non-profit FLSA overtime webinar be available at a later date via recording?

A. Yes, this webinar will be available for viewing at a later date.

Q. I have seen in articles that say that exemptions (like the less than $500,000 in commerce rule) will not apply in 11 states including Washington DC. I am in New York. Is anyone researching how state and federal rules interact especially in terms of this $500K exemption but also overall? Thank you for your help!

A. The Fair Labor Standards Act (FLSA) is the federal wage and hour law that applies nationwide. Its coverage principles (including the $500,000 annual dollar volume threshold to establish enterprise coverage) and the criteria for the "white collar" overtime exemptions are the same in all 50 states. However, some states or localities may have their own wage and hour laws that are more protective of workers.

Q. A non-profit provides services, among them building or rehabbing low-income housing for ownership, this results in cumulative sales over $500,000 but each sale itself does not result in income because the costs of housing outweigh the sale. As the non-profit is selling homes for less than cost, we do not view this as competitive with any other business and thus not a covered entity but would like your opinion.

A. We cannot determine whether your non-profit organization is covered under the FLSA based on the information you provided. We encourage you to contact the nearest Wage and Hour Division district office. You can locate the nearest office by calling the Division's toll-free help line at (866) 4US-WAGE ((866) 487-9243) between 8 a.m. and 5 p.m. in your local time zone, or log onto the Division's Website at http://www.dol.gov/whd/america2.htm for a nationwide listing of Wage and Hour Division district and area offices.

Q. Will there be a period of non-enforcement for non-profits?

A. The Final Rule's effective date is the same for all employers, profit and non-profit alike (December 1, 2016). However, the Department of Labor has announced a time-limited non-enforcement policy for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds. More information about that non-enforcement policy is available here: https://www.dol.gov/whd/overtime/final2016/nonenforcementpolicy.htm.

Q. Are teachers exempt from this rule? And does this rule cover ALL Exempt employees making between $23,000+ - $47,000+ a year?

A. The salary level and salary basis requirements do not apply to bona fide teachers, therefore bona fide teachers will not be affected by the new salary level. A bona fide teacher has a primary duty of teaching, tutoring, instructing, or lecturing in the activity of imparting knowledge, and is employed and engaged in this activity as a teacher in an educational establishment. For further information, see 29 CFR 541.204(b), .303.

As to your second question, generally, bona fide Executive, Administrative and/or Professional employees must meet the required salary basis, salary level and job duties test found in 29 CFR 541.100 - .400 to qualify for exemption.

Q. For the Administrative exemption, I've seen a carve-out for a "special salary level for certain academic administrative personnel." Which job titles fit under this description? And--is the special salary level equal to a first-year teacher's salary? Thank you for your response.

A. Under the FLSA, a job title alone is insufficient to establish the exempt status of an employee. The exempt or nonexempt status of any particular employee must be determined on the basis of whether the employee's salary and duties meet the requirements of the regulations - see 29 C.F.R. 541.2

The administrative personnel that help run education institutions and interact with students outside the classroom, such as department heads, academic counselors and advisors, intervention specialists and others with similar responsibilities are subject to a special salary. These employees meet the salary requirements for exemption if they are paid at least as much as the entrance salary for teachers at their institution. For additional information, please review our Higher Education Guidance Document: https://www.dol.gov/whd/overtime/final2016.

Q. Hi, I would like to know if passive income (like investment interest or investment returns) is considered to count towards the $500k enterprise threshold. Also, I would like to know if we hold a special event auction or raffle once or twice each year, is that income considered to count towards the $500k threshold? Thanks so much.

A. Income that a non-profit organization uses in furtherance of charitable activities is not factored into the $500,000 annual dollar volume threshold to establish enterprise coverage. For further assistance regarding coverage principles under the Fair Labor Standard Act, please contact your nearest WHD district office, available at: https://www.dol.gov/whd/america2.htm.

Q. Herzing University is both a higher education institution and non-profit. Is this webinar appropriate to watch or should I wait for the Higher Ed version on 6/13?

A. It depends. This webinar has more information relative to the non-profit sector, whereas the higher education webinar will have more information relative to that industry. The section discussing the New Final Rule will be the only information duplicated.

Q. Can you please address what hours to include in an overtime calculation for an employee who takes kids to camp. The camp is 5 days long and the employee sleeps at the camp.

A. This Final Rule has not changed what constitutes "hours worked" under the Fair Labor Standards Act. The regulations defining what kinds of activities constitute "hours worked" are provided at 29 CFR part 785, and described generally in Fact Sheet #22, available here: https://www.dol.gov/whd/regs/compliance/whdfs22.pdf.

Q. For any person executive or no, they must be salaried in order to be exempt even if they fit all other criteria they must be salary not hourly correct?

