How New Overtime Law Affects Nonprofits

A letter in support of the U.S. Department of Labor's new overtime rule, from the perspective of one nonprofit.

The U.S. Labor Department (DOL) has now released a final rule updating overtime pay protections for millions of white collar employees across America. Under the new ruling, employees with salaries less than $47,476 (with the level adjusted every three years) will be guaranteed overtime pay when they put in more than 40 hours of work in a week. This rule will sweep broadly across the economy, affecting working people and their employers in every sector. By guaranteeing overtime pay for overtime hours the new rule will sharply reduce opportunities for employers to require their employees to put in extra hours with no pay at all. The new rule also advances the dual purposes of the Fair Labor Standards Act's overtime pay requirements: to ensure that workers are fairly compensated for all their hours, and to spread hours and work opportunities among more employees and job seekers.

The Bottom Line

The new ruling, however, does not come without challenges, particularly for non-profit organizations like PathStone. Headquartered in Rochester, NY, PathStone serves low-income families and economically depressed communities in New York, Pennsylvania, New Jersey, Ohio, Indiana, Vermont, Virginia and Puerto Rico. Funded through public grants, private philanthropy and individual donations, PathStone provides job training, housing assistance, and family services to tens-of-thousands of low income individuals and families each year.

The demands for our services are boundless, while our capacity to provide them is constrained by our resources. The new overtime rule will undoubtedly affect PathStone: based on an analysis of our overall workforce of 500-plus employees, we believe that more than 80 percent will be overtime-eligible under the new rule. Regardless of the additional burden placed on our organization, we believe that paying a livable wage is the right thing to do not only for our deeply committed employees, but also for the participants that rely on our services.

The Impact

Here at PathStone we know, first-hand, the costs and consequences of the current white collar rule, which has allowed employers to exempt workers paid as little as $23,660 annually from overtime pay, while requiring them to put in long hours of unpaid labor. Low-paid employees currently denied overtime pay deserve a wage that is commensurate with the hours they work. As a result, employees will be able to spend more time providing for their families or other pursuits, including education or a second job. This new rule will also create work opportunities for the unemployed and under-employed, as employers shift hours or add jobs to make up for the loss of uncompensated overtime.

We believe that to best meet the needs of our participants, we must shift our workplace practices to better represent the same mission and vision we promote and support within our broader economy. PathStone's employees are our greatest asset; they are unwavering in the time and talent they devote to serving others. Like those they serve, our employees need and deserve family-sustaining wages, reasonable work hours and safe and healthy work environments. The Labor Department's new overtime rule will help us ensure we provide these fundamental conditions of good jobs to our employees. Doing so will pose some challenges for us, but we are committed to doing our part to extend economic opportunity and security throughout our multi-state operation and the broader communities in which we serve.

The Bigger Picture

Finally, the new overtime rule will strengthen capacity of non-profit institutions. Few careers are as rewarding as work in the non-profit sector, but its long hours, lower pay and sometimes wrenching emotional demands can take a toll, with burnout and turnover not uncommon consequences in the sector. Higher pay and greater mindfulness among non-profit leaders and employees alike on how we spend our time and allocate work among staff can help non-profits achieve more balanced workplaces that better serve all of us. In addition, to remain large (now accounting for more than ten percent of the U.S. workforce overall), vibrant and effective, the non-profit sector overall must take the steps needed to contribute to positive economic growth, and to attract and retain employees with the passion, skills, talent, and commitment our mission requires.

PathStone Corporation supports the Department of Labor's overtime reforms because they will help those we serve, benefit those we employ, bolster our institutional capacity, and strengthen the economy overall. We firmly believe we can continue to do good for individuals receiving our services, even as we do better by the individuals on the front lines of providing them.