A. Generally, yes. However, outside sales employees and certain professional occupations (doctors, lawyers, and teachers) are not subject to the salary level and salary basis requirements. For more information about the salary basis requirement, refer to Fact Sheet #17G, available at: https://www.dol.gov/whd/overtime/fs17g_salary.pdf.

Q. How does an employer handle an employee who works part time doing business enterprise and part time charitable enterprise? Is overtime only required when an employee passes 40 hours of enterprise work in a week?

A. There are two ways that an individual employee may be covered under the Fair Labor Standards Act (FLSA) and entitled to its protections: individual coverage and enterprise coverage.

A nonprofit organization is not considered a covered enterprise under the FLSA unless it engages in ordinary commercial activities that result in sales made or business done that meets the $500,000 threshold. If an nonprofit meets this threshold, its employees are covered by the FLSA and entitled to overtime for work performed over 40 hours a week regardless of how the employee spends their time.

Even if a nonprofit organization is not covered on an enterprise basis as described above, it may have individual employees who are covered individually and therefore are entitled to the FLSA's protections. An employee who engages in interstate commerce or in the production of goods for interstate commerce or in the protection of goods for interstate commerce is covered by the FLSA and is entitled to overtime pay for time worked over 40 hours in a week.

Q. Are non-profits permitted to utilize comp time for salaried staff, instead of paying overtime?

A. No, non-profits are not permitted to utilize compensatory time for salaried employees instead of paying overtime. Only public agencies, such as state and local governments, are permitted to use compensatory time instead of paying overtime.

Q. Are teachers working under 501c3 (an Educational Service Provider Organization) covered under the new overtime act?

A. The salary level and salary basis requirements do not apply to bona fide teachers, therefore bona fide teachers will not be affected by the new salary level. A bona fide teacher has a primary duty of teaching, tutoring, instructing, or lecturing in the activity of imparting knowledge, and is employed and engaged in this activity as a teacher in an educational establishment. An "educational establishment" means an elementary or secondary system, an institution of higher education or other educational institution. For further information, see 29 CFR 541.204(b), .303.

Q. Are teachers exempt?

A. A teacher is exempt if their primary duty is teaching, tutoring, instructing, or lecturing in the activity of imparting knowledge, and they are employed and engaged in this activity as a teacher in an educational establishment. An "educational establishment" means an elementary or secondary system, an institution of higher education or other educational institution. For further information, see 29 CFR 541.204(b), .303. The salary level and salary basis requirements do not apply to bona fide teachers, therefore bona fide teachers will not be affected by the new salary level.

Q. So we have a Special events position that makes donation requests to sell at our annual basket auction fundraiser. If any of those requests will be made or received from across state lines she would be individually covered even if we don't earn $500,000 in sales revenue as an agency? She would be covered because of the Individual test?

A. Generally, employees who make phone calls across state lines are individually covered under the Fair Labor Standard Act (FLSA). For further assistance with coverage principles under the FLSA, please refer to Fact Sheet #14 at https://www.dol.gov/whd/regs/compliance/whdfs14.pdf or contact your nearest WHD district office at https://www.dol.gov/whd/america2.htm.

Q. I have three “Exempt” employees in my domestic violence shelter. I understand domestic violence shelters are not a covered enterprise but all my advocates answer the crisis call line which means it could be a call from a victim from out of state or from the National DV hotline center. We also put clients on a bus to other states to relocate and forward their mail to them. Is this considered interstate commerce and are these individual employees covered by the FLSA?

A. There are two ways that an individual employee may be covered under the Fair Labor Standards Act (FLSA) and entitled to its protections: individual coverage and enterprise coverage.

A nonprofit organization is not considered a covered enterprise under the FLSA unless it engages in ordinary commercial activities that result in sales made or business done that meets the $500,000 threshold. If an nonprofit meets this threshold, including a domestic violence shelter, its employees are covered by the FLSA.

Even if a nonprofit organization is not covered on an enterprise basis as described above, it may have individual employees who are covered individually and therefore are entitled to the FLSA's protections. An employee who engages in interstate commerce or in the production of goods for interstate commerce or in the protection of goods for interstate commerce is covered by the FLSA. Examples of such activities include making out-of-state phone calls, receiving/sending interstate mail or electronic communications, and ordering or receiving goods from an out-of-state supplier. The Department, however, will not assert that an employee, who on an isolated occasions spends an insubstantial amount of time performing such work, is individually covered by the FLSA.

Q. Can you please provide a definition of an HCE for non-profits?

A. An HCE is a Highly Compensated Employee as defined in 29 CFR 541.601. An HCE must currently meet the following criteria:

1) be paid an annual compensation level of at least $100,000. ($134,004 effective 12/1/16, under the new rule );

2) be paid a weekly salary of no less than $455 per week ($913 effective 12/1/16, under the new rule)

3) pass a minimal duties test (perform any one or more of the exempt duties of an Executive, Administrative, or Professional (EAP) exempt employee as defined in 29 CFR 541.100 - .300)

For more information, see Fact Sheet #17H, https://www.dol.gov/whd/overtime/fs17h_highly_comp.pdf

Q. Can you determine what a workweek IS---Sunday through Saturday, for example, in employee policies/handbook? Otherwise, working one extra shift would affect the week before and the week after, if it can be ANY 7 consecutive 24 hour periods. Or I am missing something?

A. An employee's workweek is a fixed and regularly recurring period of 168 hours - seven consecutive 24-hour periods. It need not coincide with the calendar week but may begin on any day and at any hour of the day. Once the beginning time of an employee's workweek is established, it remains fixed regardless of the schedule of hours worked by him. The beginning of the workweek may be changed if the change is intended to be permanent and is not designed to evade the overtime requirements of the Act. See 29 CFR 778.105.

Q. Are domestic violence shelters and rape crisis centers exempt from this new rule?

A. It depends. There are two ways that an individual employee may be covered under the Fair Labor Standards Act (FLSA) and entitled to its protections: individual coverage and enterprise coverage.

A nonprofit organization is not considered a covered enterprise under the FLSA unless it engages in ordinary commercial activities that result in sales made or business done that meets the $500,000 threshold. If an nonprofit meets this threshold, its employees are covered by the FLSA.

Even if a nonprofit organization is not covered on an enterprise basis as described above, it may have individual employees who are covered individually and therefore are entitled to the FLSA's protections. An employee who engages in interstate commerce or in the production of goods for interstate commerce or in the protection of goods for interstate commerce is covered by the FLSA.

The Department of Labor's final overtime rule updates the salary level required for the executive, administrative, and professional ("white collar") exemption in the FLSA. The final rule updates the salary threshold under which most white collar workers are entitled to overtime by raising the salary threshold from $455 a week ($23,660 for a full-year worker) to $913 a week ($47,476 for a full-year worker) effective December 1, 2016.

Q. Can you please let us know where exactly to find the article and duties listing?

A. For a concise overview of all the "white collar" exemptions and their requisite job duty requirements, please refer to Fact Sheet # 17A, available at https://www.dol.gov/whd/overtime/fs17a_overview.pdf.

Q. So if we have a new hire who starts mid year, they will not have the opportunity to make $47,476. So, as long as we pay a minimum salary of $913/week beginning Dec. 1, 2016, we will be in compliance with this person remaining an exempt employee (considering they meet the duties test as well)? Thanks.

A. Yes, the salary requirement is $913 a week.

Q. Can employer pay employee a quarterly bonus for the first quarter, and overtime pay for the second quarter? I.e. first quarter is exempt employees, but the second quarter is non-exempt employees.

A. Under the Final Rule an employer can use a nondiscretionary bonus paid quarterly or more frequently to satisfy up to 10% of the standard salary level. If the sum of the salary paid plus nondiscretionary bonus received in a given quarter does not satisfy the standard salary level, the employer may not claim the exemption for that quarter and the employee is entitled to overtime pay.

Q. What if the employee doesn't work 12 months a year, they only work 10...then is it by week salary or in total?

A. To qualify for any of the white collar exemptions, employees generally must meet the salary basis test, the salary level test, and the duties test. Generally, if an exempt employee subject to the salary level test works for any amount of time during their workweek, they must receive at least the full standard salary level ($913 per week, beginning on Dec. 1, 2016) to retain their exempt status. Please see FOH 22g10 concerning rules for annual salary earned in a shorter period, which can be found at the following link: https://www.dol.gov/whd/FOH/FOH_Ch22.pdf.

Q. For all non-exempt staff, does the new ruling impact determining whether to pay hourly or salary?

A. No. Exempt employees generally must be paid on a salary basis to qualify for the white collar exemption, but there is no required method for how to compensate non-exempt employees. Newly non-exempt employees may continue to be compensated on a salary basis.

Q. How long will the final overtime rule not be enforced for non-profit organizations? What language do you have available for staff that falls under the grace period?

A. To be clear, the time-limited non-enforcement policy does not apply to all non-profit organizations. The time-limited non-enforcement period only applies to "providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds," and will begin when the Final Rule takes effect on December 1, 2016, and will last until March 17, 2019. For more information, see https://www.dol.gov/whd/overtime/final2016/nonenforcementpolicy.htm. For most employers, including non-profit organizations, the rule is effective beginning December 1, 2016.

Q. Please explain in more detail the extension of compliance to 03/01/2019 and which employers fall under the extension.

A. On May 23, 2016, the Department of Labor published in the Federal Register a time-limited non-enforcement policy for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds.

From December 1, 2016 to March 17, 2019, the Department will not enforce the updated salary threshold of $913 per week for the subset of employers covered by this non-enforcement policy. Throughout the duration of this non-enforcement policy, the Department will engage in outreach and technical assistance efforts, including to providers of services in settings covered by this policy. This non-enforcement policy does not apply to providers of Medicaid- funded services for individuals with intellectual or developmental disabilities in residential care facilities with 16 or more beds.

Q. We currently have employees designated as salary exempt that are performing exempt duties. The only change to that is the salary requirements. Do those employees automatically become non-exempt because they won't meet the "Salary level?" The job duties will not change.

A. To qualify for exemption, employees must meet certain requirements related to their job duties and satisfy the standard salary level and salary basis tests. Unless an employee works in an occupation that is not subject to the salary requirements (e.g., outside sales employees, doctors, teachers, lawyers), they must earn at least $913 per week (equivalent to $47,476 per year) beginning on December 1, 2016 to retain their exempt status.

Q. What qualifies an employee as an HCE and who does the change to an annualized salary of $134,004 apply to?

A. When the final rule takes effect on December 1, 2016, employees who satisfy the Highly Compensated Employee (HCE) duties test may qualify for exemption if they earn at least $134,004 per year and at least $913 per week. To satisfy the HCE duties test, the employee’s primary duties must include performing office or non-manual work and the employee must customarily and regularly perform at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee. Please see Fact Sheet #17H for additional information about the HCE duties test, https://www.dol.gov/whd/overtime/fs17h_highly_comp.pdf.

HCE employees must receive 100% of the $913 weekly threshold on a salary or fee basis, but non-discretionary bonuses and incentive payments (including commissions) may be used to satisfy the remainder of the $134,004 total annual compensation requirement

Q. For the bonus catchup would that catchup amount have to be classified as a bonus or could it be additional salary?

A. Following is an FAQ which best addresses your question. The FAQ's for the new Final Rule can be found at: https://www.dol.gov/whd/overtime/final2016/faq.htm.

Q. Hi, is the salary threshold the same for all exempt employees, whether they are part-time or full-time? For example, what if we have an exempt employee who is paid $300/week to work a schedule of 10 hours/week? Is the threshold pro-rated for him? Thanks!

A. No, the standard salary level requirement may not be prorated for part-time employees. If an employee works any amount of time in a workweek, they must earn the full standard salary level ($913 per week, beginning on December 1, 2016) to qualify for exemption. However, employers do not have to pay a salary for employees who do not work at all in a workweek. Additionally, since exempt status is determined on a week-by-week basis, an employer does not need to pay an employee the yearly equivalent of the new salary level ($47,476 per year) for seasonal employees who only work part of the year.

Q. I would like more clarification regarding bonuses. If we tell employees once a year what their bonuses will be can we consider those contributions non-discretionary and count them towards the income threshold?

A. Non-discretionary bonuses and incentive payments are forms of compensation promised to employees, for example, to induce them to work more efficiently or to remain with the company. Beginning on Dec. 1, 2016, employers may use non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level test ($913 per week, beginning on Dec. 1), provided that such payments are made on a quarterly or more frequent basis.

Q. Can you clarify--may part-year employees be paid $913 per week even if it doesn't total $47,476 per year?

A. Yes, a "white collar" exempt employee must make at least $913 per week, effective 12/1/16, and also meet the additional criteria for the exemption (be paid on a salary basis and meet the respective job duty's test).

Q. Could you please provide clarification on what "outside sales" represent. We have an employee who sells sponsorships. I understand that her commissions can count up to 10% of the salary basis, but I also saw where outside sales are exempt.

A. Outside sales have not changed as a result of the final rule, please see Fact Sheet #17F for more information: https://www.dol.gov/whd/overtime/fs17f_outsidesales.pdf.

Q. If our organization is covered by FLSA under Enterprise coverage, but there is a state law which exempts our industry (in this case, theatre) from overtime requirements, must we still follow the FLSA overtime regulations or can we follow state law which offers an exemption?

A. The Fair Labor Standards Act (FLSA) is a nationwide law that provides minimum wage and hour standards for workers in all 50 states. States and localities may have their own laws providing greater wage and hour protections (e.g., higher minimum wage laws, narrower exemption criteria, etc.), but to the extent that a state or local law provides less protection for a worker covered by the FLSA, the FLSA requirements still apply.

Q. If the employer pays 100% of all premiums for benefits (e.g. health insurance, dental insurance) for all employees, could that be counted towards the salary thresh hold?

A. Thank you for your question. The salary level does not include payments for medical, disability, or life insurance, or contributions to retirement plans or other fringe benefits.